A chat with Steve Forbes

FinanceAsia caught up with Steve Forbes, eponymous publisher and two time US presidential candidate, at the Asian Global Leadership Forum on the paradise island of Pangkor Laut in Malaysia.

What's your view on the potential of a war with Iraq? What are you hearing from the corridors of power in Washington?

Forbes: Clearly the Bush administration will move against Iraq, with Britain and possibly some others. Bush [has] start[ed] the public diplomacy of that campaign at the UN general assembly. Then the Congressional debate will begin and approval for war should be there by mid-October. The question then is whether the US moves before the November elections.

Key to the war will be making the campaign quick and successful. DonÆt forget there was considerable concern and worry with regards to Afghanistan before the operations started there. Another key issue will be what happens to Iraq after the campaign is over. Everyone wants a democratic regime to take root. And this will put pressure on the clerical dictatorship in Iran. So we could see a revolution in Iran such as happened in 1978/79 but this time in reverse, [with the young moving to oust the theocrats].

Are the US war plans driven by the lacklustre domestic economy?

No. The presidential focus on the war on terror is why this administration has not focused on the economy. In my view the economic team in this administration has not done a good job in helping get the economy going.

What's the mood like among corporate executives in the US? It cannot be much fun given all the shenanigans going on?

The mood among corporate America is one of great caution. No one is taking the initiative and no budgets are being released. Now, the CFO reigns in corporate America and the CFO has become the de facto CEO. But I think it will change soon and the CEO will start authorizing investments again.

From our own experience with our magazines, we've seen a slight advertising recovery in June, July, August and September - not a roaring recovery but a slow recovery.

What do you think could trigger an increase in capital spending by companies around the world?

Technology. Technology continues to move forward and computers continue to develop. For instance, after the mid 1980s bust of the personal computer market, the technology continued to develop. The big break came when PCs started to be able to talk to each other. So I think technological advances will necessitate new investment. Also when assets become cheap, business people see opportunities. Business people do not stay this shell-shocked for long. Finally I think we will get regulatory sanity back in the telecom market, especially some liberalization from the FCC in the US. The regulators have been very destructive and we could start to see some big changes there.

You are known for putting together lists of billionaires. What common themes do you notice every year about this august group of people?

The common theme is change. We have 10% to 20% turnover of the people on the lists every year. This shows that the world does not stand still. However, one thing I can say is that a lot of the wealth in the world is stock market wealth and therefore the number of billionaires goes down when the stock markets decline. For instance, one year ago it took $725 million to be in our top 400 list. This year, the hurdle will only be about $500 million.

What about Asian participation in that list? Are you seeing growing Asian wealth compared to the rest of the world?

We are always discovering new private companies in Asia - there's not as much of a public company ethos in Asia as in the US. This makes the companies and the billionaires harder to find and verify. However, we are always discovering new people to add to the lists. This year there has not been a huge surge of new entries from Asia, but there's definitely been a comeback from a few years ago.

What's your diagnosis of the health of the Asian economy?

The big issues are Japan and China. Japan is still mired in deflation due to its idiotic monetary policy. China - whether you believe the numbers or not - still definitely has economic growth. Korea as well is enjoying a second wind at the moment and is showing some good economic growth. Malaysia blessedly confounded the speculators and is doing well. In general, if you just get rid of the IMF, this region will do fine.

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