Asia is home to some of the world’s largest and most dynamic cities. Why do some of them fail?
Nikkei staff writersFebruary 18, 2022 11:59 JST
NEW YORK — Welcome to Nikkei Asia’s podcast: Asia Stream.
Every week, Asia Stream tracks and analyzes the Indo-Pacific with a mix of interviews and original reporting by our correspondents from across the globe.
This week, we ask why Asian cities lag behind in global indices. Millions, billions, live in these urban areas, which are the engines of growth and centers of culture for some of the world’s biggest economies and oldest civilizations. And yet, for those who actually live in Asia, the numbers are grim. Asian cities permanently occupy the top 20 spots in the “world’s most polluted cities” index. The U.N. says that more than half of all poverty in Asia is urban. And only a fraction of Asian cities have zero-carbon ambitions.
In this episode, we speak to Uzair Younus of the Atlantic Council, and our correspondent in Jakarta, Erwida Maulia, reports from Indonesia about that country’s new capital.
Related to this episode:
Indonesia’s new capital, Nusantara, sparks controversy, by Erwida Maulia
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WAJAHAT S. KHAN, HOST: Hello and welcome to Asia Stream — where we track, report, and analyze the issues and interests of the world’s largest region. I am Waj Khan, Nikkei Asia’s digital editor, here in New York City. Today’s episode: A Tale of Three Cities. Asia is home to some of the world’s most dynamic urban centers. Of the top 20 of the world’s most populous cities, 12 are in Asia. The global big three — Tokyo, Delhi and Shanghai — are all Asian. Millions, billions, live in these urban areas, which are the engines of growth and centers of culture for some of the world’s biggest economies and oldest civilizations. And yet, Asian cities lag behind in global indices. Sure, Conde Nast Traveler put four Asian cities — Tokyo, Osaka, Kyoto and Singapore — in the best travel destinations to visit in 2021, but that’s just tourism — for those who are visiting. On the flip side, for those who actually live in Asia, the numbers are grim. Two Chinese cities, two Pakistani cities, and 16 Indian cities permanently occupy the top 20 spots on the “world’s most polluted cities” index. The U.N. says that more than half of all poverty in Asia is urban. And only a fraction of Asian cities have zero-carbon ambitions. In this episode, we look at examples from East Asia, South Asia, and Southeast Asia, of cities that were once the focus of big dreams, but are now major disappointments. Cases of when governments invest enormous sums of political and financial capital — but it’s not enough. When top-down planning and governance fall short. When they lead to urban plans that don’t reflect the needs of the hour. It’s quite the show. Boot up for some urban outfitting. You’re listening to the sound of Asia, streaming in your ear. From Nikkei Asia, this is Asia Stream.
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KHAN: Before we get started, a quick reminder that Nikkei Asia is offering an exclusive discount to our podcast listeners. To redeem, just click the link in the episode description. These days, when talking about the frustrated ambitions of Asian cities, there’s no better place to start than Hong Kong. Once called “Asia’s Global City” and the region’s main financial hub, it’s now buckling under the weight of intense repression and possibly the world’s most stringent COVID controls. Here to bring us up to speed with what ails Hong Kong is Asia Stream correspondent, Monica Hunter-Hart. Monica, welcome back to the studio.
MONICA HUNTER-HART, CORRESPONDENT: Good to be back, Waj.
KHAN: Okay, fill me in here. Hong Kong, as we know, hasn’t transitioned well from its status as a British colony to a Chinese territory under the so-called one country, two systems model. Beijing’s controversial national security law has something to do with all of this. But why and how has Hong Kong lost its status — its mojo, if you will — as the region’s, indeed one of the world’s leading financial hubs?
HUNTER-HART: So, Hong Kong has been the victim of a double-tap policy hit by Beijing. On the one hand, it has gone through two years of turmoil that saw citywide protests that started against the government in 2019. Chinese President Xi Jinping stepped in with a draconian national security law that set the city on a more authoritarian path. Civil servants had to pledge their loyalty to the city, and free speech became more restricted. Protestors and activists were arrested and prosecuted, and newspapers critical of the government were forced to shut down.
