APEC meeting to focus on Asian financial reform

APEC meeting to focus on Asian financial reform

SINGAPORE (Reuters): With Asia's recovery comfortably in
place, Asia-Pacific finance ministers meeting in Brunei this week
can afford to put aside their fire-fighting garb and focus on the
region's patchy progress on financial reform.

"As far as I can see, there is no visible complacency. On the
contrary, most countries strengthened their commitment by
implementing additional measures," Yoshihiro Iwasaki, director of
programs department (West) at the Asian Development Bank (ADB),
told Reuters.

"But certainly there is a general concern even among the
policymakers...because if the situation is improving, then some
of the unpopular measures may not be supported," he said.

"So I think our role is to help policymakers by underscoring
the importance of perseverance on the necessary reforms."

Iwasaki noted that the somewhat slow progress of banking and
corporate restructuring in Indonesia, Thailand and the
Philippines was likely to feature on the agenda.

Gaping fiscal deficits -- the legacy of rescuing troubled
banks and pump-priming depressed economies, corporate governance
and the region's economic outlook will also rank high, according
to officials due to attend the September 7 to 10 meeting.

The Brunei authorities have not yet released to the press an
agenda of topics for discussion.

But officials set to attend say the ministerial meeting of the
21-member Asia-Pacific Economic Cooperation (APEC) forum will
have a familiar focus: the strengthening of financial systems
worldwide and the health of the global and regional economy.

The impact of high oil prices on the Asian recovery should
also feature, as Thailand is reported to have proposed discussing
the issue in hopes of securing a consensus before OPEC oil
ministers meet in Vienna on September 10.

Analysts say the finance ministers could be hard-pressed to
find a fresh cause at a time when Asia's recovery from the 1997
crisis appears well entrenched and no major trouble spots are
apparent elsewhere.

Trade liberalization -- the major sticking point after last
year's aborted World Trade Organization (WTO) talks -- is
unlikely to be very prominent ahead of APEC's November summit.

When APEC finance ministers gathered at the Malaysian resort
island of Langkawi in May last year, there was a glow of optimism
over Asia's surprisingly speedy recovery and much discussion of
how it might best be protected and strengthened.

Malaysia's apparent success in navigating the worst of the
crisis with sweeping capital controls in September 1998 gave it a
platform to push for greater regulation of speculative short-term
capital flows -- often putting it at odds with the United States.

Closer monitoring of hedge funds and other highly leveraged
institutions remains a concern.

The ADB's Iwasaki said Canada and the United States were
slated to lead discussions on reinforcing the global financial
system at this week's meeting.

But he suggested that no immediate consensus was expected on
the regulation of hedge funds.

"From previous discussions, I know that there are certain gaps
between countries and so my personal view is it's good if they
can reach any agreement. But it's difficult, it takes a little
bit longer perhaps," he said.

No new measures are expected from Japan, which grabbed the
limelight at last year's Langkawi meeting by bolstering the
Miyazawa Initiative -- a $30 billion scheme offering financial
assistance to its cash-strapped Asian neighbors.

A Japanese finance ministry official told Reuters Japan was
unlikely to announce any new aid plan. "There will be no new
Miyazawa plan third stage-type announcement," he added.

Japanese Finance Minister Kiichi Miyazawa launched the second
stage of his plan at last year's meeting, offering guarantees
aimed at spurring the floating of two trillion yen worth of long-
term debt over two years.

But his expanded offer of assistance largely fell by the
wayside as crisis-hit Asian countries, with the exception of
still troubled Indonesia, pulled out of recession.

APEC groups Australia, Brunei, Canada, Chile, China, Hong
Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New
Zealand, Papua New Guinea, Peru, the Philippines, Russia,
Singapore, Taiwan, Thailand, the United States and Vietnam.