Economic Forum quells fears on Asian recovery

Economic Forum quells fears on Asian recovery

SINGAPORE (AFP): The influential World Economic Forum on Friday dismissed fears Asia's crisis-hit economies were recovering too fast for their own good, saying the quick rebound would give a political push to reforms.

Forum managing director Claude Smadja said there had been much doubt among foreign investors about the quick pace of recovery in Asia which had plunged into recession from a financial crisis that erupted in mid-1997.

The doubts stemmed from the slow pace of restructuring of the region's badly-hit corporate sector.

"Let me be very blunt about it. I will not shed any crocodile tear about the fact that the recovery is coming too soon and too fast and in some respect too bad because the restructuring process might be hampered and stopped.

"(This is) because, quite simply, I don't believe in the concept of redemption through pain," Smadja told a news conference ahead of the Forum's three-day East Asia economic conference here beginning Monday.

The Geneva-based World Economic Forum issues annually the widely-followed Global Competitiveness Report and holds its biggest annual gathering of top political and business leaders and academics in January in Davos, Switzerland.

Smadja said the fact that Asia's recovery was coming sooner than expected would be a boost for the restructuring process "because it will make lot of very difficult restructuring moves a little bit easier politically."

He pointed out that with economic recovery, "relocation of workers, readjustments inside corporations and policy moves can become a little bit easier."

Smadja said no one should expect Asia's restructuring process to take place in just one go and added that it would be even unfair to set a time limit for the reforms.

"We have to be very clear. What is required today from the region is not comparable to the charge of the light cavalry. It doesn't happen at once.

"What we are seeing in the region is a very complex, delicate long-term process of restructuring. So I think it would be foolish and childish to expect that this would happen over 12 or 15 months.

"This is a process which by definition will happen on a kind of two steps ahead, one step backward and one step on the sideline. So I think we have to be very clear in putting the recovery in perspective in respect to the restructuring process which has to go on," he explained.

Smadja said the region must press on with banking and financial reforms and adoption of "software" for globalization, including legal institutional regulatory frameworks.

He admitted that political uncertainty in Indonesia, which holds its presidential elections next week, would bear on economic prospects in the region but pointed out that the nation was still on course to achieving positive economic growth this year.

The Singapore conference with the theme "New Asia, New Era: Co-creating the Opportunities" would try to establish a country- by-country scorecard for the region on the pace of restructuring following the crisis, he said.

He added that the message from the conference would be "that East Asia is back, and quite solidly back, despite all the question marks and the uncertainties."

Smadja said the mood at the conference here last year was filled with concerns that crisis-hit Asia would take about five to 10 years to emerge from the crisis.

"There are a number of people who had rushed into judgments and decided that the Asian miracle has been an Asian mirage. Events have proved that this was a case of conceptual myopia," he said.

Thailand's Prime Minister Chuan Leekpai, Malaysian Prime Minister Mahathir Mohamad and Singapore Premier Goh Chok Tong as well as senior government leaders, business leaders, analysts and economists from the region will participate in the conference.