It is now about one and a half years since the start of the so called “Asian Economic Crisis” that started with the collapse of the Thai Baht. The currencies of many Asian countries (Thailand, South Korea, Indonesia, Malaysia etc.) have dropped by up to 60% against the US dollar within a few months. Some experts recently warned that this crisis threatens to be the biggest financial crisis the world has ever seen since the Great Depression of the 1930s that culminated in the 2nd World War. Although it seems that way only recently, it wasn’t the case when it first started and was isolated only to the Asian countries.
The quick & sharp collapses were due to huge capital flight whereby investors, creditors and even locals were taking their money out of the countries. The real cause as explained by many including the IMF to which many Asian governments went to for financial assistance is that it was the result of easy credit given by banks and creditors to locals, bad management especially of the financial system by governments and “cronyism, corruption and nepotism”. The only way out of it is to let ‘bad’ companies fail and do away with bad government practices like corruption etc.
The result of these austere & tough measures was the fall of governments in Korea, Thailand and Indonesia. A lot of companies went bankrupt. Many people lost their jobs and have to default on loans and sell their properties. There were cases where 1 year old Proton Wira cars in Malaysia being disposed of by finance companies at RM25,000 each when they used to sell at RM45,000 just a few months ago. It is probably worthwhile to note here that a Wira car is really worth about USD10,000 in the US – a Japanese equivalent is worth about USD13,000 to 15,000. So we can also say that the Malaysian economy is not ‘real’ due to various governmental measures (cronyism included) to make sure the Wira manufacturer makes money! Using the price of the Wira car to determine purchasing power parity, we can say that the Ringgit to USD exchange rate should have been about 4.5. But the prevailing rate before crisis was only about 2.4. The same disparity can be observed about many big-ticket items like housing - exception is basic foods.
There were a lot of riots in Indonesia where average income for most of the people is less than 100,000 Rupiah per month. Before the crisis when the exchange rate is about Rupiah 3,000 to a US Dollar, salary is about USD 35 – very low even at that time. At its worst, the Rupiah exchange rate was 15,000 to 1 USD. That means salary was only about USD8 a month. (See also attached e-mail I sent to colleagues about the Indonesian riots.)
In terms of governmental reaction to the problem, Malaysia was the odd country out among those most affected (the Ringgit to USD exchange rate fell from about 2.3 to about 4.0). Prime Minister Mahathir Mohammad of Malaysia insisted that the problem is due to ‘attacks’ by speculators and hedge funds out to make quick money. According to him, it is a planned assault intended to impoverish the developing countries. And when the currencies are low and assets cheap (which was what happened), the rich countries will buy up the local companies (which also happened). To him it is another way for western countries to re-colonise the developing countries. It should also be noted that it is also true that many companies in Malaysia are in very bad state and will collapse if not helped. And many are owned by people related to or are friends of politicians. Malaysia refused to approach the IMF for help and insisted that local companies should be helped to survive the crisis instead of being left to fail. That was certainly not the view of many people including those in the IMF and, according to Mahathir, the US and Western governments. For them the IMF approach was the right way.
I also remember very clearly that a few months after the onset of the problem (around Qtr 4 1997) an e-mail sent out by the then head of JP Morgan Asia, Peter Woicke (by now the head of the International Finance Committee of the World Bank). JP Morgan (as were all other major financial institutions) at that point in time was reeling from the bankruptcies and loan defaults happening in Asia, and of course had some losses. (The financial crisis was then only restricted to Asia). In the e-mail Peter Woicke reminded the Asian staff about the need to be more ‘thorough’ when reviewing credits and essentially admonished the Asian staff for being taken in and blinded by the over-optimism of the ‘Asian miracle’. At that point, I thought he was probably right since he is a senior banker of a top financial institution, I did not know much about the guys doing credit reviews and I know for sure there were a lot of cronyism and corruption in countries like Indonesia and Malaysia.
However, things didn’t quite look that way towards the end of 1998. By October 98, the crisis has spread to Russia (largest economy in Eastern Europe) and Brazil (largest economy in South America). The Russian Ruble collapsed and caused the almost collapse of a large American hedge fund called LTCM (Long Term Capital Management). LTCM did not collapse because the US Federal Reserve got LTCM’s creditors (big Western banks) together to ‘solve the problem’. The banks extended more credit to LTCM so that it can cover its current debts while buying time so that its investments can be ‘disposed off in an orderly manner’. Analysts think that if LTCM was left to default in its debt and go into immediate bankruptcy, the sudden liquidation of LTCM’s positions would cause prices to swing so significantly that it would have resulted in a collapse of the global financial system. That gives an indication of the size of positions that LTCM and other hedge funds were holding. A corporate announcement by the management of JP Morgan said then that the ‘exercise was a private sector response to a private sector problem’. Malaysia’s PM took the opportunity to highlight the different ‘standards’ followed by the western governments. In this case, the US government was quick to step in to help resolve the situation quickly and bad management in LTCM did not matter much. In the Asian cases, governments trying to do the same are seen as supporting their cronies.
The LTCM problem arose because it was given huge credits to make ‘investments’ that finally lost money. With a few billion dollars of capital they were given 40 times that in credit and took positions with total size of more than a trillion dollar! So, while banks have to maintain capital ratio of 8% and countries generally keep reserves of 7%, LTCM was only required to keep 2% capital for their borrowings! That happened because banks had little information about total credit given to hedge funds by other banks, and hedge funds were seen to be almost risk-free. They were making huge profits for themselves as well as the banks and everyone was happy (until now). LTCM is still under receivership and run its creditors.
The truth in the case of LTCM is that there are significant deficiencies in the global financial system. One is the eagerness of banks to lend to hedge funds thinking they will always make profits for themselves and their creditors (the banks). The other is the lack of regulatory control over hedge funds that are setup in small countries like Bermuda where there are little control over them and other governments have no jurisdiction. The hedge funds have been making full use of these deficiencies to make large bets on investments and countries etc. They also have the advantage of being able to go to all the major banks to borrow money, determine all the current thinking of their bankers and to execute their market movements. They therefore know about what the banks themselves and their other clients are doing much better than everyone else! This was actually noted by bankers familiar with hedge funds.
The potential global financial problem that would have been created by LTCM was ‘wrapped up’ by the major banks involved who said that it was a ‘private sector problem’. To say otherwise would damage the reputation of these banks that have been trying for many years to convince regulators that they can ‘self regulate’ themselves and close the window on them on potential profits arising from the activities of the hedge funds. As banks make huge profits by executing trades on behalf of the hedge funds as well as from the volatility created by uncertainties created by hedge fund trading, it is possible to understand the banks’ interest in maintaining the present system. For example, the biggest source of revenue from the business group that I work for (futures and options brokerage) is from hedge funds trading in exchanges around the world!
Professor Paul Krugman, a noted economics professor of MIT, reported that he was told by Australian government officials that hedge funds actually told them that they were attacking a number of Asian, Eastern European and African currencies and Australia was just a small part in the ‘game plan’.
I think it is probably right to dispose of LTCM’s investments over time. Except that if that’s the case, may be it is also the right approach to address the sudden affliction that hit Asia. And it clearly made me think about what Mr Peter Woicke would have said to his staff if he is still around in JP Morgan Asia. Like people like Professor Krugman said, it is time to rethink conventional wisdom and the crisis can and should be ‘managed’. Malaysia has since introduced capital controls and fixed the USD exchange rate to 4.0.
See also attached articles written by Professor Krugman :
- what hedge funds did during the 1997 Asian Financial Crisis
- what sustainable economic growth is versus one-time improvement (written in 1994, 3 years before the Asian economic crisis)
I KNOW WHAT THE HEDGES DID LAST SUMMER
(Paul Krugman July 1998)
In spite of Gillian Anderson, I'm not much of a fan of the X-files, or of conspiracy theories in general. I've seen some of the world's movers and shakers up close, and they seem a lot like the rest of us - that is, most of the time they haven't got a clue, and fly by the seat of their (well-tailored) pants. Anyway, as an economics professor I am by nature inclined to the view that the truth isn't out there, it's in here - that usually you learn a lot more by thinking really hard about the data than you do by sniffing around for supposedly inside information.
Yet conspiracies do sometimes happen. George Soros really did stage a run on the pound back in 1992; Sumitomo's Yasuo Hamanaka really did rig the world copper market for a couple of years; and a cabal of hedge funds apparently did try a squeeze play on Hong Kong's currency and stock market last August. I've even heard a rumor that some guy in Seattle has been trying to take over the ... (That's funny: my computer keyboard froze when I tried to finish that sentence). But no conspiracy could be big or smart enough to play games with the whole world financial market.
Or could it? On a recent visit to Australia I had a fairly spooky conversation with some government officials. Australia, in case you didn't know, is the miracle economy of the world financial crisis. Even though most of its exports go either to Japan or to the stricken tigers, Australia has managed to ride out the storm so far without even a serious slowdown. The key to this resilience has been a policy of benign neglect toward the exchange rate: instead of raising interest rates to defend the Aussie dollar, the central bank allowed the currency to slide from almost 80 U.S. cents in early 1997 to the low 60s by the summer of 1998. The result was that while export prices plunged in U.S. dollars, they held up in local currency, and strong domestic demand kept the economy humming.
Luckily, financial markets apparently decided that the decline in the Aussie dollar - unlike, say, the decline of the Indonesian rupiah - represented a buying opportunity rather than a foretaste of things to come. As a result, the currency stabilized itself instead of going into free fall. But there have been some anxious moments. In late August, in particular, it began to look as if the Aussie dollar was going into free fall after all: day after day it fell, reaching a low of barely 56 cents. If it had kept on falling, the Reserve Bank might have had to raise interest rates after all.
What was all that about? Well, the officials I talked to confirmed what I had guessed: a lot of the plunge had to do with hedge funds shorting the currency. But what I didn't know was that some people from the hedge funds actually told the Australians, in effect, that resistance was futile - that they were only a small piece of a coordinated play against Australia, New Zealand, South Africa, and Canada - not to mention Hong Kong, Japan, and China.
Was this just boasting? There is no question that last summer a number of hedge funds did, in fact, bet on the proposition that a lot of dominoes were about to start falling: that the yen was going to plunge, dragging down the HK dollar and the renminbi with it, or vice versa, and that the currencies of commodity-exporting countries like Canada and Australia would get dragged down by the backwash. It is less certain whether the hedge funds were actually the dominant source of speculation against the potential dominoes. And whether they acted collusively is hard, perhaps even impossible to know: if there was collusion, it could have been tacit, a matter of carefully phrased generalities uttered over a bottle or two of expensive wine.
