For S-East Asia, Africa spells opportunity W BY … · company Hyflux, and a clutch of ... chain....
1
L AST week The Wall Street Journal pub- lished an op-ed article by Carly Fiorina ti- tled “Hillary Clinton Flunks Economics”, ridiculing Ms Clinton’s assertions that the US economy does better under Democrats. “Ameri- ca,” declared Ms Fiorina, “needs someone in the White House who actually knows how the econo- my works”. Well, we can agree on that much. Partisan positioning on the economy is actu- ally quite strange. Republicans talk about eco- nomic growth all the time. They attack Demo- crats for “job-killing” government regulations, they promise great things if elected, they predi- cate their tax plans on the assumption that growth will soar and raise revenues. Democrats are far more cautious. Yet Ms Clinton is com- pletely right about the record: Historically, the economy has indeed done better under Demo- crats. This contrast raises two big questions. First, why has the economy performed better under Democrats? Second, given that record, why are Republicans so much more inclined than Democrats to boast about their ability to deliver growth? Before I get to those questions, let’s talk about the facts. The arithmetic on partisan differences is ac- tually stunning. Last year the economists Alan Blinder and Mark Watson circulated a paper comparing economic performance under Demo- cratic and Republican presidents since 1947. Un- der Democrats, the economy grew, on average, 4.35 per cent per year; under Republicans, only 2.54 per cent. Over the whole period, the econo- my was in recession for 49 quarters; Democrats held the White House during only eight of those quarters. But isn’t the story different for the Obama years? Not as much as you think. Yes, the recov- ery from the Great Recession of 2007-2009 has been sluggish. Even so, the Obama record com- pares favourably on a number of indicators with that of George W Bush. In particular, de- spite all the talk about job-killing policies, pri- vate-sector employment is 8 million higher than it was when Barack Obama took office, twice the job gains achieved under his predeces- sor before the recession struck. Why is the Democratic record so much bet- ter? The short answer is that we don’t know. Mr Blinder and Mr Watson look at a variety of possible explanations, and find all of them want- ing. There’s no indication that the Democratic advantage can be explained by better monetary and fiscal policies. Democrats seem, on aver- age, to have had better luck than Republicans on oil prices and technological progress. Over- all, however, the pattern remains mysterious. Certainly no Democratic candidate would be jus- tified in promising dramatically higher growth if elected. And in fact, Democrats never do. Republicans, however, always make such claims: Every candidate with a real chance of get- ting the nomination is claiming that his tax plan would produce a huge growth surge – a claim that has no basis in historical experience. Why? Part of the answer is epistemic closure: Mod- ern conservatives generally live in a bubble into which inconvenient facts can’t penetrate. One constantly hears assertions that Ronald Reagan achieved economic and job growth never matched before or since, when the reality is that Bill Clinton surpassed him on both measures. Right-wing news media trumpet the economic disappointments of the Obama years, while hardly ever mentioning the good news. So the myth of conservative economic superiority goes unchallenged. Beyond that, however, Re- publicans need to promise economic miracles as a way to sell policies that overwhelmingly fa- vour the donor class. It would be nice if even one major GOP candi- date would come out against big tax cuts for the 1 per cent. But none have, and all of the major players have called for cuts that would subtract trillions from revenue. To make up for this lost revenue, it would be necessary to make sharp cuts in big programmes – that is, in Social Securi- ty and/or Medicare. But Americans overwhelmingly believe that the wealthy pay less than their fair share of tax- es, and even Republicans are closely divided on the issue. And the public wants to see Social Se- curity expanded, not cut. So how can a politi- cian sell the tax-cut agenda? The answer is, by promising those miracles, by insisting that tax cuts on high incomes would both pay for them- selves and produce wonderful economic gains. Hence the asymmetry between the parties. Democrats can afford to be cautious in their eco- nomic promises precisely because their policies can be sold on their merits. Republicans must sell an essentially unpopular agenda by confi- dently declaring that