The Historical Perspective¹

Abstract

There is nothing new under the sun. This is a favoured expression among historians which certainly appears to hold true for the presence of foreign capital in Southeast Asia. Between the fifteenth and seventeenth centuries this region was integrated into the world trade system and came to play an increasingly central role in intra-Asian commerce (Reid 1992: 495–6). The foreign element was substantial, consisting not only of Europeans, but also, and probably more importantly, Chinese, Indians, Arabs and Malays. Substantial amounts of capital flowed into Southeast Asia in payment for agricultural produce and ample remittances emanated from sales in local Southeast Asian markets. Yet this was not the same as FDI, aimed at obtaining a lasting interest in the economy of the host country. Precolonial flows of capital served to control trade, not production.