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Asiaweek: Asia's Unhappy Future (Must Read)
By David Roche
11/3/2001 10:57 am Sun
[Satu rencana yang begitu BAIK sekali dari seorang pakar.
Jangan kita mudah alpa kononnya krisis ekonomi sudah reda.
Kerajan tidak mereformasikan sistem kewangan sebaliknya
menggunakan dana awam untuk menyelamatkan kroni kemuflisan.
Sikap kerajaan ini akan mengheret negara ke lembah kesusahan yang
lebih ngeri di masa hadapan. Bayangkan ekonomi Amerika sedang
merudum dan Jepun sendiri pula kini tenat (politik, ekonomi dan
Ini semua akan menggugat ekspot negara dan mengurangkan lagi
pelaburan mereka di negara kita. Dan kali ini... pemimpin negara
tidak akan dapat mempersalahkan Soros lagi kerana merekalah yang
sebenarnya boros. Selamat bermuram durja pemimpin yang mewaswaskan
masa depan negara... Tanpa Daim pun negara tetap sakit jiwa
Issue 16th March 2001
Asia's Unhappy Future
Think the worst of the financial crisis is over? Dream on....
DAVID ROCHE is chairman of Independent Strategy, a London investment
Wasting capital - as if it were free water from a faucet - was the
root cause of Asia's crisis. Since then, the region has failed to
reform its financial system. Banks were bailed out, but not reformed.
Some of their lousy loans were purchased by government-backed agencies
and their balance sheets puffed up with taxpayers' money. Instead of
letting the worst deadbeat borrowers go bankrupt to cleanse the
economy of dead investments, the insolvent have been kept alive on a
drip-feed of failed foreclosure laws and rescheduled debts. The price
of this "softly-softly" approach will be paid for by lower growth and
higher taxes over the next decade.
If that was all, it would be bad. But it gets worse. The U.S. is in a
high-tech recession. One of the great benefits of globalization is
that the U.S. corporate sector spread the largesse of American
economic growth among the world's emerging economies by locating its
electronics and other industries there. This boosted growth for poor
countries dramatically. But a U.S. high-tech recession means these
countries will now suffer disproportionately. If Asia's technology
exports to the U.S. fall 6% for the first half of 2001 and then
recover to where we are now by year-end, most emerging Asian countries
will lose between one and four percentage points of GDP growth this
As domestic economic activity slows, Asian leaders will face
increasing pressure to deliver both growth and democracy. But whether
you are looking at the Philippines, Indonesia, Taiwan or Thailand, it
makes little difference - democracy has produced a crop of leaders
without vision. You can be sure that they will do something populist
about their slow-growth economies to placate their restive
electorates. The most obvious - and dangerous - course will be to bail
out their banks again by spending money they don't have. Already, new
Thai Prime Minister Thaksin Shinawatra is preparing just such a
bailout with his proposed National Asset Management Corporation.
The good news for investors in the short run is that saving the banks
will generate some false optimism about Asia's financial sector,
leading equity markets, gunned on by locals, to rise for a while. But
this brief celebration will produce a long-term hangover. There are
more bad debts left in the private sector than Asian governments
officially recognize. If Asian banks are bailed out by the taxpayer,
the public debt-to-GDP ratio will reach up to 60% in Thailand, 65% in
Malaysia and a massive 120% in Indonesia and the Philippines over the
next five years. Interest costs on this debt as a share of government
revenues are two to four times larger than OECD levels. That's because
Asia's tax base is less than half that of the OECD.
Even more worrying, these bailouts will further postpone the
development of an efficient banking system. A revitalized financial
industry can only be created if bank shareholders are forced to share
the losses from bad loans. Banks that cannot survive such drastic
action should be merged or nationalized. The government could then
resell the cleansed banks to new investors.
Reforming banks properly yields two major benefits. First, a cleansed
financial system and corporate sector can allocate capital more
efficiently and so boost productivity and growth. That is why the U.S.
can grow more productively than Asia with a savings-and-investment
rate half that of Asia. Second, the resale to the private sector of
banks nationalized in the process of reform can reduce the
public-sector debt burden.
But Asian government bailouts will simply use taxpayers' money to prop
up existing owners. Rotten management will live to make even more bad
loans, ensuring that the Asian crisis will repeat itself a few years
down the road. In addition, higher government debt and deficits are
already sucking up an increased share of national savings. And in the
future, savings will be lower, because given the slowdown in the U.S.,
Asian economies will rely more on domestic consumer demand to grow.
Unfortunately, that's not all. Populist policies can only be financed
if interest rates are low. Current-account surpluses and international
reserves will suffer as domestic demand rises and electronics exports
slow. Worse still, Asia's foreign reserves are shrinking faster than
the current-account surplus - a sure sign that capital is fleeing much
of the region for safer shores.
Japan will not ride to the rescue this time. Its woeful political and
economic state and weak yen are starting to send its huge stock of
surplus savings to safer climes. Foreign investors are less likely
than locals to be suckered by a short-term liquidity boost from low
interest rates, so capital inflows to Asia will stay low. That's bad
news for Asian currencies, which in a year or so could once again
begin a precipitous decline. And this time, Asians won't be able to
blame George Soros for their woes.