Tuesday, March 29, 2005
Hussain Najadi
THE EMERGING PATTERN OF THE ARAB FINANCIAL INVOLVEMENT IN ASIA *
Managing Director,Arab Malaysian Development Bank HUSSAIN NAJADI
--------------------------------------------------------------------------------
Never had so few, lost so much, so stupidly and so
fast
So states one of the statesmen of our time, Dean
Acheson from his book Present at the Creations The
Far Eastern Economic Review in its April 6 1979
issue. It concludes that "the Arabs are borrowing
again-believe it or not ....".
Both statements reflect the present day dilemma of
the Arab-OPEC countries. As the oil revenues begin
to peter out, a number of the Arab-oil producing
countries will find themselves not?ot better off
than before. In Iran, an inundated flow of
petro-wealth with its attendant mis-management and
an appalling rate of corruption put an end to 2,500
years of monarchy; and delivered a hard blow to the
U.S.'s vital interest in this strategic area of the
world - thanks of course, to this very slippery
black commodity called oil.
We both the Arabs and the Iranians-awoke from our
long sleep and preoccupation with trafficking in
poppies, pearls and perfumes, in the service of the
Goddesses of our beauties and the dead of the
ancient world, all via the silvery route of the
Orient suddenly to face the enormous dilemma on the
one hand of embracing this rush of wealth and trying
to cope with this problematic, very flirtatious
greasy black-liquid and on the other to learn how to
prevent it slipping away from our shaky hands and
fingers. Personally, I view this as an instrument of
instant economic revolution, in the shortest span of
time, of our recent history, though I would much
prefer becoming rich as a consequence of continuous
,human creation, endeavour and the sweat of learning
on the part of our people. The creation of wealth
and its management are part of a process which we
had never experienced, as the oil wealth came out of
the earth at such a velocity, only to meet the ever
thirsty demand of the consumer societies of the
industrial world and to fuel their locomotives of
growth. The jackpot, if you could call it that,
brought with it as well, an indefusable time bomb
now being quietly transplanted in the sands of
Arabia, which, when it explodes, will undoubtedly
shake the entire present economic order right
through to its very foundations and well beyond the
boundaries of our nations.
Admitting the present madness of accumulation of
easy wealth by many of our responsible leaders and
influential citizens, the destiny of our nation will
surely be similar to that of the late 16th century
Spain with her abundant supply of Latin American
gold and silver, filling the swallowing treasury of
that empire. Until today, Spain has not recovered
from its past insanity and no wonder that it is
still regarded as one of the least developed
countries of the continent of Europe. There is
indisputable evidence now that we too shall face the
same fate-if not worse than that of Spain-in a not
too distant future. Why and how?
From 1974 to 1978, in a span of just five years,
US$550 billion was earned by OPEC governments in
foreign exchange receipts. An approximate US$400
billion was spent hurriedly on military hardware,
goods, services and the like. This, according to a
renowned American oil consultant, Walter J. Levy,
writing in the recent issues of Foreign Affairs, was
only equal to US$200 to 300 billion in value
received on an OECD basis. Thus, a net front-end
waste of US$100 to 200 billion was "brilliantly"
achieved, not to mention how the balance was
"managed". Mind you, this historical waste was so
perfectly attained and well under the kind and
expert orchestration of the most lucratively paid
advisors from the most advanced countries.
Naturally, this shopping rush has served indeed well
the economies of the OECD, but I assure you that it
will not last in the next round. The wind of change
blowing over and around Arabia is already forcing
upon us a cold re-assessment of the past gigantic
political and economic blunders. Soon we will
establish national priorities in regard to the
petro-wealth of tomorrow, further away from the
interests of America or Europe, or Japan and closer
to God and the nation.
When the day dawns that we have to consider
faithfully the true interest of our own people in
gearing the rate of oil-flow to the speed and the
propensity of our own consumptive and development
capacities, then it is a matter of course, that we
have to lower the present rate of production which
could mean higher market prices and a slow or a
sluggish rate of growth in most of the OECD
countries. If an OECD country opts for a higher rate
of economic growth in order to pull itself out of
recessionary trend, it may face an expensive energy
bill at the risk of deterioration of its balance of
payment accounts and increasing borrowings from
abroad. Should, however, the same country opt for
the opposite direction, i.e. a drastic cut in energy
consumption, it will face the dilemma of a recession
at home followed by an alarming rate of unemployment
perhaps leading to political instability, strikes
and civil disorders of grave consequence.
