Asian sirens cast a spell but leave some things to be desired

THEY’RE robust and the road to the future, but our nearest and dearest could resolve to do better, writes Eric Ellis

THE new year is upon us, a fine time for cleansing resolutions. Corporate Asia could use a few, too, if only to make it more user-friendly for corporate Australia to plunder – and for its own benefit, too.

The region, our leaders constantly remind us, is our economic future. Indeed, Asia is nothing less than the post-global financial crisis saviour of the world as we know it. Two of the defining BRIC economies are Asian – India and China – and in Australia’s backyard, as is another if one makes it BRIIC for Indonesia, as more and more economists are inclined to do. Asia’s riches and markets are bountiful, or so we are led to believe.

But buying Western goods and being its banker is one thing; Asia’s murky networks of cronyism, corruption and dysfunctional public services are quite another. Asia can be a mystical and expensive deathtrap for young players exhorted to vault beyond selling rocks and holidays from the comfort of home to something more economically sustaining in the region.

So here’s four new year’s resolutions to make Asia a happier hunting ground for all who venture their capital in it:

China must introduce a transparent legal system

Be it Stern Hu and Rio or Matthew Ng and the Guangzhou Travel Group, get on the wrong side of the vast, opaque commercial interests of the ruling Communist Party, the world’s biggest chamber of commerce, and you’ll kiss daylight goodbye for many years.

It doesn’t matter whether any laws have been broken, China will confect a reason – ”revealing state secrets” is a favourite – to remove you from the picture, and do it all behind closed doors, the verdict pre-determined in a smoky backroom of party hacks.

And don’t expect your employer to help – there’s too much money to be made after burning you. As Richard McGregor, author of a recent best-selling analysis of China’s Communist Party, says: “it’s true that China has attempted to develop a functioning legal system over the past two decades, training judges and lawyers and promoting the courts in official propaganda. But it has never allowed the legal system and its practitioners to become independent of the Communist Party. The chief justice of China’s Supreme Court does not have a law degree. He is a politician who has risen through the ranks of the party bureaucracy. That may seem odd to outsiders but for the CCP, his lack of law degree is no obstacle to him fulfilling what are essentially political duties.” Looking for a separation of powers? Perhaps best to do business elsewhere.

Indonesia must reform its labour laws

In a country where three to five people often do the work of one, Jakarta expats like trading anecdotes about encounters with Indonesia’s labour laws.

There’s the Italian pizza chain owner who caught his local staffer stealing a case of house wine. When the boss pondered why a pious Muslim was driven to drink, the employee said it wasn’t about boozing, he wanted to be caught and duly sacked because, under Indonesian law, he’d be paid out about eight years’ salary.

That he was committing a crime wasn’t an issue. He also knew that: 1) Western employers don’t much have the stomach for local courts; and 2) it wouldn’t make any difference to the severance settlement.

And there’s the other sacking that went to a Manpower Ministry arbitration, which was fine until the employer learnt the employee was having an affair with the case arbitrator, who’d done a deal over pillow talk to share the settlement he was ruling on.

Indonesia’s labour laws are suspended somewhere between Sukarno’s post-independence jobs-for-all mantra and his daughter Megawati’s business-wary windback of the Suharto era. And then they are further complicated by a justice system ranked by bodies such as Transparency International as one of the most corruptible in the world.

Basic Indonesian salaries start at about $2 a day, which lures Western business to set up sweatshops. But at what cost? Smart Western bosses know that money buys loyalty in Indonesia, and pay valued staff accordingly. But comprehensive reform of the labour laws would make Indonesia far less of a crapshoot, and help earn that new vowel in BR-I-IC. And once that’s done Jakarta can start on root-and-branch reform of the judicial system.

Singapore must give its competition commission teeth

This is valid for many Asian economies hidebound by cosy family networks. But its rarely in sharper focus than in Singapore, where the government, usually in the form of the state behemoth Temasek Holdings, owns about half the economy, a stake many say hinders genuine entrepreneurship.

Take its mobile industry. Singapore’s three operators all trace their ownership to Temasek. In Australia, that might get the ACCC’s Graeme Samuel in an enthusiastic lather. But the Competition Commission of Singapore, only founded in 2005, would much rather look at how the country’s events ticketing agency abused its monopoly. Last year it fined it almost $1 million. That doubtless pleased Singaporean concertgoers, but there’s rather less of them than mobile users, and SISTIC isn’t run by a member of Singapore’s ruling Lee family, unlike Temasek.

Still, sometimes corporate Australia is a winner before the young commission. In 2006 it probed whether Qantas had breached Singapore law by owning big stakes in the local budget carriers Jetstar and Valuair. As they merged, it decided such an arrangement was of ”net economic benefit” to Singapore. It is also possible that of ”net economic benefit” to Qantas was that its partner in both airlines was Temasek. Moral of the story? Pick and nurture your partner carefully in Singapore.

India must make its corruptors pay

There is now a value on Indian corruption, at least in one sector. It’s $39 billion: the sum it was revealed that the state lost in telecom fees when a dodgy telco minister undersold spectrum licences to its richest conglomerates.

As a reasonable guide to wastage elsewhere, federal India has more than 50 ministries and another 1500-plus government departments to navigate, plus those of 35 states and territories. And then there’s the Commonwealth Games fiasco, a miasmic masala of funny money, where the best part of $4 billion went missing. True, the government has begun investigations into alleged wrongdoers. But, also true, such inquiries tend to go nowhere in India, disappearing into sclerotic bureaucracy.

But Indians are angry – witness an open letter this week to the Prime Minister, Manmohan Singh, by ”a concerned citizen” circulating in some influential corners of Indian cyberspace. “Really, Prime Minister? [You say] ‘no guilty person will be spared’? Sorry to say, Prime Minister, we the citizens are not so sanguine. How many public servants have been prosecuted in Independent India for corruption? We can’t think of any.”