The Rise of the Corporate Economy in Southeast Asia (review)

This thirteen-chapter book comprises the Introduction and Conclusion, three chapters each on Malaysia and Indonesia, two each on Singapore and Thailand, and one on the Philippines. It traces the post-war growth of large Southeast Asian corporations by their organization, finance, business environment, and corporate governance.

The analysis of structures of ownership, concentration and governance of family-dominated conglomerates runs parallel to the development of banks, capital markets, state and foreign capital in a corporate economy. While not into the Asian crisis, which is covered in the extant literature since 1997, the book notes the crisis as a common denominator to belie the dramatic but debt-driven regional growth; none was spared one way or the other.

In hindsight, 1997 was a blessing in disguise to catalyse reform and change to be more globalization-ready. The Asian setting is neither an excuse nor exclusivity. Every region or country claims to be unique in development. The book's analytical pole on organization and ownership of Southeast Asian corporations allows comparisons and contrasts of models and behaviour of various agents as owners and stakeholders.

The book's balance of theory and empirical evidence by country and case studies is useful to both teaching and research-oriented academicians as well as policy-makers and practitioners. Nested within large family-dominated conglomerates are small, medium-sized enterprises (SMEs) which the author noted are hard to study, but vital as supporting industries for foreign multinational corporations (MNCs) in the cluster theory.

While agreeing with the author's lament on historiography of corporations at the micro-level and statistics as another constraint, two points are footnotes. One is the currency of the bibliography, like new literature on Singapore Inc, and its developmental state. Curiously, partly due to marketing and distribution, awareness of indigenous works by Asian scholars is not commensurate. All authors help to publicize new knowledge in collegial citations, but could do without typographical errors, such as, Dananmodal (p. 47) and Standard and Poor (p. 280).

Following the ownership, concentration, governance to restructuring format after the Asian crisis, the three Indonesian chapters epitomize the most serious Southeast Asian constituent by magnitude, depth and complexity of issues. While Indonesian pribumi sentiment seems no different from Malaysian bumiputera in intent to nurture and shelter indigenous elite groups, the means and products are somewhat differentiated.

The Soeharto patron-client cronyism is more patent with the Salim family accounting for 17 per cent of total listed corporate assets in 1995 (p. 10). In contrast, Malaysia appears to have democratized bumiputera patronage under the New Economic Policy (NEP) triggered by the 1969 race riots and ensuing privatization guises.

Another interesting similarity and contrast is how loans in Indonesian and Malaysian banks or Thai finance companies as funding sources play out in their domestic settings to betray Asian household frugality and saving. Are these defective institutions as exposed by the 1997 crisis part of the state-regulatory blame or an institutional underdevelopment abbreviated as insufficiently globalization-ready? Any irrational exuberance is equally torched by real estate and equity bubbles.

Foreign direct investment (FDI) and state capital are as double-edged, whether they aided and abetted risqué and rogue Indonesian capitalism or were strong partners in Singapore Inc. To contain collateral damage, FDI in buy-outs of Indonesian joint partners posed as much an acquisition opportunity. Bail-outs turned out deconcentration and better corporate governance, but do they snuff out indigenous entrepreneur-ship and SMEs?

The Salim Group including Indocement and Indofood reassembled their portfolios and diversification outside of troubled domestic monopolies, took flight to China, Hong Kong, and Singapore. The difficulties of the Indonesia Bank Restructuring Agency (IBRA) are demonstrated in the Sinar Mas and Texmaco Groups. No corporate workout is straightforward. Reforms unhelped as much as they should cure the corporate economy. The unemployment fear averted bankruptcies demanded by efficient restructuring.

Indonesia is contrasted with Malaysia, from top political decision-making to personality sabotage as perhaps a variation on the same theme...