Quite recently, I met a risk manager from Germany who was contracted by an insurance company to evaluate our IPP (Independent Power Producers). While sitting in a Korean restaurant, enjoying the food, he asked me what kind of potential ASEAN provides to the investor.
It took me by surprise. The European Union is now looking beyond Malaysia and into the ASEAN region. The EU collectively has about 325 million people. Some of its member nations are still on the fringes of poverty including Bulgaria, Rumania, Ukraine, Albania and Georgia.
But the richer nations like Germany, France, Italy, Spain and the UK are looking optimistically at tapping their cheap labour and increasing their in-house market share for the future thus making the poorer nations richer.
Currently the world economy stands at US$60.3 trillion and the US share is about US$12.5 trillion (about 25 percent of the world’s economy is still in the hands of the Americans).
Should you add Japan, China, India and the EU, almost 75 percent of the world economy will be in their control.
What about including Canada, Australia, New Zealand, South Korea, Brazil, Mexico, South Africa, Nigeria and the Soviet Union, Sweden and Norway? That would give these nations a hold of 90 percent of the world’s economy, leaving the rest of the world (about 90 nations including Malaysia and ASEAN) to the balance of the pie which would be around US$6.3 trillion. Malaysia’s gross national product is around US$130 billion.
ASEAN as a bloc (not necessarily an economic or political bloc) has about 550 million people out which over 70 percent earn less than US$1 a day. In countries like Cambodia, most of the working people are only paid in kind and not in money. How do we assess them into the economic bracket? Are they contributors or dependents to the economy?
I told the risk manager the actual story and said ASEAN’s main strength is its poverty. Poor people are desperate for survival and even in countries like Malaysia, which once boasted to being one of the most dynamic economies of the world, now has more and more poor people on board.
Poverty may be a negative strength but rising oil and basic commodity prices have added to it a positive undertone. He looked at me for a while as though not being able to make a guess.
The strength of poverty can be converted into cheap and basic labour with a standard rate of at least US$3 per day, per person in the workforce. That would be around 200 million people (excluding 350 people as non-workforce) This would translate into about US$600 million per day additionally for ASEAN.
The EU can even look forward to sharing that per diem by creating a cheap food market. At the same time, it can sell and rewind the economies of the ASEAN countries.
How can this be done? I would like to borrow some ideas from CK Prahalad of Fortune at the bottom of the Pyramid. Poverty is a fortune if used scrupulously. Poor people need basics and not luxuries. So what do we do?
Create a cheap food market for the whole of ASEAN spearheaded by the EU. Make ASEAN a trading and industrial bloc with vast interest in increasing its agricultural resources. Let these resources be bought by the EU at a higher price and resold to them at a cheaper price.
EU can sell its technology to the ASEAN governments and reimburse its loss. The IPPs can now provide wind-based technology rather than steam coal-based technology. The poor will be able to afford this with US$3 per day. If there are five people in a family, it would be US$15 per day. That is a lot of money. This would make some 550 million people have a basic life better than in being absolute poverty.
The risk manager said we had to talk more when I returned. But then he asked me how Malaysia would accept this idea.
I said, “Not to worry, we have a sage-like leader in the waiting to be the next PM and when he becomes the next PM of Malaysia, this nation will become a very dynamic economy and would view these ideas as useful and important and that can only be Anwar Ibrahim. The promise of Anwar Ibrahim to poverty is not far away.”
