by Hadi Soesastro

1. Maintaining Macroeconomic Stability
   
   Globalisation is not a new phenomenon, but any major challenge to development is now being linked to it. Many new problems arise in a country that is in the process of opening up. Changes in the external environment can compound these problems. Developments in the global capital market are seen to have substantially eroded government controls over monetary policy. This is a fact that has been duly recognised. Some countries have difficulties accepting this and have opted for preserving national sovereignty. Others may see the value of the disciplining effect of an open capital account. Indonesia has fully liberalised its capital account at a very early stage of its economic recovery in the beginning of the 1970s to make a credible commitment to its open door foreign investment policy. In the process, its policy makers discovered the utility of its disciplining effect and made use of it during much of the 1970s and 1980s.
   
   It has been argued that the crisis has demonstrated that in the world of the 1990s this market disciplining effect has grown out of reasonable proportion. It needs to be recognised that external shocks today, which tend to come through the capital account, create greater macroeconomic disturbances than shocks in the past that were caused by changes in the terms of trade, which worked their way through the current account. Global capital can react so abruptly and indiscriminately, leading to the crisis and its regional contagion. It can punish misbehaviour or a wrong policy harshly. Tan (1998) argued that this development represents a power shift from elected governments to speculators, bond traders and fund managers, and that Prime Minister Mahathir's visceral reactions towards George Soros epitomise this painful power shift. In the immediate aftermath of the attack on Malaysia's currency, Mahathir campaigned for multilateral efforts to control speculative movements of capital. He pointed to the immorality of speculative activities that could cause great damage to an economy that is fundamentally sound. Malaysia's decision in early September 1998 to institute a system of capital and exchange controls seems to follows from this.
   
   The issue of capital controls has become a discussion item in various policy fora. Governments from industrialised countries have rejected the idea of co-ordinated controls of capital flows. Rubin's three-pronged plan has set the preferred policy direction. The essence of this plan is the strengthening of financial systems through the establishment of global standards, supported by surveillance to be carried out by the IMF and the World Bank. Joseph Stiglitz, chief economist at the World Bank, argued that temporary controls on capital inflows might be warranted. He argued that the force of vast international capital flows, especially short-term capital might overpower a well managed but small economy. Such controls, along with domestic reforms and greater disclosure, could help reduce the frequency and magnitude of a shock (Stiglitz, 1998). To strengthen his argument, Stiglitz made two additional points. First, net benefit of short-term capital is small or even negative. It is not as valuable as foreign direct investment, which brings with it technology and training. In addition, when the savings rate is already high and when the marginal investment is misallocated, additional short-term capital flows increase the vulnerability of the economy. Finally, the net benefit of short-term capital is further reduced when the reserves set aside to protect against the volatility of this type of capital are taken into account. Second, together with solid fundamentals and a sound financial system, capital controls may be the reason that Chile has been relatively unaffected by the 'tequilla effect' of the Mexican crisis. Chile has instituted three types of controls. First, 30 percent of all non-equity capital flowing into Chile must be put as interest-free deposits at the central bank for one year. Second, only if rated as high as Chile's government bonds by two bond-rating agencies can Chilean firms and banks borrow from the international capital markets. Third, any foreign money coming into Chile must stay in the country for at least one year (The Economist, 14 March 1998).
   
   The issue of controls and regulations of capital inflows will remain controversial. There is doubt that such regulations can be effective. Unless a very highly regulated financial system is introduced there will always be loopholes. It also is not plausible or sensible to put in place a system that totally and permanently isolates the economy from fluctuations in international capital flows. Furthermore, there is the danger that capital controls will be used to insulate misguided economic policies from market discipline or to delay much needed reform. Countries that already liberalised its capital account, such as Indonesia, cannot take a step backwards without jeopardising the credibility of its overall commitment to open economic policies. At the onset of the crisis in Indonesia, the need for some capital controls was considered, but this was soon abandoned. It is believed that countries that are in the process of opening up should not experiment lightly with introducing capital controls as this may provide the wrong signals to the outside world.
   
