Oil deregulation stumbles on Asian currency turmoil<\/p>\n
SINGAPORE (Reuter): The currency turmoil in Asia is creating
\nfurther hurdles for investment in energy, but governments should
\nnot allow that to hinder their struggle towards deregulation,
\nanalysts said yesterday.<\/p>\n
"Asia will welcome funding especially for the electricity and
\npipeline grid," said Gordon Kwan, an oil and gas analyst from
\nDaiwa Securities in Hong Kong.<\/p>\n
He was referring to the $150 billion Southeast Asian plan for
\na gas pipeline grid and multi-billion dollar power grid.<\/p>\n
"But it is very difficult right now given the state of the
\neconomies and the uncertainty facing some of the countries such
\nas Thailand and the Philippines...particularly with the currency
\ndevaluation, the pipeline project is in limbo," Kwan said.<\/p>\n
Investment bank Goldman Sachs has cut its 1997 gross domestic
\nproduct forecast for the four economies worst-hit by currency
\nspeculation -- Thailand, Malaysia, the Philippines and Indonesia
\n-- to 5.2 percent from 6.3 percent.<\/p>\n
Although above growth rates seen in most of the developed
\nworld, equities in the countries were sliding this week.<\/p>\n
The Philippine peso suffered a sudden seven percent fall
\nThursday. Malaysia's ringgit hit a new low versus the dollar.<\/p>\n
"Who is going to finance projects if they are going to get
\ntheir money back in pesos and baht?" asked Kwan.<\/p>\n
Analysts said the Asia-Pacific Economic Cooperation (APEC)
\nforum needed to provide risk-free regulatory regimes and open
\nmarkets to attract funds to finance growth in Asia's energy
\nindustries. The World Bank has estimated $100 billion per year
\nwas needed through 2000.<\/p>\n
Energy ministers from the 18 APEC members agreed on Wednesday
\nthey should encourage more foreign investment in power. They met
\nfor two days in Edmonton, Canada.<\/p>\n
APEC member countries, including North and South American and
\nAsian countries such as China, Thailand, Indonesia, Australia,
\nare attempting to establish free trade amongst developed nations
\nby 2010 and undeveloped nations by 2020.<\/p>\n
Thailand, the Philippines, Japan and South Korea have made the
\nmost inroads in energy deregulation, analysts said.<\/p>\n
But others like Indonesia, Malaysia, Taiwan, Vietnam and China
\nhave yet to make meaningful moves, struggling to reconcile the
\nstrategic importance of energy with growth and protecting
\ndomestic industries.<\/p>\n
James Brown, Merrill Lynch's Asia-Pacific's oil and gas
\nanalyst told Reuters that the devaluation would create negative
\nmarket perception, something governments would want to avoid.<\/p>\n
"But the fact remains with currency devaluation or not, these
\ncountries need to build their industries and there comes a point
\nwhere you have to encourage foreign investment to move a country
\nforward," Brown said.<\/p>\n
"It is ultimately what is driving deregulation...that these
\ncountries tried to build their industry with their own resources
\nand found they don't have the resources," said Brown.<\/p>\n
"There is a problem for a country with a depreciating
\ncurrency, but it is a much bigger picture...a problem relating to
\nbroader economy of the country.<\/p>\n
"They are not in a position to let their currency problems get
\nin the way of deregulation," Brown said.<\/p>",
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