Political business in east asia (politics in asia)

Political Business in East Asia “With a good mix of well-considered theory and appropriately detailed case studies, this book provides a unique, comprehensive and authoritative account of business–state relations in East Asia This is an important and wonderfully rich book in the best traditions of political economy It is a must-read for all interested in the political economy of East Asia.” Professor Kevin Hewison, Director, Southeast Asia Research Center, City University of Hong Kong When the financial crisis occurred in East Asia in 1997, it drew attention to the need to institute important structural reforms in business and politics The crisis raised questions about the quality of government intervention in the economy, the mode of enterprise development, and the form of democracy emerging in East Asia However, in spite of the political upheavals following the financial crisis, there have been few fundamental structural changes in politics and in business, particularly involving the links between the two In Political Business in East Asia two important questions are examined: ● ● Why was the opportunity for reform in business and in politics not taken advantage of after the crisis? What is it about the nature of politics and of business in East Asia that has restrained the fundamental changes shown to be necessary? The authors argue that the process of consolidation of democracy has been marred by massive corruption of politics, portending little hope of genuine political and economic reform In particular, it has been hindered by the manner of funding of political parties, which is heavily influenced by ties developed between politicians and businessmen Political Business in East Asia provides challenging new insights for students of politics, Asian studies, economics, and government–business relations Edmund Terence Gomez is Associate Professor in the Faculty of Economics and Administration, University of Malaya His publications include Malaysia’s Political Economy: Politics, Patronage and Profits (with K.S Jomo, Cambridge University Press, 1999) and Chinese Business in Southeast Asia: Contesting Cultural Explanations, Researching Entrepreneurship (with Michael H.H Hsiao, Curzon Press, 2001) Politics in Asia series Edited by Michael Leifer London School of Economics ASEAN and the Security of South-East Asia Michael Leifer China’s Policy towards Territorial Disputes The Case of the South China Sea Islands Chi-kin Lo India and Southeast Asia Indian Perceptions and Policies Mohammed Ayoob Gorbachev and Southeast Asia Leszek Buszynski Indonesian Politics under Suharto Order, Development and Pressure for Change Michael R.J Vatikiotis The State and Ethnic Politics in Southeast Asia David Brown The Politics of Nation Building and Citizenship in Singapore Michael Hill and Lian Kwen Fee Politics in Indonesia Democracy, Islam and the Ideology of Tolerance Douglas E Ramage Communitarian Ideology and Democracy in Singapore Beng-Huat Chua The Challenge of Democracy in Nepal Louise Brown Japan’s Asia Policy Wolf Mendl The International Politics of the AsiaPacific, 1945–1995 Michael Yahuda Political Change in Southeast Asia Trimming the Banyan Tree Michael R.J Vatikiotis Hong Kong China’s Challenge Michael Yahuda Korea versus Korea A Case of Contested Legitimacy B.K Gills Taiwan and Chinese Nationalism National Identity and Status in International Society Christopher Hughes Managing Political Change in Singapore The Elected Presidency Kevin Y.L Tan and Lam Peng Er Islam in Malaysian Foreign Policy Shanti Nair Political Change in Thailand Democracy and Participation Kevin Hewison The Politics of NGOs in South-East Asia Participation and Protest in the Philippines Gerard Clarke Malaysian Politics Under Mahathir R.S Milne and Diane K Mauzy Indonesia and China The Politics of a Troubled Relationship Rizal Sukma Arming the Two Koreas State, Capital and Military Power Taik-young Hamm Engaging China The Management of an Emerging Power Edited by Alastair Iain Johnston and Robert S Ross Singapore’s Foreign Policy Coping with Vulnerability Michael Leifer Philippine Politics and Society in the Twentieth Century Colonial Legacies, Post-Colonial Trajectories Eva-Lotta E Hedman and John T Sidel Constructing a Security Community in Southeast Asia ASEAN and the Problem of Regional Order Amitav Acharya Monarchy in South-East Asia The Faces of Tradition in Transition Roger Kershaw Korea After the Crash The Politics of Economic Recovery Brian Bridges The Future of North Korea Edited by Tsuneo Akaha The International Relations of Japan and South East Asia Forging a New Regionalism Sueo Sudo Power and Change in Central Asia Edited by Sally N Cummings Political Business in East Asia Edited by Edmund Terence Gomez Political Business in East Asia Edited by Edmund Terence Gomez London and New York First published 2002 by Routledge 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 Routledge is an imprint of the Taylor & Francis Group This edition published in the Taylor & Francis e-Library, 2004 Selection and editorial matter © 2002 Edmund Terence Gomez; individual chapters © the contributors All rights reserved No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalog record for this book is available from the Library of Congress ISBN 0-203-16633-7 Master e-book ISBN ISBN 0-203-26096-1 (Adobe eReader Format) ISBN 0–415–27148–7 (hbk) ISBN 0–415–27149–5 (pbk) For Evie, Eric, and Eshward who give meaning to the effort and for Sharm Contents List of tables List of figures Notes on contributors Preface Acknowledgments Introduction: political business in East Asia ix x xi xiii xv EDMUND TERENCE