   It is a matter of empirical research whether Chile was unaffected by the Mexican crisis primarily because of the capital controls that it has put in place or due to many other reasons. It may well be the case, as suggested by Gavin, Hausmann and Leidermann (1996), that Chile's success lies in its ability to satisfy some form of exchange rate commitment. The Mexican crisis followed the devaluation of the peso. The effect of being forced to abandon a regime that proved to be unsustainable can be very destabilising. The crisis in Thailand and its contagion followed the devaluation of the baht in early July 1998. The affected countries have also been forced to abandon their policy of pegging their exchange rate to a basket of currencies in which the dollar weighted heavily. They have learnt the hard way that their exchange rate policy is not viable. The realisation that it is important to have an exchange rate system consistent with an open capital account has led the crisis-affected countries to adopt a floating exchange rate. It is believed that the crisis could have been prevented if they had allowed the currency to float freely much earlier. This would have resulted in a reduction of domestic interest rates and an appreciation of the currency in response to the large inflows of capital, resulting in increased current account deficit and a slowing down of capital inflows.
   
   Yet, in a sense Indonesia and other Southeast Asian countries are still not fully comfortable with a freely floating exchange rate. There have been suggestions that sooner or later they may want to adopt a managed float, a flexible system which allows for some intervention. In this case, macroeconomic adjustment to changes in capital flows would depend on the degree of sterilisation. Greater sterilisation would tend to postpone the adjustment. Others suggest that many developing countries lack the discipline to maintain a credible commitment to a free float.
   
   A fixed exchange regime has its attraction as a means of enforcing commitment by the monetary authority to a stable and non-inflationary policy by reducing the scope for discretion in setting monetary policy. Yet the issue here is whether the commitment to the fixed exchange rate itself is sufficiently strong. Garnaut (1998) has described the conditions under which a commitment to a fixed exchange regime can be undermined. The problem arises not only in the wake of a sudden large outflow of capital but also as a result of large capital inflows. In the latter case, net capital inflows will result in an immediate accumulation of reserves. Without complete sterilisation this will generate an increase in the domestic monetary base. The increase in liquidity will reduce domestic interest rates and result in an expansion of bank credit. The increase in domestic consumption and investment may result in an economic boom, accompanied by an appreciation of the real exchange rate. Conventional wisdom suggests that the government will have to adopt a policy of fiscal contraction in order to limit the expansionary impact of the large or sudden capital inflows.
   
   In the case of a shock caused by a sudden outflow, a sharp monetary contraction and a forceful fiscal response can sustain the fixed exchange regime. The first requirement suggests the importance of a strong domestic financial system. Monetary contraction brings about high interest rates and results in a cutback of domestic credits. Difficulties on the part of corporations to service their debt can create a banking crisis. The need for fiscal contraction as well is derived from a sharp reduction in the availability of non-inflationary financing of fiscal deficits. It is interesting to note that fiscal contraction appears to be the appropriate response to both a sudden capital inflow and a sudden capital outflow. Fiscal contraction often proves to be politically difficult in response to a sudden outflow of capital. The point here is that it is not easy to maintain discipline and coherence in policymaking.
   
   It would be logical to expect that in a world of highly mobile capital flows the appropriate exchange rate regime would be one that can most effectively insulate the economy from an external shock. No strong consensus has emerged from the Latin American experience on the insulating properties of fixed or flexible exchange rates (Gavin, Hausmann and Leidermann, 1996). The recent experience in East Asia points to the same conclusion. Singapore has a managed float exchange rate policy and Hong Kong has adopted the currency board system. Both have not been seriously affected by the crisis. After all, what is important may not be the exchange regime as such but the credibility of the commitment to maintaining it. Both Singapore and Hong Kong have sizeable reserves and they have strong and open financial systems. As Frenkel (1998) put it, insulation from external shock should not be the objective of exchange rate policy. Also, an exchange rate system that will save a country from policy mistakes has not been invented. He proposed that the real issue is the adoption of an exchange rate regime that is most conducive to discipline in policymaking. This depends, according to Frenkel, on the nature of the country's institutions, on its policymakers, on its history, and on the state of the inflation cycle. To quote him, '[t]he danger is that in deciding on an exchange rate regime, policymakers will always think the grass on the other side is greener and will endlessly move back and forth between flexibility and fixity and thus fail to confront the real issue, which is how to establish discipline in policy making.' (pp.106-107). Discipline in policymaking should mean to include coherence in policymaking. The previous discussion shows that this has been visibly absence in Indonesia, especially in the past ten years.
   
