'Investors should view individual Asian countries'

'Investors should view individual Asian countries'

MANILA (AFP): Investors should look at individual Asian countries instead of the region as a whole because of the varying degrees economies have been affected by the regional financial turmoil, the World Bank chief said yesterday.

Bank president James Wolfensohn also said the social cost of the financial crisis, especially on unemployment and poverty, must be addressed.

"There is a regional issue impacting the exchange markets and stock markets throughout the region," he told a news conference here on the penultimate leg of an Asian tour of countries whipped by the seven-month-old turmoil.

"But having said that, I think that there are very great differences between the countries which I would guess over a short period of time might become apparent to the market," he said.

Wolfensohn said that as of now, the crisis-stricken countries have not been "sufficiently differentiated" by investors, who tend to view the entire region as engulfed by the financial bushfire.

The World Bank supremo visited Singapore, Thailand, Malaysia and Indonesia before coming to the Philippines to get a first- hand assessment of the turmoil's effects. He left Friday for South Korea.

Wolfensohn said Thailand and South Korea "have a particular type of problem which is not only a downturn in their economic activity... but a specific problem in terms of unhedged foreign borrowings principally from the banks."

However, he expressed confidence about the ability of the two countries to deal with the crisis under governments "that are now focusing on the problem."

"So I think I have to say on any measure that we have made significant advances in those two countries," he said.

"In the case of Indonesia, you have a different problem in that unhedged foreign borrowing emerged from the private sector without the intermediation of the banks," Wolfensohn said.

He expressed hope that the "emerging consultation between the private sector and the foreign creditor banks" in Indonesia would resolve the problem.

"I guess what we need to do is hope and expect that there will be an agreement between the borrowers and the lenders to try and space out the repayment and carry the private sector through. "That is now going on and I guess it's an open item until it is put together," he said.

The International Monetary Fund (IMF) last year arranged more than US$100 billion in rescue packages for Thailand, Indonesia and South Korea, which have seen their currencies emaciated by the crisis and financial systems tottering under the weight of bad debts.

The World Bank has earmarked $1 billion in loans for the Philippines this year to help the country deal with the effects of the Asian financial crisis and pursue social reforms, bank president James Wolfensohn said yesterday.

The loans will be on top of $1.16 billion already in the pipeline until 2000 and $350 million the bank has programmed for the country annually, Wolfensohn told a news conference at the end of a 24-hour visit here.

"I indicated to them (Filipino officials) that in addition to the $350 million that we typically advance each year, we're looking at a special program of $1 billion to cover structural reforms, social sector and infrastructure that maybe provided urgently as you need it," he said.