Of course, if there was a conspiracy, it failed. In fact, if you wanted to make up a supposed secret history of world financial markets over the past 6 months, it would go like this: during the summer a few big hedge players - let's call them the Relativity Fund and the Pussycat Fund - agreed to stage a run on Asia plus. They acquired huge sums of cash by borrowing in yen, shorting Hong Kong stocks, getting Australian credit lines, etc.; then they began ostentatiously selling all of the target currencies, spreading rumors about imminent Chinese devaluation, and so on. Meanwhile they put the borrowed money into various high-yielding assets, including things like U.S. corporate bonds and mortgage-backed securities, and also some risker things like Russian GKOs. But somehow it all went wrong: Hong Kong refused to play by the rules, then Russia fell apart, and investors around the world got more risk averse. Suddenly the funds found some of their credit lines pulled. And since they had become such gigantic players, this started a sort of cascade of margin calls: for example, as Pussycat began to unwind its yen shorts it drove up the value of the yen, causing losses that forced it to unwind even more. And correspondingly, of course, the assets the funds had been buying - like non-investment grade dollar bonds - plunged in value.
In short, all the strange things that have happened these last few months - including the bizarre run up in the yen and the mysterious near-collapse of U.S. financial markets - are, according to this story, the byproduct of the ravelling and unravelling of a vast get-rich-quick scheme by a handful of shadowy financial operators.
How seriously do I take this? The story does seem kind of out there; but it just might turn out to be the truth.
The Myth of Asia's Miracle by Paul Krugman, 1994
A CAUTIONARY FABLE
ONCE UPON a time, Western opinion leaders found themselves both impressed and frightened by the extraordinary growth rates achieved by a set of Eastern economies. Although those economies were still substantially poorer and smaller than those of the West, the speed with which they had transformed themselves from peasant societies into industrial powerhouses, their continuing ability to achieve growth rates several times higher than the advanced nations, and their increasing ability to challenge or even surpass American and European technology in certain areas seemed to call into question the dominance not only of Western power but of Western ideology. The leaders of those nations did not share our faith in free markets or unlimited civil liberties. They asserted with increasing self confidence that their system was superior: societies that accepted strong, even authoritarian governments and were willing to limit individual liberties in the interest of the common good, take charge of their economics, and sacrifice short-run consumer interests for the sake of long-run growth would eventually outperform the increasingly chaotic societies of the West. And a growing minority of Western intellectuals agreed.
The gap between Western and Eastern economic performance eventually became a political issue. The Democrats recaptured the White House under the leadership of a young, energetic new president who pledged to "get the country moving again"—a pledge that, to him and his closest advisers, meant accelerating America's economic growth to meet the Eastern challenge.
The time, of course, was the early 1960s. The dynamic young president was John F. Kennedy. The technological feats that so alarmed the West were the launch of Sputnik and the early Soviet lead in space. And the rapidly growing Eastern economies were those of the Soviet Union and its satellite nations.
While the growth of communist economics was the subject of innumerable alarmist books and polemical articles in the 1950s, Some economists who looked seriously at the roots of that growth were putting together a picture that differed substantially from most popular assumptions. Communist growth rates were certainly impressive, but not magical. The rapid growth in output could be fully explained by rapid growth in inputs: expansion of employment, increases in education levels, and, above all, massive investment in physical capital. Once those inputs were taken into account, the growth in output was unsurprising--or, to put it differently, the big surprise about Soviet growth was that when closely examined it posed no mystery.
This economic analysis had two crucial implications. First, most of the speculation about the superiority of the communist system including the popular view that Western economics could painlessly accelerate their own growth by borrowing some aspects of that system--was off base. Rapid Soviet economic growth was based entirely on one attribute: the willingness to save, to sacrifice current consumption for the sake of future production. The communist example offered no hint of a free lunch.
Second, the economic analysis of communist countries' growth implied some future limits to their industrial expansion--in other words, implied that a naïve projection of their past growth rates into the future was likely to greatly overstate their real prospects. Economic growth that is based on expansion of inputs, rather than on growth in output per unit of input, is inevitably subject to diminishing returns. It was simply not possible for the Soviet economies to sustain the rates of growth of labor force participation, average education levels, and above all the physical capital stock that had prevailed in previous years. Communist growth would predictably slow down, perhaps drastically.
Can there really be any parallel between the growth of Warsaw Pact nations in the 1950s and the spectacular Asian growth that now preoccupies policy intellectuals? At some levels, of course, the parallel is far-fetched: Singapore in the 1990s does not look much like the Soviet Union in the 1950s, and Singapore's Lee Kuan Yew bears little resemblance to the U.S.S.R.'s Nikita Khrushchev and less to Joseph Stalin. Yet the results of recent economic research into the sources of Pacific Rim growth give the few people who recall the great debate over Soviet growth a strong sense of déjà vu. Now, as then, the contrast between popular hype and realistic prospects, between conventional wisdom and hard numbers, remains so great that sensible economic analysis is not only widely ignored, but when it does get aired, it is usually dismissed as grossly implausible.
Popular enthusiasm about Asia's boom deserves to have some cold water thrown on it. Rapid Asian growth is less of a model for the West than many writers claim, and the future prospects for that growth are more limited than almost anyone now imagines. Any such assault on almost universally held beliefs must, of course, overcome a barrier of incredulity. This article began with a disguised account of the Soviet growth debate of 30 years ago to try to gain a hearing for the proposition that we may be revisiting an old error. We have been here before. The problem with this literary device, however, is that so few people now remember how impressive and terrifying the Soviet empire's economic performance once seemed. Before turning to Asian growth, then, it may be useful to review an important but largely forgotten piece of economic history.
'WE WILL BURY YOU'
LIVING IN a world strewn with the wreckage of the Soviet empire, it is hard for most people to realize that there was a time when the Soviet economy, far from being a byword for the failure of socialism, was one of the wonders of the world--that when Khrushchev pounded his shoe on the U.N. podium and declared, "We will bury you," it was an economic rather than a military boast. It is therefore a shock to browse through, say, issues of Foreign Affairs from the mid 1950s through the early 1960s and discover that at least one article a year dealt with the implications of growing Soviet industrial might.
Illustrative of the tone of discussion was a 1957 article by Calvin B. Hoover. Like many Western economists, Hoover criticized official Soviet statistics, arguing that they exaggerated the true growth rate. Nonetheless, he concluded that Soviet claims of astonishing achievement were fully justified: their economy was achieving a rate of growth "twice as high as that attained by any important capitalistic country over any considerable number of years [and] three times as high as the average annual rate of increase in the United States." He concluded that it was probable that "a collectivist, authoritarian state" was inherently better at achieving economic growth than free-market democracies and projected that the Soviet economy might outstrip that of the United States by the early 1970s.
These views were not considered outlandish at the time. On the contrary, the general image of Soviet central planning was that it might be brutal, and might not do a very good job of providing consumer goods, but that it was very effective at promoting industrial growth. In 1960 Wassily Leontief described the Soviet economy as being "directed with determined ruthless skill"--and did so without supporting argument, confident he was expressing a view shared by his readers.
Yet many economists studying Soviet growth were gradually coming to a very different conclusion. Although they did not dispute the fact of past Soviet growth, they offered a new interpretation of the nature of that growth, one that implied a reconsideration of future Soviet prospects. To understand this reinterpretation, it is necessary to make a brief detour into economic theory to discuss a seemingly abstruse, but in fact intensely practical, concept: growth accounting.
ACCOUNTING FOR THE SOVIET SLOWDOWN
IT IS A TAUTOLOGY that economic expansion represents the sum of two sources of growth. On one side are increases in "inputs": growth in employment, in the education level of workers, and in the stock of physical capital (machines, buildings, roads, and so on). On the other side are increases in the output per unit of input; such increases may result from better management or better economic policy, but in the long run are primarily due to increases in knowledge.
The basic idea of growth accounting is to give life to this formula by calculating explicit measures of both. The accounting can then tell us how much of growth is due to each input--say, capital as opposed to labor--and how much is due to increased efficiency.
We all do a primitive form of growth accounting every time we talk about labor productivity; in so doing we are implicitly distinguishing between the part of overall national growth due to the growth in the supply of labor and the part due to an increase in the value of goods produced by the average worker. Increases in labor productivity, however, are not always caused by the increased efficiency of workers. Labor is only one of a number of inputs; workers may produce more, not because they are better managed or have more technological knowledge, but simply because they have better machinery. A man with a bulldozer can dig a ditch faster than one with only a shovel, but he is not more efficient; he just has more capital to work with. The aim of growth accounting is to produce an index that combines all measurable inputs and to measure the rate of growth of national income relative to that index--to estimate what is known as "total factor productivity."
So far this may seem like a purely academic exercise. As soon as one starts to think in terms of growth accounting, however, one arrives at a crucial insight about the process of economic growth: sustained growth in a nation's per capita income can only occur if there is a rise in output per unit of input.
Mere increases in inputs, without an increase in the efficiency with which those inputs are used--investing in more machinery and infrastructure--must run into diminishing returns; input-driven growth is inevitably limited.
How, then, have today's advanced nations been able to achieve sustained growth in per capita income over the past 150 years? The answer is that technological advances have lead to a continual increase in total factor productivity--a continual rise in national income for each unit of input. In a famous estimate, MIT Professor Robert Solow concluded that technological progress has accounted for 80 percent of the long-term rise in U.S. per capita income, with increased investment in capital explaining only the remaining 20 percent.
When economists began to study the growth of the Soviet economy, they did so using the tools of growth accounting. Of course, Soviet data posed some problems. Not only was it hard to piece together usable estimates of output and input (Raymond Powell, a Yale professor, wrote that the job "in may ways resembled an archaeological dig"), but there were philosophical difficulties as well. In a socialist economy one could hardly measure capital input using market returns, so researchers were forced to impute returns based on those in market economies at similar levels of development. Still, when efforts began, researchers were pretty sure about what they would find. Just as capitalist growth had been based on growth in both inputs and efficiency, with efficiency the main source of rising per capita income, they expected to find that rapid Soviet growth reflected both rapid input growth and rapid growth in efficiency.
