Proper regulation best answer to pressure: Tung

Proper regulation best answer to pressure: Tung

SINGAPORE (Reuter): The best response to foreign economic pressure is proper regulation, Hong Kong Chief Executive Tung Chee Hwa said yesterday in the midst of market turmoil in Southeast Asia.

That included market transparency and efficiency, Tung said in a speech to business leaders in Singapore.

The process of opening markets brings great benefits but "the process does mean becoming open, as well, to pressures from outside, pressures that expose internal weakness," Tung said.

In recent weeks currencies and share prices in several Asian countries have plunged, with some leaders like Malaysian Prime Minister Mahathir Mohamad putting all or most of the blame on foreign speculators.

Tung said that after the Hong Kong market collapsed a decade ago, the then British Territory learned: "that the proper response to these pressures is to regulate properly".

"Our experience is that the risks of the open market can be managed by making the market operate as transparently and efficiently as possible, by maintaining financial discipline in the public sector, and by ensuring that financial institutions manage their investments and risks properly."

He said Asian economic fundamentals are good and that the region should "soon be back on the path to prosperity".