KHAN: That’s just one aspect though, the political suppression of the city.
HUNTER-HART: That’s right. On the other hand, Hong Kong’s been subjected to extremely stringent COVID regulations — arguably the toughest pandemic border controls in the world. They’re aimed at synchronizing the city with mainland China’s strict zero-COVID policies and have meant brutal quarantine stays of up to 3 weeks for anyone flying in. But while the goal has been to open up travel with China, so far this has failed. The doors to the mainland have been shut for almost two years, and so too is the gate for international travelers into Hong Kong.
KHAN: So, Hong Kong, once one of the world’s most open-for-business cities, has essentially been cut off.
HUNTER-HART: Exactly. Cut off as well as shut down. And the results are well documented. Hong Kong has fallen out of the top 10 most attractive global cities for the first time, according to the latest Global Power City Index we recently covered here at Nikkei Asia. It lost 88% of its international and domestic passengers. It dropped on all major tourism and dining rankings. For the first time since record keeping started 60 years ago, there was an actual decline of population … by 1.2%. School enrollment dropped to record lows. People actually just packed up and left, Waj. Tens of thousands of them went to the UK, of course, which was the former colonial government of the island.
KHAN: That sounds like a brain drain.
HUNTER-HART: Not just a brain drain, but major divestment, too. Besides the politics, for many in the business community, the restrictive COVID measures were the last straw and yet another sign that the city — increasingly under the sway of Beijing — has become inhospitable for international business. There’s been a flight of both talent and capital. Forty-seven foreign corporate headquarters exited the city in 2021.
KHAN: Wow. And I remember, even the New York Times and the Washington Post relocated their bureaus.
HUNTER-HART: Right. Since the handover of sovereignty to China in 1997, Hong Kong’s central role as a business hub has been reinforced by its openness to the outside world and its access to the mainland. Now it has neither, and no public timetable for when these will be coming back.
KHAN: Got it. Well, Monica Hunter-Hart, thanks for the insight.
HUNTER-HART: Thanks, Waj.
KHAN: So in this regional competition, Singapore, Tokyo and Seoul have emerged as contenders, vying for a piece of the action that is leaving Hong Kong. But the larger question remains: why did Beijing prefer to play hardball with Hong Kongers? Why did it subject them to a system they were politically not ready for, and thus risk pushback? And what about the loss of human and financial capital and status that the island territory suffered — was it all worth it? That central control — also known as top-down development planning, or strong, centralized governance, or armchair statesmanship — from powerful entities, which doesn’t quite take into account the sensitivities or requirements of those they are governing continues as a theme for our next Asian city of interest. Gwadar.
COMMERCIAL VOICE: Port cities have always been a beating heart of the world’s economy, the global cultural parts (?). Today, the speed and scale of expansion is astonishing. A consciously inviting urban environment, witnessing the emerging city of the 21st century right before our eyes, on the scale of modern futuristic urbanization. This is Gwadar.
KHAN: Now, chances are you’ve never heard of Gwadar, but it is, or was supposed to be, a very important city in a very important part of the world. But with a population of just over 100,000, situated on the coast of the poverty-stricken region of Balochistan in southwestern Pakistan, Gwadar is no Hong Kong. The city started to make headlines about a decade ago, when under Chinese President Xi Jinping’s multitrillion-dollar Belt and Road Initiative, it was envisioned to become one of Asia’s, indeed the world’s, most important ports. According to the planners in Beijing and Islamabad, the key was its location. Situated on the mouth of the Persian Gulf, Gwadar was supposed to develop into a modern port city connecting western China — the superpower’s least-developed region — with the rest of the world. Moreover, it was supposed to increase mainland China’s access to the energy corridor of the Persian Gulf by bridging thousands of miles of distance. Gwadar was envisioned as a superconnector — a kind of geographic multiplug — to landlocked Central Asia. Via Gwadar, the world could trade with food-strapped Afghanistan, energy-rich Turkmenistan and the rest of the Central Asia ‘Stans. Moreover, Gwadar was slotted as a potential base of naval operations for China, and with its natural deep water port, a modern alternative to the commercial ports of the UAE, India, and even Singapore, where supertankers could load and off load.