But what they actually found was that Soviet growth was based on rapid growth inputs--end of story. The rate of efficiency growth was not only unspectacular, it was well below the rates achieved in Western economies. Indeed, by some estimates, it was virtually nonexistent.
The immense Soviet efforts to mobilize economic resources were hardly news. Stalinist planners had moved millions of workers from farms to cities, pushed millions of women into the labor force and millions of men into longer hours, pursued massive programs of education, and above all plowed an ever-growing proportion of the country's industrial output back into the construction of new factories. Still, the big surprise was that once one had taken the effects of these more or less measurable inputs into account, there was nothing left to explain. The most shocking thing about Soviet growth was its comprehensibility.
This comprehensibility implied two crucial conclusions. First, claims about the superiority of planned over market economies turned out to be based on a misapprehension. If the Soviet economy had a special strength, it was its ability to mobilize resources, not its ability to use them efficiently. It was obvious to everyone that the Soviet Union in 1960 was much less efficient than the United States. The surprise was that it showed no signs of closing the gap.
Second, because input-driven growth is an inherently limited process, Soviet growth was virtually certain to slow down. Long before the slowing of Soviet growth became obvious, it was predicted on the basis of growth accounting. (Economists did not predict the implosion of the Soviet economy a generation later, but that is a whole different problem.)
It's an interesting story and a useful cautionary tale about the dangers of naïve extrapolation of past trends. But is it relevant to the modern world?
PAPER TIGERS
AT FIRST, it is hard to see anything in common between the Asian success stories of recent years and the Soviet Union of three decades ago. Indeed, it is safe to say that the typical business traveler to, say, Singapore, ensconced in one of that city's gleaming hotels, never even thinks of any parallel to its roach-infested counterparts in Moscow. How can the slick exuberance of the Asian boom be compared with the Soviet Union's grim drive to industrialize?
And yet there are surprising similarities. The newly industrializing countries of Asia, like the Soviet Union of the 1950s, have achieved rapid growth in large part through an astonishing mobilization of resources. Once one accounts for the role of rapidly growing inputs in these countries' growth, one finds little left to explain, Asian growth, like that of the Soviet Union in its high-growth era, seems to be driven by extraordinary growth in inputs like labor and capital rather than by gains in efficiency.
Consider, in particular, the case of Singapore. Between 1966 and 1990, the Singaporean economy grew a remarkable 8.5 percent per annum, three times as fast as the United States; per capita income grew at a 6.6 percent rate, roughly doubling every decade. This achievement seems to be a kind of economic miracle. But the miracle turns out to have been based on perspiration rather than inspiration: Singapore grew through a mobilization of resources that would have done Stalin proud. The employed share of the population surged from 27 to 51 percent. The educational standards of that work force were dramatically upgraded: while in 1966 more than half the workers had no formal education at all, by 1990 two-thirds had completed secondary education. Above all, the country had made an awesome investment in physical capital: investment as a share of output rose from 11 to more than 40 percent.
Even without going through the formal exercise of growth accounting, these numbers should make it obvious that Singapore's growth has been based largely on one-time changes in behavior that cannot be repeated. Over the past generation the percentage of people employed has almost doubled; it cannot double again. A half-educated work force has been replaced by one in which the bulk of workers has high school diplomas; it is unlikely that a generation from now most Singaporeans will have Ph.D's. And an investment share of 40 percent is amazingly high by any standard; a share of 7O percent would be ridiculous. So one can immediately conclude that Singapore is unlikely to achieve future growth rates comparable to those of the past.
But it is only when one actually does the quantitative accounting that the astonishing result emerges: all of Singapore's growth can be explained by increases in measured inputs. There is no sign at all of increased efficiency. In this sense, the growth of Lee Kuan Yew's Singapore is an economic twin of the growth of Stalin's Soviet Union growth achieved purely through mobilization of resources. Of course, Singapore today is far more prosperous than the U.S.S.R. ever was--even at its peak in the Brezhnev years--because Singapore is closer to, though still below, the efficiency of Western economies. The point, however, is that Singapore's economy has always been relatively efficient; it just used to be starved of capital and educated workers.
Singapore's case is admittedly, the most extreme. Other rapidly growing East Asian economics have not increased their labor force participation as much, made such dramatic improvements in educational levels, or raised investment rates quite as far. Nonetheless, the basic conclusion is the same: there is startlingly little evidence of improvements in efficiency. Kim and Lau conclude of the four Asian "tigers" that "the hypothesis that there has been no technical progress during the postwar period cannot be rejected for the four East Asian newly industrialized countries." Young, more poetically, notes that once one allows for their rapid growth of inputs, the productivity performance of the "Tigers" falls "from the heights of Olympus to the plains of Thessaly.
This conclusion runs so counter to conventional wisdom that it is extremely difficult for the economists who have reached it to get a hearing. As early as 1982 a Harvard graduate student, Yuan Tsao.) found little evidence of efficiency growth in her dissertation on Singapore, but her work was, as Young puts it, "ignored or dismissed as unbelievable." When Kim and Lau presented their work at a 1992 conference in Taipei, it received a more respectful hearing, but had little immediate impact But when Young tried to make the case for input-driven Asian growth at the 1993 meetings of the European Economic Association, he was met with a stone wall of disbelief.
In Young's most recent paper there is an evident tone of exasperation with this insistence on clinging to the conventional wisdom in the teeth of the evidence. He titles the paper "The Tyranny of Numbers"--by which he means that you may not want to believe this, buster, but there's just no way around the data. He begins with an ironic introduction, written in a deadpan, Sergeant Friday, "Just the facts, ma'am" style: "This is a fairly boring and tedious paper, and is intentionally so. This paper provides no new interpretations of the East Asian experience to interest the historian, derives no new theoretical implications of the forces behind the East Asian growth process to motivate the theorist, and draws no new policy implications from the subtleties of East Asian government intervention to excite the policy activist. Instead, this paper concentrates its energies on providing a careful analysis of the historical patterns of output growth, factor accumulation, and productivity growth in the newly industrializing countries of East Asia."
Of course, he is being disingenuous. His conclusion undermines most of the conventional wisdom about the future role of Asian nations in the world economy and, as a consequence, in international politics. But readers will have noticed that the statistical analysis that puts such a different interpretation on Asian growth focuses on the "tigers," the relatively small countries to whom the name "newly industrializing countries" was first applied. But what about the large countries? What about Japan and China?
THE GREAT JAPANESE GROWTH SLOWDOWN
MANY PEOPLE who are committed to the view that the destiny of the world economy lies with the Pacific Rim are likely to counter skepticism about East Asian growth prospects with the example of Japan. Here, after all, is a country that started out poor and has now become the second-largest industrial power. Why doubt that other Asian nations can do the same?
There are two answers to that question. First, while many authors have written of an "Asian system"--a common denominator that underlies all of the Asian success stories--the statistical evidence tells a different story. Japan's growth in the 1950s and 1960s does not resemble Singapore's growth in the 1970s and 1980s. Japan, unlike the East Asian "tigers," seems to have grown both through high rates of input growth and through high rates of efficiency growth. Today's fast growth economics are nowhere near converging on U.S. efficiency levels, but Japan is staging an unmistakable technological catch-up.
Second, while Japan's historical performance has indeed been remarkable, the era of miraculous Japanese growth now lies well in the past. Most years Japan still manages to grow faster than the other advanced nations, but that gap in growth rates is now far smaller than it used to be, and is shrinking.
The story of the great Japanese growth slowdown has been oddly absent from the vast polemical literature on Japan and its role in the world economy. Much of that literature seems stuck in a time warp, with authors writing as if Japan were still the miracle growth economy of the 1960s and early 1970s. Granted, the severe recession that has gripped Japan since 1991 will end soon if it has not done so already, and the Japanese economy will probably stage a vigorous short-term recovery. The point, however, is that even a full recovery will only reach a level that is far below what many sensible observers predicted 20 years ago.
It may be useful to compare Japan's growth prospects as they appeared 2O years ago and as they appear now. In 1973 Japan was still a substantially smaller and poorer economy than the United States. Its per capita GDP was only 55 percent of America's, while its overall GDP was only 27 percent as large. But the rapid growth of the Japanese economy clearly portended a dramatic change. Over the previous decade Japan's real GDP had grown at a torrid 8.9 percent annually, with per capita output growing at a 7.7 percent rate. Although American growth had been high by its own historical standards, at 3.9 percent (2.7 percent per capita) it was not in the same league. Clearly, the Japanese were rapidly gaining on us.
In fact, a straightforward projection of these trends implied that a major reversal of positions lay not far in the future. At the growth rate of 1963-73, Japan would overtake the United States in real per capita income by 1985, and total Japanese output would exceed that of the United States by 1998! At the time, people took such trend projections very seriously indeed. One need only look at the titles of such influential books as Herman Kahn's The Emerging Japanese Superstate or Ezra Vogel's Japan as Number One to remember that Japan appeared, to many observers, to be well on its way to global economic dominance.
Well, it has not happened, at least not so far Japan has indeed continued to rise in the economic rankings, but at a far more modest pace than those projections suggested. In 1992 Japan's per capita income was still only 83 percent of the United States', and its overall output was only 42 percent of the American level. The reason was that growth from 1973 to 1992 was far slower than in the high-growth years: GDP grew only 3.7 percent annually, and GDP per capita grew only 3 percent per year. The United States also experienced a growth slowdown after 1973, but it was not nearly as drastic.
If one projects those post-1973 growth rates into the future, one still sees a relative Japanese rise, but a far less dramatic one. Following 1973-92 trends, Japan's per capita income will outstrip that of the United States in 2002; its overall output does not exceed America's until the year 2047. Even this probably overestimates Japanese prospects. Japanese economists generally believe that their country's rate of growth of potential output, the rate that it will be able to sustain once it has taken up the slack left by the recession, is now no more than three percent. And that rate is achieved only through a very high rate of investment, nearly twice as high a share of GDP as in the United States. When one takes into account the growing evidence for at least a modest acceleration of U.S. productivity growth in the last few years, one ends up with the probable conclusion that Japanese efficiency is gaining on that of the United States at a snail's pace, if at all, and there is the distinct possibility that per capita income in Japan may never overtake that in America. In other words, Japan is not quite as overwhelming an example of economic prowess as is sometimes thought, and in any case Japan's experience has much less in common with that of other Asian nations than is generally imagined.