they have the ultimate reci- pe for prosperity – and hope that nobody points out their historically poor track record. And if someone does point to that record, you know what they’ll do: Start yelling about me- dia bias. NYT ❚❚ THE BOTTOM LINE Partisan growth gaps W ITH Africa now billed as one of the most promis- ing “new fron- tiers” of the global econo- my, South- east Asian companies are positioning them- selves to play a bigger role in the continent. One of the institutions that is helping pave their way is the Africa-South East Asia Chamber of Com- merce (Aseacc). Operational since 2013, this newest busi- ness chamber in Singapore has 14 members and counting. “We have the big guys,” says the Chamber’s co-founder and chairman of its advisory board Paulo Gomes, a Harvard-educated native of Guinea Bissau and former executive director for 24 African countries at the World Bank. Mr Gomes was recently in Singapore on a three-month stint as distinguished visiting fellow at the Centre for African Studies estab- lished by Nanyang Technological University (NTU) and the Singapore Business Federation. He notes that the membership includes the large shipping company Pacific International Lines, commodity players Wilmar International and Olam International, the water treatment company Hyflux, and a clutch of large African companies such as Ecobank (the leading pan- African bank), African Export-Import Bank and NSIA Insurance, one of Africa’s largest insur- ance groups. The membership is set to expand, according to Mr Gomes. “We have a big group from Malay- sia who is also interested, as well as a few companies from Indonesia, the MAC Group from Tanzania – a large private-sector group – and others. We’ll be having our first AGM in Africa in November.” The Aseacc was born of an idea proposed at the first Africa-South East Asia Business Forum in 2010. There was some debate about where in South-east Asia it should be based. “There was lots of lobbying from Malaysia and Indonesia to set it up in those countries,” says M Gomes. “But we, the founders, thought Singapore would be a better place to do it.” One reason was that they wanted to expose Africa’s business community to the “Singapore model”. “Singapore has succeeded in blending the pri- vate sector and the public sector to transform a country,” he points out. “We thought that model is useful to learn from. “We’re not saying it’s a perfect example; Sin- gapore is a different context and its model is not easily replicable in many African countries. But many have large public sectors, and many have had to sell a lot of state enterprises be- cause they were inefficient.” However, there are cases of state-owned companies being run efficiently, according to Mr Gomes. “Ethiopia has a number of public-sec- tor enterprises and some are successful – like Ethiopian Airlines, which is the best African air- line. It is run like a Singapore GLC. There is no interference by government, and it works. And now, that experience is being extended to other African countries.” CHINA’S PRESENCE IN AFRICA “People talk a lot about China’s links with Afri- ca,” says Mr Gomes. “But South-east Asia has been engaged with Africa for many years – since the Bandung Conference of 1955.” Initially, the engagement was more political and not so much focused on business. But subsequently, business activities have picked up. In terms of trade, China is by far Africa’s biggest partner, with two-way trade flows ap- proaching US$200 billion. China is also big in terms of projects. “China’s SOEs (state-owned enterprises) build, but they don’t invest so much,” explains Mr Gomes. “They get financing from China, they build a dam or they build a bridge, and then they leave.” Most of the equipment comes from China as well, so there are few spin-offs for local SMEs (small and medium enterprises). But that said, Mr Gomes points out that China’s contribution to Africa’s development has been enormous. “We have to be grateful for what China has done. We were really struggling to find resources to finance infrastructure. And how can you develop a continent without infra- structure?” Mr Gomes points out that some of what China has built has transformed entire coun- tries. “In Guinea-Conakry, they financed a dam which is now operational. It supplies 260 mega- watts and it will provide 40 per cent of the country’s energy needs. In my country, Guinea- Bissau, we had only 10 megawatts of installed capacity – probably even less than NTU. Be- cause of this dam, 40 per cent of Guinea Bissau’s needs will also be met, and 15 per cent of Gambia’s and 6 per cent of Senegal’s.” However, when it comes to investment, Chi- na is not the biggest; it lags behind