PACIFIC BASIN ECONOMIC COUNCIL
MAIN PAGE | CLIPS | 1998 | COUNCIL CHIEF OPTIMISTIC ON ASIAN BUSINESS REVIVAL

Council chief optimistic on Asian business revival Stephen Seawright Hong Kong Standard September 1998 Heading an organisation representing businesses in Asia should be a depressing job at the moment. With economies battered, financial markets plunging and, in the case of Indonesia, mass social unrest threatening to erupt again, one would expect business morale to be in the doldrums. But the man in the job does not portray as much doom and gloom as you might expect. Robert Lees is the secretary-general of the Pacific Basin Economic Council (PBEC), which represents over 1,100 businesses in the region, mostly large indigenous companies and multinationals. "The companies are trying to become much more efficient," Mr. Lees says of his members. He has just been traveling the region, visiting council members' companies and meeting government officials. His findings on Indonesia were cautiously optimistic, although they hinged on crucial caveats. "One would think that if the political situation hangs together, Indonesia has probably seen its worse days," he said. Of course that's a very big "if", which Mr. Lees quickly acknowledges. "The wrong response to a riot or demonstrations could set that all back," he said. Now is a key period in the political development of Indonesia which could determine the fate of the new president, BJ Habibie. In November the parliament meets to set the rules for the presidential election which will take place in December of next year. If the announced set-up satisfies the public and, more importantly, the fledgling food-distribution program works effectively, then another round of chaos may be averted. "We're in a vulnerable period of time. We've just got to keep the food moving and get the food out to the hinterlands," he said. Despite the future appearing to hang on by a thread in the volatile political arena, Indonesian companies are beginning to look up, according to Mr. Lees. "Companies, though certainly not wildly optimistic, were feeling better than when I saw them in March," he said. Another country on Mr. Lees tour was Malaysia which has its own fair share of turmoil at the moment. His scheduled meeting with Anwar Ibrahim had to be cancelled after the former deputy prime minister was sacked the day before by the fiery premier Dr. Mahathir. But he found company bosses supportive of the imposition of exchange controls by Dr. Mahathir at the start of the month. "Even though they were as nervous as heck, they supported his move on currency control," he said. But isn't it surprising that his members support such austere controls? "Ultimately in normal times the market should determine where capital flows but these aren't normal times. And it's not normal times when you have, as Dr. Mahathir says, groups with massive amounts of money that just sit around looking for loopholes to go in," he said. Mr. Lees believes that some of the recent activities have caused severe damage to the real economies in the region. But does that justify the Malaysian government's new controls and the surprise jump into the stock market by the Hong Kong government in mid-August? For him the jury is still out on the issue and he does not slam the government's moves. "The question is, by the government taking action will it give us a cooling-off period at the end of which the free market fully and completely takes over again. And traders would just have to fit with that statement. But if they could just go to Indonesia and see the kids and see the social cost of some of the profits that have been made I think they might come around." Examining the social costs of free markets was also behind Mr. Lees' visit to Hong Kong. The PBEC jointly organised a conference with the World Bank on environmental concerns, in Hong Kong last week. One of the main objectives was to ensure that good environmental practice did not move to the back burner in the crisis as businesses cut corners to keep themselves in the black. Participants from all over Asia felt that the crisis had not led to deteriorating environmental practices -- yet. But the temptation is there and governments and businesses have to combat together. "If there's a single thing we learnt it's got to take co-operation -- it's too big for anyone of us," Mr. Lees said. Recalling his visits to Hong Kong in the 1970s, he said Victoria Harbour was plagued by even worse pollution than today. Back on the crisis, we end on the question everyone asks, but nobody can answer -- how much longer will the crisis last? Mr. Lees is relatively upbeat about the region's prospects. "People, when they really look at the fundamentals, are going to say wait a minute, look at this place -- the demographics are still there, the work ethic is still there, smart business people still exist, governments there are friendly to business, isn't it about time to jump back in?" Only time will tell if investors agree.