At this stage of our political maturity, it is
inconceivable for any intelligent mind to draw up a
workable formula which could serve the interest of
oil producing countries in tandem with the
legitimate interest of the western nations. This is
an understatement: more so because the western
countries have never stopped to think of us as
anything like equal partners, in determining or
pursuing the political and socio-economic
aspirations of the developing OPEC countries. Their
attitude is c]early evidenced by their inexhaustible
capacity to manipulate our political scene in the
obsessive pursuit of economic domination and
continued supremacy. The only avenue open to us
besides violent political eruptions, is a forced
energy programme of oil production and purposeful
economic planning, exclusively designed to meet our
genuine demand for goods and services.
Prerequisite to this mature and independent economic
sailing is the re-arrangement of our national
priorities, in the service of our country and to
free ourselves from the grip of the so called
advisors and managers who are nothing but disguised
present-day white-collar paratroopers of their
colonial ancestors.
The foregoing analysis and forecast should not be
branded with the suggestion that I am advocating a
narrow, insular or dogmatic approach to our economic
development and its intercourse with the economies
of the OECD countries- not at all. We, the products
of Western education, know-how and experience, are
neither extremists of any sort nor insular men
unaware of the advantages of peaceful,
interdependent economies beneficial to the
universality of mankind.
It is true that we repudiate chauvinism as much as
we reject alien dominance. This repudiation arises
not only from our recognition of the realities of
our time and space but from the very spirit and the
temper of our culture and tradition. In the west,
there is an arrogance of power, so also let there be
in Arabia an arrogance of belief and conviction.
Having said that, allow me promptly to venture into
the difficult area of forecasting the future role of
the Arabs in the global economic theatre at large,
and in the Asian arena in particular. It can be
summarized as follows:
(i) The political scene in search of a just and an
independent Palestinian state will continue to
dominate the political horizons in the Middle East.
On this issue, the United States will totally back
Israel and her blind ambitions in the area, even at
the further risk of alienating itself from the
majority of the Arab world, including its close
allies, such as Jordan, Saudi Arabia, Kuwait and the
other Arab Gulf countries. The Camp David Peace
Accord is a prelude to such growing political
conflict and turmoil leading to a collision course
with the western countries.
(ii) Independently of the said political development
is the realization by all of us that the demand for
oil will far exceed the supply and its resultant
shortage of fuel coupled with higher prices, yet to
come. This supply/demand ratio is further worsened
by the serious doubt now prevailing over the atomic
energy plan of the industrial countries.
(iii) A definite end of the era of cheap energy to
fuel a continuous economic expansion of the rich
countries as well as a serious re-evaluation if not
a readjustment of their financial and economic
structures.
(iv) A marked improvement in OPEC current account
balances, of both low absorbers, such as Kuwait,
Saudi Arabia, Qatar, United Arab Emirates, Libya, as
well as those of OPEC high absorbers such as
Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq,
Nigeria and Venezuela. The former category of Arab
OPEC countries will boost their petro-dollar
surpluses into 100 billion US$ by 1981.
(v) In the next round, the aforesaid surpluses will
not disappear as fast as they did in the past,
neither in terms of wasteful military hardware nor
exorbitantly priced plants, goods and services nor
slavishly stuck in the U.S. treasury bills and bank
deposits.
(vi) A true diversification of supply of labour and
materials to Arab OPEC countries will directly
benefit the growing economies of the ASEAN
countries, Taiwan, South Korea, Hongkong and even
China with the consequence of intensification of
trade, tourism, in the easterly direction, followed
by increasing financial dealings in deposits with
banks and purchase of bonds are fixed assets.
The trend of Arab economies is moving slowly yet
somewhat hesitantly towards East Asia and ASEAN. It
is demonstrated by the fact that in 1978 alone more
than 5.5 billion U.S. dollars were transmitted to
their homelands by the 3 million Asian workers; the
lion's share of which was received by South Korea,
Taiwan and recently the Philippines. Now, we also
witness a marked increase of approximately 300% per
annum for the year 1978 in terms of tourist trade
originating from Middle East countries to the Far
Eastern ASEAN destinations.
