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The Political Economy of Business in SEA (1) and (2)

0900–1230, Saturday 16 April 2016, C2

Chair:

Petra Mahy
SOAS
petra.mahy@soas.ac.uk

List of Papers:

Part 1, The ASEAN Economic Community and International Relations

  • Paper 1: CLMV plus T in the AEC 2015: The Rising of Continental Southeast Asia and Its Political-Economical Implications
  • Paper 2: The Challenges and Benefits of the ASEAN Competition Law on ‘green market’ industry
  • Paper 3: The Politics of Indonesian Conglomerates: capital resurgence and regional alliance in Southeast Asia

 

Part 2, Governments, Institutions, and Businesses

  • Paper 4: Ersatz Capitalism and Industrial Policy in Indonesia and Malaysia: Theoretical Considerations and Empirical Outlook
  • Paper 5: Internationalization process of SMEs – a case of Vietnamese manufacturing industry
  • Paper 6: Trading and Business Ties between Singapore and South Vietnam during the Cold War, 1955-1975

 

Paper 1: CLMV plus T in the AEC 2015: The Rising of Continental Southeast Asia and Its Political-Economical Implications

Hugh P. H. Chen
National Chi Nan University
phchen@ncnu.edu.tw

Already today, ASEAN, a bloc of 10 nations with an aggregate economic size of USD 2.3 trillion, is the third pillar of growth in Asia in addition to China and India, with average GDP growth over the past 15 years at approximate 6%. The ASEAN Economic Community (AEC) envisaged launched at the end of 2015 will not only be an integration milestone but a potential game changer for ASEAN. The bloc’s diversity, ranging from highly advanced economies like Singapore to least underdeveloped countries like Myanmar, could be a source of synergies, bringing the capital and technologies of the more mature economies together with the competitive costs and abundant labor and resources of the less-developed member states within.
AEC is one of the three pillars of the ASEAN Community as well as the end goal of economic integration as espoused in Vision 2010. The ASEAN Charter and its associated ASEAN Blueprint, endorsed in 2007, envision an economic community based on a single market and production base, a competitive economic region with even development, and a region which is still actively engaged with the global economy. This paper aims to explore the economic dynamics of the ASEAN’s least developed countries (LDCs) – Cambodia, Lao PDR and Myanmar – and the latecomer Vietnam, known as CLMV, in achieving AEC 2105 and the GMS, especially focuses on ‘CLMV plus Thailand’ and highlights the rising Continental Southeast Asian economy and its political-economical implications to the multi-level regional integrations.

Paper 2: The Challenges and Benefits of the ASEAN Competition Law on ‘green market’ industry

Angayar Kanni Ramaiah
University Technology Mara
kanni844@ppinang.uitm.edu.my

The Competition law or also known as anti-trust law promotes and aspires to maintain market competition by regulating anti-competitive conducts by companies. The said law prohibits business practices that reduce competition and harm consumer’s welfare through a public and private enforcement. Competition law is also considered as a tool to stimulate economic growth and development in many of Asia’s developing countries. The ‘green market’ industry is one where the goods traded are a result of a joint production of a private good and an environmental public good (i.e. green goods). The Organization for Economic Co-operation and Development (OECD) in its declaration on Green Growth at the Council Meeting at Ministerial level held in June 2009, had emphasized that economic recovery and environmentally and socially sustainable economic growth are key challenges that all countries are facing today. Green related products growth is recognized as needed and relevant to face these challenges in the fight against climate change and environmental degradation, enhancement of energy security, and the creation of new engines for economic growth. Thus clear and correct price signals in the consumer market reflecting environmental externalities and appropriate incentives for investment in green technologies can only be achieved through effective competition. The paper attempts to study and explore the interaction and benefits of competition law and policy on ‘green market’ industry and growth in ASEAN. Additionally it would point out the impact and challenges posed by the fair competition policy control on green marketing in ASEAN with relevant suggestions for improvement for the green industry.

 

Paper 3: The Politics of Indonesian Conglomerates: capital resurgence and regional alliance in Southeast Asia

Faris Alfadhat
Murdoch University
f.alfadhat@murdoch.edu.au

In explaining the role of conglomerates in the contemporary politics of Indonesia, some scholars have argued that their triumph was the result of alliances forged with politico-bureaucrats and military elites, especially during the New Order regime. Through such alliances Indonesian tycoons were enabled to accumulate wealth with the support of various state policies and access to the country’s natural resources. Their prominence within the Indonesian oligarchy has helped to position them among the largest business groups in Southeast Asia. Nevertheless, this chapter argues that the existing literature has limitations in explaining the current dynamics of Indonesian conglomerates, especially with regard to their interest in the regional economic integration of Southeast Asia. The literature is important in explaining the position of big business within domestic political structures. Yet it has little to say about the complexities of economic cooperation at the regional level, which involves ASEAN governments, Multinational Corporations (MNCs), Non-Governmental Organizations (NGOs), as well as domestic conglomerates. The chapter further contends that ASEAN regional economic integration is noteworthy for the resurgence of Indonesian conglomerates after the Asian financial crisis. With the reinforcing of their global networks as well as political lobbying at regional level, which being reinforced by their domestic structural power, these businesses have enabled to suit their interests within the complexities of negotiations of economic regionalism. In doing so, such involvement also has taking part in shaping the nature and structure of regional cooperation.