the United States, UK, France and South Africa. In recent years, South-east Asia’s investments in Africa have also reached significant proportions. For example, Temasek-owned Pavilion Energy has major investments in natural gas in Nigeria and Tanzania; Singapore-listed Olam and Wilmar have invested heavily in Gabon, Nigeria, Liberia and Côte d'Ivoire, among others. Many Malay- sian companies also have large investments in Africa. THE SINGAPORE BRAND Among South-east Asian countries, Singapore is considered the “best brand”, according to Mr Gomes. “The Singapore brand is unique in Afri- ca,” he says. “And I think Singaporeans don't re- alise that enough. When you are a brand, it’s an asset.” There is a strong consciousness of Singapore in Nigeria, the most populous African country. “Rwanda is also aligning itself with Singapore in terms of its strategy. It even has an embassy here.” Some big opportunities for Singapore lie in urban development and planning. Mr Gomes points out that Temasek-linked Surbana, which specialises in urban solutions, is already design- ing master plans for cities in Rwanda, Burundi and Congo, and exploring opportunities in Sen- egal and Guinea-Bissau. “There are more than 20 African mayors pressuring us to get Surbana to do their urban planning,” he says. The needs are urgent, because Africa faces major challenges from both climate change and rural-to-urban migration. “No place in the world will be facing the challenge Africa will be facing in the next 10 years in dealing with the massive arrival of people in cities – not even China. So, if you don’t plan the cities, you’re going to have a catastrophic situation.” Africa also faces challenges arising from the downturn in commodity prices. “It’s going to hurt us,” says Mr Gomes. “But it’s a good lesson and it’s happening at the best moment. We can- not continue to design our budgets with such high commodity price assumptions, as some countries have done. So it’s a reality check. We have been talking in Africa about diversification and industrialisation for the last 20 years. But we haven’t moved forcibly.” Africa must do that, he adds. “About two mil- lion young people a month enter the labour mar- ket every month. How do we give them jobs? We can’t do it by exporting cocoa and cotton.” And so, value-added manufacturing spells another opportunity, says Mr Gomes. Some African countries have already started to go be- yond exporting raw materials. “Côte d'Ivoire is the number one producer of cocoa in the world. In the last three years, they have transformed about 15 per cent of their cocoa production by adding value. They haven’t gone all the way to chocolate yet. But they’re making cocoa butter, cocoa-based liquor and moving into the supply chain. This creates jobs.” There is thus a wealth of opportunities in Africa for South-east Asian countries to tap. And they can go it alone, says Mr Gomes. They don’t necessarily need hand-holding by countries which may have a longer relationship with the continent. “Doing business in Africa today doesn’t need a historical relationship,” he points out. “You just need to go with pragmatism. There is a whole new generation of people in Africa who have been exposed to Asia, America and else- where and who would be more than happy to team up with Singapore.” For S-East Asia, Africa spells opportunity Singapore is considered the “best brand” in the continent, and some big opportunities for it lie in urban development and planning, says Aseacc’s co-founder. BY VIKRAM KHANNA THE battles over the US budget between Democratic President Barack Obama and congressional Republicans that have dominated the legislative scene in Washington for close to eight years can be compared to a lousy television show that for some reason keeps coming back for new episodes and more seasons, until someone finally says: “Enough! Let us make a deal.” That moment may have come last week as Mr Obama started preparing for the last year of his presidency and against the back- drop of changes in the Republican leadership on Capitol Hill when the two sides struck a budget deal that would increase spending on domestic and defence programmes over the next two years while suspending the debt limit into 2017. The development came as somewhat of an anti-climax to the budget fights of recent years that had taken the form of a classic “game of chicken” between the White House and the Republican leaders, with each side refusing to yield to the other’s demands and threatening to drive the American economy over the cliff. Some of the responsibility for the political polarisation and the ensuing budgetary gridlock in Washington lay with the Republi- cans who ended up