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.