U.S. urges Asia to open finance sector

Agence France-Presse, Kuala Lumpur

A senior U.S. official Monday urged Asia to further open up its financial sectors to transform them into the region's next engine of growth.

"Gone are the days when a national airline and heavy investments in manufacturing were badges of economic advancement," deputy US treasury secretary Kenneth Dam told a news conference.

"We believe that well-developed and competitive financial sectors must be the engines of growth in this decade."

Dam, who arrived here late Sunday for a three-day trip, said he would also visit China and South Korea to begin a new dialogue to encourage financial sector openness in Asia.

He said the world economy was no longer a "zero-sum game" as the fate of all economies were now intertwined.

"We have entered a period of convergence. When the United States grows, Asia grows, and vice versa."

Dam cited increased productivity as the key to turn the financial sectors into growth engines.

"And the path to productivity, we believe, is through freer trade and investment in financial sectors," he said, adding this would boost market efficiency and promote access to new technologies and best practices.

Dam highlighted early successes in Asian financial markets and drew attention to how increased competition and better, more transparent regulation would boost economic growth.

"These efforts are in my view, essential so that Asian countries can make the best use of their deep pools of domestic savings," he said.

"Efficient use of domestic capital will be the new economic challenge for Asia in this century. This is the real path to sustainable economic growth.

Dam described Malaysia as a "relatively open" economy and its financial sector "reasonably open" despite Prime Minister Mahathir Mohamad's rhetoric on the dangers of liberalizing too quickly.

Dam was speaking on the sidelines of the Pacific Basin Economic Council (PBEC) meeting and will leave Wednesday for China.

Earlier, Mahathir in his keynote address at the meeting, reiterated Malaysia was not against globalization but said it was important to judge the process by its results.

"Globalization has already shown signs of becoming a religion that tolerates no heresy," he said.

"This is rather unfortunate... if the results are good then by all means implement it but if the results are bad for anyone, then globalization must be re-examined, reinterpreted and modified until the expected results are achieved."

The premier said liberalization must not result in "total deregulation" and anarchy in which "giant banks and corporations conspire and ride roughshod over everyone in their quest for profit."

"There should be sufficient policy and regulation to ensure fair trade and consideration for the well-being of people in general," he added.