THE CHINA SYNDROME
FOR THE skeptic, the case of China poses much greater difficulties about Asian destiny than that of Japan. Although China is still a very poor country, its population is so huge that it will become a major economic power if it achieves even a fraction of Western productivity levels. And China, unlike Japan, has in recent years posted truly impressive rates of economic growth. What about its future prospects?
Accounting for China's boom is difficult for both practical and philosophical reasons. The practical problem is that while we know that China is growing very rapidly, the quality of the numbers is extremely poor. It was recently revealed that official Chinese statistics on foreign investment have been overstated by as much as a factor of six. The reason was that the government offers tax and regulatory incentives to foreign investors, providing an incentive for domestic entrepreneurs to invent fictitious foreign partners or to work through foreign fronts. This episode hardly inspires confidence in any other statistic that emanates from that dynamic but awesomely corrupt society.
The philosophical problem is that it is unclear what year to use as a baseline. If one measures Chinese growth from the point at which it made a decisive turn toward the market, say 1978, there is little question that there has been dramatic improvement in efficiency as well as rapid growth in inputs. But it is hardly surprising that a major recovery in economic efficiency occurred as the country emerged from the chaos of Mao Zedong's later years. If one instead measures growth from before the Cultural Revolution, say 1964, the picture looks more like the East Asian "tigers": only modest growth in efficiency, with most growth driven by inputs. This calculation, however, also seems unfair: one is weighing down the buoyant performance of Chinese capitalism with the leaden performance of Chinese socialism. Perhaps we should simply split the difference: guess that some, but not all, of the efficiency gains since the turn toward the market represent a one-time recovery, while the rest represent a sustainable trend.
Even a modest slowing in China's growth will change the geopolitical outlook substantially. The World Bank estimates that the Chinese economy is currently about 40 percent as large as that of the United States. Suppose that the U.S. economy continues to grow at 2.5 percent each year. If China can continue to grow at 10 percent annually, by the year 2010 its economy will be a third larger than ours. But if Chinese growth is only a more realistic 7 percent, Its GDP Will be only 82 percent of that of the United States. There will still be a substantial shift of the world's economic center of gravity, but it will be far less drastic than many people now imagine.
THE MYSTERY THAT WASN'T
THE EXTRAORDINARY record of economic growth in the newly industrializing countries of East Asia has powerfully influenced the conventional wisdom about both economic policy and geopolitics. Many, perhaps most, writers on the global economy now take it for granted that the success of these economies demonstrates three propositions. First, there is a major diffusion of world technology in progress, and Western nations are losing their traditional advantage. Second, the world's economic center of gravity will inevitably shift to the Asian nations of the western Pacific. Third, in what's perhaps a minority view, Asian successes demonstrate the superiority of economies with fewer civil liberties and more planning than we in the West have been willing to accept.
All three conclusions are called into question by the simple observation that the remarkable record of East Asian growth has been matched by input growth so rapid that Asian economic growth, incredibly, ceases to be a mystery.
Consider first the assertion that the advanced countries are losing their technological advantage. A heavy majority of recent tracts on the world economy have taken it as self-evident that technology now increasingly flows across borders, and that newly industrializing nations are increasingly able to match the productivity of more established economics. Many writers warn that this diffusion of technology will place huge strains on Western society as capital flows to the Third World and imports from those nations undermine the West's industrial base.
There are severe conceptual problems with this scenario even if its initial premise is right. But in any case, while technology may have diffused within particular industries, the available evidence provides absolutely no justification for the view that overall world technological gaps are vanishing. On the contrary, Kim and Lau find "no apparent convergence between the technologies" of the newly industrialized nations and the established industrial powers; Young finds that the rates in the growth of efficiency in the East Asian "tigers" are no higher than those in many advanced nations.
The absence of any dramatic convergence in technology helps explain what would otherwise be a puzzle: in spite of a great deal of rhetoric about North-South capital movement, actual capital flows to developing countries in the 1990s have so far been very small--and they have primarily gone to Latin America, not East Asia. Indeed, several of the East Asian "tigers" have recently become significant exporters of capital. This behavior would be extremely odd if these economies, which still pay wages well below advanced-country levels, were rapidly achieving advanced-country productivity. It is, however, perfectly reasonable if growth in East Asia has been primarily input driven, and if the capital piling up there is beginning to yield diminishing returns.
If growth in East Asia is indeed running into diminishing returns, however, the conventional wisdom about an Asian-centered world economy needs some rethinking. It would be a mistake to overstate this case: barring a catastrophic political upheaval, it is likely that growth in East Asia will continue to outpace growth in the West for the next decade and beyond. But it will not do so at the pace of recent years. From the perspective of the year 2010, current projections of Asian supremacy extrapolated from recent trends may well look almost as silly as 1960s-vintage forecasts of Soviet industrial supremacy did from the perspective of the Brezhnev years.
Finally, the realities of East Asian growth suggest that we may have to unlearn some popular lessons. It has become common to assert that East Asian economic success demonstrates the fallacy of our traditional laissez-faire approach to economic policy and that the growth of these economics shows the effectiveness of sophisticated industrial policies and selective protectionism. Authors such as James Fallows have asserted that the nations of that region have evolved a common "Asian system," whose lessons we ignore at our peril. The extremely diverse institutions and policies of the various newly industrialized Asian countries, let alone Japan, cannot really be called a common system. But in any case, if Asian success reflects the benefits of strategic trade and industrial policies, those benefits should surely be manifested in an unusual and impressive rate of growth in the efficiency of the economy. And there is no sign of such exceptional efficiency growth.
The newly industrializing countries of the Pacific Rim have received a reward for their extraordinary mobilization of resources that is no more than what the most boringly conventional economic theory would lead us to expect. If there is a secret to Asian growth, it is simply deferred gratification, the willingness to sacrifice current satisfaction for future gain.
That's a hard answer to accept, especially for those American policy intellectuals who recoil from the dreary task of reducing deficits and raising the national savings rate. But economics is not a dismal science because the economists like it that way; it is because in the end we must submit to the tyranny not just of the numbers, but of the logic they express.
Monday, December 21, 1998
Friday, December 11, 1998
What's so Important in an Address?
Some relatives visited that night. Uncle/aunt (Mr/Mrs Chan) from Seremban were here to visit working son who stayed at our place a few weeks until he found a room to rent. Accompanied by uncle/aunt (Mr/Mrs Tam) of Farrer Rd. They phoned to ask for address etc. Father picked up phone and gave instructions. But they took more than half an hour to find our house. They didn’t actually have our address and that was not clarified during the call. Only got number 28 from father, no street name. They thought street was Haji Salam, then Limau Purut. Our phone was not put back properly by father after use so they could not call back.
Anyway, when they settled down uncle/aunt Chan were expressing their appreciation for Uncle Tam’s time to drive them around and for waiting in station from 6.45am to 9am due to 2 hours delay of KTM train from Seremban.
When I tried to introduce Wai Ling to everyone I asked Aunt Chan for the proper Chinese relationship name that Wai Ling should use to address the visitors. Uncle Tam suddenly said “What is the relationship between 2 unrelated men who married 2 sisters? None. There is no blood tie at all. If they get along they are friends. If not, they are enemies. That’s that”. I said “You are right in a way but…”. I decided against continuing further as I wasn’t sure what the point was. He obviously thought he had said something really enlightening.
On further thought I realised that he was probably trying to say that there’s not much point in trying to figure out the proper ‘addresses’ to use as it has no bearing on whether 2 persons get along with each other. The Tam brothers are known to like to make 'smart alec' statements like that.
He may be right in a way but the thing to note is that the wise people who came up with the idea of naming the relationships among people thousands of years ago were less interested in Uncle Tam's narrow scheme of things. They were more forward looking and enlightened. The intention was for future generations to know where & how near/far they are related to each other. It obviously makes it easier for one to figure out how closely people are related to each other without a long description. Imagine explaining ‘biao jiu fu’ as ‘son of my maternal mother’s sister’s son’.
But more importantly, the naming convention helps to make sure that genetic diversity is maintained by avoiding marriages that are too close to one’s family. This is therefore a convenient and effective way of remembering the family tree. In the old days, few families could or can afford to maintain written records and there were little or no central government records. Few people knew how to write and cheap paper did not even exist. On top of that, it’s not convenient to initiate a search of written family and government records every time you run into some one! Not during modern times let alone hundreds of years ago.
The need for maintaining genetic diversity is a very serious and important matter. The price for not recognizing it can be seen in the difference in the characteristics of the various races around us (this may not be the only reason but I firmly believe that it is probably the most critical). Some Indian Tamils, Malays and Muslims for example do not have the concept of a family name. A child’s name has only its fathers’ name in it instead of family name. The state of present day Tamils and Malays in general is that they are educationally & economically under-achieving compared to the other races. They have proportionally more cases of drug abuse and incest committed by fathers, grandfathers & relatives. Likewise, we see the failure of the Muslim civilisation in less than 2 thousand years of its existence. A similar issue exists for some Indian groups like the Tamils where the caste system and the non-existence of a family name combine to keep them in a perennial state of relative disadvantage and submission to the upper castes.
Imagine this scenario. It is a few hundred or a thousand years back. People live in small villages separated by distances. Without technology, everyone is busy making ends meet and transportation is bad. So, there is little travel beyond the confines of their little village. Interaction and relationships are therefore within a relatively small geographical area or population pool. Consequently, the risk of marrying very close within the family tree will be pretty high too.
Further imagine that that society does not appreciate the importance of genetic diversity and therefore does not make use of family names and an extensive verbal system for identifying the various segment/members of the family tree. It will then not be difficult to imagine that there will be little safeguards against one producing off-springs with another person who is actually very close. Repeated over time, that can only lead to a degeneration of the gene pool of the people.
I bet my every dollar that Uncle Tam did not appreciate that. Arrogant poor guy.
Anyway, when they settled down uncle/aunt Chan were expressing their appreciation for Uncle Tam’s time to drive them around and for waiting in station from 6.45am to 9am due to 2 hours delay of KTM train from Seremban.
When I tried to introduce Wai Ling to everyone I asked Aunt Chan for the proper Chinese relationship name that Wai Ling should use to address the visitors. Uncle Tam suddenly said “What is the relationship between 2 unrelated men who married 2 sisters? None. There is no blood tie at all. If they get along they are friends. If not, they are enemies. That’s that”. I said “You are right in a way but…”. I decided against continuing further as I wasn’t sure what the point was. He obviously thought he had said something really enlightening.
