THE ECONOMIES OF THE ASEAN COUNTRIES The ASEAN countries are among the fastest growing economically in the world. As the world's largest producer of natural rubber, tin, tropical hardwood, palm oil and coconut products, the region has an impressive resource base. Indonesia and Malaysia are net petroleum exporters and Singapore is the world's third largest refining centre. Manufacturing has grown rapidly and, with the planned expansion in areas such as steel, petrochemicals, fertilizer, aluminium and motor vehicles, is likely to become increasingly sophisticated over the 1980s. The ASEAN countries are significantly different in size and level of development. At one extreme, if trends of the past decade continue, Singapore will surpass New Zealand by the mid-1980s and Britain by the late 1980s in terms of GOP per capita. At the other extreme, Indonesia, although growing impressively, is still among the poorest fifty countries in the world. However, for all the countries of the region, the outlook for the 1980s is promising. Furthermore, notwithstanding their differences, they are building up cooperation with each other. Continued strong economic growth will mean increasing trade and investment opportunities for those outside the region. Imports into ASEAN in 1981 were roughly three times those into Australia and nearly equal to those into all South America combined. Foreign investment is welcomed in a number of areas. This book analyzes recent economic developments in the region and the outlook for the 1980s. Separate chapters on each country are self-contained and can be read individually by those not interested in all the countries of the region. At the same time the book is written so as to allow the reader to make comparisons among the five countries and to give a picture of the region as a whole. It is aimed at all those, such as business people, officials, teachers and students, with an interest in economic developments in the region.
Brian Wawn set up his own consultancy/publishing firm in 1981, having resigned the previous year from the Department of Foreign Affairs, Canberra, for whom he had worked since 1970. His overseas postings were in Laos, Sri Lanka and West Germany, and he worked a good deal on ASEAN issues, notably in Canberra between 1975 and 19n. While in Laos (1971-3) he was also involved with Thailand. He was a member of the Australian delegation to the annual meeting of the UN Economic and Social Commission for Asia and the Pacific (ESCAP) held in Bangkok in 1976 and to the Special Session of the UN General Assembly on North-South issues held in New York in 1980.
THE ECONOMIES OF THE ASEAN COUNTRIES Indonesia, Malaysia, Philippines, Singapore and Thailand BRIAN WAWN
Brian Wawn 1982 Softcover reprint of the hardcover 1st edition 1982 978-0-333-32481-3 All rights reserved. No part of this publication may be reproduced or transmitted, in any form or by any means, without permission First edition 1982 Reprinted 1984 Published by THE MACMILLAN PRESS L TO London and Basingstoke Companies and representatives throughout the world ISBN 978-1-349-16974-0 ISBN 978-1-349-16972-6 (ebook) DOI 10.1007/978-1-349-16972-6
Contents LIST OF TABLES LIST OF MAPS vii viii ACKNOWLEDGEMENTS ix 1. INTRODUCTION 1 2. INDONESIA 5 Introduction 5; Role of Government 9; Macroeconomic policy 11; Balance of payments 15; Foreign investment 19; Industry 20; Agriculture 23; Mining 26; Energy 27; Financial sector 31; Labour 33; Conclusion 36 3. MALAYSIA 38 Introduction 38; Role of Government 44; Macroeconomic policy 45; Balance of payments 49; Foreign investment 52; Industry 54; Agriculture 57; Mining 60; Energy 61; Financial sector 65; Labour 66; Conclusion 69 4. PHILIPPINES 71 Introd uction 71; Role of Government 76; Macroeconomic policy 77; Balance of payments 80; Foreign investment 85; Industry 86; Agriculture 90; Mining 92; Energy 93; Financial sector 97; Labour 99; Conclusion 102 5. SINGAPORE 104 Introduction 104; Role of Government 108; Macroeconomic policy 110; Balance of payments 114; Foreign investment 118; Industry 120; Agriculture and mining 122; Energy 123; Financial sector 126; Labour 130; Conclusion 133 6. THAILAND 135 Introduction 135; Role of Government 139; Macroeconomic policy 140; Balance of payments 145; Foreign investment 149; Industry 150; Agriculture 153; Mining 155; Energy 156; Financial sector 161; Labour 162; Conclusion 165 v
