The Asian Voice

Thai casino row, Asia beware Grexit, Philippines presidential race and China's duties as a rising power

Commentaries and insights from newspapers from the Asia News Network (ANN).

1. Just a temporary truce in the war of words over casinos 
The issue has been a subject of debate for decades.

Suthichai Yoon
The Nation/ANN 

Thai Premier Prayut Chan-o-cha (second right) and his wife Naraporn (second left) with a new orchid hybrid christened on June 12, 2015 in their honour. PHOTO: NPARKS 

The prime minister might have told the national police chief to stop his campaign to legalise casinos in Thailand, but you can be sure that the controversy won't just die away. It's only a matter of time before the hot issue rears its ugly head once again.

There is, of course, nothing seriously wrong with arguing the pros and cons of legalising casinos, and the issue has been a subject of debate for decades. The only problem with the idea is that it has never been given a real public hearing. Like a tornado, the question of whether casinos are good or bad for the country usually bursts in without warning, and before everybody had a chance to notice, it's left again, leaving behind a trail of debris.

The resumption of the campaign this time did indeed come out of the blue. It had a terrible start because it came through the wrong channel. The proponents probably had an insufficient advance briefing - so much so that, when questioned, they couldn't even explain the difference between a casino and an "entertainment complex".

It got off to a bad start because the proposal was made public by a group of 12 members of the National Reform Council (NRC) calling themselves "patriots". The suggestion immediately drew scepticism, followed by an avalanche of criticism.

For one thing, promoting casinos certainly isn't on the "reform agenda". Any attempt to use the "reform" banner to ram through such a contentious notion would surely have faced serious hurdles. The reason cited for the move - raking in revenue to bolster the weakening economy - made no sense to anybody in the know.

The reason for the negative reaction was simple: Even if casinos could be legalised immediately, the supposed revenue would not arrive in time to assuage the feeble economy this year, or even next year for that matter.

And, even if the rationale made sense, there is a huge question mark over whether casinos actually do strengthen a country's finances. It's still debatable whether money that passes hands in gambling activities, legal or otherwise, plays any significant role at all in boosting GDP.

Things got worse when the national police chief, Police Gen Somyos Poompanmuang, declared himself the chief promoter of the idea, saying he would even set up a website to lobby for the legalisation of casinos and underground gambling, regardless of the fact that he's retiring in a few months.

This raised eyebrows around the country, not only because he called himself  "an expert on casinos", but also because, as the top officer in national law enforcement, he's not supposed to be seen approving, let alone promoting, what remains for now an illegal activity.

When the finance minister and another Cabinet member, also a former national police chief, followed up with comments backing Somyos, things began to sound strange. Although Deputy Premier MR Pridiyathorn Devakul came out to oppose the idea, questions began to emerge as to where Premier Prayut Chan-o-cha stood on the issue.

Then came the big counter-attack. Another member of the NRC called a press conference to charge that some investors keen on getting a licence to operate casinos in Thailand had approached a certain Army general who in turn had "used" the "Patriotic Group" to fly a trial balloon. In payment, he said, the "patriots" were to receive around Bt10 billion to set up a new political party ahead of the next election. The opponent also claimed that the promoters were promised seats on the new Reform Steering Council once the NRC is dissolved following its vote on the draft constitution, expected in the first week of September.

The accusations got the premier's attention. He was initially non-committal about the proposal, saying he would have to listen to all parties concerned and that the public would have express its feelings before he made a decision. But, once the battle threatened to get out of hand and undermine his national agenda for reform, the PM called a halt to the war of words.

This might prove to be just a temporary "truce" in the drawn-out battle to push through the legalisation of gambling. There is no shortage of research on the issue, but there has never been transparent, healthy and robust debate in which civil society had a real chance to come face to face with the politicians and business interests who have so far chosen to lobby behind the scenes to achieve their goal.

No doubt the battle will resume once the politicians are back in full force.

2. Grexit: Limited direct impact on Asia , but beware what it can trigger
Some worry that it could have consequences like the failure of Lehman Brothers in 2008. 

Kahlil Rowter
The Jakarta Post/ANN 

Protestors hold signs behind Richard Fuld, Chairman and Chief Executive of Lehman Brothers Holdings, as he takes his seat to testify at a House Oversight and Government Reform Committee hearing. PHOTO: REUTERS

The unfolding drama in Greece has either entertained or scared us. And now it’s time for the final act. The upcoming vote next Sunday will determine if Greece remains in the EU or exits. So what does it matter to us, here in Asia? Taken in isolation, probably not much. 

But context is everything.

This period is marked by three important questions. First, would the EU be irreparably damaged by Greece exiting? Second, is the Chinese economy stabilising, and is its stock market bottoming? Third, when will the US Federal Reserve pull its trigger?

Some would worry that a Greek exit, or Grexit, could have dangerous consequences, much like the failure of Lehman Brothers in 2008. First thought too small to matter, that event triggered a massive liquidity shortage as risk aversion pulled back. In addition there are several Eastern European nations bordering Greece that could be pulled down should Greece sink. 

