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