taking over both the House of Representatives and the Senate. Operating under the growing influence of mem- bers of the Tea Party, the populist wing of the GOP, the Republicans rejected White House proposals for a “grand deal” on the budget that would have included both spending cuts and changes to the tax code. Instead, the Republicans have threatened again and again not to pass the budgets by the required deadlines and risked the shut- ting down of the federal government, and even resorted to the use of the so-called “nuclear weapon”, in the form of the US govern- ment defaulting on its debt. This Republican brinkmanship strate- gy proved not only to be costly to American taxpayers and busi- nesses but also eroded the credit of the United States in the finan- cial markets and raised serious questions about the ability of Re- publican and Democratic leaders in Washington to put the Ameri- can financial house in order. While the broad deal reached by both sides and which was passed in the House by a 266-to-167 vote last Wednesday would avert pending US debt default, it is not clear whether it reflects a growing consensus among Republicans and Democrats to work to- gether on the kind of grand deal that would lead eventually to a re- duction in the US deficits through cuts in spending on social-eco- nomic programmes (which Democrats oppose) and some tax in- creases (which Republicans reject). Indeed, some sceptics would argue that it is nothing more than an interim agreement that amounted to a ceasefire in the budget wars, kicking the budgetary can to the new president. Others sug- gest that the election of the young and energetic Republican Repre- sentative Paul Ryan as the new Speaker of the House would make it more likely that the next president, whether a Democrat or a Repub- lican, would be able to cooperate with Congress. In any case, in addition to ending the government shutdown and default threat, the spending measures in the new deal provide for a fiscal stimulus that could help accelerate economic growth just as the Federal Reserve is ending its monetary stimulus pro- gramme. China’s contribution to Africa’s development has been enormous and, in recent years, South-east Asia’s investments in the continent have reached significant proportions, says Mr Gomes (left) By Paul Krugman EDITORIAL Has the American Budget War truly ended or is it just an armistice? One constantly hears assertions that Ronald Reagan achieved economic and job growth never matched before or since, when the reality is that Bill Clinton surpassed him on both measures. Singapore Press Holdings News Centre, 1000 Toa Payoh North, Podium Level 3, Singapore 318994 SPH 6319-6319 | BT 6319-5360 | FAX: 6319-8278 Customer service: 6388-3838 www.businesstimes.com.sg Press releases: [email protected] Letters: [email protected] chief executive officer singapore press holdings ALAN CHAN editor ALVIN TAY associate editor VIKRAM KHANNA executive editor & news editor WONG WEI KONG editor-in-chief (english/malay/tamil media group) PATRICK DANIEL executive vice-president (marketing) ELSIE CHUA night editor EDMUND LOH bt inc editor LILIAN ANG chief sub-editor DEXTER LEE foreign editor QUAH CHOON POH digital editor CHRISTOPHER LIM associate news editor VEN SREENIVASAN associate news editor ANGELA TAN assistant news editor CHEN HUIFEN lifestyle editor JAIME EE infographics editor SIMON ANG “Doing business in Africa today doesn’t need a historical relationship. You just need to go with pragmatism. There is a whole new generation of people in Africa who have been exposed to Asia, America and elsewhere and who would be more than happy to team up with Singapore.” Mr Gomes 24 | OPINION The Business Times | Tuesday, November 3, 2015
Transcript of For S-East Asia, Africa spells opportunity W BY … · company Hyflux, and a clutch of ... chain....
LAST week The Wall Street Journal pub-
lished an op-ed article by Carly Fiorina ti-
tled “Hillary Clinton Flunks Economics”,
ridiculing Ms Clinton’s assertions that the USeconomy does better under Democrats. “Ameri-
ca,” declared Ms Fiorina, “needs someone in the
WhiteHousewhoactuallyknowshowtheecono-my works”. Well, we can agree on that much.
Partisan positioning on the economy is actu-
ally quite strange. Republicans talk about eco-nomic growth all the time. They attack Demo-
crats for “job-killing” government regulations,
they promise great things if elected, they predi-cate their tax plans on the assumption that
growth will soar and raise revenues. Democrats
are far more cautious. Yet Ms Clinton is com-
pletely right about the record: Historically, theeconomy has indeed done better under Demo-
crats. This contrast raises two big questions.
