Asia over the worst, but more grief to come

Asia over the worst, but more grief to come

SINGAPORE (Reuters): Asia is over the worst of its economic crisis, but there is still more suffering to come, Malaysian Deputy Prime Minister Anwar Ibrahim said on Thursday.

"The worst is over, but we'll have to weather the storm a bit more," Anwar told a news conference after traveling to Singapore to speak to businessmen.

Anwar said Indonesia's latest deal with the International Monetary Fund (IMF) on a new package of economic reforms and targets in return for a US$43 billion rescue package was "most encouraging" and "most welcoming".

On Wednesday, the IMF and Indonesia managed to iron out differences which had delayed the release of the IMF's second tranche of funds in March and kept international financial markets dubious about Jakarta's commitment to reform.

Anwar, who is also finance minister, said he believed most of the nagging issues, including subsidies and other social issues, "have been adequately addressed" in the deal, the third to which Jakarta has agreed.

But he slammed into multinational corporations, calling them "incredibly negative" and "excessively cynical" about Asia's attempt to recover from a shattering crisis which has resulted in IMF rescue packages of more than $100 billion.

"There is a growing cynicism or increasing skepticism on the ability and commitment of East Asian governments to overcoming the current economic travails," he said.

"I say we have the resolve to overcome this ... and we will overcome this and emerge with greater vigor and vitality."

Reflecting Malaysia's willingness to tackle the crisis was its willingness to change a long-cherished policy of giving economic priority to ethnic Malays in an economy dominated by ethnic Chinese, Anwar said.

"Adjustments are necessary and other adjustments will be made when necessary," he said. The changes to the so-called Bumiputra policy were "a permanent feature", he added.

"Our concern is with the overall economic cake which must be shared, and the Bumiputra share capped at 30 percent," he said.

Anwar said Malaysia, one of the Asian "Tiger" economies which fell into crisis last year, would continue to liberalize its investment restrictions in order to deepen competition and quicken the revival of capital flows.

Malaysia has already raised the limits on foreign ownership in the telecommunications sector to 49 percent, in the insurance sector to 51 percent and in the stockbroking industry to 49 percent, he said.

And he repeated that companies in trouble could not expect to be rescued by the government.

"We are not in a position to bail out companies. If they have to go, they have to go. My duty as a finance minister is not to facilitate bankruptcies or bail out companies."