June, 1999

Contents

1. Introduction

          Susumu Yamakage (University of Tokyo)

2. Changing South-East Countries

     Political Upheaval, Democratization, and Leadership in the  
      ASEAN Countries

             Ikuo Iwasaki (Institute of Developing Economies-JETRO)

   National Front in Malaysian Politics： Ethnicity and Election 
      System

              Takashi Torii (Meiji University)

    Adapting Regional Cooperation: Vietnam's Renovation in 
      Foreign-policy Making

      Takayuki Ogasawara (Yamanashi-Gakuin University)

3. Changing ASEAN

     ASEAN-Ten's New Challenges: Increasing Diversity and    
      Decreasing Consensus

              Susumu Yamakage (University of Tokyo)

     The Current Situation of the ASEAN Regional Cooperation and  
       the Reactions of ASEAN Countries

        Kayoko Kitamura (Institute of Developing Economies-JETRO)

4. Changing Relationship between Japan and ASEAN

       Factory Management System in a Globalized Japanese Electric 
         Company: Two Case Studies of the Local Production and 
         Hollowing-out

              Haruo Horaguchi (Hosei University)

     Japan's Regional Policy: the Current Promotion by means of 
         ASEAN and APEC

            Etsuo Sato (Ministry of International Trade and Industry)

      Asian Economic Crisis and Road to an Asian Monetary Fund

             Toru Yanagihara (Asia Development Bank)

5. Changing Viewpoints of Asia

      Asia from the viewpoint of Business History
             ─Method and Possibility of Asian Business History─

             Fumikatsu Kubo (Chuo University)

      What is Market Economy?

             Yonosuke Hara (University of Tokyo)

Summary

1. Introduction

          Susumu Yamakage (University of Tokyo)

  This volume, consisting of ten research reports, aims at grasping on-going transformations of ASEAN countries, of ASEAN as an organization, of Japan-ASEAN relations (both private and diplomatic), and of methodology to understand Asian economies.  By on-going transformations do we mean the impact of and/or response to systemic crisis triggered by the depreciation of Thai Baht in 1997 as well as the widening of ASEAN in recent few years.

  ASEAN is, and will be important for Japan in various respects, especially when Japan seeks regionalism.  Whatever is Japan's ASEAN policy, a correct understanding of the state of affairs in the ASEAN region is necessary.

  This volume hopefully provides better understanding so as to beneficial for conceiving Japan's relations with ASEAN.

2. Changing Southeast Countries

Political Upheaval, Democratization, and Leadership in the ASEAN Countries

    Ikuo Iwasaki (Institute of Developing Economies-JETRO)

  In the midst of economic crisis in Asia, the ASEAN countries show contrasting patterns in economic policies, political upheaval and democratization. While in Indonesia, the Suharto regime collapsed because of the lack of ability to counter the economic crisis, and in Malaysia, economic crisis leads to political cleavage between the leadership, Singapore is immune to political chaos caused by the economic crisis. But in the sphere of democratization, the situations are totally different. While in Indonesia, democratization is in process under the new leadership, in Singapore there is no sign of it. This economic crisis and leadership change open new dimensions in the ASEAN leadership. Whereas the common style of first generation leaders was authoritative, the new generation leaders in changed political circumstances employ a soft style and collective leadership. So the focus of stability in the ASEAN countries depends upon how new leaders establish their own style of leadership in the region, as well as in the world.

National Front in Malaysian Politics: Ethnicity and election system

             Takashi Torii (Meiji University)

　Malaysia is a multi-ethnic country which is composed of the four major ethnic groups, the Malays，the Chinese，the Indians and the Indigenous people．

　After the watershed of May 13th 1969(ethnic riots and state of emergency)， the present ruling party-led government has introduced new political stability．

　In the field of economic policies，new packaged policies，New Economic Policy (1971～1990) was launched to lift up the Malays' economic positions and breed the middle class．