GOMEZ Development and corruption: the East Asian paradox 34 ANDREW WEDEMAN Political business alliances: the role of the state and foreign and domestic capital in economic development 62 JOHANNES DRAGSBAEK SCHMIDT Political business in Malaysia: party factionalism, corporate development, and economic crisis 82 EDMUND TERENCE GOMEZ KMT, Inc.: liberalization, democratization, and the future of politics in business 115 KARL J FIELDS State predation and rapid growth: politicization of business in China 155 ANDREW WEDEMAN The political business of development in South Korea 182 PETER WAD Politics, business, and democratization in Indonesia STEFAN EKLÖF 216 viii Contents Democratization and economic crisis in Thailand: political business and the changing dynamic of the Thai state 250 TOM WINGFIELD State, politics, and business in Singapore 301 STEPHAN HAGGARD AND LINDA LOW 10 Politics, business, and the inescapable web of structural corruption in Japan 324 JAMES BABB Index 339 Tables 1.1 Comparison of regional growth rates and levels of corruption, 1960–93 2.1 State intervention in East Asia before liberalization 3.1 Malaysia: ownership of share capital (at par value) of limited companies, 1969–95 3.2 Reputed political connections of some prominent business figures 3.3 Loans by government-owned banks to UMNO companies, 1990 3.4 Changing nature of companies linked to UMNO politicians, 1970s and 1990s 4.1 Leadership of KMT, Inc., 1945–2000 4.2 Public-listed KMT enterprises, 1992 4A.1 KMT, Inc.: firms invested in by the Kuomintang, 1928–96 5.1 Distribution of forms of enterprise, China, 1985–96 5.2 Gross value of industrial output by ownership, 1985–96 8.1 Election results by political party, 1975–92 8.2 Professional background of elected assemblymen, 1933–92 8.3 Election spending, 1986–96 8.4 Senate candidates, March 2000 8.5 Non-performing loans (NPLs), November 1999–January 2000 9.1 Major holdings of Temasek Holdings Ltd, 2000 9.2 Sectoral distribution of industrial enterprises in Singapore, 1963 9.3 PAP share of popular vote, general elections, 1959–97 9.4 Sectoral distribution of promising local enterprises, May 1997 10.1 Zoku MPs and factions (Upper and Lower House MPs), 1987 36 68 85 87 93 99 123 124 141 159 160 258 259 266 275 278 305 307 311 313 330 332 James Babb constituency support organizations Yakuza or their imitators were useful in enforcing illegal bid-rigging agreements and kickbacks to politicians They could also engage in intimidation to force landowners to sell land for largescale redevelopment projects Many of these practices were widespread beyond organized crime and were well known, but were considered a problem only once financial institutions began to collapse One prominent case as early as 1995 involved the Tokyo Kyowa Credit Association and Anzen Credit Bank which exposed the murky world of bubble finance After weeks of investigation, three former credit union executives and the president of a related company were arrested on 27 June 1995 for arranging illegal loans which caused the collapse of these two financial bodies The total of bad loans exceeded 110 billion yen and were initially related to the golf course and resort development companies, including some that received financing before local government planning approval had been obtained, though most of the projects were never initiated In addition, there was insufficient collateral pledged for the loans so the prospects for recovery of the debt were small The case had a political dimension as the former Minister of Labor, Yamaguchi Toshio, and a former Director General of the Defense Agency, Nakanishi Keisuke, as well as a senior bureaucrat in the Minister of Finance, Taya Hiroaki, were implicated in the scandal Yamaguchi’s brother was a member of the board of directors of a country club with ties to the golf course development scheme and the Minister had acted as a joint surety on the loan Nakanishi admitted renting an apartment from the former president of Tokyo Kyowa Credit, Takahashi Harunori, and acknowledged that a related firm had purchased 60 million yen of political reception tickets from him but denied he had done anything illegal or unethical The bureaucrat Taya received a trip to Hong Kong on Takahashi’s private airplane, but as he had no direct responsibility for banking supervision at any time, he was only reprimanded In fact, none of the politicians and bureaucrats implicated were arrested This was not just an isolated incident as nearly all Japanese financial institutions were involved in such deals, either directly, or indirectly though the supply of funds to dubious financial institutions Indeed, most politicians have connections to similar projects throughout Japan, including the winner of the 1999 leadership election of the main opposition Demcratic Party, Yukio Hatoyama, whose implication in a dubious development scheme in his constituency was discussed in parliament in 1991 (though at the time he was still an LDP MP) The key point is that both politicians and banks knew what was happening and were enmeshed in the world being created by these policies even if they tried to distance themselves from the more shadowy corners of that world The problem spread from the banks throughout the entire corporate sector Many major Japanese firms currently have debt problems because of dubious investments in land and property development or because they are caught in Politics, business, and structural corruption in Japan 333 the spiral of debt with those who were entangled in financing the bubble encouraged by aggressive financing policies of financial institutions Politicians were involved directly as facilitators or