Bloomberg Columnists
Andy Mukherjee is a columnist for Bloomberg News. The opinions expressed
are his own.
Indian Marxist Shuns Dogma for Rich Indonesian: Andy Mukherjee
Sept. 22 (Bloomberg) -- At least one Indian communist leader has found the
courage to shed his party's anachronistic mistrust of global capitalism.
Buddhadev Bhattacharya, the Marxist chief minister of India's West Bengal
province, badly wants Indonesian tycoon Anthony Salim's $10 billion
industrial township project to come to his province.
If he can bring the project to fruition, his fellow communists will lose
their moral authority to oppose foreign investments. The federal Indian
government will then have an easier time letting global investors take
majority stakes in businesses such as retail, airports and insurance.
As more Indian communists learn a lesson in pragmatism from their Chinese
comrades and loosen up a little, Indian Prime Minister Manmohan Singh's
efforts to prepare the fast-growing economy for even speedier expansion may
come to fruition.
The communists have tied Singh's hands by making him adhere to their
outdated agenda: no sale of profitable state companies, no cuts in subsidies
and strict controls on foreign investments.
Singh has to play along with the communists because he would lose office
without the continued support of left-wing parties. Among them, the most
important are the Marxists, who have run West Bengal for 28 years in a row.
Salim Group
West Bengal, strapped for resources, is wooing Anthony Salim, the chief
executive officer of the Salim Group and heir to an Indonesian business
family that was wealthier than the Rockefellers before the Asian crisis of
1997.
The Asian crisis, which hit the Salim Group hard, also led to the ouster of
Indonesian President Suharto, with whom Salim's father had a close link for
four decades. As he rebuilds his business, Salim is looking toward China and
India. In 2002, the group acquired a 45 percent stake in COSCO Property Co.,
a Chinese state-owned real estate company.
The investment plan is similar for the eastern Indian province, where Salim
has once again opted to work with a communist government.
The $10 billion investment promised by the Indonesian businessman is almost
three times the amount all of India received last fiscal year in new foreign
direct investment.
Much as he needs Salim's money, Bhattacharya may run into trouble accepting
it. That's because he runs a government that gets most of its votes from
rural areas, and the township project involves selling 5,100 acres of
farmland to Salim.
``Acquisition of fertile, multi-cropped plots will be unavoidable,'' Ashoke
Mitra, a former West Bengal communist finance minister, wrote in the latest
issue of the Economic and Political Weekly journal. ``The consequence will
be conceivably a significant loss of both farm output and farm employment.''
Opposition
It's a good sign for investors that Bhattacharya is coming under attack from
left-wing leaders and parties of all hues -- it shows he's being taken
seriously.
``Buddhadev's scramble for foreign direct investment,'' a splinter Marxist
group said in its newsletter, is providing Manmohan Singh's party ``with its
most persuasive justification for neo-liberal policies.''
The model for Anthony Salim's project is an industrial township on the
Indonesian island of Batam, a 30-minute ferry ride from Singapore.
Salim was part of the consortium that built the Batamindo Industrial Park,
where U.S. and Japanese companies run assembly lines using Indonesia's cheap
labor.
``Bengal can actually better Batam,'' Salim told Indian newspaper Telegraph
during the chief minister's visit to Jakarta last month.
Another Batam?
Salim promised to tweak the Batam model to make use of West Bengal's ``large
pool of university graduates.'' The investment proposal for West Bengal
would include an industrial park as well as ``health'' and ``knowledge''
cities and a 53-mile four-lane road.
It's hardly a compliment for West Bengal to be favorably compared with
Batam, which, apart from its factories, is basically a beach playground for
Singapore's not-so-rich.
The Indian province and its capital Calcutta -- now Kolkata - - had a
vibrant economy before labor unrest forced companies to relocate to Mumbai
and New Delhi. Top teachers and students fled too, leaving a void where
lively intellectual life once existed.
Deng, Not Mao
West Bengal wouldn't be gasping for funds today if the previous generation
of Indian communist leaders were swayed less by Chinese leader Mao Zedong's
ideas of Cultural Revolution than those of his successor, Deng Xiaoping, who
started bringing China out of its economic isolation in the late 1970s.
In 1967, when the communists became partners in a coalition government that
ruled West Bengal, they drove most big industry out of the province by
creating a climate of fear.
The labor minister at the time likened the situation to a ``duel'' between
employees and employers, from which the police must be kept away so each
side could show its ``strength.''
Chief Minister Bhattacharya has a chance to make amends for his party's
blunders. As he told reporters in Calcutta after returning from Jakarta last
month, the time has come to ``reform, perform or perish.''
Manmohan Singh -- and investors -- would surely agree.
To contact the writer of this column:
Andy Mukherjee in Singapore at [EMAIL PROTECTED]
Last Updated: September 21, 2005 16:02 EDT
http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_mukherjee&sid=a9uhEGVYVNUM
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