Empowering civil society in Asian countries
By Emil Salim
The following article is based on a paper presented at the international symposium on the Challenges of Japanese Studies in Asia with a theme In search of Asia civil society In the third millennium in Jakarta on June 28.
JAKARTA: From 1965 to 1990, eight economies have shown a remarkable record of high sustained economic growth, as revealed in The East Asian Miracle a World Bank Policy Research Report, 1993. These eight High Performing Asian Economies (HPAE) are Japan, Hong Kong, the Republic of Korea, Singapore, Taiwan, Thailand, Malaysia and Indonesia. Causes of this miracle growth, as reported by the World Bank, are:
* more rapid output and productivity growth in agriculture;
* higher rates of growth of manufactured exports;
* earlier and steeper declines in fertility;
* higher growth rates of physical capital, supported by higher rates of domestic savings at an average rate of 20 percent of GDP during 1960 to 1990;
* higher initial levels and growth rates of human capital, with emphasis on primary and secondary education;
* generally higher rates of productivity growth.
All these HPAE's have grown at the highest rate of 5.5 percent per annum during 1965 to 199O. It was therefore quite a surprise that these countries suddenly had to face a meltdown of their rapid growth rate. Since 1997, practically all HPAE's have become Low Performing Asian Economies (LPAE's).
Five major causes may explain this sudden change.
First is rapid economic growth was accomplished under a paternalistic type of regime, which was considered as uniquely Asian. Under this system, economic growth was initiated and progressively promoted by the governments who were pushing active business corporations. Such a development gave emergence to the so-called Japan Inc., Singapore Inc., Indonesia Inc. etc., in which government links business corporations in their common endeavor under the pretext of economic growth. This opened the way for possible cooperation between government and well- connected business corporations, which lead toward the development of crony-capitalism.
Second is rapid economic growth required high capital formation, which most likely could be accomplished only by the strong and large corporations. It meant that rapid growth, especially in a high competitive global market induced a conglomeration of enterprises which was limited to few large enterprises constrained by the limitation of available capital. Such capital was made easily available by foreign investors and bankers.
Third, corporations as well as banks did not grow as rapidly as the required demand, with a consequence that they both became more and more vulnerable to any destabilizing forces in the economy that may have occurred, especially due to the weak global financial and architectural framework.
Fourth, a weak institutional structure did not provide a proper check-and-balance between the government, business and civil society. Governments in most Asian countries are the most powerful, followed by the business enterprises and a weak civil society; hence, creating an upside-down pyramid of power- structure with the top at the bottom. With such a weak civil society, political and economic development is conducted among the state-holders and business corporates, leaving the civil society completely ignored. In this situation economic growth took place while eroding the trust and support of the people at large.
Fifth, an asymmetric developmental arrangement between global commodity production and trade with global finance. The World Trade Organization (WTO), World Bank and the International Monetary Fund (IMF) are concerned more about the development of free markets for commodity production and trade while leaving behind the global financial architecture. No arrangements were made on the wide oscillation of out-and-inflow of capital inflow movements into a country. Asia economies which initially enjoyed a large capital inflow, during 1965 to l99O, suddenly suffered the reverse of large capital outflow at a similar time which widened the consequences on their respective domestic economies.
Today, practically all Asian economies are engaged in a serious attempt to overcome the economic slowdown of 1997 and l998. The IMF and World Bank are actively prescribing Structural Adjustment Programs (SAP), which cover basically the following major fields:
* Structural reform of the fiscal system to allow fiscal expansion without inviting inflationary pressures.
* Structural reform of the monetary system to allow credit to expand without spilling over into excessive pressure on the balance of payments, but are conducive enough to induce an increased lending for productive purposes.
* A flexible foreign exchange system that makes it possible to obtain a realistic exchange rate and enable the economy to build a comfortable foreign exchange reserve in the balance of payment.
* Reform the corporate and banking institutions in combination with an improvement to the legal and judicial infrastructure to assure the creation of business certainty and predictability.
* The provision of a Social Safety Net (SSN) to aid the vulnerable poor and victims of structural adjustment programs in order to rehabilitate them back to normalcy.
These SAP conditions have significant impact on the economy and societal structure as well.
In its implementation, the Indonesian experience has witnessed SAP, which deals primarily with people but without the involvement of people who have failed, as is the case with the SSN program. The reason of no participation by people in the SSN program was because of a lack of understanding, no political will or just plain ignorance on the part of the bureaucrats to recognize the need of people's participation in development.
People are involved in development, but not necessarily as a subject of their own terms, but rather as an object to implement the program as designed and programmed by the government. People are also requested to monitor the SSN program, which in its planning or implementation is not being consulted with the people.
The danger of such an approach of SAP implementation is that the symptoms are being tackled but not the major cause.
This paper is of the opinion that one of the major causes of the Asian economic crisis is that the civil society in Asia's respective countries were not involved in Asia's development. And this crisis cannot be solved satisfactorily as long as civil society is not involved in the nation's common endeavor to overcome the crises.
There is a misunderstanding on the notion of Asian values, as if the prevalence of the importance of family in society also means that paternalism dominates in society. This is then used to justify the existence of strong leaders for a long duration in most Asian countries, and for justifying a lack of democracy, limited freedom in Asian press and societal associations. In various Asian countries, the growth of non-governmental organizations and civil society building blocks are denied or hampered.
It is precisely because of the nonexistence of these civil society building blocks which gave rise to the domination of governmental, political organizations and the army which then in cooperation with the business organization co-opted practically with all other nongovernmental and nonbusiness societal organizations.
With no meaningful societal countervailing power, genuine control, check-and-balance becomes impossible. This makes the early detection of institutional shortcomings impossible.
When this line of approach continues also in the implementation of SAP and SSN, it is easy to predict that this will also fail.
It is therefore of utmost importance that development in Asia should be based on a paradigm shift from:
* a top down to a bottom up approach;
* a paternalistic-cum-authoritarianism to societal-democracy;
* a state bias with a co-opted corporate approach of development toward a civil society bias with state and corporate approach of development;
* a powerful state centered decision-making process toward a people-centered decision-making process;
* and from a northern-dominated WTO, World Bank, and IMF global development mechanism toward a balanced northern-and- southern oriented development mechanism.
The basic thrust in this paradigm shift is that civil society should be at the center of development. It is because of the ignorance to this basic notion which caused Asia to plunge into a severe economic, social and political crisis. It is therefore of utmost importance that Asian leaders should learn from this naked truth, and engage themselves in actively promoting the growth and development of Asian civil society.
It is in this context that freedom of association and expression and freedom of fear to live freely in one's own country, must be assured and actively strived for in order to create a conducive climate for building civil society in each respective Asian country.
For those civil society building blocks already in existence, there is an urgency to establish a holistic network covering all Asian civil society.
Asian civil society vision must be clear, to want a world in which Asia can develop a humane and civilized society which can uphold basic human freedoms.
To actualize this vision, Asian civil society must have as its mission to develop the capacity of Asian society, to empower itself to become a determining viable force in the development of Asian society.
As a first step in this direction, the International Symposium In Search of Asian Civil Society in the Third Millennium has its moral obligation to take the follow-up steps to promote the idea and the development of Asian civil society.
The writer, a several-time member of the Cabinet in past governments, is an economics professor at the University of Indonesia.