Samsung, Mahathir’s return

After an almost three-week vacancy, the Bank of Japan (BOJ) may be getting a new governor. Masaaki Shirakawa, a 34-year veteran of the BOJ, will need all the experience he can muster to steer Asia’s biggest economy.

Prime Minister Yasuo Fukuda’s first two BOJ picks were shot down by opposition leaders. Shirakawa, 58, was nominated yesterday and lawmakers hope he’ll be confirmed in time to attend this week’s Group of Seven meeting in Washington.

Japan has thus far avoided the worst of the subprime-loan debacle. Mizuho Financial Group Inc., Japan’s third-largest bank by market value, has been the biggest loser, taking a $3.4-billion hit. That’s a far cry from UBS AG’s $38-billion loss.

Even so, Japan is entering an unusually shaky environment.

Just about no one expects Japan to fall back into the crises of the 1990s and early 2000s. Banks are reasonably healthy and the longest expansion since World War II has a certain momentum.

Shirakawa won’t enjoy a honeymoon—not with the yen near 10-year highs and a political vacuum denting optimism on Japan. His challenge will begin today, when he acts as chairman at his first BOJ policy board meeting.

It won’t be easy with Japan’s key lending rate at a mere 0.5 percent. Yet, the odds favor the BOJ lowering rates in the months ahead. It would be more about sentiment than stimulus. Policymakers will need to ring the so-called monetary gong to show they are working to shield Japan from a global slowdown.

Japan’s challenges

There’s little doubt the US economy is going into reverse. News that payrolls shrank by 80,000 in March, the third consecutive month of declines, was disheartening in Tokyo, where officials depend far too much on exports for growth.

Japan’s long-term problems include the world’s largest public debt, a rapidly aging population and an education system that does little to encourage entrepreneurship. Its short-term challenges need more immediate attention: waning consumer and business confidence.

It’s up to Shirakawa to tackle the latter issues. Fukuda’s approval rating fell to 24 percent in a Mainichi newspaper survey, the third opinion poll in as many days to show his popularity at a record low. Let’s hope Shirakawa can cheer investors who are getting increasingly lukewarm on Japan.

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It was the “No” heard across South Korea. That’s how Samsung Group chairman Lee Kun Hee last week answered reporters’ questions about whether he ordered affiliates to create slush funds for bribery purposes.

Lee is at the center of the biggest-ever investigation of family-owned conglomerates, or chaebol. How it unfolds will say much about Asia’s fourth-biggest economy.

Koreans have long been ambivalent about their industrial giants. These heroes put the economy on the global map. They also suck up much of the oxygen that start-ups could be using to compete and create new jobs. While Koreans are tired of corporate corruption, many worry a crackdown will hurt an economy growing at about 6 percent.

In a world awash in bad tidings, Korea has enjoyed some good news of late. Foreign direct investment jumped about 70 percent to $2.7 billion in the first three months of 2008.

To keep the good times going, newly elected President Lee Myung Bak needs to show that Korea is serious about attacking corruption. With 59 units and assets of $147 billion, Samsung is the country’s biggest conglomerate. The Samsung probe is a litmus test for many investors.

Past convictions of chairmen at Hyundai Motor Co., Hanwha Group and SK Group made banner headlines. Yet, all are still running the companies. If officials in Seoul want to end the “Korea discount,” Samsung is an ideal place to start.

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Perhaps it’s a coincidence that Malaysia’s Kuala Lumpur Composite Index fell for a fourth day yesterday amid growing calls for Prime Minister Abdullah Ahmad Badawi to resign.

After all, investors should be cheered by the March 8 election, which returned the ruling coalition to power with its worst performance in 50 years. The newly empowered opposition wants to dismantle a 37-year-old system of preferences for ethnic Malays that scares off foreign investors.

Yet, Abdullah is facing growing demands to step down from none other than Mahathir Mohamad, the man who chose Abdullah to replace him as premier in 2003.

Malaise-ia

It’s bad enough that the United States, which buys one-sixth of Malaysia’s exports, is recession-bound. The state of politics is a bigger concern in an economy in which the government plays a bigger role than most in Asia. As Abdullah struggles to stay in power, he’ll have less time to make Malaysia more competitive and attractive to foreign investors.

Mahathir’s return to the spotlight may be disorienting for international investors who thought the antiglobalization firebrand would recede quietly to the background. Yet, he has a point.

Malaysia is a resource-rich nation with huge potential. To compete amid the rise of China and India, it needs to improve the economy’s competitiveness. The slower Abdullah moves, the more investors will refer to Malaysia as Malaise-ia.

From the get-go the National Food Authority (NFA) rolling stores and the Bigas sa Simbahan were designed as public-relations projects. They were meant to show a compassionate government extending a helping hand to destitute citizens by selling cheap rice either through its own stores on wheels or Catholic parishes. At least that was the initial concept. 

Filipinos nowadays are beset by two major aggravations in their day-to-day lives—intolerably high rice prices and unconscionably steep power rates. As they try to wrest free from, or at least loosen, the choking grip of these twin problems, they also somehow are aware that only the government can help them.

One cannot help but feel sorry for Art Yap, who is among the youngest members of the Arroyo Cabinet. His stint as Agriculture secretary has been marred by controversy not just once but twice, and both times due to circumstances beyond his control.

William Pesek: BOJ’s new guy, scandal at Samsung, Mahathir’s return

After an almost three-week vacancy, the Bank of Japan (BOJ) may be getting a new governor. Masaaki Shirakawa, a 34-year veteran of the BOJ, will need all the experience he can muster to steer Asia’s biggest economy.

Servant Leader: ‘Spe Salvi’–Part XII

The ‘Great Hope’

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In late April public-health activists and policy experts from around the world will head to Geneva, Switzerland, to attend a World Health Organization conference on intellectual-property rights. There, they will discuss the best ways to get medicine to the world’s poor. The resulting recommendations will have a huge impact on the health-care programs of many governments in Southeast Asia.