Sometimes it would not be a very big stretch to suggest that the majority of the Western World suffers from attention deficit disorder. Only a matter of weeks after it first dominated the headlines for the best part of a few weeks, it’s now necessary to turn many newspaper pages to find a mention of Asia’s avian influenza flu outbreak.
The World Health Organization (WHO) has said the highly pathogenic H5N1 strain “has not changed to a form easily transmitted from one person to another”. However it has stood by its claim that the virus could mutate into a form highly contagious to humans with the potential to kill millions of people around the globe.
Perhaps it’s simply a state of optimism, but the world appears to have lost interest in the story and is happy to ignore the threat on the horizon. After all, in this day and age of terror, the number of ways we could potentially be killed are numerous in the extreme.
However, behind the story there’s another anecdote, reminding us of the difficulties we face in conquering our northern neighbours, from an economic perspective at least. Like the chook flu, SARS was a sensational story that exploded almost a year ago and then slowly faded into the background.
The most spectacular angle to the story was the reluctance of many Asian governments, most notably China, to admit they had a problem until it was blatantly obvious. And if the disease had been the killer it was originally thought it was, then surely the reluctance to call in the WHO and admit they had a problem could have been exponentially more catastrophic.
Another catastrophe averted is a negative effect on foreign business confidence in the region. While an unconfirmed report had come to hand of at least one of Australia’s top-tier law firms embarking on a major downsizing exercise in its Beijing office, as Lawyers Weekly was going to press, much of the region seemed to be powering ahead.
While in Australia a very big deal is being made of good corporate governance, in Asia good governance is still something of a panacea. More a cultural issue than anything, SARS, bird flu and the harbouring of terrorists, have all been stark reminders to business that this is an unsettled region in which to do business. However, foreigners continue to come and bring their money with them.
Haydn Dare is currently seconded to Soemadipradja & Taher, Freehills correspondent firm in Jakarta, Indonesia as foreign counsel. He has worked in the region under four of the five Indonesian presidents, having made the move north from Sydney in 1993, and says that business confidence is as good as ever.
“We threw out all our chicken and all our eggs, but I don’t think it’s affected business investment. It’s obviously devastated the chicken industry, but I think people are wary, but calm.
“Jakarta itself has been remarkably robust considering what has been happening around it — the terrorist attacks, SARS and now bird flu. The economy here has been remarkably resilient and largely driven by local consumer spending.”
Dare points to the country’s upcoming elections as more of a short-term hindrance to the economy as “there may be a slow down in business activity as people wait and see what’s the outcome of that”.
Starting with the parliamentary and then presidential elections, the country’s first full democratic elections promises to be a quite a drawn out process.
“This is the first time that they are going to have direct elections of the president. So this is quite a significant change here and another step for Indonesia towards full democracy.”
Election aside, Dare says that Soemadipradja & Taher has been gainfully employed with restructuring work and re-organisation work. “There’s been a real rationalisation in the insurance industry — some foreign players are pulling out, others are taking up their stakes. We’ve done a lot of debt restructuring and trying to sort out some of the issues that are a hangover of the Asian economic crisis.”
Of foreign investment, Dare says that it is limited, but there is some. “We’re doing quite a lot of work in the oil and gas industry. In general mining, there’s not a lot activity, because there is uncertainty surrounding the regional autonomy law in forestry and the new mining law, but the existing players here still have major operation here.”
With the benefit of 10 years perspective, Dare has seen a real shift in the Indonesian economy. Up until the economic crisis, when Dare says the legal market was “crazy busy”, the economy was basically fuelled by foreign investment, but now the economy was led by consumer spending.
“Now it seems to be really relying on the consumer base to push it forward, you only need to walk through one of the shopping malls here to see what’s happening.”
While careful to avoid any negative comments directed towards the Indonesian Government, Dare admitted there were ongoing issues in the country, “but there are obviously people out there who are willing to factor that into their equation and make an assessment on a risk versus return”.
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