By 1980-81, the flow of tourism from the Middle East
region to Asia will further increase to the level
reached in Europe in the mid and late 70's with more
dollars spent per tourist head than any other
visiting person. Destinations such as Singapore,
Manila, Hongkong and Bangkok will be the first
beneficiaries of the coming tourist trade booms
followed by other points in the South East Asia
region.
In the investment and financial arena the financial
performance and the unprecedented success of the
early Arab joint financial institutions such as my
own bank -Arab-Malaysian Development Bank in Kuala
Lumpur, Arab Japanese Finance Group (UBAN), in
Hongkong and Kuwait Pacific Finance will lead to
more Arab financial and investment joint
undertakings paving the way for increased Arab
investments in Asia in general and in the ASEAN
countries in particular.
As we do not possess any technological know-how, nor
are we desirous of seeking a secured supply of raw
materials for our industries, our investments can
only be directed prudently towards financial
undertakings in the Asian markets and through
purchase of bonds, stocks and real estate, besides
the banking industry.
We are definitely impressed by the potentialities of
economic growth in the ASEAN region and the
usefulness of such financial centres as Singapore,
serving the Middle East as the regional base for
financial engagements of the Arab surplus funds.
The east has shown its usefulness in our search for
diversification of manpower, goods and services. The
west has also demonstrated its unreliability in
times of crises, its appetite to over-kill in its
commercial transactions and its wilful desire to
dominate rather than to deal with us as a
fair-business-partner worthy of trust. The bulk of
our business will still be conducted with the
powerful industrial nations but an increasing
proportion of total trade and investments will be
generated in Asia's favour as we get closer to
1980's.
It is my fascination and admiration for your people,
your culture, heritage and aspirations that will
continue to direct my human energy and resources,
for instance, towards a credible, meaningful and
humane Arab presence in this part of the world.
Arab-Malaysian, no matter how modestly one mentions
it, is only a single test of our financial
capabilities and performance conceived and promoted
by forward-looking and receptive Ma]aysian
authorities and the Arab investors from Bahrain,
Kuwait and Saudi Arabia. We are now more certain,
confident, and are poised to embark on a broader
ASEAN financial involvement with the co-operation
and the goodwill of your authorities and financial
institutions.
Managing Director,Arab Malaysian Development Bank HUSSAIN NAJADI
--------------------------------------------------------------------------------
Never had so few, lost so much, so stupidly and so
fast
So states one of the statesmen of our time, Dean
Acheson from his book Present at the Creations The
Far Eastern Economic Review in its April 6 1979
issue. It concludes that "the Arabs are borrowing
again-believe it or not ....".
Both statements reflect the present day dilemma of
the Arab-OPEC countries. As the oil revenues begin
to peter out, a number of the Arab-oil producing
countries will find themselves not?ot better off
than before. In Iran, an inundated flow of
petro-wealth with its attendant mis-management and
an appalling rate of corruption put an end to 2,500
years of monarchy; and delivered a hard blow to the
U.S.'s vital interest in this strategic area of the
world - thanks of course, to this very slippery
black commodity called oil.
We both the Arabs and the Iranians-awoke from our
long sleep and preoccupation with trafficking in
poppies, pearls and perfumes, in the service of the
Goddesses of our beauties and the dead of the
ancient world, all via the silvery route of the
Orient suddenly to face the enormous dilemma on the
one hand of embracing this rush of wealth and trying
to cope with this problematic, very flirtatious
greasy black-liquid and on the other to learn how to
prevent it slipping away from our shaky hands and
fingers. Personally, I view this as an instrument of
instant economic revolution, in the shortest span of
time, of our recent history, though I would much
prefer becoming rich as a consequence of continuous
,human creation, endeavour and the sweat of learning
on the part of our people. The creation of wealth
and its management are part of a process which we
had never experienced, as the oil wealth came out of
the earth at such a velocity, only to meet the ever
thirsty demand of the consumer societies of the
industrial world and to fuel their locomotives of
growth. The jackpot, if you could call it that,
brought with it as well, an indefusable time bomb
now being quietly transplanted in the sands of
Arabia, which, when it explodes, will undoubtedly
shake the entire present economic order right
through to its very foundations and well beyond the
boundaries of our nations.
