Asian states unlikely to follow Malaysia

Asian states unlikely to follow Malaysia

SINGAPORE (Reuters): Other Asian countries are not expected to
copy Malaysia in imposing rigid exchange controls, economists and
analysts said on Wednesday.

"We see the likelihood of the Malaysian measures being
duplicated elsewhere in Asia as being extremely slim," economic
consultants IDEA said in a commentary.

Analysts noted that three economies in Asia -- Thailand,
Indonesia and South Korea -- are already effectively run by the
International Monetary Fund anyway.

"The IMF is totally opposed to restrictions on capital flows.
The IMF mandarins (in Bangkok, Jakarta and Seoul) aren't going to
allow this sort of nonsense to happen while they're controlling
the purse strings," the chief economist at a U.S. firm in
Singapore said.

The IMF has brokered massive economic bail-out packages for
Thailand, Indonesia and South Korea. Money loaned under the deals
is lent with strict monetary and fiscal conditions -- such as
foreign exchange and interest rate targets.

Overnight, the IMF signaled its disapproval of Malaysia's
actions.

"In general, the IMF believes that any restriction imposed on
the movement of capital is not conducive to building investor
confidence," it said.

Thailand was quick to nail its colors to the IMF mast.

The country introduced strict capital controls in 1997 after
the baht plunged against the U.S. dollar, but has gradually
relaxed the bulk of them.

Thai central bank governor Chatu Mongol Sonakul said Thailand
was not considering new capital restrictions.

"The situation in Thailand has improved. The interest
rate...is coming down. The baht is stable. If we introduce any
additional controls it will do more harm than good...," he told
reporters.

In Seoul, Bank of Korea spokesman Park Jae-hwan noted that
this week South Korea announced its foreign exchange reserves had
hit an all-time high of $41 billion, exceeding its IMF target of
$40 billion by year's end.

"There is little chance outside speculators would attack our
currency," Park said.

The South Korean won is convertible only on the trade account,
which makes it difficult to purchase the currency for speculative
reasons.

"So I don't think there is any possibility that Korea would
impose capital controls the way Malaysia has," Park told Reuters.

Elsewhere, the Hong Kong Monetary Authority (HKMA) said it
would not impose exchange controls.

"We do not have any plans to change our present policy," a
spokeswoman for the HKMA, Hong Kong's de facto central bank,
said.

According to the territory's post-colonial constitution, the
Basic Law, Hong Kong cannot impose exchange controls.

"No foreign exchange control policies shall be applied in the
Hong Kong special Administrative Region. The Hong Kong dollar
shall be freely convertible. Markets for foreign exchange, gold,
securities, futures and the like shall continue," it said.

Hong Kong, a British colony for 156 years, returned to Chinese
rule on July 1 last year.

China's central bank, the People's Bank of China, the central
bank, declined any comment on its future policies.