On further thought I realised that he was probably trying to say that there’s not much point in trying to figure out the proper ‘addresses’ to use as it has no bearing on whether 2 persons get along with each other. The Tam brothers are known to like to make 'smart alec' statements like that.
He may be right in a way but the thing to note is that the wise people who came up with the idea of naming the relationships among people thousands of years ago were less interested in Uncle Tam's narrow scheme of things. They were more forward looking and enlightened. The intention was for future generations to know where & how near/far they are related to each other. It obviously makes it easier for one to figure out how closely people are related to each other without a long description. Imagine explaining ‘biao jiu fu’ as ‘son of my maternal mother’s sister’s son’.
But more importantly, the naming convention helps to make sure that genetic diversity is maintained by avoiding marriages that are too close to one’s family. This is therefore a convenient and effective way of remembering the family tree. In the old days, few families could or can afford to maintain written records and there were little or no central government records. Few people knew how to write and cheap paper did not even exist. On top of that, it’s not convenient to initiate a search of written family and government records every time you run into some one! Not during modern times let alone hundreds of years ago.
The need for maintaining genetic diversity is a very serious and important matter. The price for not recognizing it can be seen in the difference in the characteristics of the various races around us (this may not be the only reason but I firmly believe that it is probably the most critical). Some Indian Tamils, Malays and Muslims for example do not have the concept of a family name. A child’s name has only its fathers’ name in it instead of family name. The state of present day Tamils and Malays in general is that they are educationally & economically under-achieving compared to the other races. They have proportionally more cases of drug abuse and incest committed by fathers, grandfathers & relatives. Likewise, we see the failure of the Muslim civilisation in less than 2 thousand years of its existence. A similar issue exists for some Indian groups like the Tamils where the caste system and the non-existence of a family name combine to keep them in a perennial state of relative disadvantage and submission to the upper castes.
Imagine this scenario. It is a few hundred or a thousand years back. People live in small villages separated by distances. Without technology, everyone is busy making ends meet and transportation is bad. So, there is little travel beyond the confines of their little village. Interaction and relationships are therefore within a relatively small geographical area or population pool. Consequently, the risk of marrying very close within the family tree will be pretty high too.
Further imagine that that society does not appreciate the importance of genetic diversity and therefore does not make use of family names and an extensive verbal system for identifying the various segment/members of the family tree. It will then not be difficult to imagine that there will be little safeguards against one producing off-springs with another person who is actually very close. Repeated over time, that can only lead to a degeneration of the gene pool of the people.
I bet my every dollar that Uncle Tam did not appreciate that. Arrogant poor guy.
Thursday, September 17, 1998
What is Hers that is Not
Developing Asia is in middle of economic crisis and Singapore and Brunei are the least affected of the ASEAN countries. The Singapore government offered about US$1 billion (can’t really remember the total amount) to Indonesia as trade finance guarantee that is supposed to be disbursed under conditions imposed by IMF.
That offer however became a hot topic in Singapore and was debated in Parliament. Some people fear that the money will be wasted (knowing how corrupt the Suharto government is!) or not returned. Some thinks that Singapore itself may need the money as the crisis is also affecting itself. Of course, the complaints are all valid but so are the government’s reasons (officially stated or not). A huge part of Singapore’s trade & therefore income is tied to Indonesia. A downturn in Indonesia means the same for Singapore. In addition, the Indonesian government must have been approaching the Singapore government quietly for help (they know that Singapore has huge reserves too you know!). Politically, Singapore has to be seen to react to the request for help by a ‘close neighbor’ but is also well aware of the risks involved (if there’s any government with real brains it is in the Singapore Government of the last half-century). They therefore linked it to the IMF. In fact, the Indonesians later complained that Singapore is not a ‘true friend’ as the conditions for use of the funds pledged were too stringent. Malaysia also pledged some money at the same time but was never given as Malaysia itself went the same way. The Indonesians were understanding and did not complain.
So, that was the topic and background of a casual discussion among the office staff. One of them, a lady with about 3-4 years working experience (about 25 years old), was quite vocally complaining about her government risking the money and that US$30,000 of what the government holds belongs to her. Although I knew what she was trying to say I nevertheless was curious about how she came to that conclusion. She explained that Singapore’s total foreign reserve is about US$100 billion – so, if you divide that by Singapore’s population size of 3 million you will get US$30,000 per head. I then explained to her that she does not really own what much – a bit may be but not US$30,000. If it belongs to anyone, it is her parents, grandparents and the 2 generations of Singaporeans before her who has worked their whole life (as opposed to her 3-4 years!) building up the country and its current reserves. It was obviously very enlightening to her – I can see that ‘oh, I’ve not thought of it that way’ look. That ended her complain and the discussion very quickly.
I also noticed that there was another staff who is more junior (1 year working experience) who was quietly listening to the whole thing but showed clear signs of agreement with what I’ve said. The fact that she was quiet while this other girl was vocally making her point about her ‘asset’ makes me wonder about the difference caused by their up-bringing. One comes from a more Chinese background while the other from a more English educated background (I know because they both work for me!). For years, I’ve always noted and wondered about the difference upbringing makes and this is one of those instances that captured my attention.
This incident also reminds me of some note worthy social programs of the Singapore government esp. the current one of PM Goh Chok Tong – upgrading of older housing estates, special rates for elder citizens etc. To me those programs are the government way of giving the money back to the people who really owns them. The older generation who when they were younger were working at very competitively low salaries which could only afford them nothing more than a small HDB flat, and whose savings could not catch up with the high inflation in cost of living the last 10 years or so.
I was especially impressed when the Singapore government announced that they will not let their currency devalue too much as a way out of the economic crisis, and that they will not change their CPF rules to let Malaysians take their S$ savings back to Malaysia. Other than not necessarily the best way to increase Singapore’s competitiveness (as Singapore’s import is also very high), I’m quite sure they also do not want to devalue the S$ too much because that will cause their citizen’s and the older generation’s life long savings to ‘go down the drain’. The older generation, especially, can only rely on their savings from times past when their earnings were no where near the salaries now. Devaluing the currency will only shrink their one-way reducing-only account balances.
That is starkedly unlike what the other governments in the region which have either intentionally devalued their currency or has caused the same as a result of their own mismanagement. The Malaysian government was pushing very hard for Singapore to release the CPF holdings of Malaysians ostensibly because they belong to Malaysians and Singapore has no right to ‘hold on’ to the money. It was front page news in Singapore for a while. Things were a lot clearer later. The Malaysian government was soon to implement capital controls (after the Ringgit has slided 25% against the S$), and were using Malaysians’ EPF savings to buy shares to prop up the stock market (or bail out failing businesses depending on how you choose see it). God knows what they would have done if they have gotten the CPF money!
I remember the days when 1 Ringgit was 1 Singapore dollar until early 80’s and still wonders how much my father’s small Malaysian EPF savings would be like if he had been in Singapore. But then things are more expensive here now too.
That offer however became a hot topic in Singapore and was debated in Parliament. Some people fear that the money will be wasted (knowing how corrupt the Suharto government is!) or not returned. Some thinks that Singapore itself may need the money as the crisis is also affecting itself. Of course, the complaints are all valid but so are the government’s reasons (officially stated or not). A huge part of Singapore’s trade & therefore income is tied to Indonesia. A downturn in Indonesia means the same for Singapore. In addition, the Indonesian government must have been approaching the Singapore government quietly for help (they know that Singapore has huge reserves too you know!). Politically, Singapore has to be seen to react to the request for help by a ‘close neighbor’ but is also well aware of the risks involved (if there’s any government with real brains it is in the Singapore Government of the last half-century). They therefore linked it to the IMF. In fact, the Indonesians later complained that Singapore is not a ‘true friend’ as the conditions for use of the funds pledged were too stringent. Malaysia also pledged some money at the same time but was never given as Malaysia itself went the same way. The Indonesians were understanding and did not complain.
So, that was the topic and background of a casual discussion among the office staff. One of them, a lady with about 3-4 years working experience (about 25 years old), was quite vocally complaining about her government risking the money and that US$30,000 of what the government holds belongs to her. Although I knew what she was trying to say I nevertheless was curious about how she came to that conclusion. She explained that Singapore’s total foreign reserve is about US$100 billion – so, if you divide that by Singapore’s population size of 3 million you will get US$30,000 per head. I then explained to her that she does not really own what much – a bit may be but not US$30,000. If it belongs to anyone, it is her parents, grandparents and the 2 generations of Singaporeans before her who has worked their whole life (as opposed to her 3-4 years!) building up the country and its current reserves. It was obviously very enlightening to her – I can see that ‘oh, I’ve not thought of it that way’ look. That ended her complain and the discussion very quickly.
I also noticed that there was another staff who is more junior (1 year working experience) who was quietly listening to the whole thing but showed clear signs of agreement with what I’ve said. The fact that she was quiet while this other girl was vocally making her point about her ‘asset’ makes me wonder about the difference caused by their up-bringing. One comes from a more Chinese background while the other from a more English educated background (I know because they both work for me!). For years, I’ve always noted and wondered about the difference upbringing makes and this is one of those instances that captured my attention.
This incident also reminds me of some note worthy social programs of the Singapore government esp. the current one of PM Goh Chok Tong – upgrading of older housing estates, special rates for elder citizens etc. To me those programs are the government way of giving the money back to the people who really owns them. The older generation who when they were younger were working at very competitively low salaries which could only afford them nothing more than a small HDB flat, and whose savings could not catch up with the high inflation in cost of living the last 10 years or so.
I was especially impressed when the Singapore government announced that they will not let their currency devalue too much as a way out of the economic crisis, and that they will not change their CPF rules to let Malaysians take their S$ savings back to Malaysia. Other than not necessarily the best way to increase Singapore’s competitiveness (as Singapore’s import is also very high), I’m quite sure they also do not want to devalue the S$ too much because that will cause their citizen’s and the older generation’s life long savings to ‘go down the drain’. The older generation, especially, can only rely on their savings from times past when their earnings were no where near the salaries now. Devaluing the currency will only shrink their one-way reducing-only account balances.
