'Fast buck' scheme behind fiasco<\/p>\n
By Erwin Ramedhan<\/p>\n
JAKARTA (JP): North American financiers, foreign exchange
\noperators and others have launched repeated attacks on Southeast
\nAsian currencies and economies. These attacks have led to the
\nfall of the Thai baht, the Malaysian ringgit, the Philippino peso
\nand the Indonesian rupiah, while the Singapore dollar is
\nteetering on the edge. Who will be the next victim of currency
\nmanipulation? The Hong Kong dollar?<\/p>\n
Currency erosions and flotations are an ersatz for official
\ndevaluations and generally reflect an unhealthy or sick economy.
\nThis was not the case of ASEAN economies -- reputed as the power
\nhouses of the Asia-Pacific -- at least until now.<\/p>\n
What is behind these currency manipulations?<\/p>\n
To make a fast buck, on the back of these reputedly dynamic
\neconomies, could be one plausible reason. The growth of these
\neconomies have made them financially over-extend investments in
\nreal estate, public works and other prestige operations.<\/p>\n
At the same time, the rising ASEAN middle class has also been
\non a consumer binge. This trend reminds me of the Mexican middle
\nclass fervor for imitating the expensive consumer patterns of the
\nU.S.<\/p>\n
Added to this are the loose ends of the nations' economic
\nsystems. Some of the phenomena that have weakened these otherwise
\nresilient economies include: corruption here and there, high cost
\neconomies, pseudo privatized bureaucratic and economic entities.<\/p>\n
And that is where the currency manipulators (perhaps in the
\nname of the global economy) saw the opportunity to lead attacks
\nagainst the Southeast Asian foreign exchange system, plunging the
\ncurrencies to their lowest levels while raising the value of the
\nU.S. dollar.<\/p>\n
A quick profit was made by speculators at home and abroad. In
\nIndonesia the dollar attained heights of 3,100 rupiah per dollar,
\nagainst a more realistic 2,700 in the U.S. itself.<\/p>\n
Worse still, financial and monetary sectors from highly
\nindustrialized countries (whether they were speculators or not is
\nnot really important) then prepared themselves for eventual bail-
\nout solutions with tens of billions of dollars. Mexico received
\nabout US$50 billion in 1995 and Thailand $16 billion in 1997.<\/p>\n
This solution was one way of saying: \"With the money that you
\nhave lost I can lend you some money for which you will also owe
\nme interest ...\"<\/p>\n
The \"fast buck\" strategy aside, there could also be some other
\nconsiderations behind the speculations on ASEAN currencies. Are
\nthese economies (and their economists) being taught the lesson
\nthat financial and monetary institutions -- both private and
\npublic -- from the highly industrialized countries reign supreme
\nover the growth and industrial and technological production
\ncapabilities of ASEAN. Money and money accumulation is more
\npowerful than the factories, executives, managers and workforce
\nin Southeast Asia.<\/p>\n
It is a kind of brinkmanship that developed nations have
\nmastered. There exists, however, a danger about which these
\nindustrialized nations may not be sufficiently aware:
\nglobalization is not a one-way street.<\/p>\n
How can ASEAN countries continue to purchase all sorts of new
\nand traditional, visible and invisible, exports from North
\nAmerica and other highly industrialized countries if their
\neconomic systems are thrown into chaos by their currencies.<\/p>\n
An economic slump in ASEAN would also mean a slump in the
\nWest's sales of franchises, technology, managerial know-how,
\nsoftware and brainware, leisure and entertainment products, as
\nwell as traditional export products.<\/p>\n
ASEAN countries have had their lesson in globalization, maybe
\nthe highly industrialized countries will be next.<\/p>\n
The difference between ASEAN countries and the lean, mean and
\nhungry \"tigers of Asia\" of yesteryear (Taiwan, South Korea, Hong
\nKong and Singapore) is that nations like Thailand, Malaysia,
\nIndonesia and the Philippines were always the \"elephants of
\nAsia\". They did not have to be aggressive on the international
\nmarket because they had a very important domestic markets of
\ntheir own. Indonesia has, for instance, a domestic market of 200
\nmillion people.<\/p>\n
But if speculators make these elephants lean, mean and hungry
\n-- with their currency speculations -- tomorrow they may become
\naggressive tigers with the power of angry elephants.<\/p>\n
Just give them time to endure the hardship and put their
\nhouses in order!<\/p>\n
The writer is executive director of the World Trade Center,
\nJakarta.<\/p>",
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