   
2. Maintaining Open Economic Policies
   
   Credibility is the keyword. This is not just a matter of macroeconomic policy but of the overall strategy of economic reform. Thus far, the Indonesian governments has not reversed their overall strategy of economic growth and development. In fact, all crisis-affected countries in the region seem to support the view that the commitment to open economic policies is also critical for their recovery. The IMF-supported reforms in Indonesia as well as in Korea and Thailand contain substantial structural reforms that will reinforce those commitments.
   
   In their efforts to recapitalise the banks, Indonesia and Thailand have amended their regulations to allow unlimited foreign ownership. Most large banks in Indonesia are technically bankrupt and those in Thailand are severely distressed. Malaysia's banking system is also encountering some problems, and there may be greater urgency for Malaysia to relax the 30 percent limit for foreign ownership of banks. Indonesia and Thailand have no immediate alternative, but recently some members of the Indonesian parliament have expressed their views that foreign ownership of banks must also be limited in Indonesia. To begin to stabilise the currency and the economy, they must urgently rehabilitate the financial sector and work out a solution to the problem of short-term private debt. Pragmatism will dictate that they will have to accept a return of foreign capital largely through 'buy ins' of banks and corporations at bargain prices rather than through 'bail outs'. Take-overs and acquisitions, rather than green-field investments, will be the name of the game. Most of the capital is expected to come from the US and Europe plus some from Singapore and Hong Kong. New, green-field foreign direct investment will be needed in the recovery process. A widely open door foreign investment policy has been an integral part of Indonesia's open economic policy. As stated earlier, it has opted for an internationally oriented strategy with the objective to sustain growth and to accelerate the catching-up process. Since the 1980s, when most Southeast Asian economies abandoned their export promotion strategy to embark on full trade liberalisation, they have gone beyond the point of no return in their liberalisation. The policy of export promotion that predated trade liberalisation was perhaps a correct sequencing. It stimulated exports, but did little to improve the economy's overall efficiency. The international environment during the Uruguay Round of multilateral trade negotiations also helped made an end to East Asian strategy of 'double-distortion', namely that of maintaining economic inefficiencies caused by the high import barriers but compensating them with subsidies and other facilities to promoting export growth.
   
   Indonesia and also Malaysia committed themselves to open economic policies initially as a matter of necessity as they saw a rapid dwindling of oil revenues. But reforms in Thailand and the Philippines in the 1980s were not driven by any sense of a crisis. Instead they instituted significant reforms during good times, possibly because resistance to liberalisation weakened under improved economic conditions (Bowie and Unger, 1997). But once on the track of liberalisation, all four countries elect to stay on course. An important underpinning of this commitment is the adoption of this same strategy by all ASEAN economies, thus creating strong demonstration effects and a dynamic environment of competitive liberalisation. In the case of Korea, the extremely strong motivation to become a modern, industrialised economy that is on par with Japan appears to be the factor behind its global ambitions. Support from within the ASEAN economies for a firm commitment to open economic policies may be important for the process of recovery. It is believed that the recovery, reform and reinvention of Southeast Asian economies require increased marketisation and continued large inflows of foreign direct investment (ASEAN-ISIS, 1998).
   
   A continuing economic meltdown in Indonesia can have important regional implications. Having secured IMF support, Korea and Thailand should be able to insulate themselves to some extent from this effect, but other countries are more vulnerable. The Indonesian crisis is no longer a financial crisis only but this has been compounded by a political crisis. It remains to be seen in how far this crisis can be contained. The deep financial crisis in Indonesia resulted from a process of multiple equilibria involving contagion, panic, and mishandling (Radelet and Sachs, 1998). Its recovery process is likely to be one of multiple equilibria as well. At various stages of the implementation of economic reforms a failure to produce visible political reforms will result in a stagnation of the process or even an economic setback.
   
