INTRODUCTION

Recent empirical studies have shown that exports from the developing countries are not wholly dependent on the growth and trade policies of the industrialized countries. Since 1973, trade among the developing countries has shown an increasing trend. With the recent accent on collective self-reliance in the “South”, an attempt has been made in this study to put together the existing empirical evidence to measure the strength of economic relations between Indonesia and South Asia. More specifically, the survey has been carried out in the broader perspective of economic relationships by examining the flows of capital and services between Indonesia and South Asia as well as the flows of commodity trade. Throughout the study, time series data covering the period from 1970/71 to 1979 have been used. These data were predominantly collected from Indonesian sources, as the study concerns Indonesia's economic relationships with South Asia.

The following section briefly describes the general characteristics and the overall growth performance of the economies of Indonesia and South Asia. The rate of growth of gross domestic product (GDP) in constant prices has been used as a measure of overall performance. The second section measures the strength of economic ties between Indonesia and South Asia in terms of commodity trade. These links are examined by calculating the export intensity index, import intensity index, and Grubel-Lloyd index. The third section reviews the trend of capital flow between Indonesia and South Asia in terms of investment and joint ventures. The following section describes the links between Indonesia and South Asia in terms of the movement of people as tourists, and other cultural and social organizations. The last section brings together the summaries of the earlier sections and suggestions for further strengthening the economic relations between Indonesia and South Asia.

It may be worthwhile to begin the discussion with some salient economic features of Indonesia and South Asia. Until recently, the World Bank had classified Indonesia, Bangladesh, India, Nepal, Pakistan, and Sri Lanka as low-income developing countries with per capita gross national product (GNP) of US$370 or below in 1979.

INTRODUCTION

A joint venture, or more specifically, a joint international business venture is a vehicle through which a less developed country such as Bangladesh can import capital, equipment, technology and managerial skills. The central concept of a joint venture is partnership for mutual benefits. Joint ventures are primarily based on equity shares. But there are non-equity joint ventures also. The latter type includes arrangements for the provision of technical services, franchise and brand-use agreements, construction and other job-performance contracts, licensing or rental arrangements and sharing marketing or management responsibility. In many cases, equity joint ventures also involve formal arrangements (in addition to equity) for the provision of some of the services just mentioned.

This study attempts to outline the past performance and present state of joint ventures in Bangladesh, particularly those between Bangladesh and the countries of the Association of Southeast Asian Nations (ASEAN). It also examines the related problems and prospects. It is to be noted that not all possible kinds of collaboration are covered in this study; only joint ventures with equity participation are included. Collaboration achieved by what are generally called “aided projects” through the provision of credit, grants and/or technical services is not dealt with. Non-equity joint venture collaborations, such as licensing, management contract, and so forth, are occasionally referred to with a view to elaborating a particular aspect of analysis. Investment collaboration between Bangladesh and other countries is discussed only to present a comparative position of the ASEAN countries.

Like most of the studies of this nature, a performance evaluation is seriously handicapped by the non-availability of relevant data. The analytical design is influenced by data constraints. Given this limitation, this study attempts to “measure the performance” of joint venture collaboration in Bangladesh mainly with reference to the number of ventures and countries/regions involved within sectors/subsectors.

Primary data and information were collected through personal interviews with officials of the Planning Commission and Directorate of Industries, Government of the People's Republic of Bangladesh, the public sector corporations, banks, multinational companies, and other private firms involved. Data and information available from secondary sources were also used.

Introduction

So far this paper has concentrated on the ASEAN perspective to fleet development and the control of shipping. However, there are lessons to be learned from a step backwards to look at this issue from a more global perspective. Governments in the developed world view shipping policies differently than the ASEAN countries, although they may implement similar legislation to promote shipping investment. They also view with trepidation some of the means by which national control of shipping is being promoted by developing countries. This chapter intends to look at these differences and similarities, pointing to possible future directions to be considered by countries wishing to develop or sustain their participation in shipping.

Shipping Policies in the “First World”

Although this paper has tended to talk about the developed countries as only being suppliers of shipping services, that is not entirely true. Traditional shipowning nations do not include countries like Canada, Australia, New Zealand and South Africa, who are developed countries but currently follow a “user” orientation. In this sense they may have more in common with developing countries in terms of their dependence on foreign shipping. Both Canada and Australia have set up task forces to re-examine current shipping policies in 1983 and 1984 respectively. Whether their policies will reflect new, more “developing nation” attitudes towards foreign control remains to be seen.

The traditional shipowning nations are facing difficult times. Their share of the market is gradually diminishing. A glance at Exhibit 8.1 indicates that Japan, the United Kingdom, the United States and West Germany have all experienced a decline in their share of the world fleet. A loss of share when accompanied by today's stagnating market means a loss of employment opportunities for nationals. Numerous articles have moaned about the sad state of employment for U.K. seafarers, where the number of seafarers employed has been more than halved over the last twenty-five to thirty years.

International shipping, for the ASEAN countries, has been dominated for years by companies headquartered in the developed world, largely due to the colonial status held by many of the ASEAN countries until recent years. Dutch control of shipping in and around the Dutch East Indies, now Indonesia, was not severed until after World War II. Malaysia did not achieve independence from Britain until 1957 and, although the State of Singapore came into being in June 1959, Singapore did not gain complete independence from Britain until 1965. Although Thailand was never colonized, it has never had a strong fleet of its own and so has been at the mercy of foreign shipowners. Of all these countries, the Philippines was in the best position; it won independence from the United States in 1946 and had a strong private sector in domestic shipping and a steadily growing national flag fleet throughout the 1950s and 1960s.

