PUBLISHER'S NOTEBOOK

PUBLISHER'S NOTEBOOK

It's nice to be in a part of the world where optimism abounds and economic growth forecasts are downright dazzling.

Conversations with key shipping executives here are uplifting indeed.Interestingly, China and Indonesia will likely be Asia's fastest-growing economies over the next decade, according to Henrik Zeuthen, managing director of Maersk Hong Kong Ltd. Many others I spoke with agreed with this assessment.

Mr. Zeuthen, who first came to Asia in 1970, says he foresees double-digit annual economic growth for China and Indonesia mainly because of the availability of low-cost labor. Given their combined 1.3 billion population, such growth could have enormous impact on the entire world.

"The high cost of living is affecting the competitiveness of countries such as Japan, Taiwan, South Korea, Hong Kong and Singapore," said Mr. Zeuthen, adding that he nonetheless expects these five to grow at 5 percent to 7 percent per year. That's faster than any of the forecasts I've seen in either the United States or Europe.

Mr. Zeuthen oversees an organization of 800 people, including five offices in China. He said Hong Kong continues to grow as a service center even as manufacturing jobs shift to the adjacent China mainland.

He said other countries with the prospect of double-digit annual economic growth in the 1990s are Vietnam, Sri Lanka, Malaysia, Thailand and Bangladesh. These five countries have a combined population of more than 275 million.

Meanwhile, signs of the economic boom in China are everywhere, perhaps most impressively at Hong Kong's Asia Terminals Ltd., which is 33 percent owned by Sea-Land Service Inc.

ATL operates a 6.5 million-square-foot container freight station at Kwai Chung in Hong Kong Harbor. Its highly computerized facilities are housed in perhaps the world's most modern building, according to Gary Gilbert, Sea- Land's vice president for Central Asia and chairman of ATL. Mr. Gilbert, a no-nonsense graduate of King's Point, oversees Sea-Land's operations in Hong Kong, China and Taiwan. The ATL terminal building - still partly under construction - has floor space equal to 37 square miles and parking spaces of 2,975 container vehicles!

"We are looking for throughput growth of 14 percent a year," said David Allen, managing director of ATL. Most of the growth will come from mainland China, he said.

Mr. Gilbert said the value of the Kwai Chung terminal was more than $800 million.

Financial analysts are constantly seeking out undervalued assets. I wonder if Wall Street fully understands the value of ATL to Sea-Land and its parent company, CSX Corp. Both Mr. Gilbert and Mr. Allen believe ATL is poised to yield Hong Kong-style financial returns in the coming decade.

Hong Kong, of course, is China's only deep-water port, and that's one reason why it is the world's busiest. That won't change anytime soon.

While Hong Kong and Taiwan appear to be the major beneficiaries of China's growth, Singapore is in the best position to benefit from the coming boom in Indonesia, according to Peter Moe, who heads the Sea-Land office in Singapore.

Mr. Moe said he expects the Indonesian economy to grow at a 14 percent clip this year and said labor costs there are especially attractive. You can actually hire someone for $1 a day!

The only negative I heard during my Asian trip was that the United States might terminate China's "most-favored-nation" trading status. Fortunately, Congress upheld President Bush's veto of the bill that would have done just that.

"The United States needs to show patience with China," said C.H. Tung, chairman of Hong-Kong based Orient Overseas Container Line Ltd.

"The No. 1 goal has to be to improve the economic lot of the people of China," said Mr. Tung, adding: "That is precisely what is going on in China today."

Not only is the southeastern region of China enjoying unprecedented growth, Mr. Tung and others said, the entrepreneurial spirit there is beginning to spread to other parts of China.

It's hard to disagree with Mr. Tung. While the United States obviously needs to keep pressure on China on human rights, hurting the Chinese people economically would likely cause serious long-term harm.

Taiwan's experience is a case in point. It achieved its current democratic status only after it had attained economic success. Many argue that the same thing will eventually happen in China absent precipitous meddling from outside. Indeed, China's aging leadership has recently condoned the southern region's capitalistic development, much of which is fueled from Hong Kong and Taiwan.

That action sent spirits soaring in Hong Kong, whose people now seem much less worried about the 1997 transfer of the Crown Colony to mainland control than they were during my last visit in 1990.

Quite clearly, this region is positioned to lead the world in economic growth, partly because it has started from so far behind, but mostly because of the optimism that seems to be everywhere except, alas, in the Philippines.

That said, OOCL's Mr. Tung made a pithy observation that I heard from others on this trip.

"I wish more American companies would be more aggressive in pursuing economic opportunities in Asia," he said. "There is an enormous reservoir of good will toward America," he noted, adding: "You need to take advantage of that."

Mr. Tung offers good advice. Asia is too good an opportunity to miss.