ASEAN Architect Suharto Passes On

Last Sunday was a sad and a historic day in Southeast Asia as General Suharto, a key architect of ASEAN, left this world at age 86. It seemed like any other day in Indonesia and the world. There was a state funeral but few world leaders mourned his passing. However, the General's close friends and co-architects of ASEAN, Singapore's Lee Kwan Yu and Malaysia's Mahathir Muhammad, reportedly made a visit to his deathbed and wept.

Lee, 84, and Mahathir, 82, paid what they knew would be their final respects to a former comrade-in-power, in a moment pregnant with symbolism as the curtain was drawing on a key regional actor. The death of Suharto, the most senior of the three ASEAN octogenarians, marks the beginning of the end of a defining generation of regional leaders, according to a Yang Razali Kassi of Pacific CSIS.

General Suharto leaves a mixed legacy for Indonesia and the entire region. He ruled with a firm hand over a diverse and sprawling country. Many will remember him for the rapid progress made by Indonesia and the ASEAN region that transformed both from agrarian and natural resource based economies to modern industrial economies. Others will recall the deaths of millions of Indonesians in the Communist purge, the human rights abuses in Indonesia and the horrors in East Timor and Aceh that took place on his watch.

Lee Kwan Yu and Mahathir Muhammad, the other two important architects of ASEAN, share many things in common with General Suharto. It was, therefore, quite natural for them to weep at the General's deathbed and think about their own legacies.

The questions that will continue to be asked are: Could the ASEAN economic transformation have been achieved without such leaders? Are other leaders elsewhere in the world inspired or horrified by such legacies? Would countries such as Pakistan be transformed economically in the same way? Are there better days ahead for them?

Here's a video clip on Suharto's legacy:


Riaz Haq said…
Here's a book review of "How Asia Works" by Amb Maleeha Lodhi published in The News:

An important new book explains why some countries have become economic tigers in East Asia while others are relative failures or paper tigers. ‘How Asia Works’ by Joe Studwell is a bold and insightful work that is essential reading for anyone interested in understanding the ingredients for economic success in this continent.

It challenges much conventional wisdom in the development debate. Most significantly the book questions key tenets of the so-called Washington consensus, which prescribes free market ‘solutions’ for all economies regardless of their level of development. Studwell establishes that a nation’s development destiny is shaped most decisively by government action and policies. History, writes the author, shows that markets are created, shaped and re-shaped by political power.
At the very outset, Studwell identifies three critical interventions that successful east-Asian countries and China (after 1978) employed to achieve accelerated economic development. The first, “often ignored”, and now “off the political agenda” in developing countries, is land reform. This restructured agriculture into highly labour-intensive household farming. In the early phase of development, with the necessary institutional support, this helped to generate a surplus, create markets and unlock great social mobility.

The second intervention, as countries cannot sustain growth only on agriculture and must transition to the next phase, is to direct entrepreneurs and investment to industrial manufacturing. Manufacturing allows for trade and technology learning. And trade, says the author, is essential for rapid economic development. Studwell then demonstrates – while challenging the champions of free trade – how nurturing and protection, along with instituting “export discipline”, builds the capacity to compete globally. Manufacturing policy is a key determinant of success he says, as an infant industry strategy offers the quickest route to restructuring the economy towards more value-added activities.

Holding that development is quintessentially a political undertaking, the author sees the relationship between the state and private entrepreneurs as a critical variable. History, he writes, teaches that governments should not run everything themselves. But governments have to use their power and the right policy tools to make private entrepreneurs do what industrial development requires.

The third intervention necessary for accelerated development is in the financial sector, aimed at directing capital initially to intensive, small scale agriculture and to manufacturing rather than services. Studwell argues persuasively that it was the close alignment of finance with agriculture and industrial policy objectives that produced north-east Asia’s economic success.

Detailing the role of financial policy, he illustrates how premature bank deregulation exacted a high price in Thailand and Indonesia. China, on the other hand, and other north-east Asian countries resisted that, instead using financial management to serve development needs and an accelerated economic learning process.

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