Asian countries put the humiliation of the 1997 financial crisis
behind them Monday, arguing they were in a better position to deal
with the sort of meltdown that crippled the region a decade
ago.
Regional economic chiefs warned against complacency but
nevertheless struck a defiant note at a forum in Manila to mark the
10th anniversary of a crisis that saw currency and asset prices
plummet, governments topple and millions fall into poverty as
investors withdrew capital at lightning speed.
Taking a swipe against the powerful Western-dominated global
lenders such as the International Monetary Fund, Thailand's Finance
Minister Chalongphob Sussangkarn called for Asia to take more
control of its economic destiny by setting up a monetary fund to
promote exchange rate stability.
Since the crisis, Asian central banks have built up trillions of
dollars in foreign exchange reserves, much of which is invested in
Western assets such as US government debt, putting it in pole
position to lead the international financial community, Chalongphob
said.
"It's important that we make sure that we do not become
overconfident that a crisis can never happen,' Chalongphob
said.
But he added: "Looking ahead, we need to take responsibility.
Asia now needs to be the one to manage the global financial
system.
"We cannot let debtor nations manage the global financial
system. The International Monetary Fund (IMF) is more like a debtor
monetary organization, we need a creditor monetary
organization."
On July 2, 1997, Thailand gave up the fight to defend the baht
after years of current account deficits and announced a managed
float, triggering massive capital flight.
The contagion spread rapidly around the region and the erstwhile
Asian "Tiger Economies" were forced to go cap in hand to the IMF,
whose harsh prescriptions generated anti-Western sentiment and
political turmoil.
Analysts say Asia's economies are now in much better shape. Most
countries have competitive currencies and a big surplus in their
current accounts, making the region a huge exporter of capital.
But Haruhiko Kuroda, president of the Asian Development Bank
that hosted the forum, said this global economic imbalance was a
risk.
"We have the potential for more bouts of financial market
volatility," he said.
"Capital flows have ramped up significantly over the past
several years as increased global liquidity, Asia's economic
resurgence and dynamism, along with the search for yield has drawn
in and out large amounts of investment capital."
In Thailand, where less than one in 10 property firms survived
the crisis, The Nation newspaper splashed a tombstone on
Monday's front page inscribed with the names of the 56 finance
companies and six banks that went under.
"Despite diverse efforts to avoid a repeat of history, no one
can guarantee that it will not happen again," The Post
Today, a Thai-language newspaper, said in an editorial.
Within a year of the meltdown, Indonesia's long-ruling President
Suharto was out of power after the crisis sparked widespread
rioting in his nation. In Malaysia, Prime Minister Mahathir Mohamad
famously fell out with his deputy Anwar Ibrahim.
The crisis also brought down the South Korean and Thai
governments.
Ten years on, Asia is booming once again, but investment and
growth are largely centered on China and India.
Although the region is much richer it is still home to most of
the world's poor as economic growth rates in many of the countries
worst hit by the crisis lag their pre-1997 levels.
In an interview on Sunday, Chalongphob said an East Asian
monetary fund would be established within five years to help
promote further stability.
But Duck-Koo Chung, a former minister of commerce, industry and
energy in South Korea, cautioned that the question of which country
should lead a fund still had to be ironed out.
"We need some political agreement first," he said.
(China Daily via agencies, July 3, 2007)
