ASEAN members risk marginalization: WB economist

ASEAN members risk marginalization: WB economist

Agence France-Presse, Manila

Several major Southeast Asian countries risk being marginalized unless their economic reforms keep pace with their neighbors, World Bank regional chief economist Homi Kharas said here Tuesday.

While many East Asian nations had committed themselves to such reforms, they often ran into obstacles such as vested interests and disagreements among policy-makers which made implementation uneven, Kharas told AFP on the sidelines of a poverty forum.

He warned that countries delaying the reforms would "just simply become marginalized."

He cited the case of Myanmar "which has not engaged in reforms for decades and which is marginal to the region as a whole," despite its large population and rich natural resources.

China and Vietnam "are pursuing reforms (and) will continue to make progress and if other countries in the region don't keep pace, they will slowly become more marginalized from the perspective of the international financial community," Kharas said.

Indonesia, the Philippines and Thailand, which were all hurt by the 1997 Asian financial crisis, were still "fragile" and in danger of being marginalized, he said.

Many of the Southeast Asian nations hit by the 1997 crisis had failed to fully address the weaknesses that were exposed and had slowed down the pace of reform once their economies showed signs of recovering, he said.

"There is still a residue of tremendous unfinished business," Kharas warned.

The crisis, caused by tumbling currencies, pushed the economies in the region to their worst recession in decades.

Smaller economies such as Laos, Cambodia and Papua New Guinea could also be left behind, Kharas warned.

In contrast, Malaysia "has been more successful in pushing through with restructuring," he said, remarking that Kuala Lumpur had swiftly established new agencies to carry out key measures shortly after the crisis hit.

"Malaysia also starts from a position of having perhaps better developed institutions than other countries in the region," Kharas said.

Kharas said there was a relatively small window of opportunity for implementing reforms before political campaigning for key elections begins in some Southeast Asian countries, effectively slowing down reform measures.

"Many governments in the region have laid out an agenda of policy reform. We now hope in the next 12 months, we will actually see them implementing that agenda," Kharas said.