Academic journal article
By Tay, Simon S. C.
Journal of Business Administration and Policy Analysis
INTRODUCTION: CRISIS AND NEW CONTEXTS
Businesses face a new context in opportunities and regulations in South East Asia. Many indicators suggest that the crisis that affected many counties in the region since mid 1997 has bottomed out. Leaders of the Association of South East Asian Nations (ASEAN) at their 1999 Informal Summit, held in Manila, spoke confidently of a recovery.
There are good reasons to question whether sufficient reforms have been undertaken to prevent a recurrence of the crisis. Most, however, would tend to agree that the worst seems to be over. New opportunities arise in the wake of the crisis.
In many countries, more sectors have been opened to foreign investment. Many large local conglomerates, affected by the crisis, are rationalizing their operations and seek to sell parts of their holdings, either by shares, or in whole companies and plants. In some countries, liberalization is proceeding at the advice and behest of international agencies, such as the International Monetary Fund. In one or two others, such as Singapore, liberalization in the financial and other sectors (e.g., telecommunications) is proceeding as part of national strategies to meet the growing international competition.
Economic cooperation and promotion within ASEAN as a whole has been increased by the acceleration of the ASEAN Free Trade Area (AFTA) and ASEAN Investment Area (AIA). Throughout the crisis, government leaders have been prompt in declaring their abiding commitment to liberalization. Continued liberalization, together with AFTA and the AIA, promises to increase the ease of cross-border business, and hope to attract foreign businesses to think of investment in the ASEAN area more as a single entity, rather than as 10 different states.
Concurrent with these opportunities, there are new concerns and approaches in the region concerning regulation. In large part, this is a healthy response to the crisis. Liberalization without sufficient regulation in some sectors, especially in banking, contributed to the Asian crisis. There is now a search for good governance, in both corporate and public sectors, with an accompanying concern with the appropriate institutions, attitudes and instruments for such regulation. Despite the recovery in the major macro-economic indicators for most of the region, this search should continue. Reforms are required and may bring about substantial changes that will affect businesses.
What has happened in the ASEAN countries in the crisis? What further changes will come as part of that search for reform? There are good reasons to be cautious about analyses that generalize the causes of the crisis and the changes and policy responses that are arising in its wake. The specific financial and economic positions of the ASEAN countries are quite different, both before, during and after the crisis. So too are their social and political systems.
Despite the contagion of the crisis, the ASEAN countries have quite greatly differed in their responses. This is, in some regards, a caution against much commentary about where the crisis will take the region. Change in political and economic systems is more complex and difficult to predict. This is especially so given that ASEAN has traditionally been seen as a way for member states to work together, despite considerable differences and diversity among themselves. There are, as such, good reasons to be sceptical about any analysis that suggests the different countries will all, and necessarily, evolve quickly and peaceably into free market democracies.
Similar cautions must be expressed about predicting the changes for business and for environmental governance, the focus of this essay. There is little prospect for a heightened and harmonized code concerning environmental standards in the region. Nor is there any strong indication that individual ASEAN states will take the same general approaches and directions. …