First, why has the economy performed betterunder Democrats? Second, given that record,
why are Republicans so much more inclined
than Democrats to boast about their ability todeliver growth?
Before I get to those questions, let’s talk
about the facts.The arithmetic on partisan differences is ac-
tually stunning. Last year the economists Alan
Blinder and Mark Watson circulated a paper
comparingeconomicperformanceunderDemo-
craticandRepublicanpresidentssince1947.Un-der Democrats, the economy grew, on average,
4.35 per cent per year; under Republicans, only
2.54per cent. Over the whole period, the econo-my was in recession for 49 quarters; Democrats
held the White House during only eight of those
quarters.But isn’t the story different for the Obama
years? Not as much as you think. Yes, the recov-
ery from the Great Recession of 2007-2009 hasbeen sluggish. Even so, the Obama record com-
pares favourably on a number of indicators
with that of George W Bush. In particular, de-
spite all the talk about job-killing policies, pri-vate-sector employment is 8 million higher
than it was when Barack Obama took office,
twicethe jobgainsachievedunderhispredeces-sor before the recession struck.
Why is the Democratic record so much bet-
ter? The short answer is that we don’t know.Mr Blinder and Mr Watson look at a variety of
possibleexplanations,andfindallof themwant-
ing. There’s no indication that the Democraticadvantage can be explained by better monetary
and fiscal policies. Democrats seem, on aver-
age, to have had better luck than Republicans
on oil prices and technological progress. Over-
all, however, the pattern remains mysterious.CertainlynoDemocraticcandidatewouldbejus-
tified in promising dramatically higher growth
if elected. And in fact, Democrats never do.Republicans, however, always make such
claims:Everycandidatewitharealchanceofget-
ting the nomination is claiming that his tax planwould produce a huge growth surge – a claim
that has no basis in historical experience. Why?
Part of the answer is epistemic closure: Mod-ern conservatives generally live in a bubble into
which inconvenient facts can’t penetrate. One
constantly hears assertions that Ronald Reagan
achieved economic and job growth nevermatchedbeforeor since,whenthe reality is that
Bill Clinton surpassed him on both measures.
Right-wing news media trumpet the economicdisappointments of the Obama years, while
hardly ever mentioning the good news. So the
myth of conservative economic superioritygoes unchallenged. Beyond that, however, Re-
publicans need to promise economic miracles
as a way to sell policies that overwhelmingly fa-vour the donor class.
Itwouldbenice ifeven onemajorGOPcandi-date would come out against big tax cuts for the1 per cent. But none have, and all of the majorplayers have called for cuts that would subtracttrillions from revenue. To make up for this lostrevenue, it would be necessary to make sharpcuts inbigprogrammes– that is, inSocialSecuri-ty and/or Medicare.
But Americans overwhelmingly believe thatthe wealthy pay less than their fair share of tax-es, and even Republicans are closely divided onthe issue. And the public wants to see Social Se-curity expanded, not cut. So how can a politi-cian sell the tax-cut agenda? The answer is, bypromising those miracles, by insisting that taxcuts on high incomes would both pay for them-selves and produce wonderful economic gains.
Hence the asymmetry between the parties.Democratscanafford tobecautious intheireco-nomicpromisespreciselybecause theirpoliciescan be sold on their merits. Republicans mustsell an essentially unpopular agenda by confi-dentlydeclaringthat theyhavetheultimatereci-pe for prosperity– and hope thatnobody pointsout their historically poor track record.
And if someone does point to that record,youknowwhat they’lldo:Startyellingaboutme-dia bias. NYT
❚❚ THE BOTTOM LINE
Partisan growth gaps
WITH Africanow billed asone of themost promis-ing “new fron-tiers” of theglobal econo-my, South-
east Asian companies are positioning them-selves to playabigger role in the continent. Oneof the institutions that is helpingpave their wayis the Africa-South East Asia Chamber of Com-merce (Aseacc).
