Focusing on Asian business

By Mohammad Sadli

MELBOURNE (JP): Attending a big conference in Melbourne focusing on the prospects of doing business in Asia, one enters a different atmosphere. The conference was dominated by Australians first of all, then Europeans and Americans, while from Japan there was a strong delegation of Keizai Doyukai. Participants from the ASEAN countries, India and South Korea were a minority, but there was a sizable delegation from (mainland) China, reflecting the opening up of the country and the newly affluent businessmen venturing into the world.

The focus was on doing business and competing in Asia. At one time the conference broke up into three country focus groups; on Indonesia, China and India. For one reason or another Japan, Korea, Thailand, Malaysia and Singapore did not get a special focus group.

The Indonesia focus group drew the biggest crowd and was attended by some 150 people. The China focus group attracted somewhat less than 100 participants, while for the India focus group a small conference room was reserved occupied by less than 50 attendants.

Many Australian businessmen are attracted to prospects in Indonesia. From them one does not hear major complaints any more. Somewhat euphemistically, corruption in China and Indonesia was contrasted as being at one end of a scale, with New Zealand and Australia at the other end. The advise of businessmen experienced in doing business in Asia is that one has to be very patient, have consideration for the local culture and be very careful and cautious in choosing local partners. On the other hand, it is observed that Asian businessmen stay with their foreign partners for a long time. Perhaps the truth is that after foreign technology is effectively absorbed, the local partner will create a new venture in the same business but will not abandon the original affiliation.

The opening up of the Indian economy is attracting much attention. The Japanese are especially eager to be updated in their information and insight. But there is concern that the political process in India could set back economic liberalization. In the meantime, economic growth is inching upward, crossing the five percent line. Exports and imports are really picking up.

The world's extreme interest in East Asia is due to the splendid performance of the developing part of the continent. Growth rates are predicted to stay in the seven to eight percent bracket per annum, several times the rate of the western world and Japan. That means that in one or two decades Asia will become the economic center of gravity of the world. Conferences such as the one in Melbourne are basking in Asian optimism as if nothing can stop East Asia in its path of progress. Actually, this would be unwise because political stability and regional security, the underpinnings of such process, are not automatically guaranteed in the long run.

But otherwise, Western business should be inside this area, sooner rather than later, to get in on the ground floor. The infrastructure requirements alone will be a mindboggling figure of a trillion dollars or more in the ten years to come, and China and ASEAN will attract the lion's share. Such money cannot come from the World Bank or other concessional sources and hence the whole system of construction and operation of public infrastructure should be geared towards private sector involvement. The legal and management systems should be reformed from one that was originally anchored in the public sector.

Privately financed and operated public infrastructure facilities need not become more expensive because of expected greater efficiency in operation and cost savings in construction. Even if the user has to pay more as is the case with toll roads, that has to be contrasted with deficit financing in the old days when all people had to pay through the process of inflation, regardless of the fact that people living in Aceh were not using the (better) roads in Java.

The sponsor of the Melbourne conference is the Committee for Economic Development of Australia, a non-profit organization of business and no extension of the government. There is an international network of such organizations, like the Committee for Economic Development in the U.S. and Keizai Doyukai in Japan, and several others in Europe. This network holds annual meetings like this year in Melbourne and next year in Madrid.

The Australian Committee for Economic Development of Australia has also embarked on an Asian network called Asian Region International Association of Cooperating Organizations which is still in its infancy. The cooperating organization in Indonesia is Indonesia Forum with Prof. Sadli in the chair. The first day was devoted to the first meeting of the Asian Region International Association of Cooperating Organizations but the Asian delegations were small and could not field important businessmen. Probably because such businessmen are too busy to spend a couple of days in an overseas conference where the emphasis is not on business deals. Japan with Keizai Doyukai is not yet a member of Asian Region International Association of Cooperating Organizations.

But Indonesian businessmen should spend some time in meetings where their horizons can be broadened and contacts enlarged. Indonesia should no longer be obsessed with investment into, and business promotion for, their country only. The Indonesian public should also be taught that Indonesian investments overseas do not constitute capital flight, even if a Chinese conglomerate invests in China. In Australia there is already visible Indonesian investments in real estate and property, but probably more from the other ASEAN countries.

Many of the Indonesian businessmen who were top executives in the 1960s and 1970s have now become board members or chairmen and are not burdened any more with day to day responsibilities. Such senior and wise men could play a part in international business communication and diplomacy, and meet their counterparts in conferences like Asian Region International Association of Cooperating Organizations, World Economic Forum, APEC Business Forum and others.