Crony capitalism key stumbling block to reform in SE Asia
Crony capitalism key stumbling block to reform in SE Asia
P. Parameswaran, Agence France-Presse, Manila
Crony capitalism is flourishing in Southeast Asia even though it was cited as a key cause of the economic malaise that resulted from the region's worst financial crisis about four years ago, analysts say.
Under crony capitalism, politicians in power offer business contracts and other favors to their relatives or friends. It breeds corruption, nepotism and political patronage, among other evils.
Several Southeast Asian leaders, including long-time Indonesian dictator Soeharto, were toppled following the Asian financial crisis in 1997-98 when many companies collapsed due to inefficiencies caused by crony capitalism.
But analysts at a regional forum on crony capitalism in Manila lamented that reforms in business and politics that appeared imminent in the region following the economic turmoil had fizzled out.
"In spite of the political upheavals following the financial crisis, there have been little fundamental structural changes in politics and in business, particularly involving the links between the two," Edmund Terence Gomez, a Malaysian associate professor, told the conference at the weekend.
Among cases cited at the conference were recent scandals involving the husbands of Indonesian President Megawati Soekarnoputri and Philippine President Gloria Arroyo -- two women leaders who stormed to power last year.
Gomez said one of the main factors fueling crony capitalism in Southeast Asia was that with the emergence of democracy, "the state is increasingly being captured by capital" which influences the outcome of elections.
"Since political contests are being extremely influenced by access to money, this brings into question the quality of democracy that is emerging in the region," Gomez said.
In Malaysia, he said, Prime Minister Mahathir Mohamad's powerful United Malays National Organization had an "overwhelming influence" over the corporate sector and that Mahathir "protected" well-connected businessmen.
"Malaysian capital remains very subservient to the government."
In Indonesia, "the downfall of the Soeharto regime does not mean the end of cronyism," said Benny Subianto, an Indonesian visiting research fellow at the University of the Philippines, told the conference.
He said crony capitalism under President Megawati has been "decentralized" unlike during Soeharto's 32-year authoritarian rule, when he and a few of his confidants "were able to control and centralize the intact lucrative resources in their hands."
Megawati came under fire last month for appointing her husband -- businessman and legislator Taufik Kiemas -- as head of a ministerial visit to China last month, even though there was alleged conflict of interest.
In the Philippines, Mike Arroyo, the husband of President Arroyo, led a list of "people you love to hate" in a recent issue of the respected Newsbreak weekly magazine, "given persistent and vivid accounts of him putting up a shadow cabinet and supposedly dipping his hands in big questionable business deals."
Arroyo was installed to power a year ago after a popular military-led revolt ousted her corruption-tainted predecessor Joseph Estrada.
"Her administration has been smeared by various scandals that reek of crony capitalism mainly through the questionable activities of her husband," Aquilino Pimentel, the opposition leader in the Senate, charged in his opening remarks at the conference.
"Incidentally, some of the crony capitalists who are still highly visible in the unabashed game of currying favor with the President are old faces who have managed to survive transitions of power," Pimentel said.
Businessman-turned-prime minister Thaksin Shinawatra of Thailand is said to be the clearest reflection of the intimate links between money and politics in the region.
The billionaire politician was swept to power a year ago with the biggest majority ever achieved in Thai polls but seven months later narrowly got off the hook on charges of concealing part of his enormous fortune.
Ukrist Pathmanand, assistant director of the Institute of Asian Studies at Thailand's Chulalongkorn University, said it would be difficult to pursue political reform and anti-graft measures under Thaksin.
"Such policies would result in curtailing the strong economic and political power base he and his friends enjoy -- something which is at this point quite improbable," he said.