   
3. Institutional Development
   
   Indonesia and other East Asian countries will experience a new round of competition among regional economies, competition for export markets and competition for foreign investments. China, and perhaps India, will be at the leading drivers in this new race. The race is to compete in enhancing the economy's competitiveness. What is competitiveness made of? The World Economic Forum (WEF) has greatly influenced government and business perceptions of a nation's competitiveness through the annual publication of its WEF Competitive Indices (see, for instance WEF, 1997). The indices are made up of eight clusters of structural characteristics. These are: (a) openness to international trade and finance; (b) the role of government budget and regulation; (c) development of financial markets; (d) quality of infrastructure; (e) quality of technology; (f) quality of business management; (g) labour market flexibility and human resources development; and, (h) quality of judiciary and political institutions. The main point to make is that competitiveness appears to be signified not only by policies but also by institutions that promote and sustain long-term growth. In his cursory examination, Tan (1998) detected that among East Asian economies, the three countries that have been hit hardest by the crisis, Indonesia, Korea, and Thailand, have indeed experienced a gradual deterioration in their international competitiveness (as measured by the WEF Competitive Index) over the past five years. In Thailand and Korea, real appreciation of the currency has been a factor in their declining competitiveness, but in all three countries institutional weaknesses are thought to have been an important source.
   
   The concept of competitiveness, as employed by WEF, implies an activist role by the government in such areas as raising the level of technology, nation-wide and at the firm level. The creation of national systems of innovation to facilitate the process of diffusion and creation of new technologies does require active government involvement, if only at the initial stages. Beyond this task, there has always been a strong temptation on the part of many governments to actively engage in the industrialisation drive. A commitment to open economic policies, which is an important element in the competitiveness index, may now exercise greater constraint to what governments can do.
   
   A great deal of the analyses on the causes of the crisis has pointed to institutional weaknesses and deficiencies in many East Asian economies. This may not have been apparent before (McMullen, 1997). These countries have been successful in encouraging high savings and investment, entrepreneurship and market activity without the establishment of formal property rights, rule of law, and a capable and clean civil service. This has been the case because new and large opportunities and incentives have been created by the introduction of major reforms. Indonesia in the mid-1960s and China in the late 1970s illustrate this point at its best.
   
   To varying degrees East Asian countries have failed to meet subsequent institutional challenges. As market activities are expanding and become more complex formal provisions of good governance by the government ensures the continuation of economic growth and an improved distribution of the fruits of development. The crisis has greatly exposed the consequences of weak formal provision of good governance, particularly the concentration of economic activities and growth around a clientelist, patronage system that benefits only those that are 'insiders'. Such a system produces an increasingly unsatisfactory outcome over time, in terms of distribution of the fruits of development as well as the sense of fairness and justice on the part of the citizens. McMullen has argued that in most societies there is a need at a fairly early point in the growth process to institute formal rule of law, property rights, enforcement of contracts, fair adjudication of disputes, a competent civil service and other characteristics of good governance in the public sector. These need to be complemented by good corporate governance such as transparency, disclosure, accounting standards, responsibilities of corporate directors and executives, and shareholder's rights. It also covers relationships between government officials and corporations, including the allocation of financial resources and the even-handed enforcement of laws and regulations.
   
   For many developing countries making the commitment to good governance would appear to be of a tall order. It is indeed not an easy task, but there needs to be a clear understanding of its critical importance in managing a society that becomes increasingly more complex as a result of economic growth. After it is property identified and defined, good governance should be placed on the nation's development agenda. It may not be necessary to develop them simultaneously and it also may not be advisable to immediately set the highest standards. Of importance is steady progress towards higher standards over time. Equally important is their firm implementation and enforcement. Indonesia, for example, has introduced since the early 1990s a series of laws designed to improve corporate governance. The Corporate Law of 1995 has quite high standards, similar to those practised in advanced industrialised countries. Yet, it is of little use if not enforced. A more modest law but fully enforced would have made a significant contribution to establishing the habit of good corporate governance. Many developing societies continue to have weak enforcement mechanisms and a poor quality judiciary. This is an important element of public policy that has been overlooked in the World Bank's 1993 Miracle study.
   
   A reassessment of the Miracle study in light of the crisis has underlined the importance of adherence to macroeconomics fundamentals, which has been one of the study's main conclusions. It suggests, however, that the concept of 'fundamentals' that is more appropriate for a high growth strategy will have to be broadened to include the quality of the legal system, regulatory capacity, and intercountry co-operation. This broadened concept, called 'augmented fundamentals' (World Bank, 1997), has yet to explicitly include the broader range of good governance policies, procedures, and practices. It will be useful if the World Bank can bring the issues of good governance on the agenda of the international community. The World Economic Forum is already doing that, and together they can help raise the awareness of governments on the importance of good governance. But in the final analysis good governance must result from efforts within the society itself. It cannot be imposed upon a society through the use of external pressures. Asia Pacific after the crisis can be the place for the development of regional and international co-operation agendas that address these issues. There is definitely a role for APEC here.
   
