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Should Asia’s Business Giants Be Broken Up or Broken Down?

In recent decades, close ties between politicians and massive corporate conglomerates have proven effective in driving Asian economies’ development. But by concentrating and entrenching market power, this system has fueled a sharp increase in income and wealth inequality, as well as a lack of beneficial competition.

LONDON – The recent turmoil around the Adani Group in India has renewed old debates about inappropriate connections between the country’s politicians and its biggest businesses. Similarly, Thailand’s recent election revealed widespread frustration toward a regime that appeared to have grown too cozy with the monarchy, the military, and business elites.

None of this is new in Asia. When Suharto was ousted from power in Indonesia 25 years ago, similar concerns bubbled to the surface, if only briefly. Now, ties between business groups and politicians are coming under scrutiny once again, and not a moment too soon. Market concentration has been deepening across the region as big, highly diversified business groups – most of them family-owned – come to occupy the commanding heights of national economies.

In India and China, the combined revenues of each country’s top ten companies accounted for roughly 10-15% of GDP by 2018, and in Vietnam, Thailand, and South Korea, the ratio was 30-40%. Samsung’s revenues alone make up over 20% of South Korea’s GDP. Moreover, these ratios appear to have been rising – sometimes sharply – in recent decades. In India, the revenues of the 15 largest business groups grew from around 9% of GDP in 2000 to nearly 15% by 2019.

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