indirectly through policy initiatives around which many schemes were based More significantly, financial institutions and related business provided large amounts of political finance to politicians This is particularly well documented in the case of the LDP as a result of political campaign finance reports which are published each year in September Banks and construction firms, and their related industry associations consistently dominated the list of the top 20 donors to the LDP until 1993 It was only after major scandals broke in 1992–3 involving politicians and the construction industry and 1997–8 when the bailout of financial institutions by LDP-led governments made it politically unpopular to receive bank contributions, that the banks and construction firms moved down the list Corruption, money, and political change As the end of the preceding section suggests, the legacy of the bubble began to manifest itself in an economic downturn and a series of scandals starting in 1992 The first consequence of these revelations was that the LDP split over the issue of political reform and the mainstream of the business community, led primarily by major export firm business leaders, finally found the courage to distance itself from their long-time ally The key turning point in the LDP– business relationship came when the leaders of the Keidanren and Keizai Doyukai business federations indicated that they felt there was a need to rethink political contributions to the LDP which was reeling from the defection of large number of LDP MPs The business community was anticipating a new conservative or centrist group which would enable it to end its dependence on the LDP Even the construction industry, which had depended for so many years on profits from public work projects supplied by LDP politicians to their constituencies, was constrained from assisting the party as a result of a new scandal which involved the Tanaka/Takeshita faction “fixer” Shin Kanemaru, who was arrested and charged with tax evasion The Zenkon (General Federation of Construction Companies) members ended up giving a limited number of incumbents in the LDP and the LDP break-away Japan Renewal Party approximately million yen, or one-tenth of what most had requested, and much less than in previous elections The construction industry had reason to be cautious On June 29, the Tokyo Prosecutor’s Office arrested the mayor of Sendai and six top managers of four major construction companies for bribery Since most major firms could also be implicated, the industry and its relations with the LDP, were in turmoil This shift in business support was one of the main factors for the fall of the LDP from power in 1993 Removal from power was a serious blow to the LDP which in essence was a 334 James Babb party of government which managed policy and divided the spoils of office among its supporters Without access to power and patronage, the party experienced a crisis of confidence For example, on August 24, the LDP held a meeting with industrial leaders to discuss the growing strength of the yen which was hurting exports and the sudden humility of the LDP surprised the participants LDP Political Affairs Research Council chairman Ryutaro Hashimoto began his remarks to the group with the fear that “Now we have become an opposition party, the greatest concern we had was whether or not you would come or not” (Asahi Shimbun Political Bureau 1994: 37) These concerns were to a degree justified as on September 2, the largest Japanese business association, Keidanren, announced that it would no longer act as a conduit for campaign contributions to political parties from its member corporations In the past, the many industry associations and interest groups had always thought it useful to have MPs from the LDP as their chairmen or in some other symbolic capacity, but given their opposition status, these links also came under question When the anti-LDP coalition fell the following year, however, the business community began to reverse its earlier distancing from the LDP It was obvious that the longer the LDP was in power and the longer it took for the anti-LDP opposition to return to office, the more business became wary of alienating the LDP Keidanren began to encourage more individual business donations and individual business associations affiliated with Keidanren resumed contributions, even thought the amounts involved have been much less than in the past Business was also swayed in its decision to more firmly back the LDP by the deepening economic crisis in Japan which first manifested itself in the bailout of the seven Housing Loan Corporations or Jusen The Jusen were originally set up to provide reasonable mortgages in order for average Japanese to become homeowners, but during the bubble period, the corporations increasingly lent money for major development projects, including resort facilities and golf courses Jusen received their funds from a variety of sources, including the major Japanese banks, but a large proportion of their finance was supplied through the Agricultural Cooperative Banks The Agricultural Coop Banks were awash in money in the late 1980s and early 1990s and invested heavily in Jusen which were considered a relatively safe investment The figure continued to grow until, by mid-1995, the Jusen held over trillion yen in bad debt and were unable to pay their creditors, including the Agricultural Coop Banks which were in financial difficulties themselves for similar reasons Given that the LDP was heavily involved at the local level in the agricultural cooperatives, they needed to act Therefore the government proposed a reorganization plan for the Jusen which