ASEAN corporate shakeup sought
ASEAN corporate shakeup sought
HANOI (AFP): International financial institutions on Saturday
urged members of the Association of Southeast Asian Nations
(ASEAN) to push ahead with corporate restructuring to pave the
way for economic recovery.
"Corporate restructuring is the area where the least progress
has been made," said Hubert Neiss, director of the Asia-Pacific
department at the International Monetary Fund (IMF).
"That is easy to explain because this is basically a voluntary
activity," Neiss said.
"What we are doing is to discuss with the governments and try
to find ways how the government can push the process", Neiss told
reporters following a meeting between IMF, World Bank and Asian
Development Bank representatives and ASEAN finance ministers.
Corporate restructuring includes a rescheduling of the tens of
billions of dollars owed by Asian companies as well as a
retrenchment of excess production capacity built up during the
boom years.
International agencies, which have arranged multi-billion-
dollar financial bailouts for ASEAN members Indonesia and
Thailand, say that Asian economies have made progress, albeit
slow, in bank reform but lag behind on corporate restructuring.
Neiss stressed the importance of enacting bankruptcy laws to
spur debtors and creditors to solve their problems on their own.
"So if creditors and debtors are not able to work out their
debts then they will have their cases end up in the bankruptcy
courts. Without the bankruptcy courts both parties would be worse
off," he said.
He said, however, that most ASEAN countries were still at the
bottom of the learning curve and that one way international
finance institutions could help was through technical assistance.
Neiss cited debt restructuring efforts in Indonesia after the
IMF brought in a debt restructuring expert from New York as an
example of how international institutions could help.
However he said that if the carrot did not work, a stick might
be more appropriate.
"The harder way is setting some deadlines for the government.
If you don't come to an agreement by such and such a date, we
have will a more intensified involvement," he said.
Asian Development Bank vice president Peter Sullivan also said
reform of the banking and corporate sectors held the key to
economic recovery.
"Ultimately, to rekindle economic vitality, significant
progress on the restructuring and the recapitalization of
distressed banking sectors is needed, as is parallel progress on
resolving corporate debt," he said.
World Bank vice president Jean-Michel Severino reinforced the
message, warning ASEAN ministers it was "no time for
complacency."
"We have to deepen economic and financial reforms. This is the
only insurance that the countries of the region can buy against
the instability of the world market," he told AFP.
Keeping pressure on regional governments even as signs that
the regional crisis may be bottoming out was the job of the
international financial institutions, said Severino.
The institutions however said they were satisfied with the
countries' commitment to reforms, and lauded both Indonesia and
Thailand for recent steps to get their corporates back into
shape.
"There have been positive steps in these directions in the
most severely afflicted economies..," Sullivan said.
ASEAN groups Brunei, Indonesia, Laos, Malaysia, Myanmar, the
Philippines, Singapore, Thailand and Vietnam.