PACIFIC BASIN ECONOMIC COUNCIL
MAIN PAGE | CLIPS | 1998 | EXPERT SAYS ASIA IS POISED

Expert says Asia is poised to regain strong, sustainable growth Angie Ng The Star Friday, February 20, 1998 Asia, with its strong economic fundamentals, is poised to return to solid and sustainable growth once the dust of its financial and economic turmoil settles, according to Pacific Basin Economic Council (PBEC) secretary general Robert G. Lees. He said the first phase of Asian development was now over and the region was moving into a maturer, stable and sustainable stage of development. "The current crisis does not signal Asia's demise but rather its growth. And with growth comes growing pains," he told Star Business in an interview. Lees, on a visit to various Southeast Asian capitals, said significant reforms, which may bring with them painful dislocations, must continue to be undertaken. "For some countries in the region, things could get worse before they get better," he said. Lees said the region might not return to the extraordinary high growth rates seem in recent years, but would continue to grow at solid and sustainable levels. "In fact, the region's rapid economic growth which outpaced institutional building that is necessary for monitoring and regulations purposes has partly contributed to the crisis," he added. "As the free enterprise system has excesses, it is necessary to have transparent rules and regulations to ensure there are proper reporting and controls of any discrepancies." He said despite tribulations now gripping the region, many of these countries had strong economic fundamentals-high savings rates, prudent fiscal policies, a commitment to education and a strong work ethics. "Growth rates in many of these countries, although significantly moderated, will continue at levels many others would envy. "The democracies of an overwhelmingly young and growing market, with increases in per capita income swelling to the ranks of middle-class, are a marketer's dream." He said while the average age in the U.S. and Europe was in the late 30's, the average age in Vietnam for instance, is in the late teens. He added: "in the coming decades, few other areas in the world will provide comparable opportunities to sell everything from soda to cellular phones." Lees said while recent difficulties could result in a pause to the positive trends, over the longer term, the upward swing would be inevitable. "This suggests that the present difficulties should best not be viewed with distress, but rather as an opportunity to pick up some great values and to solidify one's position in the region to participate in its future growth and dynamism. "Clear headed and insightful businesses will see through the smoke and haze to the underlying core strength of most Asian markets." He said PBEC corporate leaders had in November passed a resolution of confidence in the region's medium to long term growth prospects. "The free enterprise system has a way of cleansing itself and smart governments and business community should learn from this experience." He said the silver lining of this cloud was that it had created a sense of urgency and political will power to make the long overdue fundamental, structural change. "It is a good time to continue to remain open to new ideas and investment as the problem with protectionism is that it protects inefficiency. "The people now recognized what the fundamental problems are focusing their attention on solving the problems. We hare already seeing impressive strides." Lees said Indonesia's bankruptcy Law appeared promising while South Korean corporations have recognized the folly of producing everything a competitor does and is now focusing on their core competencies. "Banking reforms in a number of countries are also gathering steam," he added. "All these developments are laying the groundwork for future growth and stability throughout Asia." Lees said although the crisis had imposed some very real hardships, it would over the long run be an important contributor to the region's economic viability. The crisis will act as a catalyst to weed out the inefficiencies and distortions which precipitated the current state of affairs. He said although some common threads run throughout the region, Asia is not a monolith but comprises separate and unique options.