A. OVERVIEW OF PUBLIC-PRIVATE SECTOR PARTNERSHIP WITHIN CURRENT BOND MARKET DEVELOPMENT INITIATIVES IN THE REGION

The public and private sectors each have proper roles to play in development. A healthy market economy is normally one where the private sector engages in robust innovation and competition, while the public sector provides sound legal and policy frameworks, regulation and supervision. However, there is much scope for both sectors to enhance each other's effectiveness in playing their respective roles. There are also areas where direct collaboration can be fruitful, such as in infrastructure development. It is in this sense that public-private sector partnership is understood in this report.

The development of bond markets is highly relevant to the Asia-Pacific region's current situation. In a defensive sense, robust bond markets strengthen economies against financial instability. In the offensive sense, they play a crucial role in economic development, meeting the needs of ageing populations, and critical infrastructure financing. Such markets also provide better opportunities to a wide range of private sector market players such as institutional and retail investors, borrowers, intermediaries and other related professionals and service providers.

Experiences of bond market development efforts in East Asia and Latin America, as well as in the broader Asia-Pacific region, illustrate the importance of cooperation between public and private sectors. Policymakers in the Asia-Pacific region are conscious of the need to design financial systems and market infrastructure in cooperation with the private sector, especially global, regional and domestic market players. The involvement of organized private sector-led groups such as ABAC and PECC in APEC initiatives, as well as that of regional industry groupings such as the ABA and ACRAA, is part of this growing cooperation.

Within East Asia, in the context of ABMI, there is a growing realization that public sector priorities must be made to converge with private sector needs, if the initiative is to succeed.

Linking the Pacific Ocean to the Indian Ocean, Southeast Asia has long been an important passage for trade. Hot on the heels of traders were missionaries and proselytizers. The first of world religions to arrive in the region were Hinduism and Buddhism via trade links with India. Indian merchants not only established trading stations along the region but also brought along their religious and cultural influences. Beyond the spiritual, Hinduism and Buddhism have contributed to the development of a written tradition in Southeast Asia. And while Southeast Asian converts have incorporated local features and cultures into Hinduism and Buddhism for a distinct flavour, aspects of their religious life are still observably Indian. By the twelfth century, peoples in what are known today as Myanmar, Thailand, Laos, Cambodia, and Vietnam were converted to Buddhism. In Bali, part of Muslimdominated Indonesia, approximately 90 per cent of the population practise Hinduism.

The year and source of Islamic influence in Southeast Asia is a matter for debate. Some European scholars argue that Islam entered the region upon trade with India, some regional Muslim historians assert that it was imported directly from the Middle East, while other scholars believe that Muslim Chinese introduced it when they traded in the region. Nonetheless, it is generally accepted that Islamic teachers had, by the fifteenth century, established religious schools largely in the Malay Peninsula as well as in parts of Sumatra, Java, Kalimantan, and Mindanao. In the course of time, Islam absorbed many pre-existing Southeast Asian beliefs such as animism. Presently both Malaysia and Indonesia are predominantly Muslim, with the latter the most populous Muslim country in the world.

Christianity was, comparatively speaking, a late arrival to Southeast Asia. Christian missionaries only ventured into the region in significant numbers with the spread of colonialism from the eighteenth century. Failing to penetrate China and Japan, many Christian missionaries settled along Southeast Asia.

Diversity and change are the only constants in Southeast Asia. In a region of approximately 4.5 million square kilometres in size, over 500 million people, one thousand languages, a religious smorgasbord of Animism, Buddhism, Taoism, Hinduism, Islam, and Christianity, the sheer diversity of Southeast Asia defies simple categorization. The region has also been host to a variety of political ideologies from monarchism to colonialism, communism, authoritarianism, and different versions of democracy.

Given this diversity, a stable and distinct Southeast Asian identity remains elusive. The region's identity is very much defined in contrast to other regions than by any specific inherent features or characteristics. As a geographical concept, Southeast Asia is a recent invention. The term only gained popular acceptance from World War II, during which the British used “Southeast Asia” to describe the collection of peninsulas and islands to the south of China and east of India as a particular area of military operation against the Japanese. It was only in the 1950s and 1960s with the wave of anti-colonial and nationalist sentiments sweeping across the region that nation-states — itself very much a modern entity — emerged. On 8 August 1967, the Association of Southeast Asian Nations (ASEAN) was established in Bangkok. The five original member countries were Indonesia, Malaysia, Philippines, Singapore, and Thailand. Brunei Darussalam joined later, in 1984; Vietnam in 1995; Laos and Myanmar in 1997; and Cambodia in 1999.

