Retaking our Position

By Tunku 'Abidin Muhriz
These days it is vague to say that the economic and financial difficulties of the US and Europe have given Asia a golden opportunity to take its position as leaders of the world economy. But perhaps “retake” is a more accurate word. As Kishore Mahbubani is fond of saying, China, India and Southeast Asia have for all of two thousand years apart from the last two hundred constituted the centre of the world’s economic activity. The industrial revolution in the West fuelled an aberration that is now conking out.

How did Asia occupy this premier position? Many of us have in our heads this idea that medieval Asia was full of despotic regimes. It’s undeniable that indeed there were such polities. There are two important caveats to bear in mind. The first, as we can see from the experience of certain island city-states, political authoritarianism can co-exist with economic development, at least for a time, if the institutions that protect economic rights function properly. The second is that there used to be many more sultanates, kingdoms and sovereign polities in the past. There was much more competition as a result. This competition did not always manifest itself through war, but often through economic and cultural prowess.

This competition is beginning to return. Indonesia’s decentralisation reforms that began in the nineties allowed many decisions about economic activity to be determined at a local level for the first time. In Malaysia the fact that some states have governments from a different political party to that at the federal level has also resulted in moves towards decentralisation. As a result, ancient cross-border linkages – such as between Medan and Penang and within the island of Borneo are being rekindled.

Looking at some of the legislation passed by the istanas [palaces] of the past, one may be pleasantly surprised. Flat taxes, prohibitions on double taxation and even semi-autonomous economic zones such as the kangchu system in Johor. All of these policies engendered competition with the inevitable consequence of economic growth, but eventually came to an end due to geopolitical pressures.

So why then, in an age where our sovereignty is not in doubt, is it sometimes difficult to convince policymakers today to adopt similar policies? It is partly because of the ingrained interests brought about by the incestuous relationship between business and politics that infects all our countries. But it is also because the justifying principles for such policies are usually couched in the language of Western classical liberalism. Frankly, this is a turnoff to many of our fellow citizens who have been brought up to idolise only their own national leaders, their own ethnic heroes, their own religious champions. If only we were more diligent at looking back through our own histories, [surely we would] find proponents of what we today call classical liberal or libertarian ideas.

We are in an abyss compared to the days when our first Prime Minister Tunku Abdul Rahman declared that “Government must not indulge in business. This must be left to the business community.” He said that only a few decades ago. The fact that attitudes can change so quickly is perhaps not surprising given the tremendous social, cultural and technological changes that have occurred in the last fifty years, but it does give hope that attitudes can change once again.

[Hopefully], in as much as competition within sectors will promote prosperity for entrepreneurs and companies, competition between countries will promote prosperity for citizens all throughout our continent. We have to remind governments and policymakers across Asia that our region is becoming increasingly vital, that the only viable way forward is through economic prosperity, and that competition within the rule of law ought to drive that prosperity.

This is an extract from a speech by Tunku ‘Abidin Muhriz, at the ‘Competition: Engine for Prosperity’ conference organized on 12 October 2011 by the Economic Freedom Network Asia.

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