Singapore, October 9, 2009
Interviewed by: Michele Bodmer
Michele Bodmer: As Western economies are still suffering from the impact of the financial crisis, hopes turn east to Asia. Do you think that these hopes are justified?
Tan Sri Francis: If only economies in Asia could cure the world's financial ills, we would be spared many sleepless nights. In reality, they are merely mitigating damage caused by the global credit crunch at present. Asians are renowned for their “serial saving habits,” amassing substantial wealth.
But with today's prices of goods and services at their lowest, they could be encouraged to become "serial consumers" like the Americans and Europeans once were. For this same reason, China's role could not be more important. During the Asian Crisis, it prevented the collapse of Asian economies by not devaluing the renminbi. Today, its extensive consumer market and pledged 2 trillion dollar fiscal spending package should once again prove critical in offering some stability to the global economy. At the very least, helping to absorb volumes of goods and services from around the world, and offsetting the economic de¬pression faced by the US and Europe.
We all hope that China's capital and consumer spending will create significant knock-on effects, acting as leaven to facilitate a global economic recovery. The slow but timely revival of Japan's economy should also add much needed impetus. But all this is uncertain. Similarly, we do not know whether China or the Asian economies will lead this recovery, pending the outcome of financial rescues in the US and Europe. Nonetheless, Asian economies as a whole have demonstrated remarkable stability and resilience, although bruised by the violent global financial cli¬mate. Many have learned the painful les¬sons of the Asian Crisis.
What are the key drivers for Asia's growth?
Tan Sri Francis: This last year has taught us that we need to review our preoccupation with the "next booms," so that we could lessen topsy-turvy boom-and-bust cycles as well as control the formation of volatile "bubbles" that drive them.
In many ways, the strength of Asia today reflects this shift from the myopia of short-term gains and goals, to more sustainable and longer-term view of how businesses and economies should be driven and run.
The Asian Crisis reinforced the better wisdom of building businesses and industries to last and with that, inculcating practical regulations and supervisory oversight to govern economic activities and transactions.
Whether in government or industry, the champions behind this bold philosophy of "smart but sustainable" economic development are the true drivers of Asia's growth. "Un-glamorized" and often ignore they epitomize responsible economic statesmanship and some have even posi¬tioned their economies to take advantage of the global downturn.
What might the next boom be and where does it come from?
Tan Sri Francis: The industries making headway and fueling Asia's continual growth are wireless internet communication, high-speed transportation, and green energy. But what makes it for them is the integration of these sectors with intellectual capital and commercial savviness. Their success is in creating "space" for innovation to thrive but also for new products and services to take markets by storm. On this front, both China and India have quickly emerged.
The meteoric rise of Alibaba.com and Baidu, China's e-commerce and search engine flag-bearers, respectively, prove that even with a controlled internet, when "space" is provided, ingenuity and enter¬prise will quickly take shape.
Looking to China and India as Asia's major economic and political powers - what role can or should they play in Asia and in the world, respectively?
Tan Sri Francis: China and India will benefit immensely by continuing to build and enhance geo-economic bridges, while step-by-step discarding their long-standing geo-political baggage. In doing so, there will be considerable spill-over effects, with greater economic and political stability for the Asian region.
More immediately, they both have the clout to work toward changing the global financial architecture. Particularly, to make it more transparent and more reflective of the economic interests of the other regions. In the longer term, one would hope that both China's and India's currencies will be global convertible currencies.
With the way things are going in the US, with worrying predictions that the practice of "quantitative easing" may cause further financial tremors in the future, it is good to have a basket full of strong currencies to offset the volatility of the US dollar.
Let's talk about the Tiger economies (South Korea, Taiwan, Hong Kong, and Singapore); Where do they stand today? Tan Sri Francis: The Tiger economies are changing their shapes. Hong Kong and Singapore, with Shanghai, are moving toward becoming the main financial centers of Asia - the London, New York and Zurich of the East.
While the other Tigers like South Korea and Taiwan have matured and excelled as manufacturing centres in their own right, becoming global beaters in churning out highly desirable and competitive products.
It is entirely possible that industrial powerhouses like China, India, South Korea and Taiwan may one day jointly spawn new tigers. Traditionally, this was a role played solely by Japan. The question is how active these countries will invest and mold the economies of potential tigers such as Vietnam and the Philippines, when China remains the "factory of the world."
Given that China's and India's economies are quite dominant, how can the Tiger economies differentiate themselves?
Tan Sri Francis: It is never just a question of differentiating from China or India. All economies must be competitive globally. The key is finding a market niche (particularly an industry), becoming its leader, and creating effective private-public partnerships to drive and maintain it.
For example, in Malaysia's case, it would be the thriving Islamic banking industry, encouraged and supported by the Malaysian government. Of course, there must be intellectual capital and culture of innovation to achieve a competitive edge. South Korea is the perfect example here. It is thriving amid the global crisis because it continually creates technological "blue oceans."
It leverages on the best technology and the sheer ability of the Korean workforce to "think out of the box." Not surprising, Samsung and LG are global leaders in the electronics and telecommunication industries, consistently inventing and re-inventing trend-setting and commercially viable products and services.
The 20th century was the century of the "American way of life". Will we see an "Asian way of life" in the 21st century?
Tan Sri Francis: The American or Asian way of life does not exist! Yes, we have different lifestyles because of our geography and our cultures, but if we dig deep, we find we have more common beliefs, values, goals, and even ancestry.
In fact, the financial crisis just proves that our common traits include our common flaws. Financial systems throughout the world collapsed because of sheer greed and lack of foresight. Gatekeepers that we have elected or chosen to protect us from the anarchy of the markets "turned a blind eye." And for small profits, do we not have environmental degradation on a massive scale? The list goes on.
If you could this century a name, what would it be?
Tan Sri Francis: We should call this century: "The Human Century." It is time all of us take seriously social and community interests in business and politics. We need to make businesses operate in a godly manner so that the employees cannot wait to go to work each day because they know they are valued and what they do lends integrity. Put green technology on the agenda and protect the environment, so that no business decision hurts others and blights our children's future.
Tan Sri (Dr.) Francis Yeoh Sock Ping: Trained as a Civil Engineer, and took over his family's company in 1988, growing it into a business conglomerate comprising of six listed companies. YTL owns and manages regulated utilities and other infrastructural assets, serving 10 million customers in three continents. Tan Sri Francis has won many business awards. He was Ernst and Young's Master Entrepreneur in Malaysia and CNBC's Malaysia CEO of the year. Most recently, Asiamoney named him one of Asia's Top Executives 2008. He is the Founder Member of Malaysian Business Council and Capital Markets Advisory Council. He is a member of Asia Business Council and Barclays Asia-Pacific Advisory Committee. He is also a Trustee of Asia Society and sits on the Advisory Council of London Business School, Wharton School and INSEAD. An ardent advocate of environmental conservation, he supports clean and renewable energy initiatives and sponsors awareness campaigns such as "Climate Change Week". He is a member of the Nature Conservancy’s Asia Pacific Council. In recognition of his many endeavors, Tan Sri Francis was awarded the commander of the Most Excellent Order of the British Empire (CBE) by her Majesty Queen Elizabeth II in 2006.