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China and India

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IT IS easy to forget, now that China and India are all the rage, that until ten years ago South-East Asia was the world's fastest-developing region, winning the sort of investor attention and breathless column inches that the two new giants now enjoy. The region has, slowly, recovered from the blight of 1997-98. It has recently had several years of strong growth (see chart 1) and its governments' finances have been greatly improved. Even so, after all this time the region's five main economies--Indonesia, Malaysia, the Philippines, Singapore and Thailand--are still notable for the near-absence of companies that could truly be called world-class.

As Asia continues to grow vertiginously, it will need a lot more infrastructure, regulated or not, and YTL, says Mr Yeoh, has shown it can provide it.

Hitherto, Malaysian companies have had a remarkable record of picking duds when they buy foreign firms. Laura Ashley, a fashion designer; Costain, a builder; Lec, a fridgemaker; and Agusta, a motorbike-maker: all were bought by Malaysian firms with less than glorious outcomes. Even so, if they continue to improve, YTL and the region's other conglomerates may yet break the mould.

Of the "godfatherish" firms profiled in Mr Studwell's book, one that analysts say is among the best performers is YTL, a Malaysian conglomerate. Big in construction, the firm also owns a British water firm, Wessex Water, operates hotels and upmarket shopping malls, runs a high-speed rail link from central Kuala Lumpur to the city's airport and owns a chain of power stations. Its founder, Yeoh Tiong Lay, built a giant construction business with state contracts in the country's early post-independence period. In the 1990s, when his friend Mahathir Mohamad was prime minister, the firm got concessions to generate electricity using subsidised gas from the state oil firm, which the state electricity firm was obliged to buy.



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