Breathing space?

Breathing space?

After months of rolling financial crisis, Asia may now be
within reach of a breathing space in which to consider the causes
of the turmoil and how best to prevent a reoccurrence. Certainly,
the climate has changed since the shockwaves from Thailand spread
across the region in the early autumn.

There are signs that the preference of Dr. Mahathir Mohamad
for blaming everything on foreign investors is losing support. It
was significant, for example, that Malaysia's attempt to
resurrect the idea of an Asian bailout fund got short shrift at
the meeting of regional finance ministers this week.

From Hong Kong, at least, there was more support for the
criticism by the International Monetary Fund (IMF) Managing
Director Michel Camdessus on the traditional Asian economic model
in which financiers and governments club together to extend easy
credit for pet projects. Had IMF warnings on the need for more
transparency been heeded last year, the recent turmoil might have
been less painful. Now that openness is being forced on countries
which have sought IMF bailout packages, it must be hoped this
accountability will become an irreversible trend.

The proposal by the financial secretary, Sir Donald Tsang Yam-
kuen, for the creation of an Asian debt market offers a more
long-term way of minimizing such turmoil. The enthusiastic
response from regional finance ministers, even including
Malaysia, should accelerate moves in that direction.

This will be good for Asia -- and especially for Hong Kong,
the likely center for any such new market. The SAR's new Mortgage
Corporation and the impending Mandatory Provident Fund should
help secure such a role. China will also benefit with a regional
debt market offering an avenue to finance restructuring of state-
owned enterprises.

-- South China Morning Post