The first section of this study was intended to do the following: (1) Set forth an intuitive model of national and international financial intermediation capable of capturing each of the functions involved in the process, as well as measures of static and dynamic efficiency; (2) Suggest strategic positioning alternatives facing banks and other firms engaged in the financial intermediation process; (3) Identify the principal determinants of competitive performance of financial firms; (4) Consider issues relating to the regulatory overlay, particularly stability versus efficiency, and the impact of regulatory structures on financial system performance; and (5) Review the alternative structures financial firms may choose to adopt, how these in turn relate to bank-industry linkages and the process of corporate control, and ultimately the dynamics of financial market development and national economic performance.

All of these issues are important in determining the competitiveness of national financial systems. Competitiveness, in turn, can be framed in terms of static and dynamic efficiency properties, discussed earlier, with static inefficiency and lack of creativity driving financial transaction streams abroad. High performance financial systems, on the other hand, may attract transactions from other financial systems, where costs or the net regulatory burdens are higher, and form the basis of an export-oriented engine of economic growth. Consequently, rigorous competition among financial services firms has increasingly been joined by equally rigorous competition among financial centres.

It should be clear from the earlier discussion that the financial services sector has grown and changed far more rapidly than many others in the world economy in recent years. Today it is one of the most structurally complex and dynamic industries in existence. It is also one of the most heavily regulated—owing to the fiduciary nature of many of its activities, its pivotal role in the execution of money and credit policies, as well as its susceptibility to recurring crises.

The remarkable revolution in this industry has created intense competition among banks and other financial services firms around the globe, as well as among the financial centres in which those firms are based and in which they operate.

The world is undergoing dramatic transformations in the wake of the crumbling of the Cold War order, and the ebbs and flows of these changes are not passing unnoticed in Southeast Asia. Indeed, the region is witnessing its own mini-versions of glasnost and perestroika, as countries like Vietnam, Cambodia, Laos, and Myanmar, for instance, seek their niches in the emerging opportunities and constraints that characterize the international economic and political scene. This, coupled with the dynamism of the member states of ASEAN, makes Southeast Asia a particularly promising and exciting area – at a turning point in world history and human affairs. These developments have reinforced a growing awareness at the Institute for the need for a publication produced in and from the region and devoted exclusively to the geo-politics and geo-economics of Southeast Asia. Accordingly, the Institute inaugurated Regional Outlook last year.

Cast in a format and style that is unencumbered by lengthy analyses or commentaries, Regional Outlook provides succinct yet substantive and easily readable overviews and insights into the current geo-political and economic situations in the individual countries and the region as a whole, together with the likely trends over the next year or so. The Institute very much hopes that the review will serve as a useful and handy guide to the region's aspirations and prospects each year, in addition to casting a look ahead.

It is thus all the more pleasurable to wish Regional Outlook and the individual contributors all the best, as well as express the hope that Regional Outlook will circulate widely among all interested in the affairs of the region, and especially so among the busy executives, and other decision-makers in both the public and private sectors. In recording these expectations it is, of course, understood that responsibility for facts and opinions expressed in the review rests exclusively with the individual authors, and their interpretations do not necessarily reflect the views or policy of the Institute or its supporters.

A useful way to visualize the competitive opportunity set that faces banks and other financial firms operating across the spectrum depicted in Figure 3.1 combines three principal dimensions in the delivery of financial services in terms of the clients served (C), the geographic arenas where business is done (A) and the products supplied (P) (Walter 1988). Figure 3.1 depicts these dimensions in the form of a matrix of C-A-P cells.

Individual cells represent a more or less distinct “market” in which Euroclear either is already active or might become active. The characteristics of each potential market can be analysed in terms of conventional competitive structure criteria. The competitive structure of each C-A-P cell is an important determinant of the excess returns a financial institution may be able to obtain. To the extent competition takes place on the basis of price, prospective returns are transferred to clients. Competitive structure is conventionally measured using concentration ratios based on the number of vendors, distribution of market share among vendors, and similar criteria.