There is little doubt that Southeast Asia is undergoing modernization, changing not only the way Southeast Asians live but also the way they see themselves. The extent of modernization, however, varies from country to country. It is thus important not to think of modernization as a static concept but as an uneven process that societies undergo. This book seeks to capture the main debates surrounding certain issues that are affected by, and in turn influencing, the modernization processes in Southeast Asia. It is not intended to serve as a comprehensive examination of the complex and multifarious processes of modernization; rather, it offers itself as an introductory, and hopefully critical, approach to selected issues.

The modernization of societies depends on their ability to create new institutions, exploit advanced technologies, master their environment, and adapt their patterns of behaviour for common goals. Conventional wisdom has it that education, by improving the capabilities of individuals and institutions, plays a key role in the modernization process. Education serves as a catalyst for economic, social, and political development, all of which contribute to overall national development. Nonetheless, precisely how education, as a causal agent, triggers economic growth continues to be a matter for debate among researchers. On the one hand, numerous studies suggest that education is strongly linked to economic productivity, technological advancement, higher individual income, lowering of poverty levels, gender equality, greater awareness of citizenry responsibilities, and the general elevation of quality of life. Education also breaks cultural barriers by connecting societies to the rest of the world through the common languages of mathematics, science and technology, and ideologies.

On the other hand, there are counter-studies that suggest that education may have negative consequences. Uneven access to education, for example, leads to an education system that may perpetuate and legitimize divisions based on ethnicity, gender, or economic status. If a certain ethnic group or class is found to be over-represented in higher education at the expense of others, it may lead to a polarization of society, with ethnically heterogeneous societies being the most vulnerable. Another popular criticism of education is its heavy reliance on Western information, technologies, pedagogy, and philosophies. This is especially evident in higher education such as colleges or universities, and if left unchecked, will make younger generations more susceptible to Western or global culture and may be responsible for weakening their cultural roots and traditional values. One economic criticism is that poverty-stricken families may begin by borrowing heavily to send their children to universities in the hope of giving them the means to a better life. However, when job scarcity becomes chronic, these families sink deeper into debt, thus creating a downward spiral.

Flipping through a popular news magazine recently, I came across two glossy images of Southeast Asia. The first was a beautifully composed photograph of weather-beaten Thai farmers in oversized straw hats bending over terraced rice fields. The second image was a close-up snapshot, washed in a fashionable blue tint, of an urban Chinese professional in a sharp business suit barking into his mobile phone as he navigated the metropolitan city. While close to caricature, these two contrasting images capture several truths about the region.

Firstly, the region's history of uneven economic development has resulted in extremes. In the city the rich are never too far from the poor while throbbing cities are never too far from half-empty dusty villages. Secondly, from Philippines to Indonesia to Thailand to Singapore the experience of modernization is a subjective one. Southeast Asia's modernization experience has been informed by the cultural, religious, and political facets of its many national constituents. Islam, semi-democratic, and authoritarian states, ethnic interests, and cultural values all influence the way modernization is conceived as well as the perception of promises and threats it holds for society at large. Thirdly, the two images underline not only the close geographical but also psychological and normative proximity between the old and the new, between the rural and the urban, between tradition and modernity in Southeast Asia. The lifestyles and values of many Southeast Asians are neither anchored completely in the rural or the traditional nor do they unfold exclusively in the urban or modern. The Southeast Asian must learn to negotiate different conceptual worlds from the religious, the ethnic, and the cultural to the professional, the cosmopolitan, and the global. Given these unique political, social, and cultural conditions, will a Southeast Asian modernity emerge?

A SOUTHEAST ASIAN MODERNITY?

One major question concerning many Southeast Asian intellectuals and thinkers is: can Southeast Asia ever become modern on its own terms?

