People
2 International
Hong Kong goes
Dutch
ISSUE 25/24 JANUARY 1994
The International Division may
not be aware of the fact, but
for a few days at the end of
last year, Rabobank actually
had two Hong Kong branches.
The high-profile, low-budget of
fice (it was made of wood and
occupied around two-by-two
metres of the city's Piazza Kow-
loon Park) was the bank's con-
tribution to the Holland in Hong
Kong promotion week organized
by the Netherlands' consulate
there.
The 'branch' was staffed by the
other Hong Kong office on a ro-
tation basis and by a 20th-cen-
tury 'Rembrandt'. Caricaturist
Frans Mensink did fine trade as
Rabobank's female staff sported
traditional Dutch costume for
photo opportunities. Around
half a million people visited the
Dutch village to see typical crafts,
such as tile and wooden-shoe
making, and sample cheeses and
other products. However, the
central attraction was definitely
the life-size windmill which
managed to withstand the gusts
of hail and high winds of tropical
storm IRA.
Utrecht Hanno W.E. Riedlin joins the International Divi-
sion's management team. Formally regional director of
ABN/Amro's South-East Asia operations, his appointment
is effective January 1.
continued from page 1
here. Suffice it to say that many
are historie and date back to the
country's colonial past. However,
Brazil became a republic in 1889
and subsequent government has
not been successful in bringing
about real change; for example,
the first time Brazil's foreign debt
was rescheduled was at the turn of
the century. Yet, this century has
not been all bad news for Brazil
and its people. The country un-
derwent a period of rapid indus-
trialization and economie growth
between the 1940s and 1970s,
vastly improving living standards
and causing it to be seen as an
example of how emerging nations
could develop.
The real bad news came in the
1980s, when hyperinflation
quickly turned into megainfla-
tion and successive governments
have proved miserably ineffective
in addressing the problem. 'We
have a historie inflation prob
lem,' says Raibobank's Marcos da
Silva Oliveira, 'and nothing gov
ernment has done in the past dec
ade has changed that. Since 1986,
government has tried to combat
inflation through economie
shocks known as "plans". We've
had the "Cruzado", the "Brazil",
the "Collor" and countless others,
but none had the political sup
port necessary to be effective.'
Oliveira says this almost matter-
of-factly. Like all Brazilians, he
has learnt to live with inflation
and with incompetent, ineffec
tive government. The enigma
emerges here again - if Brazil is so
badly governed, how come it is
currently producing regular econ
omie growth and has managed
to pull itself some way out of the
recession that has been and still
is playing havoc with much more
stable economies? Td say it's be-
cause the Brazilians themselves
are an enterprising people,' says
general manager Teun de Boon.
'They are industrious, very in-
clined and willing to work and
in spite of everything, they never
lose their sense of perspective.'
This situation has led the priva
te sector to take matters into
their own hands. In most other
economies, the development of
services, Utilities and infrastruc-
ture is the responsibility of
government. In Brazil, the pri
vate sector not only takes the in-
itiative, but usually picks up the
tab. Raibo's people can give
countless examples of roads and
even ports being laid on by pri
vate companies to facilitate their
business with no input from the
'responsible' authorities. And
this entrepreneurial spirit is also
apparent in other areas, particu-
larly technologies designed to
combat the adverse effects of
Brazil's megainflation, which
ranges between 1 and 2 percent
per day; the country has one of
the most sophisticated teleban-
king systems in the world.
But life remains tough for the
majority of Brazilians. 'To all
practical intents and purposes,
this is a dollar-indexed econ-
omy,' says De Boon. 'Whatever
you buy or rent, for example
your car, your apartment, all
-prices are based on dollar con
version, but you pay in local cur-
rency.' This situation is now ac-
cepted as normal by all Brazil
ians, including the government
which publishes conversion in
dices every month. 'But,' De
Boon explains, 'many working
people, be they blue or white-
collar workers, are not fully com-
pensated or not compensated at
all for the constant devaluation
of their money. If they are lucky,
then the index will give them a 20
or 25-percent increase per
month, but often inflation can be
35 percent. So you see who pays
the price. It's a pitiful situation,
and the notion of asking the ma
jority of Brazilians' to tighten
their beits is obscene.'
Yet that is what is going to have
to happen if the inflation prob
lem is to be beaten. What has
saved the country from econ
omie chaos and inertia in the
past is the Brazilians energy.
'They are incredibly assertive and
they are more than used to ad-
justing to extremely harsh cir-
cumstances,' De Boon believes.
'They do two jobs, their wives
start working, and somehow
they make ends meet.' One re-
sult of this attitude is the size of
the 'gray' sector in Brazil's econ-
omy - around 45 percent over
and above the official figures. 'If
you add this to the official econ-
omy, then you see that Brazil is
third only to the US and Japan,'
adds assistant general manager
Willy Castanheira Henriques.
And if the new purchasing power
parity system advocated by the
IMF is applied to classification,
then Brazil becomes the third
largest economy in the world. In
fact, with an official GNP of
US$450 to 500 billion (excluding
the 'gray' sector), the country is a
whole world in itself. And that is
what both its people and Raibo-
bank do Brasil are focussing on.
But Brazil still carries the burden
of a political community which is
noted primarily for its corrup-
tion and its lack of credibility.
The Italians have had their pain-
ful shake-up, is it now Brazil's
turn? 'We're already in that
process,' De Boon believes, 'but
it's rather more subtle here.
The president, Collor, was im-
peached and the economy didn't
even pause. Collor did a lot of
good things. He opened up the
Brazilian economy to the world.
Unfortunately, he was too greedy.
But what we've seen in the wake
of that particular scandal is a
hopeful thing; the economy goes
on and the work goes on - in spite
of rather than because of the poli-
ticians. Brazil's GNP is growing
healthily every year simply be
cause the politicians are too busy
squabbling among themselves
and they're not fooling with the
economy any more. I may be
eternally optimistic about the
future of this country, but I see
certain positive developments
that were not there before.'
In a country with the sheer size
and social and economie diver-
sity of Brazil it is impossible to
generalize about anything. Yet
the sustained growth its people
have achieved can only be good
news for all Brazilians, rich and
poor. And for the world's ex-
porting communities as foreign
trade with the nation of 150 mil
lion consumers continues to
grow apace.