Leaders say SE Asia at 'defining moment'

Leaders say SE Asia at 'defining moment'

HONG KONG (AFP): Southeast Asian leaders agree that the region's currency turmoil will now force an examination of why the "Asian miracle" was derailed and how to it get back on the road to growth.

While Malaysian Prime Minister Mahathir Mohamad continues to blame the whole world for economic turmoil, politicians, financiers, industrialists, senior officials and experts in Hong Kong for the East Asia Summit took a much more pragmatic view.

"We are at a defining moment in this region," Kishore Mahbubani, permanent secretary of Singapore's foreign affairs ministry said during the round-table finale to the summit organized by the World Economic Forum.

"What happened this year came as a shock for the policy makers in all capital cities of the region and the leaders are still reeling from this massive hit.

"But unless you are downright stupid, you have to sit back and reassess where you are at and what went wrong," he said, predicting that would take 12-18 months.

There was a rather broad agreement at the conference on what action was needed to get on top of the currency and stock market turmoil and the reforms which must be undertaken.

Delegates saw a need for a more flexible exchange system, the reconstruction of banking, the need for laws and surveillance of international standards, to look for quality and not only quantity in growth and to reinforce regional monetary cooperation.

Consensus was equally strong that given the strength of the region's economic fundamentals, ranging from high saving rates to entrepreneurship and the attention given to education, sustained growth must return after two or three difficult years.

But there was less unanimity on the pursuit of opening economies and easing trade restrictions.

"Deregulation is as difficult for Singapore as regulation is to Hong Kong, " Woo Chia-Wei, head of the Hong Kong University of Science and Technology, said during the debate.

Some delegates, a minority, called on East Asia to consider the structures and political behavior that led to the financial imbalance.

With the regional currency crisis lasting longer and having a more severe impact than first thought, the debate on the cause and the solutions has only just begun.

Australian Foreign Minister Alexander Downer said the East Asia situation was certain to dominate the next Asia Pacific Economic Cooperation (APEC) summit in Vancouver at the end of November.

Mabubhani believed it would be the same at the Association of Southeast Asian Nations (ASEAN) summit at Kuala Lumpur in December to which the leaders of Japan, China and South Korea have also been invited.