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Exclusive Interview:
Sir Terry Leahy, CEO, Tesco Plc

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  July- August 2009


Sir Terry Leahy, CEO, Tesco Plc For Sir Terry, Tesco’s core purpose is ‘to deliver value for customers to earn their lifetime loyalty’. There is no mention of products, no reference to the bottom line or market share, but a clear focus on people - the customers.

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Enter the Regionalism
Southeast Asia bears the brunt of the global crisis triggered by the financial meltdown in the United States that took a toll on multinational corporations and wiping out millions of jobs worldwide. Due to having been overly dependent on exports, Asean countries have been major victims of the so-called “hamburger” crisis.

According to a World Bank study, multinational corporations in the region tend to focus more on exports rather than the domestic market of the host country, particularly for technologically complex products. Problem is those manufacturing countries do not have domestic markets large enough to absorb vast quantities.

No wonder, Asean economies have become hostage to the “global” markets that in fact consist largely of demand from creditfed consumers in a relative few economically advanced nations.

The crisis is teaching Asean to rethink and restructure their business models to build products that are more suitable to supply domestic markets.

Having learned from the experience of the 1997 financial crisis, Asean countries have high levels of saving, which, unfortunately, has not been placed directly into productive investment.

With more trust in foreign financial institutions, the savings flowed into supposedly safe Western banks or other financial institutions that came back to Asia in the form of foreign loans.

Many Asean firms have this time limited their exposure to attractive US financial securities and have not been direct victims of the sub-prime crisis, though.

Having learnt to be less dependent on international financial arrangements during times of crisis, the ten-nation Association of Southeast Asian Nations (Asean) plus China, Japan and South Korea – known as Asean plus 3 - have agreed to implement a $120 billion foreign exchange reserve pool by the end of this year.

The so-called Chiang Mai Initiative Multilateralisation (CMIM) aims to address short-term liquidity difficulties in the region and supplement the International Monetary Fund.

Japan and China agreed to contribute $38.4 billion each, with China's share including $4.2 billion from Hong Kong. Korea will put $19.2 billion into the scheme. Among Asean countries, the biggest contributors are Indonesia, Singapore, Thailand and Malaysia, with $4.77 billion each.

The Philippines will add $3.68 billion, Vietnam $1 billion, Cambodia $120 million, Myanmar $60 million and Brunei and Laos $30 million each.

Economists see this arrangement, which Asean members believe will strengthen their integration leading up to the Asean Economic Community in 2015, as a significant move toward regionalism.

Like it or not, the global crisis is driving the world toward regionalism instead of multilateralism, as seen by the rising number of bilateral and regional free trade agreements Read the Complete Article Subscribe to ASEANAFFAIRS Magazine

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