The tigers that lost their roar FROM The Economist

IT IS easy to forget, now that China and India are all the rage, that until ten years ago South-East Asia was the world's fastest-developing region, winning the sort of investor attention and breathless column inches that the two new giants now enjoy. The region has, slowly, recovered from the blight of 1997-98. It has recently had several years of strong growth (see chart 1) and its governments' finances have been greatly improved. Even so, after all this time the region's five main economies—Indonesia, Malaysia, the Philippines, Singapore and Thailand—are still notable for the near-absence of companies that could truly be called world-class.

The region has 570m people and had a head start in economic development over much of the rest of Asia. So why does it still have no global consumer brands of the stature of South Korea's Samsung and LG? Where are its rising technology leaders, like Taiwan's AU Optronics and Taiwan Semiconductor? Where are its equivalents of India's world-conquering Tata Steel, Ranbaxy and Wipro? Or China's market-devouring Huawei and Lenovo? Ask an investor in London or New York to name globally respected South-East Asian firms and the answer is unlikely to consist of much more than Singapore Airlines.

In a recent book, “Asian Godfathers”, Joe Studwell, a journalist, examines this failure in stark terms. The region's business scene, he says, remains dominated by old-fashioned, mediocre, sprawling conglomerates, run at the whims of ageing patriarchal owners. These firms' core competence, such as it is, is exploiting their cosy connections with governing elites. Their profits come from rent-seeking: being handed generous state contracts and concessions, or using their sway with officialdom to keep potential competitors out. If they need technology, they buy it from abroad. As a result, Mr Studwell says, the region has “no indigenous, large-scale companies producing world-class products and services.”