A S A D E V E L 0 P M E N T 93660 F 0 R U M ADF DISPATCHES East Asia The Unfin shed Agenda Tuesday, March 10 RAMOS CALLS FOR 'CONTINUITY OF REFORMS' AS FIX TO CRISIS P hilippine President Fidel V. Ramos said that while "no one anticipated the crisis in its total proportion," there were "glaring weaknesses" in Asia's financial systems that led to the problems now afflicting the region. Delivering the keynote address at the opening of the Asia De- velopment Forum, President Ramos slammed "crony capitalism" for having contributed to "questionable government contracts, cor- ruption and cost overruns." These problems, in tum, fed the finan- cial excesses, and the loss of confidence, that led to the contagion of currency crashes throughout once-booming Asian economies. His own country, he said, was partly "buffered from the storm" that has hit the other Asian countries, thanks to a number of re- forms advanced over the past five years. Commenting on the fi- nancial sector, he noted that Philippine commercial banks recently sho~ed only 11.6% of their loan portfolio committed to the often risky real estate sector, compared to 94% for the commercial banks of Thailand, which suffered a more severe setback during the recent crisis. But while urging continuity of reforms, President Ramos warned against overly harsh "conditionalities" from the international insti- tutions. These, he said, could "push already battered economies to the depths of depression." Such a path could ignite a backlash QUOTE OF THE DAY against reforms in the form of "discredited interventionist and pro- tectionist measures." D "The East Asian miracle was real. Key areas of success are still valid, such as high savings and investment, macro- ASIA'S CRISIS POSES SPECIAL RISKS economic stability, and a high level edu- FOR THE REGION'S POOREST cation. This financial crisis, however, tells sia's financial crisis could significantly set back social that these conditions are not sufficient, but necessary. " ----Joseph Stiglitz, Chief Economist, World Bank A progress in the region, but it also opens potential to modernize social structures, says Michael Walton, (Continued on next page) M A N I LA, T H E PH I L 1 P P IN E S M A R C H 9 • 13, 1 9 9 8 PAGE I a senior World Bank poverty specialist. VIEWS FROM ADF PARTICIPANTS In a paper prepared for the Asia Development Forum (ADF), Mr. Walton says that even if economic declines D What do you hope to get out of this Conference? are moderate, "poverty could increase by a few percent- age points in affected countries: a significant setback." He notes that during the last decades of economic success, 'To learn from the experiences of other countries, East Asia achieved "growth with equality," but he warns ~specially in the financial and social sectors." that if distribution patterns worsen, poverty increases will Nguyen Xuan Nguyen, Central Institute for be magnified. E conomic Management, Vietnam The poor and workers in the informal sector will be the most affected by job losses, rising prices, and cuts in pub- 'To gain a new perspective, especially on capital flows." lic services. To help mitigate these hardships, Mr. Walton calls for continued support for small-farm production, in- Socorro Zingapan, National Econonmic & clusive educational policy, and greater transparency tore- Development Authority, Phiii ppi nes duce "unfair wealth acquisition." He stresses that protecting the poor is not only a moral 'A broader perspective on the East Asian crisis, and to imperative but also a political and economic necessity. see the causes beyond the domestic issues." "There are risks that the financial crisis will lead to ne- Dr. Josef Yap, Philippine Institute for Develop- glect of social issues and that this could exacerbate social ment Studies conflict, that would in tum make restoration of confidence tougher," says Mr. Walton. 'The forum is a good chance to gather experts in the There is "potential," however, for governments to "both field during the time of crisis. I expect that suggestion protect the vulnerable and move forward on the modern- jNill be made to solve the problems." ization of social structures that will be central to the future Nattha Komolvadhin, Siam Infotainment, advance of competitive and caring societies in East Asia," he concludes. D Thailand "I hope we can set up a network in development work, a kind of clearing house of information that is self- Poverty in East Asia ~ustaining." (%of population) Shankar Ghose, National Foundation for India 80 60 40 20 The ADF is organized by the Economic Development Institute of the World Bank and the Asian Development 0 Malay . Thai. lndon. Philip . Viet. China Bank, with support of the National Economic Develop- ment Authority of the Government of the Philippines. P AGE 2 AS IA DE VEL OPM ENT FORUM