vi CONTENTS 7. ASEAN ECONOMIC COOPERATION 167 UN Report 167; Bali Summit 169; Progress 169; Organization 172; Intra-ASEAN trade 173; Conclusion 174 B. CONCLUSION 176 REFERENCES AND FURTHER READING 180 INDEX 184
List of Tables 1.1 ASEAN countries: Economic indicators 1 2.1 Indonesia: Economic indicators 7 2.2 Indonesia: Budgets 11 2.3 Indonesia: Growth in money supply and prices 13 2.4 Indonesia: Balance of payments 16 2.5 Indonesia: Energy prices 30 2.6 Indonesia: Population and labour force 33 3.1 Malaysia: Economic indicators 40 3.2 Malaysia: Proportion of population which is poor by sector 41 3.3 Malaysia: Ownership of the corporate sector 41 3.4 Malaysia: Budgets 45 3.5 Malaysia: Growth in money supply and prices 47 3.6 Malaysia: Balance of payments 50 3.7 Malaysia: Energy prices 63 3.8 Malaysia: Population and labour force 67 4.1 Philippines: Economic indicators 73 4.2 Philippines: Budgets 77 4.3 Philippines: Growth in money supply and prices 79 4.4 Philippines: Balance of payments 82 4.5 Philippines: Energy prices 96 4.6 Philippines: Population and labour force 100 5.1 Singapore: Economic indicators 106 5.2 Singapore: Budgets 110 5.3 Singapore: Growth in money supply and prices 112 5.4 Singapore: Balance of payments 115 5.5 Singapore: Energy prices 125 5.6 Singapore: Population and labour force 131 6.1 Thailand: Economic indicators 137 6.2 Thailand: Budgets 141 6.3 Thailand: Growth in money supply and prices 143 6.4 Thailand: Balance of payments 145 6.5 Thailand: Energy prices 160 6.6 Thailand: Population and labour force 163 vii
List of Maps The ASEAN countries Indonesia Malaysia Philippines Singapore Thailand 2 6 39 72 105 136 viii
Acknowledgements I would like to thank the following people, who cannot, of course, be held responsible for the book, for their valuable comments on individual chapters: Professor H.W. Arndt, formerly Professor of Economics, Research School of Pacific Studies, Australian National University, Canberra; Ms Alison Broinowski, Department of Foreign Affairs, Canberra; Mr Michael Connell, Research Economist, Economic Affairs Division, Victorian Chamber of Manufactures, Melbourne; Dr Clive Edwards, Assistant Secretary, Office of National Assessments, Canberra; Mr Terry Ferris, Department of Trade and Resources, Can berra; Mr E. K. Fisk, Professorial Fellow, Research School of Pacific Studies, Australian National University, Canberra; Mr Barry Hitchcock, Department of Foreign Affairs, Can berra; Mr Peter McMahon, Economist, Con zinc Riotinto of Australia Ltd, Melbourne; Mr Des Miller, Export Manager, Commonwealth Serum Laboratories, Melbourne; Y.B. Dato Rastam Hadi, Managing Director, PETRONAS, Kuala Lumpur; Mr Richard Smith, Counsellor, Australian Embassy, Manila; Mr Greg Turnidge, Manager, Research Services, Economic Affairs Division, Victorian Chamber of Manufactures, Melbourne; Dr Bernardo Villegas, Deputy Executive Director, Center for Research and Communication, Manila and Mr Ian Wilcock, Department of Foreign Affairs, Canberra. I would like also to thank the dozens of officials, businessmen, journalists and academics with whom I spoke in the ASEAN countries, Hong Kong and Australia; officials of Australian Embassies/High Commissions in the ASEAN countries, who were particularly helpful; Ms Eve Jaszczyk, who typed the manuscript with skill and speed; Mr Garth Lonsdale, District Manager, Lanier Australia Pty Ltd, Canberra, who made available a word processor for this; Julia and Ranald Dive, Woody's Mapping Services, Canberra, who competently drew the maps and the Australian Government Publishing Service, who gave permission to make use of maps provided by the Trade Publicity Branch, Department of Trade and Resources, Melbourne. Finally, I would like to thank my wife, Chris, and my children, Michael, David and Louisa. for their support and tolerance. Canberra, November 1981 B. W. ix