HK urges world action on Jakarta's crisis<\/p>\n
PARIS (Reuters): Hong Kong chief executive Tung Chee-hwa said
\non Wednesday Indonesia's financial crisis could have a ripple
\neffect felt around the world and said the international community
\nmust resolve the turmoil.<\/p>\n
Tung, visiting Paris to boost investor confidence in the
\nterritory, said Hong Kong was concerned about a further
\ndeterioration in Indonesia even though its trade and investment
\nwith the Southeast Asian nation was small.<\/p>\n
\"The issue of Indonesia needs to be resolved by the
\ninternational community,\" he told journalists after meeting
\nFrench Prime Minister Lionel Jospin.<\/p>\n
Tung said any further instability in Indonesia would affect
\nthe rest of Southeast Asia but added: \"It is not just a question
\nof Hong Kong. I think the ripple effect will be felt all around
\nthe world.\"<\/p>\n
Earlier on Wednesday in Jakarta, thousands of students
\nprotested noisily as President Soeharto was sworn in for a
\nseventh five-year term and told the nation it had to tighten its
\nbelts after 25 years of economic growth that he said \"we will
\nnever enjoy again\".<\/p>\n
The economic crisis that struck last July has depreciated the
\nrupiah currency by more than 75 percent and driven up inflation
\nand unemployment, sparking off food riots.<\/p>\n
Soeharto has been in confrontation with the International
\nMonetary Fund and major industrialized powers over economic
\nreforms agreed with the IMF in mid-January to allow a bail-out of
\nmore than $43 billion.<\/p>\n
But in his speech he made no mention of the stand-off nor of a
\ncontroversial proposal he is considering for a fixed exchange
\nrate through a currency board system, which continues to keep
\nfinancial markets in a state of confusion.<\/p>\n
Tung praised Hong Kong's 14-year currency board, which pegs
\nthe local dollar to the U.S. unit, and called it the most
\neffective tool in ensuring currency stability for the territory.<\/p>\n
But he declined to say whether he thought it could be a model
\nfor Indonesia, which has come in for IMF criticism for
\nconsidering one.<\/p>\n
\"I wouldn't recommend it to anyone who is not ready for it,\"
\nTung said.<\/p>\n
Speaking in London, the Chief Executive of Hong Kong Monetary
\nAuthority said on Wednesday a currency board would be \"quite a
\ngamble\" for Indonesia but would help ease the Asian financial
\ncrisis if one were implemented successfully.<\/p>\n
Joseph Yam told bankers: \"The discipline involved in a
\ncurrency board system is quite tough.\" There are certain
\npreconditions that needed to be observed before such a rigid
\nexchange rate system could work successfully.<\/p>",
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