Details should have warned of Asian crisis: WB

Details should have warned of Asian crisis: WB

BANGKOK (Dow Jones): A World Bank conference on corporate recovery in Asia on Friday said closer attention to micro-level data would have forewarned of the region's economic crisis.

Delegates to the World Bank-sponsored meeting considered studies of nearly 4,000 Asian corporations from five countries, based on data stretching back to before the region plunged into turmoil in 1997.

Government agencies from Indonesia, Thailand, South Korea, Malaysia and the Philippines carried out the studies with support from the World Bank.

"Excess capacity was reflected in the pre-crisis data," Mari Pangestu, executive director of Indonesia's Center for Strategic and International Studies, told a news conference to mark the close of the three-day conference.

She was referring to the huge oversupply that built up in many Asian economies during the high-growth years, while asset prices soared many times above real productive value.

Francis Colaco of Asia-Pacific Management Consultants said the corporate studies would give an alternative to macroeconomic analysis.

"It isn't meant as a substitution for macroeconomic analysis, but will be a good compliment to those earlier studies," Colaco said.

Analysis of what went wrong in Asia has tended to focus on macroeconomic factors. Critics of the International Monetary Fund's bailout programs in Thailand, for example, say its high interest rate policy to stabilize the baht led to many corporate failures.

Mari said the general consensus among delegates was that high interest rates had starved viable companies across the region of funds for production.

"In general, credit availability was an issue," she said.

Thailand's Fiscal Policy Office, however, said in a report considered by the conference that "there was little evidence of a severe credit crunch" in the country.

According to Thai companies surveyed, 78 percent said declines in revenue were the major source of liquidity problems. Fewer companies surveyed said insufficient supply of credit was a problem.

Indonesia's Mari said policymakers must implement macroeconomic strategies to stimulate domestic demand, but must also pay attention to corporate and financial restructuring.

"For corporate recovery to take place, it's not enough for one set of policies," she said.