That is starkedly unlike what the other governments in the region which have either intentionally devalued their currency or has caused the same as a result of their own mismanagement. The Malaysian government was pushing very hard for Singapore to release the CPF holdings of Malaysians ostensibly because they belong to Malaysians and Singapore has no right to ‘hold on’ to the money. It was front page news in Singapore for a while. Things were a lot clearer later. The Malaysian government was soon to implement capital controls (after the Ringgit has slided 25% against the S$), and were using Malaysians’ EPF savings to buy shares to prop up the stock market (or bail out failing businesses depending on how you choose see it). God knows what they would have done if they have gotten the CPF money!
I remember the days when 1 Ringgit was 1 Singapore dollar until early 80’s and still wonders how much my father’s small Malaysian EPF savings would be like if he had been in Singapore. But then things are more expensive here now too.
Tuesday, July 14, 1998
Indonesian Riots of 1997/98
Below is e-mail I sent to colleagues in July 1998 upon reading another e-mail (attached below) circulating around about a family’s account of the riots.
Hi my friend,
After reading the mail you forwarded, I felt compelled to share some of my thoughts on this.
In my discussions with some people, it seems to me that the conventional wisdom to some has it that the Indonesian Chinese should justifiably take part of the blame for the state of affairs in Indonesia because they could have done more in 'helping the native Indonesians improve their lives'. The reasoning behind this view is that the Chinese makes up around 5% of the population but owns a big chunk of its wealth. How else they could have done so without exploiting the natives? In addition, their country leadership must be quite capable for their 'national values' enshrined in Pancasila are very impressive sounding indeed. And how else can a nation with such diverse population (they probably have as many different ethnic groups as China and India!) hold together for so long? Well, at least 50 years so far.
That too used to be my view when I was younger, has seen less of the world & when I used to think that the Chinese are by disposition a very selfish people. After all these years (including about 4 years of work in Indonesia) I begin to see that the Chinese are no different from any other race and that was just a convenient excuse especially for the Indonesians themselves.
If the Chinese are the cause, how come Singaporean Malays end up being the single significant Malay population in any country on Earth (they constitute 15% of the total population of Singapore with the rest being mainly Chinese) with a standard of living & education level comparable to the UK? If the earlier reasoning holds water the Singaporean Malays should be the living example of the exploitative nature of the Chinese.
The fact that they are not exploited in Singapore has to do not only with the Chinese (the Chinese have not colonized another country in the 2,000 years since its formation) but also with Singapore's older generation from the 1950's and 60's who put into power the country's leadership of clean, honest and capable leaders that included some very capable Malays, Indians & people of other minorities.
The cause of Indonesia's problems lies with the country's leadership and the ethnic majority that holds the country's political & military power. The reason why they do not hold or appear not to hold economic power is less obvious but we can get to that later. Its politicians and leadership are not just utterly corrupt and are unwilling or may be incapable to face up to the shortcomings of their system and people and do something about them. But they are fundamentally evil in disposition and intent. What is really sad (at least to me) is that their politicians and leaders are able to quite successfully influence and manipulate a significant segment of the population into believing in all but the hard realities of their country. Instead of planning for the development of its people (and not just the nice infrastructure we got so impressed by), they seem to prefer to plot on how to loot the country's wealth and to find someone else to place the blame on when things don't go well.
We see the Indonesian Chinese being conveniently used as whipping dogs every time someone wants their people's attention diverted from the reality. Singaporeans know that that has its spill over in the form of racial tensions here back in the 60's. In Singapore's case, the Malaysian politicians are no different from the Indonesians (a coincidence?).
8 years ago when I first started my job assignment in Indonesia I was quite taken by surprise when an officer of the state-owned bank I was working in told me that smoking kretek (Indonesian clove cigarettes) is actually good for the country's economy. The logic goes that the more they smoke the more farmers get employed! Here he was, a graduate and state bank officer with the potential to influence the country's direction (believe me, with the way the country is run there, a state bank in Indonesia is very influential) actually believes that with great conviction. I'm not going to discuss about alternative uses of productive capacity & money but just suffice to mention that I soon understand why when I learnt that the national clove industry happens to involve a monopoly run by the President's son.
We read of the nation's education ministry toying with the idea of making it mandatory for school children 90% of whose parents earn less than USD50 per month at 1995 exchange rates (now worth less than USD10/month) to pay USD 10 to visit a theme park at least once in their schooling years supposedly because it has educational value. And another plan to make it mandatory to buy school shoes of a particular brand costing USD 5 or 7 dollars. All because the theme park and the shoe company were owned by someone with the right connections.
From this recent crisis we read in the media about people reporting seeing organised groups being transported to Chinatown in Jakarta to cause trouble and, as we read in the sad article below, to perpetrate the most dastardly acts you can imagine (the other significant record of similar perpetrations in Asia's recent history occurred during the Japanese occupation). Believe it or not , the authorities were not able to control these acts in Jakarta (their own capital & seat of power) but they can keep Irian Jaya quiet & peaceful (through the barrel of the gun of course). The answer to me is simple. There is neither the will nor intent to do so.
Now, back to the topic of economic power.
We do not need to get into the details on the work ethics & values of Chinese around the world. That is pretty well understood by the world. But, have we ever wondered why with all the political and military power of the ethnic Indonesians they cannot, at least apparently, achieve the economic well being they so desire and the under-achievement of which they blame so much on the Chinese? They could have the equivalent of Malaysia's New Economic Policy (which is really 30 years old now) to force everyone else to give up their hard earned money to the 'bumiputras' (which they actually mean the Malays) and hoped like Lee Kuan Yew once said that it will somehow lead all & sundry to a better life. They did not. They did not because even if they had taken all the money the Chinese had they will squander it and end up the same. They did not because the people that ends up having the money (which are the politically powerful ones and not the Indonesian man on the street) would not know how or bother to invest it for the country's future and build a better place. They did not because no self righteous and capable ethnic Indonesian who could have done so would want to have anything to do with such a corrupt and ridiculous government. They did not because the ones in power did not want to share it with their people. They would rather have the money to themselves somewhere outside the country. A limousine driver in Singapore told me about a family member of the Indonesian political leadership boasting about the hundreds of millions he has gotten out of the country in the recent crisis and how he is here to get them 'properly invested'. If you had corruptly gathered huge sums of money through all sorts of ways, would you really want to let your people know about it? No, but you can boast about it to someone else.
Unlike the wealth of the ethnic Indonesian political elites, the wealth of the Chinese are obvious to all because they really have to work for it. Against all the odds stacked against them, they have to reach out to every corner of the Indonesian archipelago to build the supply network etc. that they are renowned for. The fact that they manage to make money out of the locals is testimony to the real value they obviously deliver to their clientele, the locals included. Have any Chinese or Indian descendents ever wondered why almost all of our grandparents seem to speak Malay, broken Malay it may be? But it’s hard to find any Malay of any age who can speak Chinese or Indian? May be except some Malays in Penang & Singapore who also happens to be the better off Malays? I asked myself that question some years back. In their time which was during the Western colonial years prior to 1950, there would be no real need to speak Malay since the government is anything but Malay. Unless you saw the value of understanding and reaching out to the other person. And also, to do business with him. And exploit him? To the extent the western colonial masters and their own leaders did?
As to whether the Chinese should 'help the locals improve their lives', do we expect them to 'hand out the fish as oppose to teaching them how to fish'? Do we expect them to hand their hard earned money out in the form of charity when they live their own lives wondering what his neighbor is going to do to his wife & children the next moment? Would they not look to safekeep their savings somewhere else so that they can call upon them when events turn sour like they do now? They need the money to rebuild their lives somewhere else if they have to. Remember nothing comes free, not even freedom and human rights in the US. You'll need to have a certain amount of assets before you're allowed to even lay foot in the soil they took from someone else. But, how about the poor Chinese Indonesian? Oh, surely you don't believe there is no such thing.
That's my view on Indonesia and the Indonesian Chinese. The latter are definitely not in the same position as the whites of the age of American slavery or the Israelites of the 90's - in control of everything but it's just a matter of the will to do it.
I dream of the day when Indonesia sees the ascent of an ethnic man man enough to grab his country's harsh realities by the neck and lead the country forward. When that happens I will be one of the happiest Chinese in this part of the world.
Rgds
CCK
Subject: Shattered Lives
The Yellow Ribbon Campaign
Dear friends,
Please forward this "Yellow Ribbon" to all friends around the world to show our soladirity and sympathy for the victims of the riots and chaos in Indonesia last May 13-15. Many Chinese Indonesian citizens were abused, tortured and killed. Their houses and stores were looted and burnt.
Hundreds of Chinese Indonesian girls/women (aged 10-55) were sexually harassed and gang raped brutally. Some victims were even raped in front of their family members or in front of inhuman cheering crowd. Some of them were even thrown into the fire and burnt to death after being raped. Yet, not many actions seem to have been taken to investigate all this or to help the victims. And not very many people seem to know or care about what happened.
Please help to spread the news and let the world know. We need help to get more international attention to help Chinese Indonesians, who are now living in fear in Indonesia. Please pass this ribbon around as the symbol of campaign against human rights violations,injustice, and racism towards Chinese Indonesians. Show that we care and may God help us!
The following article was posted on 06/12/98 in the Huaren (Chinese People) Bulletin Board by Indra.
A Victim's Account of Rapes and Murders
Here I post a victim's account of the May tragedy. The original is in Indonesian, and I did the English translation (forgive some awkwardness in it). Spread the word around and let the world know what really happened.
English Translation
(beginning of the account)
Name: Vivian (not real) Age: 18 Sex: Female. Vivian has a little sister and a brother. She lives in an apartment with her family.
At 9.15 am, a huge crowd had gathered around the apartment. They screamed,"Let's butcher the Chinese!", "Let's eat pigs!", "Let's have a party!" We lived on the 7th floor, and we got a call from a family who lived in the 3rd floor that the crowd had reached the second floor. They even chased some occupants upstairs. We were all very frightened. In our fright, we prayed and left everything in God's hands.
Afterward, we left our room and went upstairs to the topmost floor, as it was impossible to go downstairs. We got to the 15th floor, and stayed there with one of our acquiantances. Not long afterward, we were surprised because there were some of the crowd coming out of the elevator right before we entered the room. We hurried into the room and locked the door tight.
At that time, we heard them knocked the other rooms' doors loudly, and there were screams from women and girls. The room was filled with fear. We realized that they would come to us. So we spread throughout the room and hid in corners. Inside, we could heard girls, whose age around 10-12, screaming, "Mommy... Mommy..." "Mom... Mom... it hurts.."