Admitting the present madness of accumulation of
easy wealth by many of our responsible leaders and
influential citizens, the destiny of our nation will
surely be similar to that of the late 16th century
Spain with her abundant supply of Latin American
gold and silver, filling the swallowing treasury of
that empire. Until today, Spain has not recovered
from its past insanity and no wonder that it is
still regarded as one of the least developed
countries of the continent of Europe. There is
indisputable evidence now that we too shall face the
same fate-if not worse than that of Spain-in a not
too distant future. Why and how?
From 1974 to 1978, in a span of just five years,
US$550 billion was earned by OPEC governments in
foreign exchange receipts. An approximate US$400
billion was spent hurriedly on military hardware,
goods, services and the like. This, according to a
renowned American oil consultant, Walter J. Levy,
writing in the recent issues of Foreign Affairs, was
only equal to US$200 to 300 billion in value
received on an OECD basis. Thus, a net front-end
waste of US$100 to 200 billion was "brilliantly"
achieved, not to mention how the balance was
"managed". Mind you, this historical waste was so
perfectly attained and well under the kind and
expert orchestration of the most lucratively paid
advisors from the most advanced countries.
Naturally, this shopping rush has served indeed well
the economies of the OECD, but I assure you that it
will not last in the next round. The wind of change
blowing over and around Arabia is already forcing
upon us a cold re-assessment of the past gigantic
political and economic blunders. Soon we will
establish national priorities in regard to the
petro-wealth of tomorrow, further away from the
interests of America or Europe, or Japan and closer
to God and the nation.
When the day dawns that we have to consider
faithfully the true interest of our own people in
gearing the rate of oil-flow to the speed and the
propensity of our own consumptive and development
capacities, then it is a matter of course, that we
have to lower the present rate of production which
could mean higher market prices and a slow or a
sluggish rate of growth in most of the OECD
countries. If an OECD country opts for a higher rate
of economic growth in order to pull itself out of
recessionary trend, it may face an expensive energy
bill at the risk of deterioration of its balance of
payment accounts and increasing borrowings from
abroad. Should, however, the same country opt for
the opposite direction, i.e. a drastic cut in energy
consumption, it will face the dilemma of a recession
at home followed by an alarming rate of unemployment
perhaps leading to political instability, strikes
and civil disorders of grave consequence.
At this stage of our political maturity, it is
inconceivable for any intelligent mind to draw up a
workable formula which could serve the interest of
oil producing countries in tandem with the
legitimate interest of the western nations. This is
an understatement: more so because the western
countries have never stopped to think of us as
anything like equal partners, in determining or
pursuing the political and socio-economic
aspirations of the developing OPEC countries. Their
attitude is c]early evidenced by their inexhaustible
capacity to manipulate our political scene in the
obsessive pursuit of economic domination and
continued supremacy. The only avenue open to us
besides violent political eruptions, is a forced
energy programme of oil production and purposeful
economic planning, exclusively designed to meet our
genuine demand for goods and services.
Prerequisite to this mature and independent economic
sailing is the re-arrangement of our national
priorities, in the service of our country and to
free ourselves from the grip of the so called
advisors and managers who are nothing but disguised
present-day white-collar paratroopers of their
colonial ancestors.
The foregoing analysis and forecast should not be
branded with the suggestion that I am advocating a
narrow, insular or dogmatic approach to our economic
development and its intercourse with the economies
of the OECD countries- not at all. We, the products
of Western education, know-how and experience, are
neither extremists of any sort nor insular men
unaware of the advantages of peaceful,
interdependent economies beneficial to the
universality of mankind.
It is true that we repudiate chauvinism as much as
we reject alien dominance. This repudiation arises
not only from our recognition of the realities of
our time and space but from the very spirit and the
temper of our culture and tradition. In the west,
there is an arrogance of power, so also let there be
in Arabia an arrogance of belief and conviction.
Having said that, allow me promptly to venture into
the difficult area of forecasting the future role of
the Arabs in the global economic theatre at large,
and in the Asian arena in particular. It can be
summarized as follows:
(i) The political scene in search of a just and an
independent Palestinian state will continue to
dominate the political horizons in the Middle East.
On this issue, the United States will totally back
Israel and her blind ambitions in the area, even at
the further risk of alienating itself from the
majority of the Arab world, including its close
allies, such as Jordan, Saudi Arabia, Kuwait and the
other Arab Gulf countries. The Camp David Peace
Accord is a prelude to such growing political
conflict and turmoil leading to a collision course
with the western countries.