involved the injection of 685 billion yen of public monies as part of the restructuring, an amount which meant that every man, woman, and child in Japan would be forced to pay 5,500 yen in additional taxes to save these financial institutions Politics, business, and structural corruption in Japan 335 The opposition demanded full disclosure of Finance Ministry information on the scale of the crisis, and publication of the information created an uproar as the situation was far worse than the government had led the public to believe A number of large loans had inadequate collateral to back them and some of them involved questionable deals between financial institutions and individuals associated with organized crime However, the main goal of the business community was Japanese financial stability and the murky issue of the pursuit of responsibility for the crisis could not be allowed to endanger that goal Business once again fully backed the LDP Thus, a shift of business away from the LDP helped to remove the party from power in 1993, and once out of power, business was able to operate more freely Once the LDP returned to power, however, they had to be placated by the business community and the old relationship was resumed Moreover, the growing economic crisis led business to support LDP efforts to bail out stricken financial institutions LDP interests and those of business were so deeply tied with the troubled financial institutions that the rethink of the relationship between business and politicians was shelved indefinitely Conclusion: the unchanging role of “money politics” Evidence for suspecting that little will change in structural corruption in Japan is compelling Business has always tended to develop an unseemly close relationship with the LDP as the perpetual party of government With the lack of alternation of parties in power, as we have seen, these interest group links become fixed These links are continuously being renewed For example, the factional leadership of the LDP has been renewed with the influx of dynamic new leaders However, each of these leaders have prominent backgrounds as members of zoku policy tribes Moreover, the new stricter rules governing political fund raising and the provision of public financing for political parties have not stopped allegations of serious impropriety At the end of 1999, LDP only reluctantly passed legislation prohibiting business and interest group contributions to individual MPs, and left a large loophole by making it possible for businesses to make donations to local party branches which are dominated by individual MPs It is not surprising then that all of the new major faction leaders have been implicated in past political contribution scandals For example, in January 1996 it was alleged by the leader of his local constituency organization that the then LDP Party Secretary Koichi Kato had received million yen illegal campaign contributions from a failed leisure complex developer who had been convicted of bribing public officials This did not stop Kato from becoming the new leader of the Miyazawa faction in early 1999 and actively campaigning to replace the Prime Minister Keizo Obuchi in the summer of 1999 and trying to unseat Prime Minister Mori in late 2000 Similarly, Taku Yamazaki took control of the bulk of the old Nakasone faction in early 1999, despite his implication in a scandal in which a petroleum 336 James Babb wholesaler received a total of 640 million yen over the period from 1992 to 1994 from Mitsubishi Petroleum and Mitsui Mining to act as their agent Mitsui Mining also provided the wholesaler with an unrecovered 240 million yen short-term loan, all of which was not declared for tax purposes The wholesaler admitted giving 20 million yen to Yamazaki as a political contribution Yamazaki has indicated his interest in becoming prime minister at some point in the future Finally, Yoshiro Mori who assumed control of the Hiroshi Mitsuzuka (former Abe) faction in early 1999 was one of the MPs involved in the Recruit scandal of 1988–9 in which he obtained a 10 million yen profit when the Recruit shares he received were subsequently listed on the Tokyo stock exchange Mori has played a balancing role between the faction of the Prime Minister Obuchi and the ambitious Kato and Yamazaki factions It was Mori who became prime minister in early 2000 as a result of the sudden death of Obuchi Thus, each of these three faction leaders – Kato, Yamazaki, and Mori – were the key figures who have made the Hashimoto (1996–8) and Obuchi (1998–2000) governments possible They have been joined by the former Tanaka/Takeshita faction, to which Hashimoto and Obuchi have belonged, the former of whom is the current faction leader Indeed, the Tanaka faction and its successors have been instrumental in the selection of most of the Prime Ministers since Tanaka himself resigned as a result of the Lockheed scandal Whatever the political fate of any of these key leaders, the key point to be made is that LDP leaders continue to rely on contributions which – even though not always illegal in themselves – sometimes rely on illegally obtained funds in which Japan was awash especially in the period of the bubble economy Japanese politicians created the bubble through their economic policies and reaped the benefits in various ways, both straightforward and dubious There is no indication that these practices have ended, and the process of deregulation and continuation of massive public works spending to stimulate the stagnant Japanese economy, not to mention persistent allegations of impropriety, indicate that past practices continue unabated In this way, it is possible to see the role of