SE Asia warned of prolonged currency pains

SE Asia warned of prolonged currency pains

HONG KONG (AFP): Southeast Asia's currency crisis will be
prolonged and could even get worse, a senior official of the
World Economic Forum warned yesterday, as the group prepared to
stage an East Asian summit here next week.

"We are not yet at the end of the process," said Claude
Smadja, managing director of the Geneva-based foundation to
encourage global economic dialog.

"It is a phase of getting back to economic reality. I think
the region has been carried away by exuberance. It is realistic
to plan for a two to three year restructuring phase.

"The question is not whether economic fundamentals are there.
They are here. The question is at the political level ... whether
the will is there."

Smadja said one session of the three-day East Asia Economic
Summit beginning Monday would be devoted to the currency crisis,
which has slashed 30 to 50 percent from the values of the Thai,
Indonesian, Malaysian and Philippine currencies against the
greenback in three months. The crisis was sparked by the July 2
float of the Thai baht.

"I think there are still a lot of questions about whether this
is just a passing crisis or something much deeper ... whether we
are at the bottom of the crisis or there are still some more
shocks to expect," he said.

"Is Asia getting the right message from the crisis and is Asia
getting the right answers to the crisis?"

Smadja said Malaysian Prime Minister Mahathir Mohamad was
invited to the meeting but declined. Mahathir has blamed
international currency dealers for the crisis, singling out
billionaire U.S. financier George Soros. Soros denies the charge
and has in turn criticized Mahathir's leadership.

Malaysian Deputy Prime Minister and Finance Minister Anwar
Ibrahim had indicated he would attend the forum, even just for
the opening dinner, but was forced to cancel, Smadja said, adding
the Indonesian government would also be without official
representation.

Southeast Asian officials were mostly "tied up at their desks
and overwhelmed by the issues they have to confront," he said
However, Philippine President Fidel Ramos and Singaporean Prime
Minister Goh Chok Tong are to deliver keynote speeches at the
talks.

The World Economic Forum organizes the annual summit of
international business and political leaders at Davos in
Switzerland and a series of regular regional conferences such as
the East Asia Economic Summit.

Other major issues on the agenda at this year's forum include
the impact of Chinese economic reforms endorsed at the recent
Communist Party Congress in Beijing, Smadja said.

The region's environmental woes, including thick smog caused
by Indonesia forest fires which is blanketing southeast Asia,
would also be highlighted.

A delegation from North Korea, led by State Commission of
External Economic Affairs Vice Chairman Kim Mun-Song, will mark
the isolationist Stalinist state's first international appearance
since Kim Jong-Il was officially named head of the country's
Workers' Party Wednesday.

A session of the forum will be devoted to foreign investment
prospects in North Korea. Rival South Korea will be represented
at the talks by Deputy Prime Minister and Finance Minister Kang
Kyong-Shik.

Taiwanese government officials were not invited to the
meetings as the forum observes the "one China" policy of
recognizing only Beijing, Smadja said.

They would only be allowed to attend the World Economic
Forum's summits in a private capacity and as representatives of
Chinese Taipei.