Empowering civil society in Asian countries

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.