the two key issues raised in the introduction to this volume: the politics of the state and the politics of the development of the corporate sector The role of the politics of the state is important in Japan because politicians have created connections of mutual interest and expertise to exploit the powers of the bureaucracy for the gains of business clients This is the core of the zoku phenomenon of Japanese interest politics discussed above When these connections are used for particularistic gain, it is considered corruption, but when entire sectors – as a financial services, real estate, and construction – are intertwined in a policy nexus which produces a similar (if structural) result, the situation is not straightforward This is why some observers have resorted to the term “structural corruption” in the Japanese context, though in some sense this term is also unsatisfactory The second issue of the development of the corporate sector is similarly Politics, business, and structural corruption in Japan 337 difficult to place in a simple category When a dynamic corporate sector is produced as a result of collusive practices and policies, then it is considered an economic miracle, but when it produces economic collapse (as in the bubble economy), then it is viewed as a failure caused by excessive political interference in the corporate sector In fact, politics and the corporate sector are often difficult to separate in Japan Nearly every sector has been politically involved (promoted and protected) at some point of time in Japan’s modern history, and at any given moment, some sectors are more “political” than others In a sense, all business in Japan is political business Yet, this may be true in every country It is only more apparent in those countries in which the institutional structure of the state has yet to insulate business from deep involvement in politics and policy-making In Japan, as in most of East Asia, the political route for business has been attractive if not necessary Indeed, the record of the post-war period in Japan indicates that corruption has become more endemic in spite of, and even due to, the political involvements of a dynamic and economically successful Japanese corporate sector Over time the relationship between business and politicians has gone from being simple ties of mutual interest to a structural compulsion to find new ways to create opportunities for gain There is strong evidence to suggest that political contributions by businesses to political parties (and politicians) will continue to be made with the continued hope than policies will favor specific business interests Current moves toward deregulation of the economy in Japan may create new rules, but these rules will also provide new opportunities for impropriety and dubious practices References and further reading Asahi Shimbun Political Bureau (1994) Renritsu Seiken Mawari Butai (Coalition Government Behind the Scenes), Tokyo: Asahi Shimbun Sha Babb, J (1995) “Japan’s Ministry of Finance and the Politics of Complicity,” Review of International Political Economy 2(3) —— (2001) Business and Politics in Japan, Manchester: Manchester University Press Hara Yoshihisa (1995) Kishi Nobusuke – Kensei no Seijika (Nobusuke Kishi – An Authorative Politician), Tokyo: Iwanami Shoten Itagaki Hidenori (1987) Jiminto no Senkyo Himitsu (The Secret of LDP Election Success), Tokyo: Sanichi Shobo Ito Hirotoshi (1993) Zenekon Giwaku: Boro sareta dango no ura joho (The General Construction Scandal: Publicly Disclosed Inside Information on Collusive Practices), Tokyo: Seikai Shuppan Sha Iwai Tomiaki and Inoguchi Takeshi (1987) Zaikai no Kenkyu (A Study of Business), Tokyo: University of Tokyo Press Iyasu Tadashi (1984) Jiminto – Kono Fushigi na Seito (The Liberal Democratic Party – That Strange Party), Tokyo: Kodansha Johnson, C (1982) MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925–1975, Stanford, CA: Stanford University Press —— (1986) “Tanaka Kakuei, Structural Corruption and the Advent of Machine Politics in Japan,” Journal of Japanese Studies 12(1) 338 James Babb Kato, J.O (1994) The Problem of Bureaucratic Rationality: Tax Politics in Japan, Princeton, NJ: Princeton University Press Murobushi Tetsuro (1981) Oshoku no Kozo (The Structure of Corruption), Tokyo: Iwanami Shinsho Ramseyer, J.M and F McCall Rosenbluth (1993) Japan’s Political Marketplace, Cambridge, MA: Harvard University Press Tachibana Takashi (1982) Tanaka Kakuei Kenkyu Zenkiryoku (A Study of Kakuei Tanaka: The Full Record), Tokyo: Kodansha Tadamiya Eitaro (1963) Showa no Seijikatachi (Politicians of the Showa Era), Tokyo: Kobundo Index Abdulrahman Wahid 16, 240–2, 243–4 Abe, Shintaro 330 Aburizal Bakrie 224–5, 232–4, 235–6 Adi Sasono 233–4, 236, 239 Adisai Bodharamik 216, 264 Agricultural Cooperative Banks 334 Akbar Tandjung 238 Akorn Hoontrakun 268 Amata group 263 Amin Shah Omar Shah 88, 100 Amnuay Wirawan 270 Anand Panyarachun 264 Ananda Krishnan, T 86, 90, 91, 108 Andi Ghalib 237 Anwar Ibrahim 2, 76, 86, 87–90, 97, 98–9, 101–2, 103, 104–9, 111 Asia Trust group 253 Association of Indonesian Muslim Intellectuals (ICMI) 224 Astra group 218 Aw Boon Hwa 306 Bakrie group 232–3, 235–6 Baktimu Sdn Bhd 92 Bakun Dam 91, 98 Bambang Subiyanto 235 Bambang Trihatmojo 221, 223, 225, 227, 228 Bambang Wiyogo 233 Ban Chang group 263 Bangkok Bank 253–4, 255, 257–8, 260, 263, 269, 271, 272, 277, 285, 287 Bangkok Bank of Commerce (BBC) 270–1, 287 Bangkok Land group 264 Bangkok Metropolitan Bank 253, 271–2 Banharn Silpa-archa 8, 264, 266, 270, 280, 287 Bank Bali 238, 240, 243 Bank Bumiputra Bhd 92, 93, 102, 109 Bank Central Asia (BCA) 234–5 Bank Danamon 236 Bank Lippo 235 Bank Nusa