Modernization has had major influences on two sources of identity in Southeast Asia — citizenship and ethnicity. Although ethnic groupings precede citizenship as a source of identity, the birth of the nation-state has linked both of them together with different consequences. This chapter is not a comprehensive discussion of the development and specificities of citizenship and ethnicity but, instead, seeks to highlight the main challenges faced by these two communities brought about by the reduction of distance and permeation of boundaries in the age of globalization. Two particular issues are addressed here: firstly, the ways in which these communities and identities are challenged by globalization, and secondly, how they are responding.

CITIZENSHIP: RIGHTS, DUTIES, AND BELONGING

Citizenship is fundamentally a European invention and is generally underpinned by two principles. Firstly, citizenship entitles one to uniform national rights, an idea alien to pre- modern societies where slaves and serfs enjoyed no such privilege. British sociologist T.H. Marshall defined three basic rights of citizenship. “Civil rights” protect the rights of the individual to free speech and faith, ownership of property, and justice. “Political rights” are concerned with the right to direct or indirect political participation, while “social rights” entitle the citizen to economic welfare, security, and acceptable standards of living. This has been described as a liberal individualist notion of citizenship as defined under the welfare state.

Secondly, citizenship binds one to a social contract with the state where, in return for the protection of rights, one is expected to fulfil certain duties such as the paying of taxes, obeying the laws of the land, or conscription. This has been described as a civic republican notion of citizenship where the emphasis of citizenship is not on individual rights, but on a shared commitment to a common endeavour for the collective good of society. The emphasis of either principle varies from society to society.

According to modernization theory, economic growth paves the way for the development of a middle class from which universalism and democracy will engender. Based on the Western European experience, this theory sees modernization and democracy as two sides of the same coin. Unlike in Western Europe, however, the fledgling Southeast Asian middle classes are largely the result of state-centred capitalist economic development. It is argued that a middle class created under such conditions is generally beholden, even compliant, to the state, lacking the instinctive desire for democratization as historically demonstrated by its European counterpart.

To be sure, the emergence of the Southeast Asian middle class is not a uniform one. There were, generally speaking, three waves of regional economic development responsible for its emergence. The first wave of economic development, from the 1950s to the 1970s, occurred in Japan, resulting in a Japanese middle class by the mid-1970s. The second economic wave, from the 1960s to the 1980s, swept Hong Kong, Taiwan, South Korea, and Singapore (popularly known as the “Asian Tigers”) to the higher ground of middle-class comforts. Malaysia, Thailand, Indonesia and, to a certain degree, the Philippines caught the third wave of economic development from the mid-1980s to the mid-1990s (ending abruptly with the 1997 Asian financial crisis); and saw a middle class emergence in their respective countries in the short span of one or two generations. These waves of economic development, enthusiastically encouraged by governments, were the result of economic globalization, increased foreign direct investment (FDI), the region's cheaper labour and abundance of raw materials, and later, banking and portfolio investment liberalization. All these combined to effectively integrate Southeast Asia deeper into the world economy.

Along with economic development and a broadening middle class come changes in buying and spending patterns — or mass consumption. Greater disposable income and more leisure time, together with the influx of imported products, have created an insatiable demand for consumer goods such as cars, washing machines, refrigerators, personal computers, television sets, mobile phones, and trendy street apparel in many of the capitals in Southeast Asia. The ubiquity of global brands like Nike, SONY, McDonalds, Toshiba, GAP, DKNY, Levis in highly populated urban centres has also made material consumption more conspicuous than ever before.

One fundamental trend of modernization is capitalism's ability to turn a society of diverse cultures and ethnic groups into a society of consumers. Mass consumption not only indicates the rising income levels of a consumer society, but its patterns also provide a vivid picture of the society's desires, values, and fantasies. In other words, the things people buy, the reason they buy them, and what these things mean to them, tell us about the character of a modern consumer society.

When one speaks of modernization, one usually refers to physical change such as the springing up of new buildings, roads, transportation system, and the introduction of machines and new technologies into daily life. In this sense, modernization can be seen as the industrial progress of society, conventionally signifying the material transition of a developing society to a developed one. The modernization of society has European origins. The Industrial Revolution of Britain, usually dated from 1760 to 1850, resulted in numerous technological innovations like the steam engine, the combustion engine, the spinning mule, as well as the expansion of railroads, to increase efficiency in product output and delivery. The modernization of Southeast Asia, a twentieth century phenomenon, has taken place in an era of globalization and global capital, both of which have been key factors that have shaped the development of the region.

