Asia needs to keep crisis lessons in mind: ADB

Asia needs to keep crisis lessons in mind: ADB

CHIANG MAI, Thailand (Agencies): Asian countries need to keep the painful lessons of economic upheaval in mind to avoid a devastating new blow from the increasingly globalized economy, the president of the Asian Development Bank warned Saturday.

Tadao Chino opened the Manila-based bank's annual meeting with an appeal to Asian governments - who saw the regional economy recover with 6.4 percent growth last year after shrinking 7.7 percent in 1998 - to avoid complacency now that the Asian financial crisis seems past.

"Asia must not revert to business as usual, taking the crisis as simply a short-term aberration," Chino told an audience including finance ministers and central bankers from around the region.

Asia risks a new shock, which would hit hardest the 900 million people living in dire poverty, unless it speeds up corporate and financial reforms that would improve governance and reduce corruption, Chino said.

Chino said that countries without sound policies and institutional capacities were more vulnerable to the "social and economic stresses as well as financial volatility" generated by the globalizing economy.

"Globalization presents developing economies with enormous opportunities, but it also poses risks that have to be managed," he said.

The benefits include increased access to foreign markets for developing countries, which can increase inflows of capital, technological and managerial know-how, raising employment and productivity, he said.

Thai Prime Minister Chuan Leekpai, who has pushed through a radical program of economic reforms, warned that the only way to avoid a repeat of the crisis was to tackle fundamental weaknesses in Asian economies.

"We must not become complacent, nor be locked into a false sense of security," he said. "The East Asian financial crisis will go down in history as ... a wake up call for several countries."

Chuan pledged that Thailand, where the 1997 crisis erupted, would not stint in its drive for economic reform, and said it was "critical" that other Asian governments also promoted a reform agenda.

Delegates at the three-day conference were expected to discuss a range of measures aimed at improving living standards in Asia and an expansion of the bank's soft-loan facility.

The comments were in line with the Asian Development Bank annual report issued in Bangkok last month, which said that although Asia remained the world's fastest growing region, it still faced systemic risks.

Crisis-hit countries have spent the last few years overhauling corruption-riddled and inefficient financial systems which collapsed when speculators saw an easy victim in Asian currencies in 1997.