Nasional 236 Bank of Asia 253 Bank of Ayudhya 253, 258, 260, 272, 277 Bank of Thailand 251, 252, 255, 271, 272, 283 Bank Sinopac 122, 124 Baramuli, Arnold 238 Barisan Nasional 82, 83, 84, 91, 107 Barisan Socialis 302–3, 309–10 Beijing Capital Steel and Iron (Shougang) 167–8 Berjaya Group 87, 90, 91, 92, 126 Bhichai Rattakun 259, 268 Bimantara group 221–2, 223 Boonchu Rojanastien 260 Bulog 233–5, 240–1 Bulog-gate 240–1 Camdessus, Michael 229 Celcom Sdn Bhd 93–4 Center for Strategic and International Studies (CSIS) 230, 241 Central Provident Fund (CPF) 304, 317, 318 Central Investment Holding Company 121, 125, 141–9 340 Index Chang Myong 50, 187 Charoen Pokphand (CP) group 14, 73, 255, 264, 269, 276, 278, 279, 281, 285 Chat Pattana Party 264, 266, 272 Chat Thai Party 8, 257, 258, 260, 263, 264, 266, 270, 280, 281, 284, 287 Chatri Sophonpanich 285 Chavalit Yongchaiyudh 2, 15, 264, 266, 268, 269, 270, 272, 280, 281, 287, 289 Chen Cheng 122–3 Chen Shuibian 115 Chi Sheng Industrial Holding Company 125, 141, 144, 146 Chiang Ching-kuo 118, 131, 135, 136 Chiang Kai-shek 118, 129, 131 Chiloo Enterprises 121, 142 China 7, 23–4, 34, 51, 55, 118, 129, 130, 131, 155–78; and collective enterprises (COEs) 167, 170–2, 173, 174, 176–7; and international investment and trust corporations (ITICs) 169, 170; and private-owned enterprises (POEs) 172–4, 176–7; and state-owned enterprises (SOEs) 156, 158, 159–60, 161–8, 169, 170, 171, 172, 173, 174–5, 176–7; and township and village enterprises (TVEs) 156, 158, 159–60, 169, 170–1, 172 China International Trust and Investment Corporation (CITIC) 169 Chinese Communist Party (CCP) 7, 24, 155–6, 175–6, 178 Ching Teh Investment Holding Company 125 Chong, Joseph 86, 90 Choo Wee Khiang 304 Choonhavan, Chatichai 258, 261–3, 266, 267, 279 Choonhavan, Phin 254, 258 Chuan Leekpai 2, 263, 264, 267, 270, 274, 276, 277, 280, 284, 287, 289 Chun Doo Hwan 184–5, 186, 187–8, 189, 195, 196, 197–8, 199, 204, 207 Chung Hsing Bills Finance Company (CHBFC) 136 Chung Ju Yung 8, 199–200, 206 Chung Mong Hun 200 Chung Mong Jun 199 Chung Mong Koo 200 Chung Se Yung 199, 206 Citra Lamtoro Gung group 222 Cold Storage Bhd 88, 92, 97 Corrupt Practices Investigation Bureau (CPIB) 303–4 corruption: in Africa and Latin America 37–55, 57; definition 3–5, 10–11, 14–18, 37–9; degenerative corruption 22, 37–45, 46, 52, 53, 54, 55, 57; and democracy 14–18; and development 34–61, 56–7, 75–7; developmental corruption 22, 45–55, 56, 57–8; in the United States 64–5 Daewoo 10, 13, 190, 193–5, 197, 198, 203, 206, 212 Dahua Securities 122, 124 Daim Zainuddin 86, 87–90, 91–7, 98, 99, 101, 103–4, 105, 107–9 Democrat Party 257, 259, 264, 265, 268, 272, 275, 276, 281, 287 Democratic Action Party (DAP) 83, 97 Democratic Liberal Party 188, 207 Democratic Progressive Party (DPP) 115, 118, 127, 132, 137 Deng Pufang 167 Deng Xiaoping 161, 167, 168, 169 Deng Zhifang 168 Development Bank of Singapore (DBS) 304, 317 developmental state model, 46–50, 55, 62–4, 66–70, 72–3, 116–17, 175; and Korean model 182–91, 203–4, 211–12; and Singaporean model 302–6 Dhanin Chearavanont 14, 276, 278, 280, 281–2, 285 Djoko Chandra 238 Drucker, Peter 63 Economic Development Board (EDB) 304, 310, 313, 314, 316, 317, 318 Estrada, Joseph 15 ethnic Chinese: in business in Southeast Asia 50–1, 74–5, 76; in Indonesia 53, 54, 216–17, 218, 219, 224, 225, 229, Index 341 230–4, 235, 241, 243; in Malaysia 53, 76, 83, 84–6, 90–1, 96, 97–8, 103–4, 110; in the Philippines 53; in Thailand 253, 255, 257, 282 Evans, Peter 37, 53, 63, 72–3, 116 Faber Bhd 92 factionalism: the concept 7–8; in Japan 7–8, 17, 132, 330, 331, 333, 335–6; in Malaysia 7–8, 97–9, 111; in the Philippines 8; in Taiwan 8, 131–5; in Thailand 8, 263–4, 266, 280, 281, 287 Federation of Korean Industries (FKI) 203 Feisal Tanjung 230 Fiat 193 financial crisis, 1997 1–2 First Pacific group 14 Fleet Group 92, 93 Fleet Holdings Sdn Bhd 92, 93, 96, 97 Ford 193, 194 Fukuda, Takeo 328 funding political parties 18–22, 56: in Indonesia 20; in Japan 20, 21; in Singapore 20–1; in South Korea 20; in Taiwan 20, 21; in Thailand 21, 267–72, 273–4, 284, 288 General Motors (GM) 193, 194 Gerakan Rakyat Malaysia 83, 85 Ghafar Baba 90, 98 Ginandjar Kartasasmita 233, 235 Goh Chok Tong 310, 311, 321 Goh Keng Swee 309, 310 Golkar 16, 228–9, 237, 238, 239–40 Grand Cathay Securities Corporation 121 Grand National Party 209 Granite Industries Bhd 87, 90, 97–8, 103 Guan Zhong 131, 132 Guangdong International Trust and Investment Corporation (GITIC) 169, 170 Guanghua Investment Holding Company 133–4 Habibie, B.J 16, 24, 220, 224, 229–30, 231, 232–3, 235, 236–7, 238, 240, 242–3 Halim Saad 87, 91, 93, 96–7, 98, 100, 101, 102, 108 Hanbo 16–17, 189, 204–5, 208, 210 Hanguk Fertilizer Company 198 Hariyadi B Sukamdani 236 Harmoko 226–7 Hartono 226–7 Hashimoto, Ryutaro 334, 336 Hemaraj group 263 Hipmi (Himpunan Pengusaha Muda Indonesia) 224, 232, 233, 236 Hong Leong group 306 Hong Yiah Seng group 255 Housing and Development Board (HDB) 304, 308, 314, 315, 317, 318 Hua Hsia (Xia) Investment Holding Company 125, 141, 142, 143 Huaren Holdings Sdn Bhd 85 Humpuss group 222, 223 Hutomo Mandala Putra see Tommy Suharto Hyundai 8, 10, 13, 188, 190, 193–5, 197, 198, 199–200, 203, 206, 207, 208, 210 Ibnu Sutowo 221 Ikeda, Hayato 326, 327 Indofood 226 Indonesia 2, 6, 9, 11, 12, 13, 14, 17, 18, 20, 22, 24, 50, 53, 54, 55, 63, 70–1, 77, 107, 126, 301; and corruption (and KKN factor) 76, 225–9, 237–42, 240, 241, 242, 243–4; and political business 16, 75, 216–44; and pribumi enterprises 216, 218, 220, 221–4, 236, 243; and Sino-Indonesian enterprises 216, 218, 219, 220, 221, 222, 223, 224, 229, 233, 235, 236, 242–3; and state-owned enterprises (SOEs) 216, 