Asia trails China in reforms: ABN

Asia trails China in reforms: ABN

SINGAPORE (AFP): Asia's commitment to push ahead with
structural reforms in the aftermath of the 1997-98 crisis paled
in comparison to that of China, Dutch bank ABN Amro said.

The bank said this could see the region losing out to the
world's most populous nation in the race to attract foreign
investment funds.

While it gave no specific data on foreign direct investment
(FDI), ABN noted that they "appear to be directed more and more
to China in the run-up to the country's WTO (World Trade
Organization)".

"The economic stresses and the slow progress of economic
reforms in many other Asian developing countries are other push
factors," the bank said in its latest quarterly report.

"To lure foreign investors back, other Asian countries have to
step up their efforts to reform and liberalize their restrictive
domestic industries," the bank added.

But the region's appetite to implement these reforms was
weakening and this placed its long-term prosperity at risk.

"One major reason for the difference in reform progress
between China and other Asian countries is the political will to
push through difficult reforms," ABN said.

Chinese authorities are implementing a raft of pro-competitive
economic policies in several areas such as the banking sector,
capital markets and agricultural sectors.

In contrast, the rest of Asia most affected by the 1997-98
regional crisis has been slow to carry out their promises to
carry out structural reforms.

"A variety of reforms have been announced, notably reforms
aimed at revamping damaged banking systems, some attempts at
corporate restructuring and some market opening or liberalization
measures," the bank said.

"However, after most economies recovered from the crisis with
strong cyclical rebounds, the commitment to, and the pace of
reform, reduced."

Asia's long-term growth outlook remained cloudy if the acute
stress on its financial systems brought about by the crisis was
not solved, ABN said.

Apart from Singapore, other Asian countries have been
reluctant to stay on the reform bandwagon, notably those that
were hit hardest by the crisis.

The report noted the city-state has "aggressively liberalized"
key services like telecommunications and banking and pushed its
homegrown companies to look beyond the tiny home market of four
million people.

Malaysia, the city-state's closest neighbor to the north, was
a sharp contrast, the bank said.

It said "Malaysia is least eager to reform" and long-term
growth prospects were under threat from structural constraints
and slow progress in liberalizing the services sector.

Malaysian leaders have often voiced fears that globalization,
if left unchecked, will hurt the Third World most.

Indonesia, one of three Asian economies which received multi-
billion dollar bailouts from the International Monetary Fund,
looked likely to be the last to recover from the regional crisis.

"The economic problems of Indonesia are so pervasive that the
economic cost of reforms may be too high for any government to
bear," the bank said.

"Worse, leadership uncertainties distract the government from
resolving economic problems."

In Thailand, the deficient legal system was an obstacle to
reforms, the bank said.

The South Korean government and chaebols now appeared to be
shying away from reforms, the bank added.

"While the government has been less enthusiastic about selling
nationalized distressed assets, the chaebol have also been less
keen on selling their non-core assets."