An ode to lobbyists

One basic problem that the Centre was created to address was a broken or non-existent transmission belt between government and business in Asia.  In the area of trade policy, it makes little sense for government (especially) to be operating without clear knowledge of the needs and demands of the business community. 

Yet I’ve seen it over and over again in different governments across Asia—there is no clear mechanism for business to feed in even basic information to government officials.  To the extent that information flows, it tends to be ad-hoc and often conveyed informally.  It may have once taken place over the golf course, but now is done over tea, coffee or other beverages, perhaps at a reception somewhere for a different matter entirely. 

Alternatively, business relies on informal connections—the board chairman went to school with the key government official or has useful relatives.  The board chairman may even have been selected precisely because he (and it’s nearly always a he) went to the same school and has these types of personal connections. 

This model is clearly limited—there are just not enough people who went to school with key officials.  

Foreign companies hope to connect with the “right” local partner (meaning, preferably, someone who has these types of informal relationships with key stakeholders).  Companies often drag in their own government officials in embassies in the region only when things go horribly wrong.

What is largely missing in this region is a good lobbying sector with clear mechanisms for engaging with government at different levels and in different ministries to address specific trade-related policy issues.   Such a system would help head off many of the problems across the region and ultimately lead to more efficient, more effective policies with greater opportunities for growth.

Given that the business of trade policy is to create an environment for conducting business, the lack of feedback between government and business is deeply problematic.  Government officials end up trying to make policy in the absence of information about their own economy and have even less knowledge of systems in other countries.  It is perhaps not surprising that the outcomes from such a flawed system can be disappointing.

I remain an optimist and assume that most government officials in trade actually do want to create certain outcomes.  Even when the intended result is to protect the local industry, however, government often acts in ways that fail to achieve the desired outcome.  A lack of knowledge makes it more likely that decisions will actually create unintended consequences and perverse incentives. 

The problems are significant.  Start with the fact that many companies in Asia do not have anyone actively paying attention to government policy at all.  Most local companies—even the biggest, most powerful players in any given field—will not have a single person in the firm paying attention to trade and trade policy.  There will simply not be a government affairs or government relations person (let alone a whole team).  The marketing or corporate affairs or PR person may also pay zero attention to the policy side.  As a result, local companies can be blindsided by policy and regulatory changes in their own countries and in neighbors.

Also surprising—many foreign companies do not have anyone paying attention to policy in Asia.  They may have a team very busy in Washington or in Brussels, but no one on the ground in Asia.  If there is any attention paid to the region at the corporate level, it might be handled by someone based in the headquarters. 

In the relatively rare company that does have someone to follow trade policy in Asia, the person (or, perhaps, limited team) generally has no budget and limited ability to actually follow policy.  More problematic, the Asia-based staff members rarely have a good grasp or connections to government individuals involved in making policy so even if they are on the ground, they have limited capacity to influence outcomes.

Of course, this becomes a reinforcing mechanism—with limited staff and no budget, the Asia policy team rarely succeeds in making a difference, making it harder to justify the existence of the person and/or budgets in the future for the task.

The exception to this pattern is generally American companies (and, to a lesser extent, European companies).  Of course, many will say, the American approach to corporate lobbying is not something that anyone wants to emulate. 

However, if you look at who gets what they want and who succeeds, American companies have a much better track record than others.  This is true even for firms that might be thought of as competitors, like the Australian or Canadians.  Companies from both countries, by and large, do not engage in lobbying.  Except for the biggest global firms, both tend to wait for a crisis and then, perhaps, call in their own government or embassy staff to help.  Companies are just not as successful in reliably getting what they want.

As an example of the relative difference, last week the American Chamber of Commerce held their annual Asian conference in Singapore.  This event brought together the 27 AmChams from Mongolia to ASEAN.  The ballroom at the Marina Bay Sands was full. 

The Canadians held a similar event in Bangkok today.  The Canada/ASEAN Business Forum had less than half the number of people participating.  Of course, it was focused more narrowly on ASEAN than the American event with an Asia-wide remit.  The entire CABC has only been in existence for a few years (which also helps illustrate the problem).  Finally, the scale and scope of US versus Canadian investment is quite different—there are 3600 American companies in Singapore alone. 

But the important point remains—nearly all of the participants in Bangkok from Canadian companies were not following trade policy and government affairs as their sole job.  Most were company heads who grasp the importance of Asia to their corporate bottom line.  While welcome, such individuals are unlikely to be deeply engaged in following policy changes in the region over time.  

Canada does have more than 1000 trade commissioners located around the world.  These people do work full-time on trade issues.  However, each of these individuals is unlikely to be an expert in the industry, and certainly do not fully understand specific firms.  Thus, while government officials like trade commissioners should be a key element of a company’s strategy, they cannot and should not be the first (or only) line of defense for a firm.

A complex, shifting economic and policy environment like Asia requires the full-time attention of company staff.  Without a sustained focus, companies cannot hope to get the results and policy environment that they would like.

Government is going to make policy decisions.  Companies can either try to influence these decisions in a proactive, preferably helpful manner, or they can be reactive.  Those companies that do it well will likely have more success than those that do not.