COMMERCIAL VOICE: This is one of those cities poised to move in a smart direction with the ocean, breathing life into its pores. Drawing people’s attention to this booming metropolis attempting to manage the chaotic forces of growth. To evolve from barren land, to industrial free zones, to a leading high tech engineering hub. And it’s all doing so through conscious modern urban planning.
KHAN: But as central planners plan, reality bites. It’s been almost nine years since Beijing and Islamabad touted Gwadar as the centerpiece of the Belt and Road Initiative, but it still hasn’t taken off. Capacity problems, security problems and finance have stalled the port city project. Today the city suffers from insurgent attacks, a water shortage, and mass protests by locals against the authorities who they blame for exploitation and heavy-handedness. The transformation of Gwadar has been planned by the powerful Pakistani military, who are inspired by their Chinese allies. Where did these so-called visionaries go wrong? Was it the fault of elite, top-down planning that didn’t account for the realities on the ground? Or did Gwadar fall victim to the revenge of geography? To discuss that and more, I’m joined by Uzair Younus, who is the director of the Pakistan Initiative at the Atlantic Council’s South Asia Center in Washington, DC. He’s also the manager for engagement and strategy at Dhamiri, an innovation firm helping companies align their business competencies with public good needs. Uzair, welcome to Asia Stream.
UZAIR YOUNUS, GUEST: Thank you for having me, Waj.
KHAN: Okay, so, Uzair, you have an excellent op-ed coming out soon. I’m going to read from the beginning of that. You write: “If the China Pakistan Economic Corridor, CPEC, is the crown jewel of China’s Belt and Road Initiative, then Gwadar can be described as the ‘holy grail’ of CPEC.” And yet, Uzair, that holy grail is a tad rusty, and isn’t holding up to expectations. So give us an overview of Gwadar and what is going wrong there.
YOUNUS: Well watch, as I argue in that article, the holy grail argument is that if Gwadar succeeds in meeting the aspirations and ambitions that Pakistan’s political and non-political elite have for it, then Pakistan’s economy by definition would be fundamentally reformed and restructured. And if that happens, then the argument goes that there will be greater human development and socioeconomic opportunities in Pakistan, particularly for people like those who live in Gwadar, who have been — for, in essence, since the founding of Pakistan — on the periphery of its political economy. The issue that comes to bear in this situation is that this is a top-down developmental model. And it is only exacerbating the local issues on the ground in places like Gwadar and highlighting Pakistan’s own capacity gaps related to state machinery. And so, on the one hand, when we see influential people and celebrities go into Gwadar, taking selfies with a lush, green cricket field, or the pristine beaches of the area, we also then hear that citizens don’t even have access to clean drinking water. They recently protested for weeks on end, related to issues focused on their livelihoods and water access. The issues in Gwadar are reflective of the broader, top-down developmental strategy that Pakistan is pursuing, and its own limitations.
KHAN: But Uzair, to play the devil’s advocate here, isn’t most development top-down development? I mean, Pakistan is clearly inspired by its best friend China, which has perfected top-down development, as an art. So, if the Chinese can do it — I’m wondering, as a Pakistani planner would — why can’t we do it? It also seems to work right next door in India, which has a very strong center. Top-down development is a thing which is pretty fashionable across Asia. So why isn’t it working in this case?
YOUNUS: Well, it’s fashionable in the sense that, when you look at China, or even India, for that matter, the vision is set by the center, and the center then mobilizes capital and expertise to achieve that vision. But the implementation and the nuance come from empowered local bodies, you see this in India, where states compete around special economic zones. We saw this in the early days of China’s own reforms, where the experimentation happened through local initiatives. Xi Jinping himself, has run sort of through the local bodies of the Chinese state machinery in, on his way to becoming the premier of the country. And so the problem on the Pakistani side is that the vision and the execution, both is overly centralized and put in the hands of an ossified and hollowed out bureaucracy that is fundamentally disconnected from the needs of the local population. And so, what Pakistan must do is recognize that nuance at the local level is very, very important, and empowered local bodies that implement policies and move forward the vision of the country is the only way to achieve the progress that we’re aiming for here.