The inherent attractiveness of each cell clearly depends on the size of the prospective risk-adjusted returns that can be extracted from it. The durability of these returns will depend on the ability of new players to enter the cell, as well as the development of substitute products over time. Entry into a new market (associated either with a new product, client-group or arena), if initially successful, can be described in terms of a time-path of sub-normal, super-normal, and normal returns such as that depicted in Figure 3.2. This time-path is important with respect to the entry costs, exit costs, as well as size and durability of excess returns. Durability is described by the time-path (decay) of excess returns that can be extracted from the new market in this context, and their discounted net present value can be compared with those other market initiatives including transfers of financial innovations across clients, arenas or products.

Close to twenty years have passed since South Vietnam was liberated in 1975. The economy of a re-unified Vietnam, however, is still poverty-ridden. One of the reasons for this is the lack of effectiveness in the use of private domestic resources, particularly that of the ethnic Chinese in Vietnam. Before 1975, Chinese capital, entrepreneurship, and skilled manpower in South Vietnam played an important role in the development of domestic markets and international trade. After 1975, however, Chinese participation in the Vietnamese economy underwent a decline brought about by the socialist transformation of the South and an exodus of capital. However, the residual economic potential of the Chinese who have remained in Vietnam is still considerable.

Under doi moi, which is the programme of economic and political reforms in Vietnam, there is evidence that the Chinese are once again contributing significantly to the expansion of internal markets and capital accumulation for small-scale industrial development. Accordingly, the role which die Chinese have played in the past and are beginning to play again seems eminently worthy of study. From a more pragmatic point of view, it is also possible that a better appreciation of the role of the Chinese in the Vietnamese economy both historically and in the immediate future may well be of some value, if not indeed essential, to economic development. In addition to this, there are other related issues which continue to be of academic interest, for example, the study of ethnic relations and the interaction of the Chinese and Vietnamese in more recent times.

The role of the Chinese in Vietnam's economy has been the subject of study by many Vietnamese and non-Vietnamese scholars, and it would be impossible to review all the relevant literature here. However, a brief summary will provide an understanding of the subject and issues that require further investigation.

Vietnamese audiors began writing on the Overseas Chinese in the 1920s. Prominent among them at the time was Dao Trinh Nhat.

I am in basic agreement with most of Sree Kumar's analysis and conclusions. I would like to make the following points of relevance to his paper.

First, ASEAN has taken a very bold step at the Fourth ASEAN Summit in January this year. The AFTA agreement is a milestone. However, the objective of AFTA should not be just to promote intra-ASEAN trade but, and more importantly, to improve ASEAN countries' export competitiveness and investment attractiveness vis-à-vis the rest of the world. ASEAN cannot afford to be inward looking. In other words, the emphasis should be on enlarging the economic pie rather than equitable sharing of the pie, for AFTA is relatively small in terms of market size when compared with the trading blocs of EC and NAFTA. AFTA is also very small when compared to the emerging natural economic zone of South China, Hong Kong, Taiwan and South Korea. At last year's ASEAN Roundtable, Seiji Naya and Pearl Imada had shown in their paper that the static gains from trade creation in AFTA are very small. A recent World Bank conference on regional integration (April 1992) also showed that the trade creation effect of trading blocs among developing countries is very small. So we have to focus on the dynamic gains of increased export competitiveness arising from economies of scale, increased competitiveness and innovation, and increased attractiveness for foreign investors.

Second, I would like to briefly discuss the issue of ASEAN's investment attractiveness or competitiveness. Investment co-operation is necessary to ensure the investment attractiveness and competitiveness of ASEAN countries in the context of the global competition for foreign direct investment (FDI). In that regard, Sree argues that intra-regional investments may offset some of the FDI the ASEAN countries need to attract. But ASEAN would need to attract FDI from extra-ASEAN sources for a long time to come, and thus the regional investment climate becomes critical.

The first problem Chuan encountered when he tried to form his government was the selection of a fifth party, since his four-party alliance had only a slim majority of 185 in the 360-seat Lower House. The Democrat Party wanted to include the Chart Pattana Party (CPP) of former Prime Minister Chatichai Choonhavan, which had 60 seats. But that attempt was resisted by other partners. This was because if the CPP was brought in it would be the second largest in the government, which, under the system of four MPs to one ministerial post (both ministerial and deputy ministerial posts) (see Appendix Table 5), would upset the ministerial quotas of the other three parties — the NAP, PDP, and Solidarity. Another choice was the Seritham Party led by former House Speaker, Arthit Urairat. But Arthit's party commanded only eight seats, which was thought to be too small to stabilize the government majority in the House. Under such circumstances the other three partners were in favour of the Social Action Party (SAP).

