moving through the manufacture of industrial products such as cars and computers and on to services such as retailing and airlines – have never been afraid to use the money they make to buy political influence and a comfortable place in high society. They make alliances with army generals and presidents’ children; indeed, sometimes they are army generals and presidents’ children. They have been involved in everything from drug-trafficking and illegal logging to lucrative and corrupt infrastructure projects for roads and telephone lines. In the early days, the businessmen can be openly thuggish, as they were in Cambodia in the early 1990s. But before long the drug barons and gangsters are dressed in Savile Row suits, their children are educated overseas, the family business is engaged in banking and finance and the past is all but forgotten.
The fate of business in south-east Asia is inseparable from the fate of the various ethnic Chinese communities which dominate trade and industry. Although some of the Chinese in south-east Asia suffered grievously at the hands of the invading Japanese during the Second World War, they quickly re-established themselves after the war and soon occupied the commercial territory abandoned by the departing colonial powers. Chinese minorities run the biggest conglomerates in Indonesia, the smallest shops in Cambodia and much in between. Needless to say, they are often resented. If they invest too much of their profits in their home markets, they are accused of dominating local business; if they invest overseas, in mainland China for example, they are accused of disloyalty to their adopted country. In Indonesia, where tens of thousands of Chinese were murdered in anti-communist massacres in the mid-1960s, some of the wealthiest Chinese businessmen threw in their lot with Suharto and his relatives. This ensured favourable treatment for a time, but leaves them vulnerable now that Suharto has been forced out of the presidency. The Malaysian government, alarmed by clashes between Chinese and Malays which left scores of people dead after an election in 1969, adopted a deliberate policy of favouritism called the New Economic Policy designed to transfer wealth, opportunity and skills to Malays; in Malaysia, it is the Chinese who feel resentment, although even Malays think the discriminatory policies may have outlived their usefulness. Thailand has taken a different approach, slowly assimilating the Chinese over hundreds of years to the extent that many of them think of themselves as Thai. In the Philippines, the ethnic Chinese share the upper reaches of society with another elite – the professionals and business families of Spanish descent.
However much the ‘indigenous’ – or, more accurately, non-Chinese – peoples of south-east Asia succeed in improving themselves, ethnic Chinese business will remain crucial for economic progress in the foreseeable future. But businesses will need to change fast if south-east Asia is to resume the spectacular economic growth of earlier years. That is because many of them are old-fashioned organizations. They can make money at the early stages of an industrial revolution, when they are able to exploit unregulated markets in natural resources and cheap labour, create domestic monopolies and make products for the local market behind a protective barrier of high import duties. But they are ill equipped for genuine competition in the modern global economy. Frequently they are centralized, family-run businesses that have made money the easy way, initially using government connections to win road-building or other infrastructure contracts or to gain logging concessions in virgin forests, before graduating to joint ventures or franchise agreements with foreign companies from car manufacturers to pizza parlour managers (the foreign companies provide the technical expertise and the local companies contribute their political influence and local knowledge). Finally, they buy land and become property speculators and developers. In spite of all the praise heaped on south-east Asian economies for their liberal economic policies and their successful penetration of export markets, many of the region’s own markets remain protected in reality if not by law. Foreigners cannot just buy a house in Thailand or set up a bank in Singapore or sell noodles in Indonesia, although the recent economic upheaval and the need for foreign capital has forced several countries to liberalize protectionist regulations.
The limitations of rough and ready pre-modern capitalism are quickly becoming apparent. Investments made by south-east Asian companies in the more competitive markets of Europe and America often run into trouble. But such failures have been dwarfed by the problems at home. The currency and stock market crisis which affected Thailand, Indonesia and Malaysia in particular in 1997 and 1998 showed that these economies, and many of the businesses in them, were managed by people who were too complacent, over-dependent on short-term borrowings and more reliant than they should have been on government largesse. Fortunately for south-east Asia, a new generation of entrepreneurs is eager to meet the challenge. Many of them are the sons of old-fashioned capitalists, but they are often educated at universities and business schools in the US or elsewhere in the West. They have learned modern management methods and they know that south-east Asia is quickly losing the advantage of cheap labour as wages increase; they are starting to believe in creativity and innovation, backed by higher spending on research and development, instead of copying something done elsewhere and trying to do it cheaper; and they know that trade liberalization in the region and internationally will expose their businesses to more competition than ever.
One of the depressing results of industrialization, population growth and the success of businesses greedy for growth has been the destruction of the natural environment, the subject of chapter 5. Such damage is by no means unique to south-east Asia, but the speed and scale of the abuse since the 1960s is unparalleled. Governments insist, in spite of evidence to the contrary, that it is cheaper to get rich first and use the money to repair the environmental damage later. And they suggest – or at least Mahathir Mohamad of Malaysia does – that foreign environmentalists are motivated by foolish sentimentalism or by a protectionist desire to weaken Asia’s economies. But the situation is so severe that even unsentimental locals are starting to take notice. Filthy, noisy and congested metropolitan cities such as Manila, Jakarta and Bangkok have become nightmarish for the poor and difficult even for the rich. Countryside that was once lush and green has become scarred and barren.
The damage is done in many ways. Population growth and indiscriminate tree-felling have shrunk south-east Asia’s forests to a fraction of their former size. Malaysia, Indonesia and Thailand complain that they are not given recognition for having set aside vast areas of their territory as national parks. It is true that such legally protected areas are much larger than those in most developed countries. But legal protection does not always mean real protection. In Cambodian national parks, soldiers with chainsaws can be seen today happily cutting down trees. Some of Thailand’s ‘forest areas’ are actually devoid of trees. In Indonesian and Malaysian Borneo logging continues on such a large scale that even government officials admit it is unsustainable. With the Philippines, Thailand and Vietnam already devastated, Asian logging companies have moved on to Cambodia, Laos and Burma or further afield to South America, where their rapacity is as controversial as it is at home.
Wild animals have had their habitats destroyed, and the survivors are hunted down so that their body parts can be incorporated into Chinese medicines and aphrodisiacs. The tiger became a symbol of the economic strength of east Asia, but these ‘tiger economies’ have few real tigers left. Likewise, the elephant has long been associated with the traditions of Burma, Thailand, Laos and Cambodia, but wild elephants are increasingly rare. There is little sentimentality about the loss of wild creatures which kill farm animals and damage crops, any more than Europeans mourned the disappearance of wolves and bears. Nor is there much concern about ‘biodiversity’. But millions of people suffer too: deforestation has contributed to soil erosion, landslides, droughts and devastating floods. The sea has fared no better than the land. Fishermen, like their counterparts in Europe and North America, have overfished their waters. They poach in their neighbours’ fishing grounds, prompting armed clashes and frequent seizures of fishing boats – and arrests of fishermen – by the governments concerned. The coastal mangrove forests where fish and shrimp once bred have been uprooted by property developers and commercial prawn farmers, while coral reefs are killed by sewage or blown apart by fishermen using dynamite to catch the few remaining fish.
Neither the depredation of land and sea nor the pollution typical of the early stages of industrialization have received much attention from wealthy city-dwellers. They are much more concerned with the critical state of their cities. The air is thick with dust and toxic gases generated by the trucks, cars, factories and building sites that are the accompaniments to economic success; pedestrians