219–20 Indonesian Bank Restructuring Agency (IBRA) 235, 236, 241–2 Indonesian Democratic Party (PDI) 237 Indonesian Democratic Party of Struggle (PDI-P) 240, 241 International Monetary Fund (IMF) 62, 176, 184–5, 186, 227–9, 230, 236, 238 Ishak Ismail 88, 98–9 Jakarta Stock Exchange (JSE) 12 342 Index Japan 2, 6, 7, 8, 11, 17, 20, 21, 22, 25, 34, 35, 50, 52, 63, 65, 66–9, 70, 71–2, 75, 116, 118, 119, 121, 122, 126, 128, 156, 196, 197, 198, 203, 206, 207; and corruption 324, 333–5, 336–7 Jasmine group 264, 269, 285 Jen Hua Investment Holding Company 125, 141, 147, 149 Johnson, Chalmers 9, 36–7, 46–7, 329 Jurong Town Corporation (JTC) 304, 308, 314, 315 Jusuf Wanandi 230 Kadin (Chamber of Commerce & Industry) 224–5, 232, 235 Kamaruddin Jaffar 89, 98–9 Kamaruddin Mohamad Nor 89, 99 Kanemaru, Shin 333 Kang Hua Industrial Corporation 167 Kanjanapas family 264 Kaset Rojananin 268 Kato, Koichi 335, 336 Keidanren 52, 203, 326, 328, 333, 334 keiretsu 52, 126, 164 Kia 190, 193–5, 225 Kim Bong Ho 209 Kim Dae Jung 2, 186, 187, 188–9, 190, 191, 194, 198, 200, 201–3, 207, 209, 210 Kim Jong Pil 188, 189, 191, 209 Kim Yong Sam 2, 16–17, 185–6, 188–9, 194, 195, 198, 200, 201, 204, 205, 206, 207–8, 209, 210 King Dom Investment Holding Co 141, 142, 143 Kishi, Nobusuke 326, 327 KMT, Inc 23, 115–52 Komoto, Toshio 330 Korean Stock Exchange (KSE) 192 Krisdathanont family 264 Kristiadi, J.B 230 Krung Thai Bank 272, 274, 277 Ku In Whoi 206 Kuala Lumpur Stock Exchange (KLSE) 12, 94, 95, 104, 110, 316 Kuang Hua Investment Holding Company 121, 122, 125, 141, 144, 145, 147 Kumbo 203, 209 Kuok, Robert 96 Kuomintang (KMT) 6, 9, 17, 21, 23, 50, 53, 77, 115–52 Kutche 209, 210 Kwangju uprising 187–8, 207 Lamsam family 253, 254, 277 Lamsam-Wanglee group 253 Land & General Bhd 87, 95 Lee Byong Chull 197–9, 206 Lee Ho Ching 318–19 Lee Hsien Loong 311, 315, 318, 319 Lee Hsien Yang 318 Lee Kong Chian 306 Lee Kuan Yew 302, 304, 309, 311, 315 Lee Kun Hee 198, 204 Lee Rubber group 306 Lee Soon Ja 207 Lee Teng Hui 118, 119, 129, 130, 131–2, 135, 136, 137, 138 Li Ka-shing 168 Li Peng 168 Lian Zhan 137, 138, 140 Liberal Democratic Party 6, 7, 8, 17, 21, 25, 52, 69–70, 132, 156, 324–30, 332, 333, 334, 335 Liem Sioe Leong 14, 16, 217–18, 226, 227, 228, 229, 232–3, 234 Lim, T.K 86, 90 Ling Hee Leong 86 Ling Liong Sik 86 Lippo group 16, 218, 235–6, 239 List, F 65, 66 Liu Taiying 122, 123, 124, 139 Lockheed scandal 327, 328, 336 Luan Buasuwan 253 Lucky Goldstar (LG) 10, 13, 197, 203, 206 McVey, R 10 Mahaguna group 253 Mahathir Mohamad 2, 76, 82, 83, 86, 87–90, 91, 92, 97, 98, 100, 101, 103, 104–11 Malayan Banking Bhd 93, 102, 110 Malayan Communist Party (MCP) 302 Malaysia 2, 6, 7, 8, 9, 10, 11, 12, 13, 16, 17–18, 22, 23, 24, 50, 53, 63, 70–1, Index 343 126, 301; and corruption 76; and political business 54, 73–4, 75, 82–113 Malaysia Airlines Bhd 87, 94 Malaysian Chinese Association (MCA) 83, 84, 85, 86 Malaysian Helicopter Services (MHS) Bhd 87, 94 Malaysian Indian Congress (MIC) 83, 84, 85 Marcos, Ferdinand 6, 15 Mar’ie Muhammad 228 Matsushita Electrical Co Ltd 71 Mazda 193, 194 Megawati Sukarnoputri 240, 242 Metro group 255 Millennium Democratic Party (MDP) 190 Mirzan Mahathir 89, 96, 100, 101, 102, 105 Mitsubishi 65, 71, 193, 336 Mitsui 65, 336 Miyazawa, Kiichi 330, 335 Mohamed Sarit Yusoh 88, 98–9 Mohammad “Bob” Hasan 218, 222, 229 Mohd Noor Yusof 88, 102 Monetary Authority of Singapore (MAS) 314, 315, 319 money politics 3–6, 10–11, 16, 48–50, 56; in China 155–6; the concept 2–3; and electoral reform 18–22; in Indonesia 237–42; in Japan 17, 333–7; in Malaysia 17–18, 83; in Taiwan 133–5, 137, 140; in Thailand 21, 250, 263–72, 273–4, 282, 283, 284, 287 Mori, Yoshiro 335–6 Multi-Purpose Holdings Bhd 85, 90, 109 Murdani, Benny 241 Musa Hitam 90, 98, 105 Nakasone, Yasuhiro 330, 335–6 Narong Wongwan 266 National Semiconductor 71 National Trades Union Congress (NTUC) 303, 317 National Wages Council (NWC) 310 New Aspiration Party (NAP) 264, 265–6, 268, 269, 270, 280, 281, 284 New Economic Policy (NEP) 84–5, 86, 94, 108 New KMT Alliance 132 New Korea Party 189 New Party 132 new rich 4; the concept 1; in Malaysia 86–91; in Thailand 262–3, 279 New Straits Times Press Bhd (NSTP) 88, 92, 93, 97 Newin Chidchob 270 Obuchi, Keizo 2, 335, 336 Ong Eng Guan 309 Osano, Kenji 327–8 Osathanugrah family 264 Osotsapa group 264 Overseas-Chinese Banking Corporation (OCBC) group 306, 315 Overseas Union Bank 315 Pak Kwan Yong 209 Palang Dharma Party 264, 268, 280 Park Chung Hee 16, 50, 184, 186, 187–8, 191–2, 195, 196, 197–8, 199, 205, 206–7, 209 Partai Republik (Republican Party) 239, 240 Parti Keadilan Nasional 83, 106–7 Parti Se-Islam Malaysia 83 Peace and Democratic Party 188 People’s Action Party (PAP) 10, 25, 301–3, 306–10, 311, 315–16, 318, 320, 321 People’s Liberation Army (PLA) 155, 156, 167 People’s Sovereignty Party (PDR) 239 Peremba Bhd 87, 91–2, 93, 96 Pertamina 221 Phataraprasit group 264 Philippines 2, 6, 7, 8, 9–10, 11, 12, 13, 14, 22, 53, 63, 70–1, 74, 77, 122, 301; and political business 15, 55, 76 political business 22, 63, 64, 65; in context of East Asia 6–10, 56–7, 70–5; in China 155–78; definition 2–6, 35–7, 47–50, 53–4, 177–8; evolution of the concept 14–18; in Indonesia 216–44; in Japan 17, 324–37; in Malaysia 17–18, 75, 344 Index 82–113; in Singapore 301–21; in South Korea 182–214; in Taiwan 115–52; in Thailand 250–96 Prabowo Subianto 231 Pramarn Adireksarn 258, 260 Pramoj, Kukrit 257–8 Pramoj, Seni 257, 259 Prem Tinsulanonda 259–60, 261, 262 Probosutejo 217, 221, 228, 236 Promising Local Enterprise (PLE) program 313, 314 P.T Bogasari 217 P.T Mega 217 P.T Timor Putra Nasional 225 Rachakhru group 254, 258 Ramos, Fidel 13, 15, 76 Rashid Hussain 88 Rashid Hussain