There was a considerable reluctance to include the SAP in the first place because of its affiliation with the previous Suchinda government, but its number of seats, 22, were just right. The partners worked out the conditions that should the SAP agree to join the government, two of its key members — party leader Montri Pongpanich and another senior member Piyanat Watcharaporn — had to be excluded from ministerial posts. Montri was barred mainly because he was still facing an allegation for corruption lodged by the military. Piyanat was disliked for having blatantly supported Suchinda when he was a minister in Suchinda's government. Piyanat was seen by pro-democracy forces as having sold himself short just to get the ministerial post. With the SAP joining the government, the Chuan administration has a comfortable majority of 207 in the House of Representatives (see Appendix Table 4).

It is to be noted here that, unlike in the past, the military completely restrained itself from interfering in the formation of the Chuan government.

Conventional universities are expensive institutions to create and maintain, and as the number of younger Asians increases, there is a need to provide alternative routes to higher education. It is at this higher education level that many countries have introduced open universities to provide for those who were unable, for a variety of reasons, to have their opportunity for higher education earlier in life. Open universities, especially in developed countries, have also been found to satisfy the educational needs of disadvantaged people. They are particularly suited for those who find it difficult to leave the home environment, for example, handicapped people; those in prison; and women who work in the home. In many countries, such as in Australia, Canada, and Thailand, where there are interested people living in remote and sparsely populated areas OUs provide the only opportunity for higher education.

While the British Open University has set the pattern for open universities, there are other patterns of open learning establishments which have emerged in the last two decades. The different types can be grouped into the following categories:

1. (a) “stand alone” universities;

2. (b) dual mode models;

3. (c) “stand together” universities;

4. (d) “parasitic” institutions/agencies.

“Stand Alone” Universities

The British Open University (or UKOU) is the prime example of this category. Since its inception in 1969, this OU has been instrumental, by assistance and example, for the birth of similar “stand alone” open universities in Europe, the Middle East and Asian countries. They are independent academic institutions with formal structures. They establish the curricula, create the courses, provide the materials for students, the support services for student learning, conduct the monitoring and assessments of student performance and award the qualifications. Academic staff teach, develop, and write curricula and have research responsibilities. Non-academic staff administer, provide human support programmes, run assessments and examinations, run publishing services including fully independent printing operations.

In the introduction to this book, it was argued that the period 1975–80 formed a particularly significant phase in Japan–Southeast Asia relations. It was during this period that Japan underwent a shift from economic to political diplomacy towards the region, exemplified by the Fukuda Doctrine. Theoretically we have attempted to explain causal relations between four independent factors and the policy shift. Having analysed the process of forging the Doctrine and the Japanese Government's implementation of it, let us recount how and why Japan's active foreign policy has been put into motion. In so doing, the two periods of Japan–Southeast Asia relations and the implications of this study will be summarized. Based on the conclusions derived from this case study we will then discuss briefly the future prospects of Japan–Southeast Asia relations.

THE PRE-DOCTRINE PERIOD

During the first period, 1951–4, Japan's so-called “economic” foreign policy had been vigorously carried out by relying upon the U.S. security networks in Asia. The triangular relationship among the United States, Japan, and the countries of Southeast Asia was the key to Japan's encroachment on the Southeast Asian economies. The process of decision-making; although slightly different in the case of the Asian Development Bank, was characterized by the pattern of a tripartite alliance between the ruling party the business community and the concerned bureaucracies. More important was the fact that Japan was designated as the superdomino, or workshop, of Asia in U.S. cold war strategy which was basically retained until 1974.

Secondly the pursuit of Japan's economic diplomacy had a direct bearing on the three assumptions discussed earlier: American military protection and its reliable commitments in Asia; free access to raw materials and export markets in order to accelerate the Japanese economy; and a stable political framework in which a dominant LDP can pursue a consistent foreign policy There was little doubt that the ruling party that is, the LDP, took every effort throughout the first period to preserve the three assumptions as the philosophy of main-stream conservatism (Hoshu Honryu).