KHAN: But isn’t geography on their side in this case, Uzair? Because Gwadar was supposed to be perfectly placed, right? I mean, it was near the Persian Gulf, and on the mouth of the Arabian sea. And on, if you look at it from the mainland perspective, it was in a fulcrum position between China and Central Asia and Afghanistan and Iran, a hop, skip and jump from India, a hop, skip and jump to the UAE, Qatar, Saudi. I mean, I remember, a Pakistani general once told me during one of my visits, that this was like the Plaza Hotel on the corner of Fifth Avenue and Central Park. You can’t go wrong with Gwadar, was the word. So what went wrong with its Fifth Avenue and Central Park location?
YOUNUS: I think the key thing that’s gone wrong — um, and it’s not too late to fix it so far — is that while Pakistan has increasingly talked about Gwadar in the right sort of ways, and has the right ambition related to its location, etc., the economic focus has been one that is focused on land access into Central Asia through Afghanistan, or into Xinjiang. Now, a couple of things that we must keep in mind is, number one, the journey of geography and history goes against that economic argument. Because from Central Asia, and from the plateaus in the northwest, historically only armies, not wealth, has flowed into the Indian subcontinent across the Khyber Pass. And so you’re combating that, and we’ve seen this, you know, wreak havoc with Pakistan’s own geoeconomic ambition, not just recently, but for decades. So for example, the first MOU with Turkmenistan on an oil and gas pipeline was signed back in 1995. It’s been 30 years and that pipeline is still a pipe dream. What Pakistan needs to do is understand that its industry, its capital, its trade is oriented towards the seas. And if you can reorient your geoeconomic strategy by focusing on maritime create?, and an ocean strategy that links to the Gulf, that links to East Asia, that links to the United States and Europe, the largest market for Pakistani exports, then really, you can meet a lot of potential. And I’ll just give you some numbers here. So according to the World Bank, the total export potential — which is the gap in Pakistani exports at this point — is roughly $61 billion. Out of that, $25 billion just come out of three key markets, $13 billion from China, $6 billion from the United States and $4 billion from Japan. All three of these markets essentially can be accessed, not through land routes, but through the oceans. But you rarely hear Pakistani policymakers talk about a maritime strategy, or an oceanic strategy, to get and meet this potential. Now compare that figure with the trade potential according to the same report by the World Bank on Central Asia, where Uzbekistan and Kazakhstan are combined under $1 billion in potential. So really a lot of energy, a lot of time, a lot of newspaper ink is being used to talk about a geoeconomic strategy into Central Asia, where I would argue the risk-reward sort of benefit is towards the oceans, not towards the land routes.
KHAN: Uzair Younus of the Atlantic Council talking about Gwadar, the intended holy grail of the China Pakistan Economic Corridor, and what is going wrong with that vision. Thank you, sir.
YOUNUS: Thank you.
KHAN: Now let’s move to Southeast Asia to look at one last struggling city: Jakarta, the notoriously polluted, congested, and natural disaster-prone capital of Indonesia. Jakarta’s problems are considered to be so insurmountable that the country has actually decided to build a whole new capital. And that means we’re looking at yet another enormous, government planning project that’s supposed to use a city to transform a nation. Will it work in this case? Let’s head to Indonesia, with Nikkei Asia’s Erwida Maulia reporting from Jakarta and Borneo.
ERWIDA MAULIA, CORRESPONDENT: It would be difficult to say that it’s the perfect time for any country to prioritize an unprecedentedly large capital project. And that includes Indonesia. Like everywhere else, it’s struggling through a devastating pandemic. Right now, case levels are at an all-time high due to the omicron variant.
