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NOVEMBER 3, 2000 VOL. 26 NO. 43 | SEARCH ASIAWEEK

Cronyism in Asia: A Primer
To fight cronyism, it pays to know the factors that feed the habit, which would give clues on how to combat it. One big problem is defining exactly what cronyism is. There is nothing illegal or harmful about most cozy deals, but picking out and punishing the bad ones is the constant challenge. Unfair practices are widespread and entrenched. Centuries of feudalism are a key factor; others are government intervention in the economy and weak institutions. There are also country-specific factors:

ALSO
Struggle: Why Asia's battle against cronyism is taking forever
Connections: Li Ka-shing has got them
Fall: Suharto's buddies are fighting their way back
Fighter: Sabri Zain on the new Malaysia
Reformers: Crusaders wage war against corruption

China Malaysia
The communist system grants authorities vast powers to meddle in business and to muzzle exposEs. This autocracy, along with rapid liberalization and economic growth, has multiplied the opportunities and rewards of cronyism. The breakdown of moral values and the glorification of wealth, epitomized by Deng Xiaoping's dictum, "To get rich is glorious," has further spurred corruption. Created to help indigenous races, the New Economic Policy affords ample ways to favor businesses through state contracts, funding, privatization deals and share allocations. The dominant UMNO party used to control vast commercial interests; some major ones are now under listed Renong.
Hong Kong Pakistan
Since the Opium Wars, big business has influenced government, with top business people in the Executive Council and functional constituencies in the Legislative Council. Government control of land supply and regulation of services leads affected companies to lobby officials. Landowners and industrialists have long dominated Parliament and have had close ties with the past governments of both jailed former premier Nawaz Sharif and exiled ex-premier Benazir Bhutto. There is heavy state involvement in the economy and banking. The military's tremendous power has increased since last year's coup by Gen. Pervez Musharraf.
India Philippines
Economic reforms have reduced the state's role in the economy, but there are still plenty of opportunities for influence-peddling and special deals. Privatization has enriched crony interests. Campaign spending for the world's largest elections also builds links between politicians and business. Since self-rule in 1946, a political-spoils system has allowed well-connected interests to rise with every new administration. In the 31-year-rule of Ferdinand Marcos, ousted in 1986, cronies controlled key sectors, including the sugar and coconut industries and media, and got state loans, lucrative contracts and concessions.
Indonesia South Korea
Decades of opaque politics and close ties between the previous Suharto regime and big businessmen have further entrenched a tradition of buying top-level influence. State dominance in banking has led firms to lobby for loans and over debt restructuring. Cozy business practices. Until President Kim Dae Jung took power in December 1997, there had been close ties between past governments and the giant conglomerates, or chaebol. When democracy came in 1988, these business groups provided campaign funds. Feudal ways like offering gifts for favors is widespread and starts early; even parents do it for their kids' teachers.
Japan Taiwan
State-supported industrialization. Business obtains influence by funding patronage spending by politicians. Government-business links are mainly between political parties or government agencies and industry groups. In a practice called "descent from heaven," firms and banks gain influence by hiring top bureaucrats when they retire. "Black gold" politics. The Kuomintang, ruling party from 1949 until this year, has vast business interests. Another issue is corruption in infrastructure projects. There are links between politicians and criminal elements, some of whom have won seats in Parliament. Elections have created the need for campaign funding.
Thailand
Election overspending. Thai politicians depend heavily on business support. Patronage politics, particularly in the countryside, boosts both political spending and the cronyism mentality of asking favors from the powerful. The prostitution and drugs trade has corrupted many officials and police.

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  THIS EDITION
COVER: Cronies: Why Asia's battle against cronyism is taking forever
Connections: Li Ka-shing has got them
Fall: Suharto's buddies are fighting their way back
Fighter: Sabri Zain on the new Malaysia
Reformers: Crusaders wage war against corruption
Cronyism in Asia: A primer

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