PACIFIC BASIN ECONOMIC COUNCIL
MAIN PAGE | CLIPS | 1998 | PBEC CHIEF BLAMES ASIA CRISIS ON PRACTICES OF PRIVATE SECTOR

PBEC chief blames Asia crisis on practices of private sector By Sayuri Daimon The Japan Times Tuesday, April 21, 1998 The private sector is responsible for the recent economic turmoil in Asia, and businesspeople are the ones who can help tackle the problem, according to the secretary general of the Pacific Basin Economic Council. Robert Lees, secretary general of PBEC, stressed that the recent economic turmoil is driven by the private sector, unlike the Latin American currency crisis. "In the case of (South) Korea, they were building too much capacity. Koreans can sell 1 million cars in a year, but they have enough factories to make 6 million cars. That's also true in chemicals and many other products," Lees told The Japan Times in an interview. Established in 1967 to serve as a forum to forge new business relationships and recommend key economic strategies for both governments and companies, PBEC has nearly 1,200 member corporations from 20 countries in the Pacific region. It will hold an annual general meeting from May 25 to 27 in Santiago. Lees, who is based in Honolulu, has been touring Asia "to get the personal feel of the situation," because this year's meeting, which will be attended by business leaders, International Monetary Fund officials and Indonesian Vice President Bacharuddin Jusuf Habibie, will focus on Asia's economic crisis. Lees hopes the participating business leaders, through open discussions, learn from PBEC's Latin American members, who went through the Mexican currency crisis in 1995 and other crises elsewhere in Latin America earlier this decade. "We are having this meeting to discuss many of these issues and (to) come up with some recommendations to speed up the recovery," he said, adding that the strength of PBEC is its members, who are top management at the world's major corporations. By bringing its members together, they can do business with each other and foster the region's economic recovery, he said. Lees predicts unemployment in Asia will grow more serious in the coming years as companies and governments began to recognize they can operate efficiently with fewer workers. "This is a tendency in. China and everywhere in the region," he said. Now is the best time to invest in Asia because prices are on a decline, he added, expressing hope that more PBEC members find opportunities for joint ventures and investment. "As a result of that, we create .more jobs and more economic vitality," he said. Asia needs more transparent and stricter rules, regulations and systems for financial institutions, Lees said, proposing that the world create an organization that sets common rules and criteria for financial sectors, just like the World Trade Organization covers trade and the United Nations handles social and political issues. "In Asia, so much banking has been based on relationships and not on the bottom-line fundamentals," he said. "We need to have much more transparency and have an agreement between governments to come up with some sort of standard so we don't have this problem happen again." Although he supports the IMF's recent efforts to direct the ailing economies in Asia toward recovery, Lees said he has mixed feelings about its role. "If the banks and businesses start believing that every time there is a crisis, the IMF will bring money, I think we'll have many more crises in the future," he said, warning governments not to take it for granted. Lees thinks the real vitality of the region may be gone for two or three years due to the unemployment problem, but after visiting many countries in Asia and talking to economists, government and businesspeople, he is confident the worst is over. The key is to get Indonesia and Japan back on a recovery track, he said, pointing out the growing concerns among Japan's neighbors over the country's mushrooming trade surplus. "We will not get full confidence back to Asia until Indonesia is OK and until Japan is OK, because Japan is so big and so important to the entire region," he said. "Japan contributes so much to the region, but the feeling is that when the region is in such serious trouble, Japan and the U.S. must do more."