MAULIA: The pandemic is also worsening poverty. Over 2 million additional people fell into poverty between the end of 2019 and July of last year. The World Bank even reclassified the country last summer as a lower-middle income country, after it had briefly been considered upper-middle income. Indonesia is also, of course, at the front lines of climate change. Its islands are already very vulnerable to natural disasters, which can be expected to become more common as the climate shifts.
NEWS ANCHOR 1: Indonesia says it’s dedicated to climate targets as it sends delegates to the U.N. Climate Change Conference this weekend. Meanwhile, people on the ground are already facing the grave consequences of extreme weather.
NEWS ANCHOR 2: On the one hand, Indonesia needs cheap and reliable energy to sustain its growing economy, but at the same time power plants like this one are harming the very people they were made to serve.
NEWS ANCHOR 3: The archipelago nation is the world’s fourth-most-populous nation and the eighth biggest emitter of greenhouse gases, with coal making up almost about 65% of its energy mix.
NEWS ANCHOR 1: In Indonesia, coal is king.
MAULIA: Furthermore, because of the pandemic, the world’s fourth-most-populous nation is facing an uphill battle to escape the middle-income trap, and risks turning its current demographic dividend, into a demographic disaster. So, it’s pretty safe to say that this is a country with a lot on its plate. And the government has a very unconventional solution: renewing its plan to move the country’s capital from one island to another. From the overcrowded Java, further west, to less developed island of Borneo, closer to the center of the Indonesian archipelago. Not only that: It’s building an entirely new city from the ground up for this capital, which the government envisions to be a green and smart global city. It will be called “Nusantara.” Like all Indonesians, I have a lot of questions about this project. Moving the capital has been suggested before, so will it actually happen this time? What do locals in Borneo think about it? And why is this happening now? So last month, I took a 2-hour flight to Borneo to investigate the matter for myself.
(Sound of pilot speaking on flight)
MAULIA: I touched down in Balikpapan, which is a major city on Borneo and a 2-hour drive from the heart of the planned capital location. Both Balikpapan and the new capital location are in coastal regions of the island. But in general, Borneo is famous for its jungles.
(Sound of the forest)
Most people I spoke to seemed really excited about the capital relocation. They would say to me things like, ‘Welcome to the new capital! You’re from Jakarta, so you’re the one from the province now.” That became like an old joke after a few days being there.
(Sound of the forest)
MAULIA: Borneo is the third-largest island in the world. Malaysia and Brunei share a piece of it, but the Indonesian part occupies most of it. Borneo is the largest of Indonesia’s major islands, but it holds just 6% of the country’s population, compared to 70% of Indonesians who live on the island of Java. Borneo contributes 8% of the Indonesian economy. Java contributes 58%. And that’s exactly why the government wants to move the capital. It wants to reduce the burdens on Jakarta, which is one of the most traffic-clogged, polluted and fast-sinking cities in the world.
(Sound of traffic in Jakarta)
KHAN: Borneo was chosen because it is relatively safe from the earthquakes and volcanic eruptions that haunt other parts of Indonesia. It also already has two established cities that can support the new capital. Then there’s the geography of it. Borneo is a more central island than Java, in the west. The government wants to fuel new engines of growth for the less-developed, eastern part of Indonesia. When I arrived on the ground, I found many people who were eager to talk to me about the planned move.
(Sound of Risman Abdul’s voice rises, then falls under Erwida)
Transcript in Indonesian:
Sangat antusias. Karena itu tadi. Tadinya saya ragu, apa iya atau tidak. Tetapi dengan disahkannya UU tanggal 18 kemarin, saya optimis IKN akan pindah ke sini. Dampak ekonominya buat masyarakat kita ya tentu sungguh luar biasa. Jangankan — belum pindah saja sudah mulai merasakan mereka.
(Translation: I’m very enthusiastic about the project. I was initially doubtful if the plan would proceed or not. But after the law was passed on Jan. 18, I’m optimistic the new capital will move here. The economic impacts on local residents will be tremendous. Even before the move, they’re already feeling the impact.)
