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.