   
4. International Co-operation.
   
   It is a significant development that intercountry co-operation is seen as an important element in the augmented fundamentals. Intercountry, regional or multilateral co-operation processes are important avenues for socialising such ideas and concepts as good governance. More importantly, the exchanges of views on these ideas and concepts can result in greater understanding of the need for standards or benchmarks that may vary according to particular, specified conditions. The crisis has only begun to arouse the attention of various regional and international fora on this new dimension and agenda of co-operation in a globalised world. Initiatives taken to date have been modest. The so-called Manila Framework of November 1997, drafted by Finance and Central Bank Deputies from some APEC economies, now known as the Manila Group, focuses on more immediate tasks to contain the crisis through the development of a regional surveillance mechanism. It also establishes an approach for rescuing affected economies and containing the crisis that relies primarily on the role of multilateral financial institutions. These suggestions have been further developed in the follow-up meeting of the Manila Group in Tokyo in March 1998. The IMF and the ADB have been drawn in to provide the framework for the surveillance. It may not have been immediately obvious to participating governments that a regional surveillance mechanism can only function effectively if it is supported by a commonly accepted set of standards or benchmarks. It is on the basis of those standards or benchmarks that governments can legitimately 'interfere' in the affairs and policies of another country.
   
   This regional surveillance mechanism can become the forerunner of an international surveillance mechanism that has been proposed by the U.S. Secretary of the Treasury. The objective is to ensure that country risks premiums are more accurately based. It would make available substantial expansion of the types of economic and financial data, including foreign exchange exposure and the maturity structure of public and private debt. It also would formulate minimum world standards for banking systems, accounting methods, bankruptcy regimes and corporate governance. These standards would not be made compulsory. However, countries that fail to meet the standards for either information flow or financial regulation would suffer because wide publicity would ensure that this would be factored into market assessments. The plan is to entrust the surveillance upon a joint venture between the IMF and the World Bank. It is questionable whether their constitution could allow these multilateral institutions to effectively undertake this task
   
   In Southeast Asia, ASEAN has also begun with non-controversial initiatives such as the use of regional currencies to finance intra-regional trade. In December 1997 the ASEAN finance ministers decided to launch a process of ASEAN Finance Ministers' which includes a wide range of activities, including a general exchange of notes on practical experience, monitoring, and surveillance. In the context of the Manila Group, the ASEAN process is thought to function as a caucus. If implemented effectively, it will transform ASEAN into a different kind of regional organisation. This development has been anticipated and it is believed that that the time may have come for ASEAN to be ready to put aside its sacred principle of non-interference. It has been an embarrassment to ASEAN that is has performed poorly in dealing with such important regional issues as the financial crisis and the haze problem caused by forest fires. It recognises that it must institute fundamental political and institutional changes in order to stay relevant. This implies that ASEAN member states must become 'more comfortable with constructive and discreet comments on each other's policies, especially those which impinge negatively on neighbours' (ASEAN-ISIS, 1998). It will not be easy to convince ASEAN governments that the principle of 'constructive involvement ' should now replace the more familiar principle of non-interference in each other's affairs.
   
   However, short of accepting this, ASEAN cannot consider the desirability of engaging members in greater macroeconomic co-ordination and policy harmonisation. The crisis demonstrates the need for ASEAN, and developing countries in general, to develop habits and mechanism of co-operation for maintaining macroeconomic stability, a task that has become all the more difficult in a globalised world. The contagion of the 1997 crisis is likely to haunt the ASEAN members for a long time. This may have a favourable effect on ASEAN co-operation. Not all developing countries are in this fortunate situation.
   
   
5. Good Governance.
   
   The crisis has firmly placed the issue of good governance on the national agenda of the affected countries, especially in Southeast Asia. Good governance should be on the top of the list of tasks in the recovery, reform and reinvention of Southeast Asia. Good governance is seen as a prerequisite for sound macroeconomic policies. In regard to this, the strengthening of institutions of checks and balances in the states' system is found critical. Another important component of the policy is maintenance of social stability and peace (ASEAN-ISIS, 1998).
   
