Asian economies warned of strikes

Asian economies warned of strikes

SINGAPORE (DPA): The massive labor unrest currently paralyzing South Korea -- one of Asia's most mature "tiger economies" -- have prompted observers to speculate that other rapidly- developing Asian countries might be naturally progressing toward similar crises.

The region's sudden economic downturn over the past year has added to concerns that East Asia's "economic miracle" might, by its very nature, negate itself and crumble into inflation like Japan's or labor woes like South Korea's.

Some fear the rising lifestyles that come with Asia's new prosperity could easily scare away the foreign investors who made it all possible -- and send them scouting for less-developed, job-hungry countries to begin the cycle again.

In Singapore, a tiny island nation with no natural resources and heavy dependence on manufacturing, the economy in recent years has been so good that many companies have had to lure employees with year-end bonuses equivalent to half their annual salaries.

There is no unemployment, poverty or homelessness in Singapore, and the best-selling car is Mercedes-Benz. Lifestyle and wage expectations have been skyrocketing among the country's notoriously status-conscious citizens.

Singapore's ever-resourceful government has managed to keep many crucial manufacturers from fleeing all this by liberally importing unskilled workers and by upgrading encouraging concentration on higher-tech products.

But the country's domestic economy grew by only 3.2 per cent in the third quarter of 1996, alarming Singaporeans accustomed to double-digit growth. The manufacturing sector declined by 4.3 per cent in the third quarter of 1996, its worst performance in a decade.

Singapore's neighbor Malaysia faces a similar situation, with manufactured exports growing by only 5.8 percent in 1996 after a 22.9 percent jump the year before.

Analysts in both countries, however, say the slump is due more to a global decline in demand for electronics than to rising wages, and that international investors' interest in Singapore and Malaysia remains high.

Rising labour costs have been more of an issue in Thailand, whose staple low-end exports such as garments, shoes and processed foods are suddenly seeing competition from Eastern Europe, South America and less-developed countries in Asia.

Thailand's export growth fell from 23.6 per cent in 1995 to year- end estimates of zero per cent in 1996, a major disappointment after the Bank of Thailand had forecast 14 per cent growth for the year.

Indonesia's promise of a huge, inexpensive workforce and improving infrastructure have not yet outweighed, in the eyes of economists and investors, the ominous militarism, political violence and corruption that have plagued the country throughout its modern history.

International auto manufacturers reacted with disgust in February when the Indonesian government awarded its new "national car" project to a joint venture between a Korean carmaker and Hutomo "Tommy" Suharto, the son of long-ruling President Soeharto.

Indonesia was also torn by political and religious riots last year, and humiliated when pro-independence activists from the island of East Timor were awarded the Nobel peace prize.

Fueling the theory of investor flight to poorer countries, the Philippines -- which has been dubbed "the sick man of Asia" due to an inability to catch up with its neighbors -- had one of its best years ever in 1996.

The Philippines' gross domestic product (GDP) grew an estimated 5.5 percent in 1996, up from 4.8 percent in 1995 and 4.4 percent in 1994.

Economists say Philippine President Fidel Ramos' reforms, which included dramatic liberalizations on foreign investment, telecommunications and banking, helped convince formerly reluctant investors to take advantage of the country's highly- skilled, English- speaking work force and relatively low costs.