Operational since 2013, this newest busi-ness chamber in Singapore has 14 membersand counting.
“We have the big guys,” says the Chamber’sco-founder and chairman of its advisory boardPaulo Gomes, a Harvard-educated native ofGuineaBissau and former executive director for24 African countries at the World Bank.
Mr Gomes was recently in Singapore on athree-month stint as distinguished visitingfellow at the Centre for African Studies estab-lished by Nanyang Technological University(NTU) and the Singapore Business Federation.
He notes that the membership includes thelarge shipping company Pacific InternationalLines, commodity players Wilmar Internationaland Olam International, the water treatmentcompany Hyflux, and a clutch of large Africancompanies such as Ecobank (the leading pan-African bank), African Export-Import Bank andNSIA Insurance, one of Africa’s largest insur-ance groups.
The membership is set to expand, accordingto Mr Gomes. “We have a big group from Malay-sia who is also interested, as well as a fewcompanies from Indonesia, the MAC Groupfrom Tanzania – a large private-sector group –and others. We’ll be having our first AGM inAfrica in November.”
The Aseacc was born of an idea proposed atthe first Africa-South East Asia Business Forumin 2010. There was some debate about where inSouth-east Asia it should be based. “There waslots of lobbying from Malaysia and Indonesia toset it up in those countries,” says M Gomes. “Butwe, the founders, thoughtSingapore would be abetter place to do it.”
One reason was that they wanted to exposeAfrica’s business community to the “Singaporemodel”.
“Singaporehassucceeded inblendingthepri-vate sector and the public sector to transform acountry,” he points out. “We thought that modelis useful to learn from.
“We’re not saying it’s a perfect example; Sin-gapore is a different context and its model isnot easily replicable in many African countries.But many have large public sectors, and manyhave had to sell a lot of state enterprises be-cause they were inefficient.”
However, there are cases of state-ownedcompanies being run efficiently, according toMrGomes. “Ethiopiahasanumberofpublic-sec-tor enterprises and some are successful – likeEthiopian Airlines, which is the best African air-line. It is run like a Singapore GLC. There is nointerference by government, and it works. Andnow, that experience is being extended to otherAfrican countries.”
CHINA’S PRESENCE IN AFRICA“People talk a lot about China’s links with Afri-ca,” says Mr Gomes. “But South-east Asia hasbeenengaged withAfrica formanyyears – sincethe Bandung Conference of 1955.” Initially, theengagement was more political and not somuch focused on business. But subsequently,business activities have picked up.
In terms of trade, China is by far Africa’sbiggest partner, with two-way trade flows ap-proaching US$200 billion.
China is also big in terms of projects.
“China’s SOEs (state-owned enterprises) build,but they don’t invest so much,” explains MrGomes. “They get financing from China, theybuild a dam or they build a bridge, and thenthey leave.” Most of the equipment comes fromChinaaswell, so thereare fewspin-offs for localSMEs (small and medium enterprises).
But that said, Mr Gomes points out thatChina’s contribution to Africa’s developmenthas been enormous. “We have to be grateful forwhat China has done. We were really strugglingto find resources to finance infrastructure. Andhow can you develop a continent without infra-structure?”
Mr Gomes points out that some of whatChina has built has transformed entire coun-tries. “In Guinea-Conakry, they financed a damwhich is now operational. It supplies 260 mega-watts and it will provide 40 per cent of thecountry’s energy needs. In my country, Guinea-Bissau, we had only 10 megawatts of installedcapacity – probably even less than NTU. Be-cause of this dam, 40 per cent of GuineaBissau’s needs will also be met, and 15 per centof Gambia’s and 6 per cent of Senegal’s.”