   Good governance implies that authority is based on the rule of law, its policies are transparent, and it is accountable to the society, and it also must be based on institutions and not on the wishes of persons. Last but not least, it should adhere to the principle that all men (and women) are equal before the law (Wanandi, 1998). The important policy question is how governments can be induced to make a workable and credible commitment to good governance. The immediate follow-up question issue is whether good governance can be promoted only in a democratic setting. Singapore and Hong Kong immediately come to mind as examples where good governance can be present in a non-democratic environment. Are they models for East Asia to emulate? Good governance in these two economies is clearly manifested, first and foremost, in their clean civil administration of government, based on stringent rule of law laid down by the British. The good news is that good governance is a possibility in the region, although no local word for it exists as yet in most East Asian societies. The bad news is that both Singapore and Hong Kong are likely to be the exception, by virtue of being city-states. Their geopolitical situation may also provide an explanation.
   
   It is difficult to imagine that in other East Asian countries good governance can be promoted in the absence of democratic developments because in these more diverse societies there is a greater need for flexibility and participatory processes. Even a 'soft' authoritarian system cannot accommodate this need.
   
   Conventional wisdom has suggested that in an ideal development, political development should proceed behind economic development. This will guarantees that political development does not create an obstacle for economic development. The basic assumption here is that political development creates instability. Many governing elites have used this assumption as a justification for postponing political reforms. It should be recognised that economic development may also create discrepancies and inequalities initially that can be destabilising as well. Greater participatory processes that result from an opening of the political system can help alleviate the problems created by economic discrepancies. Therefore, political development should go hand-in-hand with economic development. The need for good governance at a relatively early stage in the economic growth process suggests that political development and democratisation must be introduced earlier rather than later.
   
   How far and how fast political development should be pursued in Indonesia and in other East Asian countries will depend on each country's history, tradition and stage of development. The Korean model of opening up the political system only after a certain level of economic development has been achieved can no longer be applied in much of Southeast Asia today. The crisis has pointed to the need to hasten the process of political development. One wonders, however, whether there is indeed an observable relationship between economic development and political development, or between economic liberalisation and political liberalisation, and what that relationship is. Crouch and Morley (1993) developed the argument that there exist a dynamic comprising three distinct but interrelated processes, in which initially economic growth drives social mobilisation, then social mobilisation drives political mobilisation, and finally political mobilisation drives regime change.
   
   In view of observable exceptions to the overall pattern of political change, such as the case of Singapore on the one hand and the Philippines on the other hand, Crouch and Morley listed a number of factors that appear to have an influence on the political outcomes of the process. These factors include such geographic factors as size and internal regional tensions, such social factors as the inherited class structure and communalism, as well as such political factors as political institutions and elite cohesion, plus political culture and the external environment. It is perhaps changes in the external environment that will create greater pressures for change. As economies are opening up and the process of globalisation is accelerating, individuals, communities or societies tend to feel more insecure and therefore demand greater participation in the political process in order to assure that their security and interests are being protected.
   
   The process of democratisation and political development involve trial and error, and some instability is inherent in this process. That is why they should be undertaken in a gradual fashion, and the process needs to be based on some consensus. In most East Asian economies there is already a critical mass of the middle class that can form the basis for making the consensus and for initiating the process of democratisation.
   
   The 'grand sequencing' issue is after all perhaps not a matter of dramatic choices. Economic development and political development can go in tandem and reinforce each other, if an orderly process can be allowed to take place. The concern is that political development can be highly unpredictable, and once the dam is broken, the water will immediately flood the area. This metaphor, however, would only apply if no consensus has been attempted and society's aspirations cannot find their outlet. This being the case, an anarchical situation obtains; that is when the dam breaks. Forming the consensus is an ongoing effort. It can be likened to an opening of the dam bit by bit. How far and how fast this process should go is a matter that cannot be engineered in advance. They are matters to be settled within the process itself.
   
   Most East Asian countries experience enormous obstacles in this process of consensus building. The governing elite tends to hold back the process, while the emerging middle class wants a faster process. It has been most unfortunate that the governing elite often opposes the demand for faster development by branding it as being influenced by western values. They then come up with counter suggestions based on a more appropriate set of Asian values in defence of their unwillingness to move. Some East Asian leaders have used Asian values as justification for imposing a more paternalistic and repressive political system. Good governance is what all societies long for. Genuine efforts at democratisation and a firm political will are important to institute and develop good governance. A democratic environment is necessary to underpin a credible commitment to good governance.

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