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As the slump lights fires of unrest, Asia must press on with proven
By Ricardo Saludo

ASIAWEEK (28 November 1997)
MARTIN SHEEN WAS NOT in Hollywood, but he worked the cameras and the
crowd like a movie star just the same. "I have come to create awareness,
by my celebrity if you will, about this problem," the 57-year-old actor
told the press at the Jesuit-run Ateneo de Manila University. Invited by
the Urban Poor Colloquium, a non-governmental organization, Sheen led a
mission to publicize the plight of slumdwellers, street children and
beggars, visiting Manila's former garbage dump-cum-shantytown of Smokey
Mountain. "I can't solve your problems," Sheen admits. "But if I can
encourage anyone else to go into these communities, who comprise just
about half the population of Metro-Manila, they will change your life."

Asian nations will indeed be taking more notice of the poor in the months
ahead, but not because of film stars. Rather, the economic downturn
spreading through the region threatens to light fires of unrest in
societies already witness to yawning income disparities and some of the
most appalling destitution there is. "The severity of poverty especially
in urban areas is so serious and demeaning, you are setting yourself up
for socio-economic, if not political, explosion," says Lim Teck Ghee,
regional adviser on poverty alleviation and social integration for the
U.N.'s Economic and Social Commission for Asia and the Pacific.

At its recent ministerial conference in Manila, ESCAP warned that the
economic downturn could jeopardize the region's efforts to lift people
out of destitution. With unemployment and inflation surging, hundreds of
thousands of households will fall below the poverty line. From Bangkok
building sites to Manila factories and Hong Kong eateries, jobs are
getting scarcer and daily necessities dearer. Industry associations in
the Philippines are reporting between 10% and 40% less business, with
predictable impact on hiring and firing. In Indonesia, economist
Laksamana Sukardi of Econit Advisory Group expects some 2 million
blue-collar workers -- equivalent to a quarter of Jakarta's population --
to lose their jobs.

Governments will have less resources to help the poor. "The regional
target is to reduce absolute poverty to half the 1990 level by 2000 and
to eradicate it by 2010," explains Adrianus Mooy, ESCAP's executive
secretary. "We hope governments will not trim spending [on anti-poverty
programs] . . . in particular, with respect to health, education and
social sectors." Stijn Claessens, the World Bank's principal economist
for East Asia and the Pacific, agrees. A key issue, he stresses, is how
Asia will raise the tens of billions of dollars needed to bail out
financial institutions, as much as 15% of GNP. If governments slash
outlays for the poor, even as jobs fall and prices leap, then increasing
unrest, if not violence, is inevitable.


S. Arutchelvan is co-founder of Community Development Center, a
non-governmental organization in Malaysia helping plantation and factory
workers and the urban poor. He says "people faced problems even during
the boom," including low wages, tough working conditions and, in recent
years, the conversion of plantations to real estate, which deprived their
laborers of jobs and social services. "I can't imagine how they will fare
during the recession," laments the 30-year-old activist. His solution:
"We try to empower workers to fight for what they think is right." Hong
Kong community worker Ng Wai-tung, also 30, is adopting the same tack
with the elderly, whom he has led in protests over the meager support
they get from a government fat with surpluses.


Probably the most tense in slump-hit East Asia is Indonesia, where in
recent years there had already been chronic spasms of ethnic rioting, fed
in part by enmity toward rich Chinese and crony businessmen. On top of
the hundreds of thousands likely to be retrenched, there are 2.6 million
new entrants to the workforce every year. To employ most of them,
Indonesia needs 7% GNP growth, but only 5.4% is forecast this year and
4.8% next year. Compounding woes are the recent closure of 16 banks, and
soaring consumer prices -- in Surabaya, the No. 2 city, rice is
reportedly dearer by more than 30%.


Social worker Prateep Ungsongtham Hata, 45, has been watching the slump
take its toll on slumdwellers near Bangkok's port. "Opportunities have
dropped dramatically," she explains at her Duang Prateep Foundation
office, overlooking the riverside shantytown. "Many companies are cutting
imports, and people unloading vessels have less work." She also worries
that the downturn may undo the fruits of two decades of foundation
efforts, which have helped the area get schools, social welfare bodies, a
small-loans unit, help for the elderly, and wooden and brick houses.

Pain and rage also gripped those who saw poverty in Smokey Mountain --
before the scavenging slumdwellers got tenement housing and jobs with the
help of Catholic priest Benigno Beltran. "With abstract statistics, you
can't build up much anger," says Father Ben. "But when you know this
person being oppressed is Mang Ige, a kind, decent person, then comes the
rage and the motivation to help." Beltran organized the Mountaineers to
press the housing authority for homes nearby. He also runs a free school,
a library and even a small computer center ("the kids take to it
naturally"). Fr. Ben aims to organize the poor on a wider scale. "I will
motivate them, raise their consciousness level," says the 50-year-old,
well-built cleric. "But I don't fight unless absolutely necessary. If I
give in to my anger, people will get hurt."