That time I didn't know what was happening. After about half an hour, the noise diminished, and we had some guts to go out and check. It was indescribable. A lot, some of them girls, young girls, lied on the floor.
"O my God, what has happened?" Seeing all of this, my little sister, Veny, screamed histerically and hugged her father. Tears started coming down from my eyes.
With our acquaintances, a newly-wed couple,we started going downstairs. Reaching the 10th floor, we heard a scream for help. The scream was very clear, and we decided to go down and see. But as we turned, we saw a lot of people. I saw a woman in her 20s being raped by four men. She tried to fight, but she was held tight. Realizing the danger, we ran with all our might. But unfortunately, the mob caught Veny. We tried to rescue her, but we had to give up.
There were around 60 of them. They tied us--I, my father, my mother, Veny, Dony, Uncle Dodi, Aunt Vera--with ripped sheet. They led us to a room. Uncle Dodi asked what they wanted, but they didn't answer. They cast an evil and savage look. One of them grabbed Veny rudely and dragged her to a sofa.
At that time, I knew that she was in danger. I screamed loudly, and one of the mob slapped me. My father who also screamed was hit by a wooden block, and he fainted. My mother had fainted when Veny was dragged to the sofa. I could only pray and pray that the disaster would not befall us...
Uncle Dodi kept trying to persuade them by offering money, but the effort was fruitless. And in the end they forcedly raped Veny. Not able to stand all of this anymore, I cried and closed my eyes. There were about 5 people who raped Veny, and before beginning, everyone always said, "Allahu akbar" (and Islamic phrase in Arabic, meaning "God is the greatest"). They were ferocious, brutal.
Not long afterward, around 9 men came to the room and dragged me. I also had a chance to see them forcing and dragging Aunt Veny. But, I instantly fainted and everything was blank. I became conscious at around 5 or 6 in the afternoon. My head was in pain, and then I realized that I had no clothes on my body. I cried.
I was very depressed. I realized that my family were still there, and obscurely I saw my father hugged my mother and Doni. I also saw that Uncle Dodi was lying on the floor, and Uncle Vera was crying over his body. I felt so weak, and fainted again.
The next day, I was in the Pluit Hospital. My mother and father were beside me. With all the pains on my body, I asked, "Mom, why Vinny, Mom?" I felt a stinging pain as I said those words. I felt my cheek swollen. My mother instantly cried and couldn't speak any words, while my father, holding his tears, managed to smile.
After 4 days in treatment, my condition started getting better. With a sad look, my father then told me what happened. After I fainted, 7 people raped me. At that time my father still couldn't see well after being hit with the block. They raped me by rolling my body and hit it against the wall. Then, my father said to me, "Vin, Venny has gone..." I was confused and instantly cried loudly. "Why, Dad???" My father didn't answer. He told me to rest and went out of the room. I cried over and over again, feeling that my life is worthless anymore.
A week ago, after I had been able to gone home, I was told everything that happened. When she was raped, Veny kept fighting, and so she was slapped repeatedly by her rapists. The last time she fought,Veny spitted on one of them. Offended, the man grabbed a knive and stabbed it to Veny's stomach. Brutally, he did it repeatedly until Veny drew her last breath with blood all over her.
After I heard the story, I was shocked. My father then said that Uncle Dodi had the same fate, watched by Aunt Vera who is also a victim of the rape. God... why should all of this happen? Now Aunt Vera stays in her parents' house,accompanied by her sister. According to what the sister said, she is still shocked. Her face is blank, and often she refuses to eat.
Almost every hour, my mother and I cry over this tragedy. I couldn't ever forget it. No matter what, they (the mob) are uncivilized people who have no sense of humanity.
(end of the account)
Indonesian Original:
Nama : Vivian (samaran) Umur : 18 tahun Kelamin : Perempuan
Dia memiliki seorang adik perempuan dan seorang adik laki-laki.Dia tinggal sekeluarga di apartemen ini. Sekitar pukul 9.15 pagi hari sekeliling apartemen sudah dikerumuni ratusan orang massa yang terlihat seram sekali. Mereka berteriak-teriak seperti kesetanan, "Bantai Cina", "Mari makan Babi", "Ayo Pesta". Kami sekeluarga tinggal di lantai 7. Saat itu, kami ditelepon oleh keluarga yang tinggal di lantai 3 bahwa massa sudah naik ke lantai 2, dan bahkan ada penghuni yang dikejar-kejar sampai ke atas. Saat itu kami langsung takut, tapi dalam ketakutan itu, kami sekeluarga berdoa dan pasrah kepada Tuhan.
Setelah itu, kami bersiap pergi meninggalkan kamar, dan kami terus naik melalui tangga ke lantai atas, karena ke bawah sudah tidak mungkin. Kami naik sampai lantai 15 dan di sana kami diam di kamar salah seorang kenalan kami. Tidak lama kemudian, kami kaget karena dari lift keluar sejumlah orang tepat saat kami akan masuk, lalu kami cepat-cepat masuk dan kemudian mengunci pintu. Saat itu kami mendengar pintu kamar lain diketuk dengan keras dan terdengar banyak teriakan dari ibu-ibu dan anak2 gadis. Sementara kami merasakan amat mencekam di dalam kamar,lalu sadar bahwa kamar kami nantinya akan mendapat giliran, maka kami langsung berpencar dan sembunyi di sudut2 kamar. Dari dalam kami mendengar sayup-sayup anak2 gadis sekitar umur 10 sampai 12 tahun yang berteriak, "mami....mami......", "mami.....sakit.....mami..........". Saat itu saya tidak tahu apa yang terjadi.
dorisng@ucla.edu
Hi my friend,
After reading the mail you forwarded, I felt compelled to share some of my thoughts on this.
In my discussions with some people, it seems to me that the conventional wisdom to some has it that the Indonesian Chinese should justifiably take part of the blame for the state of affairs in Indonesia because they could have done more in 'helping the native Indonesians improve their lives'. The reasoning behind this view is that the Chinese makes up around 5% of the population but owns a big chunk of its wealth. How else they could have done so without exploiting the natives? In addition, their country leadership must be quite capable for their 'national values' enshrined in Pancasila are very impressive sounding indeed. And how else can a nation with such diverse population (they probably have as many different ethnic groups as China and India!) hold together for so long? Well, at least 50 years so far.
That too used to be my view when I was younger, has seen less of the world & when I used to think that the Chinese are by disposition a very selfish people. After all these years (including about 4 years of work in Indonesia) I begin to see that the Chinese are no different from any other race and that was just a convenient excuse especially for the Indonesians themselves.
If the Chinese are the cause, how come Singaporean Malays end up being the single significant Malay population in any country on Earth (they constitute 15% of the total population of Singapore with the rest being mainly Chinese) with a standard of living & education level comparable to the UK? If the earlier reasoning holds water the Singaporean Malays should be the living example of the exploitative nature of the Chinese.
The fact that they are not exploited in Singapore has to do not only with the Chinese (the Chinese have not colonized another country in the 2,000 years since its formation) but also with Singapore's older generation from the 1950's and 60's who put into power the country's leadership of clean, honest and capable leaders that included some very capable Malays, Indians & people of other minorities.
The cause of Indonesia's problems lies with the country's leadership and the ethnic majority that holds the country's political & military power. The reason why they do not hold or appear not to hold economic power is less obvious but we can get to that later. Its politicians and leadership are not just utterly corrupt and are unwilling or may be incapable to face up to the shortcomings of their system and people and do something about them. But they are fundamentally evil in disposition and intent. What is really sad (at least to me) is that their politicians and leaders are able to quite successfully influence and manipulate a significant segment of the population into believing in all but the hard realities of their country. Instead of planning for the development of its people (and not just the nice infrastructure we got so impressed by), they seem to prefer to plot on how to loot the country's wealth and to find someone else to place the blame on when things don't go well.
We see the Indonesian Chinese being conveniently used as whipping dogs every time someone wants their people's attention diverted from the reality. Singaporeans know that that has its spill over in the form of racial tensions here back in the 60's. In Singapore's case, the Malaysian politicians are no different from the Indonesians (a coincidence?).
8 years ago when I first started my job assignment in Indonesia I was quite taken by surprise when an officer of the state-owned bank I was working in told me that smoking kretek (Indonesian clove cigarettes) is actually good for the country's economy. The logic goes that the more they smoke the more farmers get employed! Here he was, a graduate and state bank officer with the potential to influence the country's direction (believe me, with the way the country is run there, a state bank in Indonesia is very influential) actually believes that with great conviction. I'm not going to discuss about alternative uses of productive capacity & money but just suffice to mention that I soon understand why when I learnt that the national clove industry happens to involve a monopoly run by the President's son.
We read of the nation's education ministry toying with the idea of making it mandatory for school children 90% of whose parents earn less than USD50 per month at 1995 exchange rates (now worth less than USD10/month) to pay USD 10 to visit a theme park at least once in their schooling years supposedly because it has educational value. And another plan to make it mandatory to buy school shoes of a particular brand costing USD 5 or 7 dollars. All because the theme park and the shoe company were owned by someone with the right connections.
From this recent crisis we read in the media about people reporting seeing organised groups being transported to Chinatown in Jakarta to cause trouble and, as we read in the sad article below, to perpetrate the most dastardly acts you can imagine (the other significant record of similar perpetrations in Asia's recent history occurred during the Japanese occupation). Believe it or not , the authorities were not able to control these acts in Jakarta (their own capital & seat of power) but they can keep Irian Jaya quiet & peaceful (through the barrel of the gun of course). The answer to me is simple. There is neither the will nor intent to do so.
Now, back to the topic of economic power.
We do not need to get into the details on the work ethics & values of Chinese around the world. That is pretty well understood by the world. But, have we ever wondered why with all the political and military power of the ethnic Indonesians they cannot, at least apparently, achieve the economic well being they so desire and the under-achievement of which they blame so much on the Chinese? They could have the equivalent of Malaysia's New Economic Policy (which is really 30 years old now) to force everyone else to give up their hard earned money to the 'bumiputras' (which they actually mean the Malays) and hoped like Lee Kuan Yew once said that it will somehow lead all & sundry to a better life. They did not. They did not because even if they had taken all the money the Chinese had they will squander it and end up the same. They did not because the people that ends up having the money (which are the politically powerful ones and not the Indonesian man on the street) would not know how or bother to invest it for the country's future and build a better place. They did not because no self righteous and capable ethnic Indonesian who could have done so would want to have anything to do with such a corrupt and ridiculous government. They did not because the ones in power did not want to share it with their people. They would rather have the money to themselves somewhere outside the country. A limousine driver in Singapore told me about a family member of the Indonesian political leadership boasting about the hundreds of millions he has gotten out of the country in the recent crisis and how he is here to get them 'properly invested'. If you had corruptly gathered huge sums of money through all sorts of ways, would you really want to let your people know about it? No, but you can boast about it to someone else.
