Subang, Nov 19 - The global economic and financial crisis has brought to the fore an underlying reality not sufficiently acknowledged - the emergence of China as a major world power whose weight is a critical factor in the international system.
Malaysia Airlines Chairman Tan Sri Dr. Munir Majid, who is also Senior Visiting Fellow at the London School of Economics and Political Science, made the observation when addressing the plenary session of the Global China Business Meeting in Barcelona yesterday.
He said, "There has been a strategic shift in the global balance of both hard and soft power. This must be recognised and made implicit in all the efforts towards stabilisation and economic recovery, including the critical stewardship of the global economic and financial system."
Munir added that the major economies needed hard cash to finance the trillions of dollars that are being thrown at the economic and financial crisis to achieve stabilisation and turnaround: recapitalisation of banks; de-freezing of the inter-bank market; governmental purchase of toxic assets; and various stimulus packages.
"China is not going to throw in good money after bad or just sit back to see its dollar stock of investments fall in value in domestic currency terms against underlying economies, currencies and returns that are weak and deteriorating, " the MAS chairman declared.
Munir's advice : China must be brought into play in addressing global structural imbalances twin deficits, consumption and savings, and not just asked to come up with the money and to expand domestic consumption.
At the same time, he said, China has to be directly involved in the setting of standards in financial regulation.
He noted that the G-20 meeting last weekend was a good first step, but the commitment to coordinated economic stimulus must be followed by a system of similarly coordinated global economic management and financial regulation.
At another session, on maximising the value of corporate boards, Munir said that economic managers and financial regulators in developed economies have lost the soft power of the intellectual high ground and leadership by ignoring the tenets of good governance they had preached to others.
Evidence of this, he said, were the catastrophic collapse of major financial institutions and the earlier corporate scandals involving Enron.
Chinese and emerging economy companies, he said, should pick on the good aspects of those tenets, of which there are many, he said, but not because of any superior advice.
"Principles, structures and rules," Munir commented, "are important, but it is not just a matter of ticking the boxes. The people at the helm were more important with their knowledge, experience, commitment and integrity."
Citing Malaysia Airlines, Munir reiterated that the board must also have a specific focus on the particular business and organise itself according. This was achieved by ensuring good strategy, good management leadership, a relevant board committee structure and at least annual reviews.
Munir added that some committees are essential, such as the audit committee and, in the case of airlines, the board safety and security committees.
But having them does not guarantee that job will be done unless board members ensure management responds to the quality standards required.
He said that company in a developed economy is not necessarily better at achieving this than one from an emerging economy like China if it is committed to compete and excel.
Issued by: Media Relations, Communications Division, Malaysia Airlines, Subang
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