However, when it comes to investment, Chi-na is not the biggest; it lags behind the UnitedStates, UK, France and South Africa. In recentyears, South-east Asia’s investments in Africahave also reached significant proportions. Forexample, Temasek-owned Pavilion Energy hasmajor investments in natural gas in Nigeria andTanzania; Singapore-listed Olam and Wilmarhave invested heavily in Gabon, Nigeria, Liberiaand Côte d'Ivoire, among others. Many Malay-sian companies also have large investments inAfrica.
THE SINGAPORE BRANDAmong South-east Asian countries, Singapore isconsidered the “best brand”, according to Mr
Gomes. “The Singapore brand is unique in Afri-ca,” he says. “And I think Singaporeans don't re-alise that enough. When you are a brand, it’s anasset.”
There isastrongconsciousnessofSingaporein Nigeria, the most populous African country.“Rwanda is also aligning itself with Singapore interms of its strategy. It even has an embassyhere.”
Some big opportunities for Singapore lie inurban development and planning. Mr Gomespoints out that Temasek-linked Surbana, whichspecialises inurbansolutions, isalreadydesign-ing master plans for cities in Rwanda, Burundiand Congo, and exploring opportunities in Sen-egal and Guinea-Bissau. “There are more than20 African mayors pressuring us to get Surbanato do their urban planning,” he says.
The needs are urgent, because Africa facesmajor challenges from both climate change andrural-to-urban migration. “No place in the worldwill be facing the challenge Africa will be facingin the next 10 years in dealing with the massivearrival of people in cities – not even China. So, ifyou don’t plan the cities, you’re going to have acatastrophic situation.”
Africa also faces challenges arising from thedownturn in commodity prices. “It’s going tohurt us,” says Mr Gomes. “But it’s a good lessonand it’s happening at the best moment. We can-not continue to design our budgets with suchhigh commodity price assumptions, as somecountries have done. So it’s a reality check. Wehavebeen talking inAfricaabout diversificationand industrialisation for the last 20 years. Butwe haven’t moved forcibly.”
Africamust do that,he adds. “About two mil-lionyoungpeopleamonthenter the labourmar-ket every month. How do we give them jobs?We can’t do it by exporting cocoa and cotton.”
And so, value-added manufacturing spellsanother opportunity, says Mr Gomes. SomeAfrican countries have already started to go be-yond exporting raw materials. “Côte d'Ivoire isthe number one producer of cocoa in the world.In the last three years, they have transformedabout 15 per cent of their cocoa production byadding value. They haven’t gone all the way tochocolate yet. But they’re making cocoa butter,cocoa-based liquor and moving into the supplychain. This creates jobs.”
There is thus a wealth of opportunities inAfrica forSouth-eastAsiancountries to tap.Andthey can go it alone, says Mr Gomes. They don’tnecessarily need hand-holding by countrieswhich may have a longer relationship with thecontinent.
“Doing business in Africa today doesn’t needa historical relationship,” he points out. “Youjust need to go with pragmatism. There is awhole new generation of people in Africa whohave been exposed to Asia, America and else-where and who would be more than happy toteam up with Singapore.”
For S-East Asia, Africaspells opportunitySingapore is considered the “best brand” in the continent, and some big opportunities for itlie in urban development and planning, says Aseacc’s co-founder. BY VIKRAM KHANNA
THE battles over the US budget betweenDemocratic President Barack Obama andcongressional Republicans that have dominatedthe legislative scene in Washington for close toeight years can be compared to a lousy televisionshow that for some reason keeps coming back fornew episodes and more seasons, until someonefinally says: “Enough! Let us make a deal.” That moment may have come last week as Mr Obama started
preparing for the last year of his presidency and against the back-drop of changes in the Republican leadership on Capitol Hill whenthe two sidesstruckabudgetdeal thatwould increasespending ondomestic and defence programmes over the next two years whilesuspending the debt limit into 2017.
The development came as somewhat of an anti-climax to thebudget fights of recent years that had taken the form of a classic“game of chicken” between the White House and the Republicanleaders,witheachsiderefusingtoyieldto theother’sdemandsandthreatening to drive the American economy over the cliff.