In fact, giving in to angry protests at the expense of proven
anti-poverty strategies may well be the biggest threat to the poor in the
current downturn. As social distress mounts, so will pressure on
governments to do something. They may then sacrifice unpopular policies
needed to maintain trade- and investment-driven economic growth -- the
most potent weapon in the global war on poverty. Between 1975 and 1995,
people in East Asia living below the poverty line (defined as those
subsisting on $1 a day at 1985 prices) fell by more than half to about
350 million. As a ratio to population, the poor shrank from 57.6% to
21.2%. And those laudable gains were mainly due to the boom propelled in
large part by exports and foreign capital.

"Without an open trading regime and a competitive economy, growth will be
impeded," says M.G. Quibria, assistant chief economist of the Asian
Development Bank's economic analysis and research arm. "And unless there
is growth, it is very difficult to reduce either poverty or inequality."
In India, the poor as a share of total population fell by 2.4 percentage
points a year from the mid-1970s to the late 1980s -- nearly thrice the
rate in the previous three decades, when growth was much slower.

Today, East Asia is suffering from a drought in investor confidence
brought on by financial troubles and manifested in the wholesale dumping
of the region's currencies. Hence, says Michael Walton, who heads a key
World Bank division dealing with poverty, "it is important to take
decisive action across macroeconomic and financial-sector issues to
ensure there is no big drop in private investment."

That means involving the International Monetary Fund, whose guidance is
seen by global investors and financiers as a reassuring sign that
economies are on the mend. But both the IMF and policymakers under its
tutelage face attack from politicians and activists. Governments in the
Philippines, Thailand and South Korea, all facing elections, are
particularly susceptible to pressure. In Manila, the Ramos government's
approval rating has slumped since it bit the bullet, allowed the peso to
depreciate and slammed on the economic brakes with high interest rates.
Meanwhile, Bangkok changed its prime minister and Seoul its finance czar
for lack of will in implementing harsh IMF programs.

What should Asian nations do to stay the course toward growth and further
prosperity? Clearly, there is need to build public support for policies
needed to restore investor confidence and export competitiveness. Key to
this effort are programs to cushion the pain on vulnerable segments of
society, like public-works projects, which would create temporary jobs
while helping make those places more economically productive. "This is
potentially valuable in urban areas, where we appear to see big drops in
construction demand," says Walton, who used to be World Bank chief
economist for East Asia.

Such outlays would certainly ease the woes of Taiwan aborigine Ah Hsiung,
a construction worker along with his wife and his sister. "You hear of
work on the grapevine or wait around under bridges for contractors to
come recruiting," says Ah Hsiung. But it is now hard to find work for
more than 15 days a month since foreign laborers were allowed.

Two political measures would help minimize public opposition to painful
policies. One, ironically, is greater democracy. It would admittedly
encourage unrest. But given an avenue for grievances, people would avoid
the desperation which could be exploited by groups opposed to economic
adjustments. The urban hopeless, says ESCAP's Lim, are more susceptible
to demagoguery and outbursts of anger against the system. Moreover, adds
Walton, involving the poor in shaping and implementing policies and
programs help make them more successful and acceptable. Fr. Beltran
recounts how Smokey Mountain residents pressed for larger apartments than
those originally designed for their resettlement, which were too small
for their families.

Also helpful in securing popular support for difficult policies is a
perceived fairness in sharing the economic pain. Jakarta's decision to
shut down three banks linked to the Suharto family did much to mute
public criticism of the shutdowns. On the other hand, lobbying by
powerful ministers to save some well-connected finance companies made it
difficult for the Chavalit administration to demand IMF-mandated
sacrifices from ordinary Thais. Corruption and conspicuous consumption,
especially the high-level kind, have the same effect. In Nanchong, a town
in China's Sichuan province, workers at a money-losing silk factory
endured six months without pay. They eventually rebelled in March when
they heard that the manager and his wife were going on a trip to Thailand
at company expense.

Along with rekindling exports, investment and economic growth, policies
to alleviate poverty should include three other strategies that have
given the poor a fighting chance to improve their lot: providing basic
social services and education, investing in infrastructure for less
developed areas, and channeling "microcredit" to people ignored by banks.
The last two are ways of giving the less privileged the assets they need
to exploit economic opportunities offered by the boom. Roads to rural
areas, for instance, enable farmers to obtain better prices for their
produce and open those place up to industrial development. Microcredit,
meanwhile, gives people with drive and ideas but no bankable assets, the
wherewithal to become entrepreneurs.

Asia's economic rise owes much to widespread primary education, which
equipped millions with basic skills for modern farming and industry. Now,
says Walton, the region must offer secondary and tertiary education to a
broader population. That would help narrow the income gap between the
better educated and the mass of primary schoolers. In China, says veteran
poverty expert Shen Hong, most poor kids quit school at age 14, as
millions do elsewhere in Asia, limiting their earning capacity. But in
Malaysia, giving higher education to Malays was crucial to reducing
poverty and income disparities among ethnic groups. Such a policy would
also address Asia's shortage of skilled or expert employees, a major drag
on growth.

In the coming budget battles, proven anti-poverty programs deserve strong
lobbying. Over 80% of Asia's poor still live in the countryside. "It is
important not just to focus on the more vocal urban or near poor,"
stresses Walton, "but to make sure the rural poor are protected and
sustained. That's where the deepest poverty is." And remember: giving the
poor a chance to participate in the economy will do much to end the slump

-- With reporting from Bangkok, Beijing, Hong Kong, Jakarta, Kuala
Lumpur, Manila and Taipei