Rash of departing Asian PMs shows how parochial politics stifles economies

The keenest observers have been caught by surprise by the departure of prime ministers in three Asian nations over the past week or so.

Admittedly, events in Bangladesh, Japan and Thailand highlight vast differences rather than similarities. But over the past 16 days, the sudden U-turns of leadership in Dhaka, Tokyo and Bangkok stunned political wonks, traders and credit-rating analysts all the same.

Even more surprising, perhaps, is how the dots between these seemingly divergent dynamics connect. The common thread leaders around Asia would be wise to heed: How semi-constant and parochial political squabbling gets in the way of creating more vibrant economies.

First, on Aug. 5, Sheikh Hasina’s 15-year rule in Bangladesh came to an abrupt and unforgiving end. Hasina fled to India amid a bloody popular uprising that saw mobs ransacking her prime minister’s residence. It was a spectacular downfall for a leader thought to have morphed Bangladesh into an economic tiger and investment darling.

Next, Japanese Prime Minister Fumio Kishida upended many a summer vacation on Aug. 14 with a sudden announcement he will next month relinquish the leadership of his party, and thus his premiership

That same day, Thailand’s never-dull Constitutional Court terminated yet another premiership in a fog of confusion. Southeast Asia’s No. 2 economy is used to sudden changes of governments — more than a dozen have fallen to military coups since the 1930s. But the ouster of Srettha Thavisin, just one year in office, put battle-hardened Bangkokologists in a whirl.

Again, these events feature wildly divergent fact patterns, backstories and economic implications. For all their differences, though, Bangladesh, Japan and Thailand demonstrate the evils of political short-termism that squanders economic potential. Even worse, all three are focused inward as China — and in some ways India, too — speed up Asia’s economic clock, raising the stakes of complacency yet further.

People vandalise the statue of Sheikh Mujibur Rahman the ‘Father of the Nation,’ as they celebrate the resignation of Bangladeshi Prime Minister Sheikh Hasina in Dhaka’s Bijoy Sarani area on Aug. 5.   © Reuters

Let’s look at these stories — and how the dots connect — from largest economy to smallest, starting with Japan.

Kishida pulled something of a “Joe Biden moment” last week. With his approval ratings trapped in the 20s, Kishida bowed out to allow his ruling Liberal Democratic Party to go with a fresher face ahead of a general election that must be held by October next year.

In the weeks after U.S. President Biden handed the torch to Kamala Harris, Tokyo buzzed about the need for Kishida to do the same. Still, his announcement unsettled markets and has left the political establishment jockeying for the premiership.

This means that next month Japan will be on its third prime minister since the late Shinzo Abe stepped down for a second time in 2020. Going back to 1987, premiers in Japan have held power for an average of 1.5 years.

These truncated stints leave little time for any leader to upgrade a rigid economy at a moment when competitive threats from China call for aggressive retooling. Japanese leaders tend to be too busy keeping their jobs to do their jobs.

Thailand’s chaotic politics tends to churn out new governments with even greater frequency. The latest turn even has another member of the Shinawatra clan decorating the prime minister’s residence. Paetongtarn Shinawatra, 37, is the youngest daughter of billionaire Thaksin Shinawatra, who was ousted in a 2006 coup.

In 2014, it was his sister’s turn to be removed from office. Yingluck Shinawatra was removed by the Constitutional Court in the wake of yet another coup. Yet the court’s Aug. 14 move to sideline Srettha was a stark reminder of how Bangkok’s cacophonous politics stands in the way of making Thailand’s economy work for the nation’s 71 million people.

Talk about a revolving door. Paetongtarn is Thailand’s 13th prime minister (including interims) since her father was shown the door in 2006. Such a revolving door of leadership helps explain why Thai progress in innovation and increasing productivity and living standards disappoints year after year.

In Dhaka, events are unfolding at an even faster clip. As Hasina sits things out in neighboring India, Nobel Peace Prize-winning economist Muhammad Yunus is settling in as head of Bangladesh’s caretaker government.

But while the details of how Bangladesh got here differ, the throughline with “Abenomics” in Japan and “Thaksinomics” in Thailand is how Hasina prioritized macroeconomic spin over implementing true micro-level reforms.

On a macro level, Bangladesh seemed a success story as surging exports of garments and other goods created new jobs. Under the surface, Hasina neglected the need to level playing fields to spread the benefits of growth. This explains why Dhaka turned to Yunus, a development economist who founded microfinance pioneer Grameen Bank. Hasina’s legacy will not be an economic boom, but a case study in the pitfalls of authoritarian rule.

In 2024, Asian governments that talk a better game of change than producing actual results are having their comeuppance. And making for some truly strange economic bedfellows.

source : asia.nikkei