Southeast Asian 'Tigers' still roaring ahead<\/p>\n
KUALA LUMPUR (Reuter): Once sellers of raw materials to the
\nindustrialized world, Southeast Asian countries are now rapidly-
\nindustrializing \"Tigers\" with no thought of turning back<\/p>\n
Some are further along the road than others, but all talk more
\nabout the pace than the direction of development even though
\nsome, like communist Vietnam, are just beginning.<\/p>\n
Indonesia and Malaysia have made impressive strides. In
\nThailand progress has been slower while the Philippines is still
\nsuffering from the economic legacy of profligate former president
\nFerdinand Marcos.<\/p>\n
Indonesia has progressed quickly in the last three decades in
\ntransforming a mainly agriculture-based economy towards a more
\nindustrial economy, economists said.<\/p>\n
Industrial production contributed some 24.3 percent of
\nIndonesia's gross domestic product (GDP in 1995, compared with
\n9.2 percent in 1989. Agriculture's contribution to GDP has
\ndeclined steadily to 17.2 percent last year from 49.3 percent in
\n1969, the government says.<\/p>\n
\"The structure of our economy has changed a lot. You don't
\nhave to look far. Just comparing 1973 and now there has been a
\nvery significant change,\" said Miranda Gultom, an economist
\nattached to the Ministry for Economics and Finance.<\/p>\n
The Indonesian economy is more diversified now, with the
\nmanufacturing sector making up about one-third of GDP, followed
\nby the agricultural sector and service industries.<\/p>\n
Christianto Wibisono of the Center for Business Data, said,
\nhowever, there was still much to be done because Indonesia had
\nmany advantages in certain sectors which could be developed.<\/p>\n
\"We should have the fifth largest paper industry in the world
\nbased on the potential we have. We should manufacture more value-
\nadded products than exporting raw materials,\" he said.<\/p>\n
\"We are still behind Thailand in terms of export ability. Our
\neconomy is still very much resources-based. The government needs
\nto encourage industries which could add more value to our
\nproducts,\" Wibisono said.<\/p>\n
He said Indonesia should focus on industries with a natural
\nbase here rather than those needing a high level of imports.<\/p>\n
\"The high import contents have made our export products
\nuncompetitive,\" he said.<\/p>\n
Economists said another important structural change was the
\ndeclining dependence on oil exports to finance the budget.<\/p>\n
From 1984\/85 to 1996\/97, income from the oil sector, as a
\nproportion of total government revenues, diminished to an
\nestimated 18 percent from more than 65 percent, while income from
\ntaxation had grown to 70 percent from 30 percent.<\/p>\n
Malaysia<\/p>\n
Nowhere has the change been more dramatic than in Malaysia,
\nonce a purveyor of rubber, tin and palm oil, now among the
\nworld's largest producers of semiconductors.<\/p>\n
The share of primary commodities in the economy has fallen by
\nmore than half to around 20 percent of GDP over the last decade.
\nThat of manufactured goods has more than doubled to about 31.5
\npercent, Malaysia's Economic Report for 1995\/96 says.<\/p>\n
\"I think the industrialization process is well under way. From
\nnowhere, it has become the world's leading maker of
\nsemiconductors. There is no looking back for Malaysia,\" said Liew
\nYin Sze, economist with J.M. Sassoon & Co in Singapore.<\/p>\n
\"There is fairly consistent decline in dependence on commodity
\nexports. It has happened everywhere.\"<\/p>\n
Economists say a key factor in the transformation was a
\nrecession between 1985-87 in the OECD countries, which caused a
\nsharp drop in prices of tin, rubber and palm oil -- then
\nMalaysia's primary exports.<\/p>\n
The Malaysian economy went into a tailspin. The impact was so
\nsevere, another racial conflict between Malays and ethnic Chinese
\nof the type which traumatized the country in the late 1960s
\nlooked likely.<\/p>\n
A series of dramatic economic policy changes by Prime Minister
\nMahathir Mohamad, who opened up the country to foreign investment
\nand privatized state-owned companies and infrastructure projects,
\npulled it back from the brink.<\/p>\n
The response was huge. Malaysia's economy has been growing
\nsince at more than eight percent a year.<\/p>\n
Under Mahathir's Vision 2020 program to make Malaysia a fully
\nindustrialized nation by that year, economists say GDP growth
\nwill have to be maintained at that level.<\/p>\n
Sassoon's Liew said that although manufacturing now dominated
\nthe economy, this would change as it moved toward more capital
\nintensive, high-technology and service-oriented industries.<\/p>\n
Thailand<\/p>\n
In Thailand, economists say the government will have to work
\nharder on human resources, infrastructure and an outdated tax
\nsystem to ensure a transformation to full industrialization.<\/p>\n
With little virgin land to be opened up to farming and the
\nprospects of a dramatic improvement in agricultural prices slim,
\ndependence on primary exports must decline.<\/p>\n
\"Inadequate infrastructure is one of the major constraints,\"
\nsaid Supavud Saicheau of the Phatra Research Institute. \"And
\nabout only one third of our workforce finishes high school.\"<\/p>\n
Thailand has good industrial potential, particularly in the
\nautomobile industry and in electronic products, said Chalongphob
\nSussangkarn, president of the private Thailand Development
\nResearch Institute.<\/p>\n
\"But the government will have to chip in much more before that
\ncan happen,\" he said.<\/p>\n
Thailand's transition from agriculture economy to
\nindustrialized economy began to show in 1985 when manufactured
\ngoods exports first exceeded primary commodity exports.<\/p>\n
Another crucial step took place in 1993 when medium-to-high-
\ntech products made a splash and started to replace exports from
\nlabor-intensive industries as the economy's growth engine.<\/p>\n
To maintain traditional strength in commodities in an
\nincreasingly diversified economy, Chalongphob said Thailand must
\ncultivate niche markets.<\/p>\n
For example, instead of trying to increase all rice exports,
\nThailand should focus only on top quality grades such as fragrant
\nrice, he said. Exotic fruit sales were another potential growth
\narea, he added.<\/p>\n
\"We cannot just sell average agricultural products which other
\ncountries with cheaper labor can catch up very soon,\" Chalongphob
\nsaid. \"We should try to make some of our primary commodities
\nhigh-value luxury goods.\"<\/p>\n
The Philippines is perceived to have lagged in the transition
\nto industrialization, which Joey Salceda, research director at
\nSBC Warburg in Manila, attributed to \"financial hemorrhages\"
\nduring the rule of late president Ferdinand Marcos.<\/p>\n
He said the hangover of debt left by Marcos had dashed
\nManila's dream of keeping pace with others in the region.<\/p>\n
\"Commodity exports from the Philippines, ranging from copper,
\ngold, sugar to coconut oil, between 1974 and 1980 really boomed.
\nIt could have made the country the first tiger in Southeast Asia
\nif it had been able to wisely use its export receipts while
\nbuilding up its industries,\" Salceda said.<\/p>",
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