Indonesia still vulnerable to external shocks: ADB

Indonesia still vulnerable to external shocks: ADB

MANILA (AP): The president of the Manila-based Asian
Development Bank Tadao Chino said here on Wednesday that
Indonesia remains vulnerable to external shocks because of its
dependence on oil exports and trade within the region.

"On the domestic front," he said, "a major uncertainty is the
recovery of private-sector demand, which will in turn be
influenced by perceptions over banking and corporate sector
reforms."

Chino noted that bad loans in Indonesia's banking system
remain high and that while progress has been made in corporate
restructuring, much remains to be done.

ADB says that the economic recovery in the Asian region is
recovering more rapidly than expected from its financial crisis.

The Manila-based bank plans to announce later this month that
it expects developing countries in Asia will grow by an average
of more than 6 percent this year, President Tadao Chino said.

The ADB originally forecast 5.1 percent growth this year for
the region, excluding Japan, and raised that to 5.7 percent last
November.

"The recovery has been more robust than we forecast before,"
Chino said in an interview with The Associated Press.

He said government policies across Southeast Asia have helped
domestic demand grow, while economic reforms have "strengthened
investor confidence in the region so more funds have been flowing
in."

The ADB, however, remains concerned about the progress of
reforms in some countries including Indonesia, Chino said.

He indicated the ADB is also concerned over the slow pace of
corporate restructuring in Thailand, which has so far mainly
taken the form of voluntary negotiations and out-of-court
settlements.

For Hong Kong, South Korea, Singapore and Taiwan, the ADB is
forecasting aggregate growth this year of 6 percent to 7 percent,
considerably higher than an earlier estimate of 5.2 percent.
Growth in China this year is expected at 6.5 percent, up from an
earlier estimate of 6 percent.

For the Philippines, however, Chino appeared rather less
bullish, forecasting growth of "around" 4 percent in both 2000
and 2001. The ADB earlier forecast growth of 4.5 percent this
year.

Chino said that there may be a role for a new Asian monetary
fund to help countries hit by financial problems, but the
International Monetary Fund should continue to take the lead in
responding to future crises.

"I think the concept (of an Asian fund) is one of the ideas
which Asian countries could consider over the medium term," he
added.

"But I believe the IMF should be the lead agency for handling
liquidity crises," Chino added.