(ii) Independently of the said political development
is the realization by all of us that the demand for
oil will far exceed the supply and its resultant
shortage of fuel coupled with higher prices, yet to
come. This supply/demand ratio is further worsened
by the serious doubt now prevailing over the atomic
energy plan of the industrial countries.
(iii) A definite end of the era of cheap energy to
fuel a continuous economic expansion of the rich
countries as well as a serious re-evaluation if not
a readjustment of their financial and economic
structures.
(iv) A marked improvement in OPEC current account
balances, of both low absorbers, such as Kuwait,
Saudi Arabia, Qatar, United Arab Emirates, Libya, as
well as those of OPEC high absorbers such as
Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq,
Nigeria and Venezuela. The former category of Arab
OPEC countries will boost their petro-dollar
surpluses into 100 billion US$ by 1981.
(v) In the next round, the aforesaid surpluses will
not disappear as fast as they did in the past,
neither in terms of wasteful military hardware nor
exorbitantly priced plants, goods and services nor
slavishly stuck in the U.S. treasury bills and bank
deposits.
(vi) A true diversification of supply of labour and
materials to Arab OPEC countries will directly
benefit the growing economies of the ASEAN
countries, Taiwan, South Korea, Hongkong and even
China with the consequence of intensification of
trade, tourism, in the easterly direction, followed
by increasing financial dealings in deposits with
banks and purchase of bonds are fixed assets.
The trend of Arab economies is moving slowly yet
somewhat hesitantly towards East Asia and ASEAN. It
is demonstrated by the fact that in 1978 alone more
than 5.5 billion U.S. dollars were transmitted to
their homelands by the 3 million Asian workers; the
lion's share of which was received by South Korea,
Taiwan and recently the Philippines. Now, we also
witness a marked increase of approximately 300% per
annum for the year 1978 in terms of tourist trade
originating from Middle East countries to the Far
Eastern ASEAN destinations.
By 1980-81, the flow of tourism from the Middle East
region to Asia will further increase to the level
reached in Europe in the mid and late 70's with more
dollars spent per tourist head than any other
visiting person. Destinations such as Singapore,
Manila, Hongkong and Bangkok will be the first
beneficiaries of the coming tourist trade booms
followed by other points in the South East Asia
region.
In the investment and financial arena the financial
performance and the unprecedented success of the
early Arab joint financial institutions such as my
own bank -Arab-Malaysian Development Bank in Kuala
Lumpur, Arab Japanese Finance Group (UBAN), in
Hongkong and Kuwait Pacific Finance will lead to
more Arab financial and investment joint
undertakings paving the way for increased Arab
investments in Asia in general and in the ASEAN
countries in particular.
As we do not possess any technological know-how, nor
are we desirous of seeking a secured supply of raw
materials for our industries, our investments can
only be directed prudently towards financial
undertakings in the Asian markets and through
purchase of bonds, stocks and real estate, besides
the banking industry.
We are definitely impressed by the potentialities of
economic growth in the ASEAN region and the
usefulness of such financial centres as Singapore,
serving the Middle East as the regional base for
financial engagements of the Arab surplus funds.
The east has shown its usefulness in our search for
diversification of manpower, goods and services. The
west has also demonstrated its unreliability in
times of crises, its appetite to over-kill in its
commercial transactions and its wilful desire to
dominate rather than to deal with us as a
fair-business-partner worthy of trust. The bulk of
our business will still be conducted with the
powerful industrial nations but an increasing
proportion of total trade and investments will be
generated in Asia's favour as we get closer to
1980's.
It is my fascination and admiration for your people,
your culture, heritage and aspirations that will
continue to direct my human energy and resources,
for instance, towards a credible, meaningful and
humane Arab presence in this part of the world.
Arab-Malaysian, no matter how modestly one mentions
it, is only a single test of our financial
capabilities and performance conceived and promoted
by forward-looking and receptive Ma]aysian
authorities and the Arab investors from Bahrain,
Kuwait and Saudi Arabia. We are now more certain,
confident, and are poised to embark on a broader
ASEAN financial involvement with the co-operation
and the goodwill of your authorities and financial
institutions.
# posted by Michael P. Whelan : 11:26 AM