Some of the responsibility for the political polarisation and theensuing budgetary gridlock in Washington lay with the Republi-cans who ended up taking over both the House of Representativesand the Senate. Operating under the growing influence of mem-bersof theTeaParty, thepopulistwing of theGOP, theRepublicansrejected White House proposals for a “grand deal” on the budgetthat would have included both spending cuts and changes to thetax code.
Instead, the Republicans have threatened again and again notto pass the budgets by the required deadlines and risked the shut-ting down of the federal government, and even resorted to the useof the so-called “nuclear weapon”, in the form of the US govern-ment defaulting on its debt. This Republican brinkmanship strate-gy proved not only to be costly to American taxpayers and busi-nesses but also eroded the credit of the United States in the finan-cial markets and raised serious questions about the ability of Re-publican and Democratic leaders in Washington to put the Ameri-can financial house in order.
While the broad deal reached by both sides and which waspassed in the House by a 266-to-167 vote last Wednesday wouldavert pending US debt default, it is not clear whether it reflects agrowing consensus among Republicans and Democrats to work to-gether on the kind of grand deal that would lead eventually to a re-duction in the US deficits through cuts in spending on social-eco-nomic programmes (which Democrats oppose) and some tax in-creases (which Republicans reject).
Indeed, some sceptics would argue that it is nothing more thanan interim agreement that amounted to a ceasefire in the budgetwars, kicking the budgetary can to the new president. Others sug-gest that the electionof the young and energetic Republican Repre-sentative Paul Ryan as the new Speaker of the House would make itmorelikely that thenextpresident,whetheraDemocratoraRepub-lican, would be able to cooperate with Congress.
In any case, in addition to ending the government shutdownand default threat, the spending measures in the new deal providefor a fiscal stimulus that could help accelerate economic growthjust as the Federal Reserve is ending its monetary stimulus pro-gramme.
China’scontribution toAfrica’sdevelopment hasbeen enormousand, in recentyears, South-eastAsia’sinvestments inthe continenthave reachedsignificantproportions,says Mr Gomes(left)
By Paul Krugman
EDITORIAL
Has the AmericanBudget War trulyended or is itjust an armistice?
One constantly hearsassertions thatRonald Reaganachieved economicand job growth nevermatched before orsince, when thereality is that BillClinton surpassedhim on bothmeasures.
Singapore Press HoldingsNews Centre, 1000 Toa Payoh North, Podium Level 3, Singapore 318994
SPH 6319-6319 | BT 6319-5360 | FAX: 6319-8278Customer service: 6388-3838www.businesstimes.com.sg
Press releases: [email protected] Letters: [email protected]
chief executive officersingapore press holdings
ALAN CHAN
editorALVIN TAY
associate editorVIKRAM KHANNA
executive editor & news editorWONG WEI KONG
editor-in-chief(english/malay/tamil media group)
PATRICK DANIEL
executive vice-president (marketing)ELSIE CHUA
night editorEDMUND LOH
bt inc editorLILIAN ANG
chief sub-editor DEXTER LEE
foreign editorQUAH CHOON POH
digital editorCHRISTOPHER LIM
associate news editorVEN SREENIVASANassociate news editorANGELA TANassistant news editorCHEN HUIFENlifestyle editorJAIME EEinfographics editorSIMON ANG
“Doing business in Africatoday doesn’t need ahistorical relationship. Youjust need to go withpragmatism. There is awhole new generation ofpeople in Africa who havebeen exposed to Asia,America and elsewhere andwho would be more thanhappy to team up withSingapore.”Mr Gomes
24 | OPINIONThe Business Times | Tuesday, November 3, 2015
![28 Feb 2012 - Asia Opportunity, by Mark Ross [Questex Asia, Hong Kong]](https://static.fdocuments.in/doc/165x107/55bfc7aabb61eb884e8b468c/28-feb-2012-asia-opportunity-by-mark-ross-questex-asia-hong-kong.jpg)