MAULIA: That’s Risman Abdul, the head of the district that will host much of the new seat of government. He says he was initially skeptical about the capital move, but has recently become very optimistic. In the past few months, he’s been busy receiving visits from officials in Jakarta. They came to check progress of the initial construction currently underway for the new capital. He believes that locals will feel tremendously positive economic impacts from the move. Actually, they’re already feeling the impact through soaring land prices. In his district, a hectare of land near the main road was selling for just under 100 million rupiah a few years ago. Now, it’s selling for at least 2.5 billion rupiah.
(Sound of Eko Supriyadi’s voice rises, then falls under Erwida)
SUPRIYADI: Kalau ditanya perasaan kita, kami sampai saat ini masih waswas. IKN itu kami waswas. Apa benar dengan datangnya IKN ini kami dilindungi dan diakui? Nah setelah lahir UU kemarin yang mana kita cermati tidak ada satupun yang mengakomodir terkait kepentingan hak masyarakat adat.
(SUPRIYADI TRANSLATION: If you ask how we feel, we’re still worried about the new capital. Is it true that if the capital is moved here, our rights will be protected and recognized? After the law was passed recently, what we’ve learned so far is that it has not accommodated the interest and rights of indigenous people at all.)
MAULIA: That’s Eko Supriyadi of a local indigenous group called Lembaga Adat Paser. He said they’re worried about the capital relocation because the law doesn’t do much to protect indigenous rights. The Paser people have been marginalized for a long time, he says. They’ve been on the wrong side of land disputes with the coal miners and plantation companies who control large swathes of land in the region. He thinks this problem could get even worse with the new capital development. And he’s also worried that newcomers flowing in from more developed regions will cause the Paser youth, who aren’t as well educated, to fall further behind.
MAULIA: So clearly, not everyone is behind this relocation project. And President Jokowi is facing huge challenges in executing it. Most Indonesians are still opposed to it, according to a December survey, although that likely reflects the majority of the population who are on Java. A survey back in 2019 suggested that people on Borneo favor the move more. And due to the pandemic, the government has not been able to resurface international investors’ interest in the project. Another concern is corruption, which has been blamed for large projects in Indonesia being abandoned in the past. So again: With so much opposition, as well as so many other things to worry about, why is relocating the capital a priority now?
MAULIA: Well, much of it comes back to noisy,Jakarta.
(Sound of traffic in Jakarta)
MAULIA: Some analysts said that relocating the capital from Jakarta is actually not even an option, but a requirement, and that it’s long overdue.
NEWS ANCHOR 1: Jakarta is literally sinking into waters, and so are Indonesia’s ambitions of becoming a great economic and military power.
NEWS ANCHOR 2: Due to sea level rise and excessive drilling of groundwater, it’s sinking about 25 centimeters a year. It is also routinely ranked among the most polluted cities in the world.
NEWS ANCHOR 3: The city has been experiencing a substantial ecological breakdown accompanied by intensely gridlocked traffic and congestion. Nearly four and a half million cars and more than 13 million motorcycles are used on the city streets.
MAULIA: It is not just about Jakarta’s traffic or flood problems, but also the need to spur developments away from the oversaturated island of Java. Then there’s the politics of the issue. President Jokowi’s term will end in 2024. His successor might not make the capital move a priority, so he’s eager to make it happen now. Jokowi wants this to be part of his legacy.
MAULIA: But several previous presidents, including Indonesia’s founding father, have attempted to move the capital, without success. Construction has begun, but we’re still in the earliest stages of the project. It remains to be seen whether Jokowi will be the one president to actually make the relocation happen. For Asia Stream, this is Erwida Maulia of Nikkei Asia, reporting from Indonesia.
KHAN: Now, one quick news update before we let you go. A trial from one of the world’s great financial heists just kicked off here in New York City, where an ex-Goldman Sachs banker is in court for his role in the massive 1MDB scandal that has rocked Malaysia for the last few years and put a prime minister behind bars. Here in the studio is Jack Stone Truitt, who has been at the courthouse covering the trial for Nikkei Asia. Jack, thank you for being here.