ECONOMIC DEVELOPMENT OF SOUTHEAST ASIA

Asia's economic development in the twentieth century came in three waves. The first regional economic wave began in Japan from the mid-1950s to the early 1970s. This led to the regionalization of Japanese capital, which helped engender the second wave. The second regional economic wave swept through Hong Kong, Taiwan, South Korea, and Singapore — collectively known as the “Asian Tigers” — from the mid-1960s to the 1980s. The third regional economic wave took place from the 1980s to the mid-1990s and included Indonesia, Thailand, Malaysia and, to a lesser extent, the Philippines — popularly known as the “Asian Dragons”.

Cheaper labour, raw goods, and lower business costs offered by Southeast Asian countries were key factors in attracting global capital. For Indonesia and Malaysia, both oil- and gas-producing nations, the oil bonanza helped sustain their early development policies while Singapore leveraged heavily on its electronics industry. Thailand's abundance of staple crops and agricultural industry was a major contributor to its growth. Meanwhile, the manufacturing industry played a key role in all Southeast Asian countries. This combination of high-performing industries, complemented by global demand, resulted in the “Asian miracle” that was, in turn, perpetuated by undervalued currencies pegged to the US dollar and became the catalyst for industrialization.

From moral order to individual right

Subsistence need carries the moral authority of the community. Because it carries this authority, subsistence need has power over the member, the power to determine what the member needs and how that need will be satisfied. The community's power over its members carries with it an obligation to assure, so far as possible, that the member's needs, which are also the community's needs, are satisfied. The member has his or her obligation to do work of a particular kind and, more generally, to perform his or her designated function. And the community has its obligation to assure, so far as possible, the livelihood of its members. In a world where the community no longer carries the moral authority to determine need and how need is satisfied, what replaces the community's moral authority and the system of mutual obligation that goes with it is the ideal of individual right. The growing hegemony of this ideal has the most far-reaching implications for the theory of need and the idea of poverty. To see where the ideal of right takes the theory of need, we will first consider that ideal more closely.

The language of right links conduct to volition. In a moral order, conduct is determined by external imperatives. In a system of individual rights, conduct originates in individual will.

The facilitating environment and the normative order

In this book, we treat poverty as the lack of something vital in living. We consider this something vital the capacity and opportunity to make doing the expression of being. The availability of the capacity depends on a number of factors, the most important of which fall into the category Winnicott refers to as a “facilitating environment.” In concluding, we would like to explore this dimension of the problem in a preliminary way to indicate what our concept of poverty might imply for policy and institutions.

The literature directly concerned with the facilitating environment tends to conceive it narrowly as the environment in the family, and especially the relationships that shape early emotional development. If we were to summarize the issue at this level, the main elements would be (1) the conception of the emerging person held in the mind of the parent, especially whether that conception is animated by the principle of the “freedom of opportunities yet undetermined” as Erikson terms it, and (2) the provision of a setting in which it is safe to make doing an expression of being so that it is possible for self-development to occur.

We can make our main point in the following way. The parent relates to the infant or young child in a specific way, shaping a relationship that has a specific meaning into which the infant or young child fits. We can divide the modes of relating into two groups.

In this chapter, we explore three examples of how thinking about poverty and unemployment shapes poverty policy. The link forged by the Puritans between personal character and fortune has been particularly influential in shaping poverty policy. Recent and contemporary accounts of poverty often revert to the formula that character is all, circumstances nothing, while other, opposed, accounts formulate the issue in the same framework, simply reversing the causality favored by the Puritans and insisting that circumstance is all and character has nothing to do with the problem. This view, in its more recent formulations, has required that we find ways to measure poverty so that we can gauge the effectiveness of poverty initiatives, the second topic of the chapter. We begin with the problem of unemployment and suggest that the way we understand the causes of unemployment affects who we judge to be responsible and what measures for alleviating poverty are seen as appropriate. We end by considering the idea of individual responsibility and its implications for thinking about poverty policy.

Self-correcting and crisis prone markets

England's New Poor Law of 1834 responded to the concern that poor relief leads to withdrawal from the labor market and encourages idleness. We see the same concern in the last quarter of the twentieth century in the idea that welfare payments would encourage people to remain outside of the workforce.