 

Paper 4:  Ersatz Capitalism and Industrial Policy in Indonesia and Malaysia: Theoretical Considerations and Empirical Outlook

Mr. Fabian Bocek
Goethe University Frankfurt
bocek@soz.uni-frankfurt.de

Despite considerable economic growth in Indonesia and Malaysia during the last decades, the political goal of generating a class of domestic industrial entrepreneurs has not been achieved. It is rather the case, that Southeast Asian firms in the manufacturing sector are characterized by inefficiency and technological backwardness. The inability of the state to develop the economy inspires the notion of Southeast Asian ersatz capitalism.
Due to internal and external political blockades, the Southeast Asian alternative to the developmental state is merely an inferior duplicate, respectively ersatz, of the Northeast Asian model. While crony capitalism and ethnic affirmative action policies constrain the internal capacity of the state, international political blockades and restricted technological access act as external factors favouring the ersatz character of Southeast Asian capitalism.
The internal capacity of the state may be conceptualized from an institutional perspective, whereby the relationship between markets and states refers to the diversity of national governance structures. The political economy and the role of politics is essential for the analysis of Southeast Asian economies. The thesis of ersatz capitalism posits the inefficiency of Southeast Asian state sectors due to their nature of cronyism. Southeast Asian government interventions in the economy are often driven by issues of interethnic redistribution and the promotion of patronage networks.
No Southeast Asian country has shown indigenous capacities to design, innovate and commercialize into new and more profitable sectors. The considerations of ersatz capitalism aim to contribute to the theories of comparative capitalism.

Paper 5: Internationalization process of SMEs – a case of Vietnamese manufacturing industry

Tuong Nguyen Ke
Leipzig University
ngktuong@gmail.com

Can firms with lack of resources and capabilities still succeed in their internationalization process? This study examines the influences of external resources on internationalization process of SMEs in developing countries.
In early stage of SMEs internationalization, firms need to acquire important capabilities to gradually expand to foreign market. It has been discussed that a firm’s capability is influenced by different factors, such as location and institution factors. The movement of one firm from its home market to foreign market is automatic but is an induced transition. Internationalization gives different advantages, for example: cost, product quality, market expansion, competition, etc. through a value chain upgrading practice. Thus, it’s worth discussing the contribution of external factors to firms’ strategic orientation, step by step lead to a comprehensive international performance and competitiveness.
This research aims to explore role of from external resources that contribute to firm capabilities, during the process of internationalization using export as a most common mode, explained in three different phases: (1) from no regular export activities to export via an independent agents/ intermediaries, (2) from indirect to direct export activities via sale subsidiaries, (3) and from no export activities to direct activities. Following exploratory research in phase I, based on literature review, a number of 8 to 10 companies will be interviewed to verify most significant relevant constructs. In phase II, a survey to more than 100 firms will be conducted to validate the reliable of found constructs.

Paper 6: Trading and Business Ties between Singapore and South Vietnam during the Cold War, 1955-1975

Jason Lim
University of Wollongong
jlim@uow.edu.au

Singapore held its first General Elections in April 1955. Six months later, the Republic of Vietnam was proclaimed in Saigon. While both countries began dismantling colonial rule, their paths taken were divergent ones. Singapore became a self-governing, and later, an independent city-state while South Vietnam descended into political chaos and military failures. Trade and business ties between both countries were recognized as paramount, not for the countries’ survival, but as a means to ensure continued economic and political ties. These ties were fraught with various challenges. The governments of South Vietnam and Singapore maintained trading relations despite the ongoing military conflict in Vietnam. Chinese merchants in Singapore also maintained their trading networks with businesses in South Vietnam. Despite the passage of anti-Chinese laws in Saigon in 1956, trading ties continued as usual. My presentation will examine several issues. Firstly, despite the challenges in the South Vietnam-Singapore trade, and the strong possibility of business failure with an ongoing military conflict, what motivated both governments and traders to press on? Secondly, what commodities were in demand from traders and governments in South Vietnam and Singapore, and what problems emerged in the import and export of these commodities? Finally, as the war began to go badly for South Vietnam, how did the government and merchants from Singapore react to the possibility of the fall of South Vietnam? What does the experiences of governments and traders tell us about doing business in Vietnam during the Cold War?