Asia's dependence on senior leaders poses problems

Asia's dependence on senior leaders poses problems

SINGAPORE (Reuters): The heavy dependence of some Asian countries on senior leaders rather than on government institutions poses problems of succession, but few are likely to face difficult transitions when these leaders die, analysts said yesterday.

The exception may be Indonesia, which has long vested great power in President Soeharto, who is like "a banyan tree, allowing nothing to grow underneath", said an academic who declined to be named.

On Tuesday, wild rumors of Soeharto's death, later denied, caused the rupiah to fall almost 11 percent to an historic low of 4,600 to the dollar. More rumors yesterday that security around the presidential palace had been tightened also hurt the currency.

Experts said political figures in Asia were viewed far beyond their policy-making roles and were often considered the glue of the whole national structure.

"It's true of a lot of countries in the region because the national institutions are pretty weak -- legislature, judiciary, monetary and regulatory bodies," said Bruce Gale of the Hong Kong-based Political & Economic Risk Consultancy.

"What we tend to focus on instead are the individuals running the systems, so that our faith in the system doesn't depend so much on the institutions," Gale said.

That dependence is why the death of someone like Soeharto could create panic.

"People don't like uncertainty ... (Indonesian) succession is unclear, nobody knows what is going to happen," said Neil Saker of SocGen Crosby.

Soeharto is expected to stay in power despite a call he made to reevaluate his nomination for a seventh term in office, analysts said.

The 1,000-member People's Consultative Assembly meets in March for the presidential vote, but few surprises are expected as he has retained a firm grip for more than 30 years.

"This is a very monolithic political system where power is concentrated in one man. He is a master at not showing his hand," said Professor Jamie McKie at the school of Pacific and Asian Studies, Australian National University.

Malaysia's electoral system ensures a much smoother transition when Prime Minister Mahathir Mohamad retires, said Chia Woon Khien, head of Asian research at Skandinaviska Enskilda Banken.

"Malaysia has (Deputy Prime Minister) Anwar (Ibrahim) and people have grown to like him more and feel comfortable and confident in him," she said.

Added Gale: "The fact of the matter is that if Mahathir was to die tomorrow, there is a fairly well and widely accepted means by which his successor will be determined."

Others noted that as recently as September, Mahathir told leaders of his United Malays National Organisation (UMNO) that Anwar would succeed him.

Mahathir, 71, has led UMNO, the dominant party in the National Front coalition, for 16 years.

Even less worry prevails for Singapore, analysts said.

Senior Minister Lee Kuan Yew has had two heart operations and was hospitalized this year for an acute respiratory tract infection, but the markets stayed calm.

Lee, 73, premier from 1959 to 1990 and who is credited as the architect of modern Singapore, has passed the reins to Prime Minister Goh Chok Tong.

Lee remains a key adviser to Goh and his hand-picked cabinet, but Goh is clearly in charge. Experts believe the system, founded on Lee's probusiness, antiwelfare and law-and-order policies, will continue unfazed.

Elsewhere, Thailand's constant changes in leadership pose some concerns, but analysts said King Bhumibol Adulyadej provides a semblance of stability.

"Thailand has a lot of respected statesmen and a king who can control the military if there is a takeover," Chia said.