Unlike the wealth of the ethnic Indonesian political elites, the wealth of the Chinese are obvious to all because they really have to work for it. Against all the odds stacked against them, they have to reach out to every corner of the Indonesian archipelago to build the supply network etc. that they are renowned for. The fact that they manage to make money out of the locals is testimony to the real value they obviously deliver to their clientele, the locals included. Have any Chinese or Indian descendents ever wondered why almost all of our grandparents seem to speak Malay, broken Malay it may be? But it’s hard to find any Malay of any age who can speak Chinese or Indian? May be except some Malays in Penang & Singapore who also happens to be the better off Malays? I asked myself that question some years back. In their time which was during the Western colonial years prior to 1950, there would be no real need to speak Malay since the government is anything but Malay. Unless you saw the value of understanding and reaching out to the other person. And also, to do business with him. And exploit him? To the extent the western colonial masters and their own leaders did?
As to whether the Chinese should 'help the locals improve their lives', do we expect them to 'hand out the fish as oppose to teaching them how to fish'? Do we expect them to hand their hard earned money out in the form of charity when they live their own lives wondering what his neighbor is going to do to his wife & children the next moment? Would they not look to safekeep their savings somewhere else so that they can call upon them when events turn sour like they do now? They need the money to rebuild their lives somewhere else if they have to. Remember nothing comes free, not even freedom and human rights in the US. You'll need to have a certain amount of assets before you're allowed to even lay foot in the soil they took from someone else. But, how about the poor Chinese Indonesian? Oh, surely you don't believe there is no such thing.
That's my view on Indonesia and the Indonesian Chinese. The latter are definitely not in the same position as the whites of the age of American slavery or the Israelites of the 90's - in control of everything but it's just a matter of the will to do it.
I dream of the day when Indonesia sees the ascent of an ethnic man man enough to grab his country's harsh realities by the neck and lead the country forward. When that happens I will be one of the happiest Chinese in this part of the world.
Rgds
CCK
Subject: Shattered Lives
The Yellow Ribbon Campaign
Dear friends,
Please forward this "Yellow Ribbon" to all friends around the world to show our soladirity and sympathy for the victims of the riots and chaos in Indonesia last May 13-15. Many Chinese Indonesian citizens were abused, tortured and killed. Their houses and stores were looted and burnt.
Hundreds of Chinese Indonesian girls/women (aged 10-55) were sexually harassed and gang raped brutally. Some victims were even raped in front of their family members or in front of inhuman cheering crowd. Some of them were even thrown into the fire and burnt to death after being raped. Yet, not many actions seem to have been taken to investigate all this or to help the victims. And not very many people seem to know or care about what happened.
Please help to spread the news and let the world know. We need help to get more international attention to help Chinese Indonesians, who are now living in fear in Indonesia. Please pass this ribbon around as the symbol of campaign against human rights violations,injustice, and racism towards Chinese Indonesians. Show that we care and may God help us!
The following article was posted on 06/12/98 in the Huaren (Chinese People) Bulletin Board by Indra.
A Victim's Account of Rapes and Murders
Here I post a victim's account of the May tragedy. The original is in Indonesian, and I did the English translation (forgive some awkwardness in it). Spread the word around and let the world know what really happened.
English Translation
(beginning of the account)
Name: Vivian (not real) Age: 18 Sex: Female. Vivian has a little sister and a brother. She lives in an apartment with her family.
At 9.15 am, a huge crowd had gathered around the apartment. They screamed,"Let's butcher the Chinese!", "Let's eat pigs!", "Let's have a party!" We lived on the 7th floor, and we got a call from a family who lived in the 3rd floor that the crowd had reached the second floor. They even chased some occupants upstairs. We were all very frightened. In our fright, we prayed and left everything in God's hands.
Afterward, we left our room and went upstairs to the topmost floor, as it was impossible to go downstairs. We got to the 15th floor, and stayed there with one of our acquiantances. Not long afterward, we were surprised because there were some of the crowd coming out of the elevator right before we entered the room. We hurried into the room and locked the door tight.
At that time, we heard them knocked the other rooms' doors loudly, and there were screams from women and girls. The room was filled with fear. We realized that they would come to us. So we spread throughout the room and hid in corners. Inside, we could heard girls, whose age around 10-12, screaming, "Mommy... Mommy..." "Mom... Mom... it hurts.."
That time I didn't know what was happening. After about half an hour, the noise diminished, and we had some guts to go out and check. It was indescribable. A lot, some of them girls, young girls, lied on the floor.
"O my God, what has happened?" Seeing all of this, my little sister, Veny, screamed histerically and hugged her father. Tears started coming down from my eyes.
With our acquaintances, a newly-wed couple,we started going downstairs. Reaching the 10th floor, we heard a scream for help. The scream was very clear, and we decided to go down and see. But as we turned, we saw a lot of people. I saw a woman in her 20s being raped by four men. She tried to fight, but she was held tight. Realizing the danger, we ran with all our might. But unfortunately, the mob caught Veny. We tried to rescue her, but we had to give up.
There were around 60 of them. They tied us--I, my father, my mother, Veny, Dony, Uncle Dodi, Aunt Vera--with ripped sheet. They led us to a room. Uncle Dodi asked what they wanted, but they didn't answer. They cast an evil and savage look. One of them grabbed Veny rudely and dragged her to a sofa.
At that time, I knew that she was in danger. I screamed loudly, and one of the mob slapped me. My father who also screamed was hit by a wooden block, and he fainted. My mother had fainted when Veny was dragged to the sofa. I could only pray and pray that the disaster would not befall us...
Uncle Dodi kept trying to persuade them by offering money, but the effort was fruitless. And in the end they forcedly raped Veny. Not able to stand all of this anymore, I cried and closed my eyes. There were about 5 people who raped Veny, and before beginning, everyone always said, "Allahu akbar" (and Islamic phrase in Arabic, meaning "God is the greatest"). They were ferocious, brutal.
Not long afterward, around 9 men came to the room and dragged me. I also had a chance to see them forcing and dragging Aunt Veny. But, I instantly fainted and everything was blank. I became conscious at around 5 or 6 in the afternoon. My head was in pain, and then I realized that I had no clothes on my body. I cried.
I was very depressed. I realized that my family were still there, and obscurely I saw my father hugged my mother and Doni. I also saw that Uncle Dodi was lying on the floor, and Uncle Vera was crying over his body. I felt so weak, and fainted again.
The next day, I was in the Pluit Hospital. My mother and father were beside me. With all the pains on my body, I asked, "Mom, why Vinny, Mom?" I felt a stinging pain as I said those words. I felt my cheek swollen. My mother instantly cried and couldn't speak any words, while my father, holding his tears, managed to smile.
After 4 days in treatment, my condition started getting better. With a sad look, my father then told me what happened. After I fainted, 7 people raped me. At that time my father still couldn't see well after being hit with the block. They raped me by rolling my body and hit it against the wall. Then, my father said to me, "Vin, Venny has gone..." I was confused and instantly cried loudly. "Why, Dad???" My father didn't answer. He told me to rest and went out of the room. I cried over and over again, feeling that my life is worthless anymore.
A week ago, after I had been able to gone home, I was told everything that happened. When she was raped, Veny kept fighting, and so she was slapped repeatedly by her rapists. The last time she fought,Veny spitted on one of them. Offended, the man grabbed a knive and stabbed it to Veny's stomach. Brutally, he did it repeatedly until Veny drew her last breath with blood all over her.
After I heard the story, I was shocked. My father then said that Uncle Dodi had the same fate, watched by Aunt Vera who is also a victim of the rape. God... why should all of this happen? Now Aunt Vera stays in her parents' house,accompanied by her sister. According to what the sister said, she is still shocked. Her face is blank, and often she refuses to eat.
Almost every hour, my mother and I cry over this tragedy. I couldn't ever forget it. No matter what, they (the mob) are uncivilized people who have no sense of humanity.
(end of the account)
Indonesian Original:
Nama : Vivian (samaran) Umur : 18 tahun Kelamin : Perempuan
Dia memiliki seorang adik perempuan dan seorang adik laki-laki.Dia tinggal sekeluarga di apartemen ini. Sekitar pukul 9.15 pagi hari sekeliling apartemen sudah dikerumuni ratusan orang massa yang terlihat seram sekali. Mereka berteriak-teriak seperti kesetanan, "Bantai Cina", "Mari makan Babi", "Ayo Pesta". Kami sekeluarga tinggal di lantai 7. Saat itu, kami ditelepon oleh keluarga yang tinggal di lantai 3 bahwa massa sudah naik ke lantai 2, dan bahkan ada penghuni yang dikejar-kejar sampai ke atas. Saat itu kami langsung takut, tapi dalam ketakutan itu, kami sekeluarga berdoa dan pasrah kepada Tuhan.
Setelah itu, kami bersiap pergi meninggalkan kamar, dan kami terus naik melalui tangga ke lantai atas, karena ke bawah sudah tidak mungkin. Kami naik sampai lantai 15 dan di sana kami diam di kamar salah seorang kenalan kami. Tidak lama kemudian, kami kaget karena dari lift keluar sejumlah orang tepat saat kami akan masuk, lalu kami cepat-cepat masuk dan kemudian mengunci pintu. Saat itu kami mendengar pintu kamar lain diketuk dengan keras dan terdengar banyak teriakan dari ibu-ibu dan anak2 gadis. Sementara kami merasakan amat mencekam di dalam kamar,lalu sadar bahwa kamar kami nantinya akan mendapat giliran, maka kami langsung berpencar dan sembunyi di sudut2 kamar. Dari dalam kami mendengar sayup-sayup anak2 gadis sekitar umur 10 sampai 12 tahun yang berteriak, "mami....mami......", "mami.....sakit.....mami..........". Saat itu saya tidak tahu apa yang terjadi.
dorisng@ucla.edu
Subscribe to:
Posts (Atom)