Against this is the European Central Bank (ECB) that this year has raised its quantitative easing to unprecedented levels. Its head, Mario Draghi, said in 2012 he would do all that was required to keep the euro intact. In the 2015 context this would mean: “don’t worry about a Greek default as we will lend cash to whoever has a liquidity issue because of it”. 

Most private lenders to the Greek government have exited, but still hold close to 40 billion euros (S$59.8 billion). Official creditors like the ECB, the IMF and the EU Commission hold the rest, about 240 billion euros. That amounts to 200 per cent of gross domestic product (GDP). 

Besides this Greek banks borrowed close to 120 billion euros from the ECB. These amounts are not life threatening for the likes of the ECB, the IMF or the EU Commission.

The politics, however, can be dangerous. An exit by a member challenges the credibility of the EU as a whole. If its economy improves down the road, a Grexit would raise the incentive for other economies or political parties to attempt the same. 

There are voices now being raised in Portugal, Spain and even Italy about why they should endure austerity programs imposed in the past. In addition Britain is also discussing its exit from the EU.

For Greece, rejecting the euro would mean even more pain in the short term. In the medium term, it must eradicate corruption, raise tax compliance and improve the efficiency of the civil service and state-owned enterprises. The irony is that Greece’s pain strengthens the EU.

China will cool down to 5–7 per cent annual GDP growth. Stock will likely continue its downward slide, even after shedding 17 per cent value in the last two weeks. The Chinese stock market rose each time the central bank eased monetary policy. 

Despite the fact that there is still room for more rate cuts — note the 1.5 per cent inflation versus 4.85 per cent current policy rate — US and European experiences show that an interest cut quickly loses its effect at low rates and if it is the only policy measure used.

In the US, the Fed is set to hike interest rates, probably this coming September. This is not a surprise as the market has been preparing for this for two years. But in recent months several US treasury market makers have experienced liquidity shortages as a result of restrictions imposed on US banks following the 2008 global crisis. This should be addressed soon as these kinds of  “accidents” can cause market panic very quickly.

As for Indonesia, with its wide-open financial market, we can expect even more volatility. As long as important institutions like big banks, pension funds, and insurance companies are well capitalised, they should be able to weather the storm. 

The government has low debt to GDP and has ample liquidity to service debt. The corporate sector has seen a large rise in its foreign debt. Yet only about 30 per cent is hedged, mainly because of the high cost and lack of longer-term facilities. A new Bank Indonesia (BI) regulation to require hedging on foreign loans should, in time, overcome these issues. In the meantime the authorities should remain vigilant and practice fire drills more often.

The writer is chief economist at PT Danareksa. The views expressed are his own. 

3. Glimpses of a Binay presidency 
The current system raises concerns about public services becoming the privileges of the connected 

By Randy David
Philippine Daily Inquirer/ANN 

President Tony Tan (right) shaking hands with Mr Jejomar C. Binay (centre), Vice-President of the Philippines. PHOTO: ZAOBAO

In many ways, the state of politics and governance in the city of Makati exemplifies everything that is dysfunctional in the nation’s political system. Law is put in a position of having to constantly assert and defend its autonomy against political power. The official is so tightly folded into the personal that it becomes impossible to tell where one ends and the other begins. Every attempt to audit official performance is regarded as a personal attack, or an assault on the whole family.

But our people appear to tolerate it, or even welcome it, unable perhaps to imagine any other way of governing a society. That is how entire clans are able to monopolise political power in many provinces of the country across generations. These families manage to weave an elaborate tapestry of patronage that covers all the essential spheres of everyday existence. Access to this system is solely decided by one’s place in an intricate web of personal connections. Here, public services become the privileges of the connected, not the entitlements of citizens.

The modern hope is that as a society becomes urbanised and relatively more prosperous, people are released from the diffused roles they play in traditional patronage systems. When this happens, the personal is demarcated from the institutional, and the various function systems of society become sharply differentiated from one another.

Instead of becoming a reality, this vision has remained a pie in the sky for most of our people. Instead of advancing to a higher level of institutional complexity, Philippine society appears to be drowning in a series of “de-differentiations.” The majesty of the law is undermined when politicians insist on deciding what is lawful and what is not. The sanctity of public office itself is eroded when politicians stay too long in power, and pass on their offices to members of their families as though they were part of the heirloom.

But, there are two significant developments in the nation’s politics that are worth noting. The first is that, instead of withering away, the patronage system has flourished everywhere, recruiting new players into the game. A new political class that controls a lot of cash, rides on media popularity, and commands a direct line to major politicians at the center has replaced the land-based traditional ruling elite. But, there has hardly been any change in the patronage system itself.

The second is the simultaneous entry of members of the same family into the political system. Using the same patronage network and political machinery, the political family expands its clout by deploying its members to multiple elective positions, in much the same way a corporation uses a strong market presence to develop new businesses. This did not exist in the golden years of pre-martial-law politics, when a strong feeling of delicadeza (restraint arising from a deep sense of propriety) was enough to deter politicians, no matter how popular they were, from fielding their relatives to various positions at the same time.

