Asia told to fight corruption

Asia told to fight corruption

MANILA (Reuters): The United States said yesterday it would encourage the return of investment to Asia but added that ailing countries must take the bitter "medicine of economic reform" and fight corruption.

"We also have to recognize that this crisis is not going to be resolved by aid alone," U.S. Secretary of State Madeleine Albright told American businessmen before she left Manila after the annual meeting of the Association of Southeast Asian Nations (ASEAN).

Foreign ministers who attended the meeting agreed ravaged Asian economies needed foreign assistance to cope with the year- long crisis but that this must go hand in hand with internal financial reforms.

"In some countries, the medicine of economic reform will be bitter. It requires that the old ways of doing business must change. The consequences for workers and families caught in the middle can be difficult and unfair," Albright said in a speech to the American Chamber of Commerce.

"But this does not change the fact that reform is medicine. If refused, the illness only grows worse."

The crisis began in Thailand in mid-1997 and rapidly spread, causing many currencies and stocks to tumble and prompting widespread bankruptcies.

Albright said direct foreign investment was essential to get Asia back on track and "the United States is ready to work with its partners in this region to encourage renewed investment".

But "competition must be encouraged...foreign investors should be treated like domestic investors...corruption must be frankly discussed and vigorously fought," she said.

"Economies powered by open and sound financial policies will be better able to adjust to the global market than economies that are closed and hobbled by financial favoritism."

She said Asian economies must accept that the current crisis would not be resolved by aid alone.

"One thing aid cannot do is to make up for the billions of dollars in new private investment Asian economies are losing," she said.