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AIDS a big and growing risk to Asian markets
William Pesek Jr.
August 20, 2004
Standing in line last month to vote in Indonesia's presidential election,
23-year-old Rita Sarjiya and her friends blushed when the conversation turned
to sex.
We had already covered the pressing issues of the day -- Indonesia's rising
poverty rates, government corruption, the nation's neglected education system
and others. Sarjiya, a service-industry employee, and her five friends, all in
their 20s, treated each issue seriously.
Yet when asked about the government's handling of Indonesia's HIV/AIDS problem,
the young women responded with embarrassed giggles. "AIDS isn't an issue in
Indonesia," Sarjiya explained, her friends nodding their heads in agreement.
"This isn't Africa. Sex doesn't kill people here the way it does there."
Interviews with more than three-dozen Indonesians between the ages of 18 and 36
in Jakarta suggested this perception might be common in the world's fourth most
populous nation. Yet the reality is very different. HIV/AIDS rates are
expanding rapidly in this poverty-stricken nation of 235 million as well as
China, India and Vietnam.
The disconnect between perceptions and reality explains why people like
Kathleen Cravero are so worried about HIV/AIDS in Asia -- and why investors
should be thinking more about it than they are.
Asia's Next
"Asia is facing life and death choices when it comes to the epidemic," says
Cravero, the deputy director of UNAIDS, noting that the region has a small
window of opportunity to stop HIV/AIDS from ravaging its economies.
"If we miss it," explains the Geneva-based official, "we will see an epidemic
the likes of which we never imagined, despite what has happened in Africa."
Sub-Saharan Africa is still the epicenter of the HIV/AIDS crisis, but Asia is
next. This region, which is far more connected to the global economy than
Africa, is seen as the epicenter in the next decade.
All this explains why Asia was chosen as the site for the 15th International
AIDS Conference; it was held last month in Bangkok. The huge meeting -- nearly
20,000 attended it this year -- was held here to publicize what's not only an
Asian health crisis in the making, but a financial one, too.
Asian nations will need three times their current investment, or about $5.1
billion a year, by 2010 to stem a surge in infections, the Asian Development
Bank said in a report. HIV/AIDS will cost Asia's governments $17.5 billion a
year by 2010 in medical expenses and loss of income to the patients and their
families if governments don't invest to stop the spread of the disease,
according to the report.
High Debt
Consider that even today, when Asian economic growth is robust and HIV/AIDS
prevalence rates are still manageable, debt is a problem for the region. Seven
years after the Asian financial crisis public balance sheets remain a
formidable constraint on future growth.
Debt-to-gross-domestic-product ratios remain high and government revenue as a
share of GDP in many parts of Asia is low by global standards. And then there
are the rising costs of disposing of non-performing loans, funding state
pensions and the increased risks of terrorism.
HIV/AIDS will only add pressure to national budgets in the years ahead. Credit
ratings may be negatively affected, boosting bond yields. In recent years,
markets in South Africa, the country with the most infected people, have
increasingly reacted to HIV/AIDS trends. India, home to an estimated 5.1
million HIV cases, is expected to overtake South Africa.
India and China
India and China are arguably the world's two most important marketplaces of the
future. Both boast one-billion-plus populations and, to varying degrees, are
welcoming ever- increasing numbers of multinational companies to set up shop.
Companies are relying on China's cheap labor to manufacture goods and India's
English-speaking masses to outsource services.
The trouble is, both countries risk major HIV/AIDS challenges that could force
millions further into poverty. Officials in Beijing and New Delhi seem to spend
more energy dismissing suggestions they face epidemics than stepping up efforts
to halt the spread of HIV/AIDS. Governments need to speak out more about the
risks and spend more money educating people about them, especially those
involved in Asia's thriving sex industry.
China has 1.3 billion people and, according to the American Foundation for AIDS
Research, fewer than 200 doctors who have experience giving anti-HIV medicines.
UNAIDS predicts the world's most populous nation may have 10 million HIV cases
on its hands by 2010. To discern what affect that might have on the world's
most dynamic economy, look no further than Africa's experience.
Direct Threat
One reason for Asia's complacency is low prevalence rates. Less than 1 percent
of the populations of most Asian countries are infected. The good news is that
Asia has a window of opportunity to avoid Africa-like outbreaks. The bad news
is that HIV/AIDS rates tend to skyrocket once prevalence rates go above 1
percent. Time, in other words, isn't on Asia's side.
Investors may be able to ignore how HIV/AIDS is decimating Africa, but they'll
turn a blind eye to events in China and India at their own peril. That goes for
the rest of Asia, too. Africa represents about 13 percent of the world's
population. Asia represents 60 percent and is home to some of the most
promising economies.
If that's not a direct threat to the Dow Jones Industrial Average and the
Nikkei 225 Stock Average, one wonders what is.
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