For Southeast Asia's resilience, thank its governments
FOR the government, the peninsula's eastern seaboard is no backwater, despite the best efforts of oppositionist locals to save their corner of the country from the 21st century. Chairing the East Coast Economic Region (ECER) Development Council last week, the prime minister said the specially designated growth corridor had brought in RM32.7 billion in investments in the past five years, 30,000 jobs and some RM7 billion in gross national income.
Perhaps surprisingly for a swathe of the land that may look dowdy to unfamiliar eyes, apart from some sections of coastline, the top draw was its tourism cluster, which accounted for 55 per cent of total investments. But it wasn't just the beaches. The federal agencies netted respectable industrial projects in biotechnology and infrastructure. Datuk Seri Najib Razak also said a feasibility study on an east coast rail route across Pahang, Terengganu and Kelantan had been completed.
ECER's attractiveness as an investment destination is part of the splash that Southeast Asia is making on investors' radar screens. Reporting on its Asean and Asia Forum held last week, the Singapore Institute of International Affairs said 82 per cent of attendants were upbeat on Asean's economic prospects. This evaluation was from hard-nosed businessmen who were unlikely to be swayed by politics. Much of Asean's shine might be relative, given greater radiance only against the dim outlook for most of the rest of the world. Nevertheless, Southeast Asia's resilience in the midst of a global downturn is neither luck nor flash in the pan. It is mostly the result of governments pursuing responsible policies and getting their financial houses in order. In the developed West, on the other hand, governments' inability to restart growth and manage debt has led to persistent gloom among lenders and investors.
Indeed, reformist governance more than anything else underlies analysts' positive expectations. One of them, quoted in this newspaper on Saturday, even called it "the only piece of good news" as Southeast Asia's major markets, including China, retreat in the third quarter of the year. The role of government can hardly be overestimated in the case of the east coast, which has lagged behind the west in economic advancement. ECER was formulated to close the gap between the two halves. But it is not only about a grab bag of incentives. Investors also look for such institutional assurances as rule of law and fair treatment of their properties and interests. It is from this, more so in formerly lax countries like Indonesia and the Philippines, that the new keenness on Southeast Asia derives.