Africa quarterly special on emerging powers.pdf - SAFPI

P A R A D I G M S H I F Tthe same type of countries, and we have much to learn fromthis region than from Europe or anywhere else” [Reuters,2010]. There is some truth in this although South East Asiahas some countries with high per capita incomes. If one considersthe average GDP real growth rate for South East Asia,it was 5 percent between 2000 and 2005, while it was 4.4 percentfor <strong>Africa</strong>. While the per capita GDP for Singapore in2005 was $20,000, the figures for Cambodia, Laos, Myanmarand Timor-Leste were less than $500. In <strong>Africa</strong>, thecorresponding figures for the same year showed that whilecountries like Equatorial Guinea had a per capita GDP of$13,410, half the Sub-Saharan states had GDP per capita ofless than $500 [UNDP, 2007]. Many South East Asian countrieshave faced socio-political problems typical to ThirdWorld nations and are now transiting to their own forms ofdemocracy just as <strong>Africa</strong>n states are trying to do. These stateshave also known war and conflict and have faced theproblem of re-building their economies. <strong>Africa</strong>n countriescan, therefore, relate to these countries in a way that theycannot with the major powers or even China.However, South East Asian nations do not have much ofa history of investing abroad, particularly outside the region.Transaction and information costs are higher wheninvesting in <strong>Africa</strong> than in other Asian economies and bothhost and home-country regulatory frameworks often imposeconstraints. Only Singapore,Malaysia and Indonesia began toinvest in <strong>Africa</strong> prior to this centuryand even then the investment waslimited. However, driven by soaringcommodity prices, FDI in naturalresources in <strong>Africa</strong> showed aconsiderable increase from 2005.Investment was, however, directedto only a limited number ofcountries.<strong>Africa</strong>n countries, on the other hand, are actively seekinginvestment from this region, which has several transitionaleconomies with good investment potential as well asexpertise in commodity production like palm oil, rice andrubber. According to BJR Itoua, Congo’s Energy Minister,“It is not an <strong>Africa</strong> that needs humanitarian consideration orpity, it is an <strong>Africa</strong> that needs investment and partnership”[Reuters, 2010]. In pursuit of mutual benefits, therefore, thefirst <strong>Africa</strong>-South East Asia Business Forum was organised inSingapore in April 2010 with the aim of bringing togetherbusinessmen, policy makers and investors from both regionsto explore business prospects.Firms of South East Asia were urged to invest in theupgrade of airports, seaports, transportation infrastructure,real estate, food processing, mining and energy. Given thatthe region’s average growth was strong at 5.6 percent in 2010,it was better placed to invest than the U.S. and Europe. Therewere dividends from this forum: Temasek, an autonomouswealth fund of Singapore commanding around $122 billion,Malaysian transnationalcorporations (TNCs) havebeen active in variousparts of <strong>Africa</strong> and insectors of the economyother than hydrocarbonsis all set to invest in <strong>Africa</strong>; Olam, a well knowncommodities firm, has agreed to purchase one of the threelarge wheat millers of Nigeria for $107.6 million. SingaporeTelecommunications, too, will enter the <strong>Africa</strong>n marketthrough Bharti Airtel’s recent purchase of Kuwaititelecommunication company Zain’s <strong>Africa</strong>n assets. In theaftermath of the Forum, an <strong>Africa</strong>-South East Asia Chamberof Commerce has also been set up [Borden, 2011].At the bilateral level, Malaysia is the foremost country toseek relations with <strong>Africa</strong>n states. Malaysia’s trade with <strong>Africa</strong>increased from RM4.8 billion (US$1=RM380) in 2001 toRM25 billion in 2010 [Borneo Post, 2011]. According toMaTrade (Malaysia External Trade Development Company),bilateral trade increased 51 percent in 2010 over 2009 toRM17.99 billion. Malaysia’s top trading partners in <strong>Africa</strong>are Egypt, South <strong>Africa</strong>, Benin, Togo, Djibouti, Algeria,Ghana, Nigeria, Mauritius and Tanzania. Palm oil was themajor export and petroleum the major import. In fact,Malaysia has encouraged bilateral relations through itsLangkawi International Dialogue (LID) initiative, establishedin 1995, which seeks to strengthen ties with <strong>Africa</strong>n andCaribbean countries. Here, ideas on trade, development,investment and even topics like religious extremism areexchanged. The initiative is underlined by the concept of‘Smart Partnership’, the brainchild of Prime MinisterMahathir Mohamad.As part of the Smart PartnershipDialogue, the Southern <strong>Africa</strong>nInternational Dialogue (SAID) wasset up in 1995 to enhance relationsnot only with South <strong>Africa</strong> but othercountries in the region likeBotswana, Mozambique andNamibia. SAID is a follow-up andcounterpart of LID, and it isadvertised as a potential growth area and hotbed forinter-regional trade and investment with particular focus onblocs like the COMESA and SADC [Aliyn, 2011]. Inaddition, a Malaysia-<strong>Africa</strong> Business Forum (MABF) has alsobeen formed recently with its first meeting being held inJune 2011 on the sidelines of the LID meet at Putrajaya. Theinaugural theme was ‘Exploring New Dimensions’.At the meet, <strong>Africa</strong> was represented by 177 delegates from27 states, highlighting the importance now being paid toMalaysia. What is interesting is that the talks focused not onlyon economic but political and social issues, including aneducational exchange programme and an internshipprogramme for <strong>Africa</strong>n students in Malaysian educationalinstitutions through which <strong>Africa</strong>n students already inMalaysia could familiarise themselves with the local culture.It should be noted that there are about 21,000 <strong>Africa</strong>n studentscurrently studying in Malaysia: the ‘soft’ power diplomacy atdisplay here is similar to that of the emerging powers. Itshould also be mentioned that ASEAN is not part of MABF,which is Malaysia’s own initiative.36August 2011-January 2012