Viewpoint: David Lyman
Being a second-generation US lawyer domiciled in Asia, and my family having first settled in East Asia 71 years ago in 1947, I have learned several lessons as to my own role in this geography.
The countries and people of the Greater Mekong Subregion (GMS) are extremely diverse in their cultures, histories, customs, moralities, religions, resources, political systems, legal traditions, economies and economic objectives, states of technological development, social goals, education levels, life rhythms and commitments to building a sustainable society. This variation exists not only between countries but also within the regions of each country. Therefore, any advice must be specific and tailored, not general. No one solution fits all stakeholders.
Despite my long-term residence in and dedication to South-east Asia, I am still a foreigner, educated and steeped in the ways of Western tradition, though this is tempered with some wisdom of Eastern philosophies. That recognition mitigates my advice, actions and observations.
For decades, all emerging economies in this region have trumpeted that, as a national priority, they want local and foreign businesses to invest in their countries. Yet – with isolated exceptions – the officials and legislators of these nations do precious little to put themselves in the shoes of the very investors they wish to attract. Hence, they often fail to adopt or implement policies that would entice a wide variety of businesses, or even targeted categories of companies, to come and stay.
The need to create a friendly environment for investors, whether domestic or foreign, is still not fully appreciated or accepted by those responsible for attracting investment. Business stakeholders invest where they are welcomed, where their risks are predictable and quantified, and where they can make and keep a fair return on their capital outlays. Anything less, and they will not be interested in investing here. While that’s a very simple and straightforward proposition to which countries pay lip service, the authorities often fail to follow through with the necessary actions.
What do businesses look for before making a financial or human capital commitment to a country? Generally, business can function in almost any environment, provided certain conditions exist. The ground rules for the conduct of business – in other words, the rules of the game, whatever they may be – must be clear and consistently applied. They must be understood and observed by all concerned with the conduct, regulation and control of business. These ground rules cannot be changed easily on a whim. Changes in these rules generate concern and consternation among investors.
Stability in government is required, though political systems or policies may change. Predictability, transparency, efficiency, tolerance and honesty by the governing authorities; firmness yet fairness in treatment; strict but even-handed application; and enforcement of the rules for the benefit of society – not of interest groups or personalities – are all characteristics that are scrutinised.
What constitutes investment attractiveness? Each of the countries in the GMS has its own policies, emphasis and interpretations towards what they consider attractive to them, so much that even the same words used can have different meanings from one country to another. This is not unusual, for in the law, we say that reasonable people can differ.
The creation of the ASEAN Economic Community in 2015 focuses on ASEAN becoming an integrated single market with the free flow of goods, services, investments, people and capital among its 10 member countries. Each member has learned and is trying to adhere to the aforementioned lessons of investment attractiveness to some extent. Some are fast learners, and others are playing catch-up.
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