Asian reforms 'hurt by financial flaws'<\/p>\n
KUALA LUMPUR (Bloomberg): Malaysian Finance Minister Anwar
\nIbrahim reiterated yesterday that the international financial
\nsystem is flawed and would be the main stumbling block to Asia's
\nrecovery efforts.<\/p>\n
"The sudden surge in capital flows show how currency traders
\nand international hedge funds can drastically create real havoc"
\nto countries' currencies, he said at a Muslim Rulers' conference.
\nThe system "is lop-sided and bent on favoring the rich economies
\nand needs to be re-adjusted."<\/p>\n
Countries such as Indonesia and Thailand are struggling with
\nrecessions as a plunge in their currencies sparked higher
\ninterest rates and forced companies to the brink of bankruptcy.
\nMalaysia, too, is caught in Asia's economic downturn and is set
\nto slide to its first recession in 13 years.<\/p>\n
This is the second time that Anwar -- who today described
\nMalaysia's economic troubles as the "worst in its history" -- has
\ndrawn attention to problems in the international financial
\nsystem. He made his first remarks in New York in April at a
\nconference on the Asian economic crisis.<\/p>\n
While Asia's economies have been called upon to raise interest
\nrates, open up their economies and provide more disclosure, the
\n"same treatment" should be leveled on "hedge funds and currency
\ntrading," Anwar said. "You want disclosure (from us), you
\ndisclose," such as "where the funds are from."<\/p>\n
Still, he doesn't expect the international financial system to
\nchange anytime soon. If "the rich benefits, don't expect the
\nground rules to change, to them it's not a moral issue, it's the
\ndollar issue."<\/p>\n
Anwar also echoed views of Prime Minister Mahathir Mohamad, a
\ncritic of the International Monetary Fund, that IMF conditions
\nfor giving loans to countries such as Indonesia are too tough and
\ndid more harm than good.<\/p>\n
International financial institutions shouldn't make the
\nprescriptions "into a new theology" that must be "implemented at
\nall costs without understanding the complexities and
\npeculiarities of each country," said Anwar.<\/p>\n
While he acknowledged that there were problems in Indonesia,
\n"fundamentals alone could not have resulted in such destruction"
\non Indonesia, he said. "You don't condemn the whole society to
\nabject poverty."<\/p>\n
The World Bank said in July that Indonesia's economy is
\nexpected to shrink as much as 15 percent this year, inflation
\nwill skyrocket to 80 percent and the number of Indonesians living
\nin poverty could double.<\/p>\n
Indonesia's turmoil culminated in riots which broke out in May
\nand forced Soeharto to resign as president.<\/p>\n
Separately, Anwar said more measures to boost the economy will
\nbe "announced later." He didn't elaborate. His statement comes
\nafter Mahathir said during the weekend that Malaysia may
\nimplement measures that "appear drastic" in a bid to revive the
\ncountry's economy.<\/p>",
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