TRUITT: Thank you for having me.
KHAN: Ok firstly, could you give us a very quick overview of this whole scandal?
TRUITT: So in 2009 the government of Malaysia created a sovereign wealth fund — which is basically a state-owned investment fund — to spur economic development for the country. The fund, called 1 Malaysia Development Berhad or 1MDB for short, was in part masterminded by a wealthy Malaysian businessman named Jho Low. Low used his wide range of connections from around the world to raise capital and get the fund going, and used those same connections to siphon money from the fund itself for his own benefit.
KHAN: A bit of a Low blow eh? How much money are we talking about here?
TRUITT: Authorities say roughly four and a half billion dollars.
KHAN: That’s a lot of money to take from the cookie jar. What did Low do with all this cash?
TRUITT: What didn’t he do. A lot of that money was used for bribes and kickbacks to businessman and politicians involved in the scheme — most notably the Malaysian Prime Minister Najib Razak, who is now in prison for his involvement — but Low would throw parties costing millions of dollars and hang with celebrities like Leonardo DiCaprio and Kim Kardashian while jetting around the world. It’s actually been speculated that Low might have had access to more liquid cash than anyone on earth.
KHAN: But Low is not the one on trial here?
TRUITT: Well technically he is, but at the moment he’s still an international fugitive believed to be hiding somewhere in China, possibly Macao. But his co-defendant is a Malaysian gentleman named Roger Ng, an ex-Goldman Sachs employee who the government alleges received $35 million in stolen money from the fund. The trial was delayed for almost two years due to COVID, but is now underway in a U.S. federal court in Brooklyn.
KHAN: That sounds like a Robert Ludlum novel already, Jack, but tell me: what’s Goldman’s role in this?
TRUITT: In 2012 and 2013, Ng was part of a team at Goldman which helped issue three different bonds — those are basically loans from investors to 1MDB — worth about six and a half billion dollars. This netted Goldman more than $600 million, and Ng and his team huge bonuses. Mr. Ng’s been charged with bribing officials, circumventing internal controls at Goldman to hide what was going on, and with laundering the money itself.
KHAN: Right. And the trial has kicked off this week here in New York, so what’s the latest?
TRUITT: Each side had their opening arguments, of course. The defense is arguing that Ng is quote 100% innocent, that his name is nowhere to be found on any incriminating emails or evidence, and that the key witness of the prosecution — Tim Leissner, Ng’s former boss at Goldman who has plead guilty to similar charges — is basically throwing Ng under the bus for a lighter sentence.
KHAN: Right, but what about Goldman Sachs? Now, this is one of the world’s major investment banks helping facilitate — whether they knew it or not — this massive scheme. Are they facing any type of punishment?
TRUITT: Well the two Goldman employees, Ng and Leissner, are being charged in part with deliberately circumventing rules at the bank, and Goldman says they were deceived by officials at 1MDB. But the company has made settlements in the U.S. and Malaysia of almost $8 billion for their involvement. And the trial is offering a very interesting glimpse into the inner workings of Goldman, from its oversight procedures to interpersonal employee dynamics, as both the prosecution and defense try and paint a picture of an employee gone rogue, versus Ng as a fall guy for his boss.
KHAN: Well we will certainly be paying attention as the trial continues. Jack Stone Truitt, thank you for the update.
TRUITT: Thanks Waj.
KHAN: Thanks to our guest Uzair Younus for joining us today, and to our correspondent Erwida Maulia for her reporting. That’s it for Asia Stream this week.
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KHAN: As always, I encourage you to head to Nikkei Asia at asia.nikkei.com for more in-depth coverage of Jakarta, Gwadar, Hong Kong and, of course, the rest of Asia. If you enjoyed this podcast, please share, subscribe and leave us a review — and hopefully, a five-star rating! And a reminder that Nikkei Asia is currently offering an exclusive discount for our podcast listeners: to redeem, just click the link in our episode description.
This episode was produced by Monica Hunter-Hart and Jack Stone Truitt. I’m your host, Waj Khan. See you next week on the “streamboat.”
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