　In correspondence to these new economic policies，Malays-led political party，United Malays National Organization (UMNO) restructured the coalition government on condition that Malay political hegemony is maintained．This new political system，National Front (Barisan Nasional) has been re-produced and legitimated through general election．

　This paper shows the part of mechanism of the National Front in the case of general election． In particular relations between ethnicity and election system．

Adapting Regional Cooperation: Vietnam's Renovation in Foreign-policy Making

              Takayuki Ogasawara (Yamanashi-Gakuin University)

  Adapting regional organisations such as ASEAN and APEC, the government in Hanoi has made serious effort to renovate its foreign-policy making institution. In this process, three events are to be noted. Firstly, the Ministry of Foreign Affairs set up the Department of ASEAN which handle all the issues on relations with ASEAN. Secondly, the Prime Minister's Office established the National Committee on International Economic Cooperation. This committee half-above the ministries is expected to co-ordinate the policies relating to Vietnam's integration into economic and trade organisations including APEC and WTO. Thirdly, the committee is designed to give a stronger voice to the Ministry of Trade, which has not been very powerful, within the central government. The government is keen to impress the international community as well as the domestic elements that it is really willing to promote an export-oriented economic growth.

3. Changing ASEAN

ASEAN-Ten's New Challenges: Increasing Diversity and Decreasing Consensus

               Susumu Yamakage (University of Tokyo)

  The paper deals with various implications of the widening of ASEAN. Within less than five years, between 1995 and 1999 to be exact, ASEAN expanded from six members to ten, so that the organization embraced all of the Southeast Asian countries. As a result, a very diversified nature of ASEAN has become even more diversified. To simplify the point, the gap between the five old comrades and the six new-comers is shown in economic development, social infrastructure, and familiarity with the ASEAN way. Furthermore, even between old comrades, a significant cleavage exists in terms of the principle of non-interference of internal affairs. ASEAN adopted constructive engagement policy toward Myanmar in hoping to improve human rights conditions in Myanmar. Once Myanmar joined, it became controversial whether the relationship with Myanmar was to be based on ASEAN's established practice of non-interference or to be based on constructive engagement. Old comrades are divided.  Nevertheless, other issues such as joint measures against forest fire and haze and mutual surveillance mechanism of macro economic condition and policy have been eroding the traditional principle.

  ASEAN should overcome this intra-regional difference in order to deepen integration in Southeast Asia.

The Current Situation of the ASEAN Regional Cooperation and the Reactions of ASEAN Countries

               Kayoko Kitamura (Institute of Developing Economies-JETRO)

  This report aims to describe the current situation of the regional cooperation In Association of Southeast Asian Nations (ASEAN) through focusing on the real development of ASEAN Free Trade Area (AFTA) and ASEAN Industrial Cooperation Scheme (AICO).  ASEAN has revised the scheme of AFTA as advancing the date of accomplishment of the trade liberalization and as widening the items which would be applied by Common Effective Preferential Tariff (CEPT).  In addition, AICO, which is the mixture of trade liberalization and regional industrial cooperation, has been developing.  However, the real situation of ASEAN regional cooperation has been complex and its future is unforeseeable.  It is so difficult to explain clearly to what degree the trade liberalization and the industrial cooperation are attained and how ASEAN countries would deepen its regional cooperation in the future.  This report tried to show the present condition of ASEAN regional Cooperation while specifies the peculiarity of it.

4. Changing Relationship between Japan and ASEAN

Factory Management System in a Globalized Japanese Electric Company: Two Case

Studies of the Local Production and Hollowing-out

               Haruo Horaguchi (Hosei University)

  As a Japanese multinational company faces down turn of macro economic conditions in Japan, it has been urged to restructure domestic production system. Two interview survey to the factories of the giant multinationals were conducted in 1998.  It reveals that the multinationals has reduced its employment up to 1,363 for ten years period of time while it has invested abroad heavily. Although some characteristics of the Japanese production system have still been remained, competitiveness of the multinationals seems to be challenged by a local condition such as aging of production workers.