Bhd 88, 102 Rattanarak family 253, 254, 277 Razaleigh Hamzah 97, 98, 105 Red Chips 158, 164–5, 169–70 Renault 98, 194 Renong 13, 87, 93, 96–7, 102, 105, 109 Rhee, Syngmon 50, 186, 187, 192, 196, 206 Riady family 16 Riady, James 235 Riady, Mochtar 218, 235 RJ Reynolds Bhd 87, 94–5, 96 Robison, Richard 216, 222 Roh Tae Woo 185, 186, 188, 189, 191, 195, 197–8, 199, 204, 207–8 Rohas Sdn Bhd 94–5 Rong Yiren 169 Ruentex 137 Ryutaro Hashimoto Sahat Mahakhun 253 Salim, Anthony 235 Salim group 16, 218, 222, 235, 236 Samhak Distillery 210 Samsudin Abu Hassan 87, 97–8, 101, 103 Samsung 10, 13, 14, 190, 194–5, 197–9, 203, 207, 210 Sapuan 241 Sapura group 89, 96 Sarit 254–5, 256, 257 Sato, Eisaku 326, 327 Seagate Technology Inc 71 Seda, Frans 235 Sempati Air 222 Setya Novanto 238 Shamsuddin Kadir 89, 96 Shinawatra group 73, 269, 278, 279–80, 281, 288–9 Sia Song 268 Siam City Credit Finance and Securities Plc (SCCF) 270 Siam Commercial Bank 264, 272, 277 Sime Bank Bhd 88, 92, 97, 102; also known as United Malayan Banking Corp Bhd (UMBC) and RHB Bank Sime UEP Bhd 92 Singapore 7, 9, 10, 11, 13, 18, 25, 34, 35, 36, 63, 71, 122, 126, 226; and corruption 303–4 (see also Corrupt Practices Investigation Bureau (CPIB)); and government-linked companies (GLCs) 301, 302, 304, 305, 307, 311, 314, 316, 317, 318, 319; and multi-national corporations (MNCs) 301, 302, 310, 321 Singapore Association of Trade Unions (SATU) 303 Singapore Chinese Chamber of Commerce and Industry (SCCCI) 308–9, 310 Singapore Federation of Chamber of Commerce and Industry (SFCCI) 311–12 Siti Hardiyanti Rukmana see Tutut Suharto Siti Hediati Hariyadi 226, 228 SK 10, 13, 203 Snoh Thienthong 266, 281, 287, 288 Social Action Party 257, 260, 267 Sofyan Wanandi 230, 241 Sondakh, Steve 233 Song Chuyu, James 131, 132, 135–7, 140 Soon Hua Seng group 255 Sophonpanich family 253–4, 255, 271, 277 South Korea 2, 6, 7, 8, 9, 10, 11, 12, 13, 14, 16–17, 20, 22, 24, 25, 34, 35, 50, 52–3, 63, 66–9, 70, 71, 75, 77, 106, 116, 121, 122, 126, 128, 156, 225; and Index 345 chaebols, 2, 16, 24, 52–3, 182–3, 184, 185, 186, 188, 189, 190, 191, 192, 194–203, 204, 205–6, 207, 208, 209, 210, 211; and corruption 76, 203–11; and Economic Planning Board (EPB) 185, 191, 203; and HCI policy 184, 186, 193, 195, 198, 199, 208; and “politics–economy collusion” 192, 204, 210, 212; and sunshine policy 200 Ssangyong 203 Star Publications Bhd 85, 87 Stock Exchange of Thailand (SET) 263, 267–8, 269 Sudwikatmono 217, 221 Suharto 2, 6, 11, 13, 16, 20, 24, 53, 54, 105, 216–18, 220, 221, 222–32, 236–8, 239, 242–3 Suharto, Tommy 222, 223, 225, 228, 229, 239 Sukarno 216, 221 Sukavich Rangsitphon 269 Sukree Potiratanangkun 256 Sun Yat-sen 117–18, 127 Supachai Panitchpakdi 268 Suryajaya family 241 Suryajaya, William 218 Suwondo 240–1 Sykt Maluri Sdn Bhd 91–2 Taiwan 6, 7, 8, 9, 11, 13, 17, 20, 21, 22, 23, 24, 34, 50, 53, 63, 66–9, 70, 71, 77, 106, 110, 158; and political business 115–52; and state-owned enterprises (SOEs) 119, 120, 121, 126 Taiwan Polystyrene 121, 124 Taiwan Stock Exchange (TSE) 124, 136 Tajudin Ramli 87, 91, 93–4, 95, 96, 97, 98, 100, 101, 102, 108 Takeshita, Noboru 331, 333, 336 Tan Chee Yioun, Vincent 86, 90, 91, 100 Tan Lark Sye 309 Tan Siong Ke 218 Tan, Tony 209 Tanaka Kakuei 8, 327–9, 330, 331, 333, 336 Tanri Abeng 235 Tarrin Nimmanhaeminda 264, 277 Tat Lee Bank 315 Techaphaibun family 253, 254, 263, 271 Technology Resources Industries Bhd (TRI) 87, 93–4, 97 Temasek Holdings Ltd (THL) 305–6 Thai Farmers Bank 253, 254, 272, 275, 277, 288 Thai Rak Thai Party 2, 266, 276, 278, 279, 281–2, 284, 285, 286, 287–8 Thai Roong Ruang group 256 Thailand 2, 7, 8, 9, 10, 12, 13, 14, 22, 25, 50, 63, 70–1, 74, 75, 106; and corruption 15, 21, 55, 75–6, 250, 251; and political business 15, 54, 73, 250–96; and privatization 268–70, 279–80 Thaksin Shinawatra 2, 73, 250, 263–4, 266, 276, 278, 279–80, 281, 284–90 Thanong Bidaya 281 Thaworn Phornprapha 256 Therd Thai faction 264, 266, 280 Ting Pek Khiing 86, 90, 91, 97–8, 100, 103 Toh Chin Chye 309 Tong Kooi Ong 86 Toyota 71, 193 Tuntex 137 Tutut Suharto (Siti Hardiyanti Rukmana) 222, 225, 227, 228–9, 239 TV3 88, 92, 97 U Chuliang 253 Ucom group 269 Unification National Party (UNP) 199–200 Union Bank of Bangkok 253 United Development Party (PPP) 237 United Engineers (M) Bhd (UEM) 87, 97 United Liberal Democrats 189, 209 United Malays’ National Organization (UMNO) 6, 7, 10, 13, 73, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 96–7, 98, 99, 100, 101–2, 105, 106–9, 111, 302 United Overseas Bank (UOB) 315 United People’s Party 8, 17–18, 23 Uthane Techaphaibun 253 346 Index Vijit Supinit 270–1 Wan Azmi Wan Hamzah 87, 93, 94–5, 96, 98, 100, 108 Wang Nam Yen 266, 287 Wardah Hafidz 238, 239 Wee Cho Yaw 310 World Bank 62, 65–6, 238, 250, 272, 306 Xu Lide 122–3, 139 Yang Jixiong 135, 136 Yeo Ning Hong 318–19 Yeo, Philip 318, 319–20 Yeo Seng Teck 304 Yeoh, Francis 103, 108 YTL Corporation Bhd 96 Yueh Sheng Chang Holding Co 122, 125 Yutai Corporation 121, 124, 131, 142 Yahya Ahmad 87 yakuza 331–2 Yamazaki, Taku 335–6 Zhou Guanwu 167–8 Zhu Rongji 166 zoku 325, 329–31, 335, 336 ... of capital in East Asia as well as the evolution of the links between politics and business Defining political business The favoring of particular business interests by politicians in power has... March 2001 Introduction Political business in East Asia Edmund Terence Gomez Financial crisis and political change In 1997, a financial crisis occurred in East Asia1 seriously impairing economies... particularly involving the links between the two In Political Business in East Asia two important questions are examined: ● ● Why was the opportunity for reform in business and in politics not taken