More liberalization needed
By his remarks yesterday (Tuesday), Singapore Prime Minister Goh Chok Tong confirmed his status as the markets' good cop in the routine he occasionally plays to Dr. Mahathir's bad cop. Mr. Goh's call for greater transparency, more -- not less -- financial liberalization and the need for East Asian nations to take tough but necessary measures to get their economies back on track was music to the ears of the market-movers who Dr. Mahathir excoriates.
Mr. Goh was right when he told the East Asia economic summit in Hong Kong that only these fundamental reforms would provide the foundation for sustained economic growth in the region. More to the point for Mahathir-watchers, Mr. Goh said the currency crisis was a direct consequence of market forces. We cannot and must not turn the clock back. Rather we must turn it forward. It is the sort of reasoned and pragmatic approach we have come to expect from the Singaporean leadership.
Thailand, where the currency crisis began with a series of speculative attacks in May leading to the baht's devaluation on July 2, appears to have taken Mr. Goh's advice to heart with its restructuring package. Its belated recognition of massive financial sector problems led to the International Monetary Fund's involvement and an eventual US$17.2 billion rescue package for Thailand.
Australia, which is a contributor to those IMF loan arrangements, wants to see the Thai economy back on the recovery path as soon as possible. It is in our commercial interests for that to occur. A number of observers now take a pessimistic view of the impact the Southeast Asian crisis will have on the Australian economy, given that about 10 percent of our total exports go to Thailand, Indonesia, Malaysia and the Philippines.
While that is cause for concern, there should be no dispute that the economic fundamentals favor Asia's recovery. As Mr. Goh said yesterday (Tuesday), despite the hiccups in East Asia's financial sector, its economies will grow robustly in the medium and long term.
-- The Australian