The efforts of the ASEAN nations to gain greater control over international shipping are based on the desire to create a New International Economic Order. They see the benefits which accrue to the carrier, for example, foreign exchange generation, employment for nationals, and the development of spin-off industries, and believe that those benefits should accrue in some measure to the cargo generator.

The last five chapters have discussed, on a country-by-country basis, the success or failure of the individual ASEAN countries to achieve an increased presence in the shipping industry. Umbrella organizations, such as Thailand's Office of the Mercantile Marine Promotion Commission, have been established to develop co-ordinated shipping policies; Indonesia and the Philippines have given the Directorate of Sea Communications and MARINA, respectively, similar mandates. Neither Singapore nor Malaysia have developed such government machinery but have made gains through other means.

Regional shipping was one operational area, overlooked by the traditional European shipowning companies, that has been profitably exploited by local entrepreneurs. Regional shipping is a “bread-and-butter” activity for NOL and supports many smaller ASEAN companies as well. Some Singaporean shipowners still operate their aging general cargo vessels, mostly tweendeckers, on regional trade routes.

What is the actual and potential contribution of small and medium entrepreneurs in South and Southeast Asia to social and economic development in their countries? Which influences encourage or hinder their contributions to development? These two central questions will be investigated in the light of the activities of small and medium enterprises; in this investigation, observations relating to Asian developing countries (DCs) in general will be supplemented by an examination of the experiences gained in Indonesia and Malaysia in particular.

The study is divided into three main sections:

– Identification of the contribution towards development Assuming that the aims of the development to which the small and medium enterprises could contribute are known, the extent to which they participate in the achievement of those aims can be empirically established and described in detail.

– Determination of the factors restricting and promoting entrepreneurial contributions to development Areas of influence will be circumscribed, particularly those which hinder or promote the activities of enterprises in realizing the stated aims of development.

– Recommendations for improving the contribution towards development

Suggestions will be put forward on how the contribution to development made by small and medium entrepreneurs can be rendered more effective, with, special emphasis being placed on the possibilities of promotion by non-governmental institutions.

The investigation is confined to the manufacturing sector in view of the outstanding importance of this sector in the economic policy of developing countries. The two central questions raised will be answered with regard to this sector by way of example. The numerous and important contributions to development made by small and medium enterprises operating in the service sector (particularly in commerce and repairs enterprises), in the construction industry, and in the transport sector are not included within the scope of this study.

It is possible to define the small and medium enterprise sector within the manufacturing industry in both quantitative and qualitative terms.

The concrete contribution towards development made by a small or medium enterprise is the product of an intricate combination of a) behaviour patterns and the associated attitude and knowledge of the entrepreneur; and b) incentives or obstacles which give rise to a particular behaviour pattern.

Attitude and behaviour are generally not changeable in the short term. They are formed by upbringing and education and the cultural system in the broadest sense (and are also conditioned by personal disposition), and become ingrained over a period of many months or years. Economic incentives and restraints, on the other hand, can frequently be changed in the short term (for example, in a few days or weeks), according to their scope and intensity. However, positive incentives or the removal of restraints can only lead to a particular change in behaviour pattern if this change is in any case consistent with the general attitude of the entrepreneur.

In trying to explain why the actual contribution made by small and medium enterprises to social and economic development and social welfare sometimes meets and sometimes falls below expectations, it is practical to divide these promotional and inhibitive factors into two broad categories: environmental factors (external to the enterprise); and corporate, or internal factors.

From the environmental viewpoint, one can see the kind of climate in which the small and medium enterprise operates. We are not examining the cultural and social environment, but are particularly concerned with influences exerted by the area of decision-making controlled by the state, since general economic conditions and the development policy adopted exert a very strong impact on the behaviour of the small and medium enterprise. Moreover, we shall address ourselves to the influence of factors of location, commodity market conditions, and the contribution of self-help organizations to economic life.

Examination from the internal, corporate point of view is intended to shed light on the factors within the enterprise which affect the extent and quality of its development contributions.

One part of the hypothesis proposed in the preceding chapter is that different levels of structural transformation generate differing requirements for capital accumulation. To give substance to this proposition we shall, first, look at the process of structural transformation taking place in the ASEAN countries, and then examine the policies on capital accumulation and industrialization pursued by the governments of these countries to bring about the changes. Following upon this, we shall put together some relevant information on the labour market situations in these ASEAN countries. It is desirable because changes in the structure of output are assumed to bring about changes in the structure of employment as well. This will, then, set the stage for testing the second part of the hypothesis proposed in the preceding chapter, that different patterns of industrial relations emerge at different levels of structural transformation, as the economies and labour markets are the important environmental factors for the development of an industrial relations system.

The ASEAN Economies

From the point of view of economic growth, the ASEAN countries were among the best performers in the decade of the 1960s. Their growth performance was spectacular in the decade of the 1970s as well. The growth rate of the real gross domestic product (GDP) of the ASEAN countries as a whole was 5.3 per cent per annum in the 1960s. It jumped to 7.3 per cent per annum in the 1970s. This is remarkable, especially in view of the fact that the growth rates of GDP decelerated from an average of 5.9 per cent per annum in the 1960s to an average of 5.6 per cent per annum in the middle-income countries in the 1970s. The corresponding rates for the industrialized countries were 5.2 per cent per annum in the 1960s and 3.2 per cent per annum in the 1970s. Moreover, we should not forget that the world economy was sluggish in the 1970s due to the recession, and the ASEAN economies, against this odd, grew faster then than in the 1960s.

Inter-country variations in the rates of growth of GDP are also noticeable.