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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek story


A panel of experts analyzes competitiveness, currency regimes and challenges to come

AT THE WORLD ECONOMIC Forum's East Asian Summit last October, Asiaweek brought together a distinguished panel of experts to discuss the Crisis, then in its early months. One year on, we conducted another Summit Roundtable, focused on what Asia had learned from the Crisis - and what had yet to be learned. Three panelists made their second Roundtable appearance: VICTOR CHU, chairman of Hong Kong's First Eastern Investment Group; HARINDER KOHLI, senior operations adviser for the World Bank; and JUSUF WANANDI, chairman of the supervisory board of the Center for Strategic and International Studies in Jakarta. They were joined by MANU BHASKARAN, director of SG Securities in Singapore, and LIEW HENG SAN, managing director of the Singapore Economic Development Board. Here is an exclusive fuller transcript of the discussion:

Q: What lessons has Asia learned over the past year?

Bhaskaran: I think we are still in the process of learning lessons. I think the issue of corporate governance and related issues are being taken more seriously, prudential standards in the banking sector are being improved. And I see a trend in some of these countries, like Thailand for instance, not to blame foreigners as much as before. Xenophobia is not as prevalent as before, the realization that the problem is pretty much within, as much as without. The biggest lesson is that there is no substitute for rolling up the sleeves and getting down to the hard work of cleaning up the banking sectors, corporate sectors and balance sheets. The countries that are succeeding, such as Thailand and South Korea, are precisely those countries that have realized that.

Liew: I think there were both external and internal factors at play. The former would include the strengthening of the U.S. dollar in 1995-6, lower regional exports, globalization and free capital flows and the herd instincts of investors. The internal factors would include the inadequate standards of governance, lax supervisory and regulatory mechanisms, lack of transparency, poor legal framework. There were also weaknesses like connected and policy directed borrowing, inattention to the credit worthiness of borrowers, expectation of bailouts, poor disclosure standards, prevalent use of short-term borrowings for long term projects.

In addition, the structural distortions and monopolies in some countries did not help. To make matters worse, there were some questionable policy turns, which shattered confidence further.

I think it is easy to forget that Asia's economic development was compressed in just two decades. For comparison, the developed countries took several generations to attain the same development. With such a fast pace of growth, it is prudent to have the necessary institutions and the right environment in place if you want a sustainable framework for growth. Asia would not be in such a rough patch had more countries put their houses in order.

Now that the economies are more inter-connected, and the contagion has spread, we in Singapore also have to be concerned about what happens in Brazil and Russia. I hope more countries will return to fundamentals and build the framework and institutions for sustainable growth in the next century. I hope more and more countries will put the houses in order. Go back to the fundamental basics to make for better companies, countries and societies in the next century.

Wanandi: What we learned now is that the whole region has been somewhat complacent before. With all due respect to the World Bank, all these miracles have created the image that we can go on and on and on up to heaven. And, everybody has been saying that. See all these projections before. They are all going up - until this happened. Of course, we can't continue to go higher forever - we are still on earth. And, of course, we forgot that cycles of the economy that are happening. So, when it hurts us, of course we are completely taken aback. And, everybody else, not only us in the region, but the whole world is saying: "Oh, forget about Asia now."

So, in the meantime, as has been said, the countries have to learn their own lessons, as well. Except the regional one. Let me add this to rub it since we are in Singapore anyhow. This values debate has really given a false impression to all of us. That we are all so special. This is really B.S., I tell you. It's very unfortunate. Saying that we had a special standing that we can sustain the whole thing. Of course, it is not so. That came very hard on the region. In our case [Indonesia], of course, the most critical one in the region. No doubt about that, because there is much involvement in political change and reforms, which are necessary because of political suppressions - what do you expect else? There is a huge middle class that has risen in the last 40 years.

The second lesson we learned is: It is not easy because we are such in a critical period to see forward and to learn a lot from this. For a longer term development, it is a very difficult proposition at this stage. Because people are starving, people have no work, and when I say people I mean about half of the population. For that easy enough, to think further what we learn. But, hopefully when we overcome the immediate problem, of stabilizing the situation, of course we have more time and more opportunity to learn the real lesson from this. And, to think longer term, so we don't make the same mistakes again. It was much easier in 1965, [Suharto's] regime took over, it was a much easier problem. We had an ideological debate, but everybody was poor, and therefore it was less complicated. Of course now, it is a much more complicated society. It is still a critical year, it is a much more critical crisis.

Chu: Different economies within Asia have learned different lessons. One thing is Asia is by no means homogeneous. Problems in different parts of Asia have special relationships with its own particular system. Secondly, it's not just Asia. I remember last year when we met, we said it was a wake-up call. Certainly, it has become a nightmare as well. When it hits you , it hits you very hard. The world has learned this because of the effect of globalization, because of the technology. The treatment how to manage this crisis requires different skills, blends of medicine than we've known before. It is very much like HIV virus. It is very fast, you don't know where it is going. And, traditional medicine may not work. So, we have to be open-minded, prepared to try new things. New cocktails of medicine. Different economies may be receptive to different cocktails. Whatever is right for Malaysia, may not be right for Hong Kong. What is right for Hong Kong might not be right for Indonesia. This brings us to be far more humble, far more open-minded, be prepared to accept other people and give them the benefit of the doubt. I think world opinion is moving that way; to the opinion that there is no one right way of doing things. Certainly we see there are very eminent scholars [who say] that the traditional method of dealing with crisis has to be refined. The second thing is, we in Asia have been growing so fast that we lost sight that the integrity of an institutional foundation was not really in place or as well established as we thought it was. Therefore, when markets crumbled, they crumbled so fast because the foundation wasn't there. And these are the basics we are talking about. Not just structural, but also the political foundation. But we have to keep our nerve. The fundamentals of Asia have not changed. What you say, the hardworking nature, all these fundamentals are still there. So, why are people so pessimistic today? I think we have to strike the right balance. There are some silver linings that we have to capitalize on. And, I hope when the dust is settled, we can talk more positively. We are playing ourselves into black hole.

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This edition's table of contents | Asiaweek home



U.S. secretary of state says China should be 'tolerant'

Philippine government denies Estrada's claim to presidency

Faith, madness, magic mix at sacred Hindu festival

Land mine explosion kills 11 Sri Lankan soldiers

Japan claims StarLink found in U.S. corn sample

Thai party announces first coalition partner


COVER: President Joseph Estrada gives in to the chanting crowds on the streets of Manila and agrees to make room for his Vice President

THAILAND: Twin teenage warriors turn themselves in to Bangkok officials

CHINA: Despite official vilification, hip Chinese dig Lamaist culture

PHOTO ESSAY: Estrada Calls Snap Election

WEB-ONLY INTERVIEW: Jimmy Lai on feeling lucky -- and why he's committed to the island state


COVER: The DoCoMo generation - Japan's leading mobile phone company goes global

Bandwidth Boom: Racing to wire - how underseas cable systems may yet fall short

TAIWAN: Party intrigues add to Chen Shui-bian's woes

JAPAN: Japan's ruling party crushes a rebel at a cost

SINGAPORE: Singaporeans need to have more babies. But success breeds selfishness

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