Japan's Regional Policy: the Current Promotion by means of ASEAN and APEC

               Etsuo Sato (Ministry of International Trade and Industry)

  The report aims to describe the current situations of Japan's regional policy related to Association of Southeast Asian Nations (ASEAN) and Asia Pacific Economic Cooperation (APEC).  The Policy dealing with ASEAN has been the centerpiece of Japan's policy toward Asia while APEC has provided the arena in which Japanese government can display its positive attitude that it supports ASEAN countries.  At first, this report points out the current issues in ASEAN countries and between them and Japan, and then explains the function of AEM-MITI Economic and Industrial Cooperation committee, which was established in 1998 so as to treat these issues.  Then the report shows the current actions in APEC and Japan's position in it through focusing on the Ministerial Meeting and informal Economic Leaders' Meeting in November 1998 in Kuala Lumpur.  I would like to assure that the author of this report is an officer of the MITI while it does not show the formal view and consensus of the MITI.

Asian Economic Crisis and Road to an Asian Monetary Fund

               Toru Yanagihara (Asia Development Bank)

  An Asian Monetary Fund (AMF) is one of the proposals for regional cooperation in Asia that has attracted much attention. The idea was first floated by some ASEAN countries and Japan as early as in summer 1997. The first showdown came at the time of the IMF-World Bank annual meeting of September 1997, where the idea was met with strong opposition from the US and IMF. In November 1997, an agreement was reached among the fourteen members of the Manila Framework Group --- including East Asian economies, Japan, and US --- with regard to a new regional approach to monetary and financial stabilization. It incorporated a Contingent Financing Arrangement (CFA), but its activation was to be conditioned on an agreement of an economic program with the IMF. The Manila accord also introduced a scheme of regional surveillance on economic situations and policies, opening a possibility of a regional peer pressure mechanism.

  As the crisis deepened in 1998, there arose increased criticisms against IMF programs. Criticisms centered on macroeconomic austerity, high interest rate policy, inadequate attention to vulnerable groups, and lack of due attention to historical, social and institutional factors in designing and implementing economic reform measures. Japanese Government became increasingly vocal and forceful in its criticism of IMF programs and also in its advocacy of reform of international financial architecture. Japanese criticism covered a whole range of issues including exchange rate regimes, capital controls, the IMF-World Bank regime, and need to provide liquidity in rapid and massive manner. Correspondingly, Japanese advocacy featured proposals on managed flexibility in the currency pegs to a basket of major currencies, more aggressive use of guarantee functions of the World Bank and the Asian Development Bank, and establishment of regional monetary funds operated on the basis of regional peer review and peer pressure. This last item represents the current status of a proposed Asian Monetary Fund.

5. Changing Viewpoints of Asia

Asia from the viewpoint of Business History

    ─Method and Possibility of Asian Business History─

               Fumikatsu Kubo (Chuo University)

  In order to concern about the 20th century system, analyzing the history of economy and business administration in Asia. Especially it is getting more important to study Asia from the viewpoint of business history, because Asian business history enables us to consider the subjective condition of economic growth in Asia such as innovative combination of government, entrepreneurship and engineer.

  On this paper I point out three points. The first point is the importance of colonial business history as start point of Asian business history and common character of postwar economic growth between Taiwan and Korea. Second point is my view on the method and possibility of Asian business history. And the last point is the "innovative" entrepreneurship creating the "late development effect of enterprise".

What is Market Economy?

               Yonosuke Hara (University of Tokyo)

　The East Asia economic crisis may have resulted from the globally moving money capital rather than from defects in the East Asian-model economic system. We must acknowledge that interpreting the East Asian economic crisis is fundamentally inseparable from interpreting the basic characteristics of the market economy. In doing so, it will be important that we abandon the paradigm of a completely competitive market under the neo-classical school, which is not a model that reflects reality, but is only a model for recognizing reality. In order to survive this age of globalism, we must take a good look at the real market economy and abandon "extreme simplification and ideology". The present economic crisis in East Asia may be a reminder of this simple, but crucial fact.