PACIFIC BASIN ECONOMIC COUNCIL
MAIN PAGE | CLIPS | 1998 | ASIA BUSINESS PROTECTIONISM

Asia business protectionism Mike O'Sullivan West Coast News Bureau Voice of America October 20, 1998 Intro: the Asian economic miracle abruptly came to an end last year. Some countries in east Asia, notably South Korea and Thailand, have started to rebound. But as Mike O'Sullivan reports, a number of Asian business leaders -- who met recently in Los Angeles -- worry that growth may be slowed by new calls for protectionism. Text: the phenomenal growth of the Asian economies in the 1980s and '90s was fueled by investment from outsiders. Thai business executive Chote Sophonpanich says that internally, many Asian industries were shielded from the hazards of competition by protective legislation. Mr. Sophonpanich, who is chairman of the Green Spot Company of Bangkok, was a participant in a forum on the Asian crisis, sponsored by the pacific basin economic council, a business association. The corporate executive notes that the rest of the world called the booming Asian economies "tigers," overestimating their stability and growth potential. He says "they lent us so much money, we could only waste it." Sophonpanich: I think they were blinded by the prospect of unlimited, continuous economic growth. Internal problems, and Asian business practices, were partly to blame for the crisis, in the opinion of John Prasetio, chairman of the Jakarta branch of the financial consulting firm Arthur Anderson. Mr. Prasetio says cronyism and nepotism are corruptions of positive Asian values -- respect for longterm relationships and loyalty to family. But they were not the only cause of the economic collapse. Prasetio: to accuse the Asian values to be responsible for the Asian crisis is totally unfair because basically what happened was there was this excessive borrowing incurred by Asian conglomerates, and then the international lenders wanted to have their money back, and we don't have the money. One response to the Asian crisis is the call for economic reform, to foster open business dealings and a level playing field. One Japanese participant of the Los Angeles business conference sees another response emerging. Takeshi Kondo, managing director of the Japanese trading firm Itochu Corporation, is worried by calls for anti-dumping legislation from Japanese textile and chemical firms -- ostensibly to keep out underpriced foreign imports. Kondo: Well, I don't know how legitimate their claims are. But as the business community, we need to stand firm resisting disguised forms of protectionism. One academic analyst from Stanford University sees the same potential threat in the united states. Asia policy specialist Mike Oskenberg says rising trade deficits could fuel protectionist sentiments here. Oksenberg: The United States trade deficits continue to soar, particularly with Asia. Those would be tolerable to the American public when our own economy is thriving. But I do wonder whether the United States will remain as committed to maintaining our open markets were we to suffer from a recession. Participants of the business conference were unanimous on one point: continued open trade among the pacific rim nations is just as important as internal financial reforms, if the fallen Asian "tigers" are to fully recover. They are unlikely to achieve their previous growth rates of up to eight percent per year, but can realize more sustainable gains, without the risk of a sudden withdrawal of confidence -- and capital -- by investors.