What is remarkable is that this is happening not only in the countryside, but also in the most urbanised cities of the country. The family of Vice President Jejomar Binay is perhaps the most glaring example of this phenomenon. Appointed mayor of Makati by President Cory Aquino in the period of transition that followed Edsa I, Binay went on to be elected and re-elected to the same position until he hit the constitutional three-term limit in 1998. Instead of giving others a chance to serve, he made his wife run for the same office, even as he groomed his only son to be mayor someday by getting him elected as city councilor.

Elenita Binay became mayor of Makati from 1998 to 2001, the same period Jejomar Binay served as chair of the Metropolitan Manila Development Authority. When his wife’s term was over, he promptly took over again as Makati mayor, was re-elected twice, and stepped down only in 2010, when, once again, he ran into the mandatory three-term limit. But, rather than relinquish the position, he kept it within the family by fielding his son Junjun Binay, who is currently on his second term as mayor.

After being mayor of Makati for 21 years, Binay thought 2010 was the right time to enter national politics. He ran for vice president and got elected, even as his presidential candidate lost. In the meantime, his daughter Abigail was elected district representative of Makati, in which position she is now on her third term. As if to test the extent of his growing national clout, in 2013 he fielded another daughter, Nancy, who had worked as his personal secretary, for a senatorial seat. In a crowded field dominated by administration candidates and veteran politicians, Nancy won as part of the opposition slate, affirming the bankability of the Binay name at the national level.

Any politician who has garnered electoral successes of this magnitude, a record that indicates at the very least a tacit public approval of his dynastic ways, cannot be faulted for believing he will be the next president of the republic. But, more than that, it should not come as a surprise to anyone if the Vice President, who has lorded over the city’s affairs for more than three decades, has begun to imagine himself as the lawgiver of Makati.

Watching the Binay patriarch and Senator Nancy rush to the side of Mayor Junjun, not just to lend moral support but also to assail the legitimacy of an order from an independent office of the judicial branch, gives us a glimpse of what things could be like under a Binay presidency. The law would take a backseat to politics. The political would be reduced to the personal.

4. China has vital duties as rising power 
Despite its economy growing, China should be open to learning from the rest of the world 

Li Wei

A Chinese man walks under an overhead bridge in the Central Business District (CBD) area in Beijing, China, June 30, 2015. PHOTO: EPA 

Even if the Chinese economy overtakes the United States as the world's largest in the next 10 years, there will still be an obvious gap between their comprehensive powers and the quality of their economies. So at least for the next two decades, China's strategy should be to play the role of the world's No 2 power.

To do so, China should maintain its win-win cooperation with the US even while defending its own interests. It should properly handle its relations with other countries, too, making them accept its leadership in some fields without creating misgivings about its rise.

From regarding itself as the "Middle Kingdom", the centre of the world, China slid down the economic and geopolitical ladder and came to be seen by the international community as a "rebel". Which means China does not have the experience of playing the role of No 2. To build the learning curve, therefore, it needs a clear strategic goal in line with its real position.

In this regard, China should guard against expansionist moves that come with economic success, for expansionism has extracted an exorbitant cost from rising powers.

The "Belt and Road Initiative", aimed at promoting common development and regional integrity, is one of China's most important policies. And through the initiative, China wants to export the economic energy it has accumulated over the past three decades.

The initiative should have a clear strategic focus, and China's decision-makers have to soberly recognise the country's power and position, and fix its strategic goals rationally. If they overrate its national power, especially in comparison to the United States, they will create big problems for the country.

But even while playing the role of No 2, it should be open to learning from the rest of the world how to respond to global challenges that cannot be met by the US alone, or by following the US model.

China has been a victim of imperialism, colonialism and hegemony in the past. So as a rising power, it should not act like the present and past big powers, because its rise is not only the rise of a power, but also the rise of a civilisation.

The US replaced the United Kingdom as the world leader in the early 20th century, and it helped build a stable world order after World War II by putting forward a series of more pragmatic and attractive global principles in international relations compared to those propounded by the UK.

China should understand that the competition among big powers in the 21st century in the backdrop of globalisation is a competition both of hard power and soft power. So it should help develop fairer and more just international rules to ensure that its rise ushers in a more civilised and just world order.

It should take measures to protect its national and strategic interests, because the unending conflicts within the US have affected its foreign policies. Way back in 2010, the US pledged to reform the International Monetary Fund and the World Bank. But because of the overpowering effect of its domestic politics, the US has not fulfilled that promise. Instead, it has obstructed important reforms in the global financial agencies. This is one of the reasons why China was prompted to establish the Asian Infrastructure Investment Bank.

China should exercise strategic patience and have a broader strategic foresight without being tempted to make quick gains. It should also pay more attention to serving the world, rather than following a rigid principle of "national interests top all".

Today, countries across the world are more interdependent than ever. As a big country, China needs to think more about promoting common development across the world and fulfill its responsibilities of helping solve major global problems such as climate change.

And it should adopt a more forgiving attitude toward other countries and listen to different voices from across the world.

The author is a senior researcher in international relations at Renmin University of China, Beijing.