Asian bankers discuss region's future

Jon · Korean Citizen Joined: Mar 19, 2004 Posts: 525

ADB meeting opens in Jeju with 3,200 experts from 63 member countries
By Kim Jung-min, Kim Ji-hyun and Rambabu Garikipati

JEJU - The 37th Annual Meeting of the Board of Governors of the Asian Development Bank kicked off yesterday at Jeju Island's International Convention Center.

The three-day meeting, which officially begins Saturday, is expected to bring together more than 3,200 delegates from around the world including 63 member countries. They will discuss in-depth issues ranging from poverty reduction, development of finance and international financial architecture to regional economic and social development.

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The delegates will also discuss issues such as the feasibility of a single currency for East Asia, capital market development, corporate restructuring, challenges of infrastructure financing and the role of credit rating agencies in Asia. Acting President Goh Kun is expected to attend the meeting in his capacity as prime minister regardless of whether President Roh Moo-hyun is reinstated by the Constitutional Court. Roh was impeached by parliament on March 12 and the court is scheduled to decide his fate today.

Cho Yoon-je, presidential economic aide, said he is confident that President Roh will retain his executive powers today. "You can expect a renewed thrust to corporate and economic reforms soon," he said. (Related story: P19.)

Many economists and financial experts say China's recent efforts to cool its heated economy, which could have significant repercussions for the regional economy, will be a major topic, although it may not be on the official agenda.

ADB chief economist Ifzal Ali said he expected the Korean economy to grow 4.8 percent this year at a news conference in Seoul last month. The prediction was less than what private economists and government officials forecast earlier. Overall, the ADB has forecast that the regional economy will grow 6.8 percent this year, compared to 6.3 percent in 2003.

The ADB warned that a possible dramatic deceleration in China's economic growth could be a stumbling block to the future of the Korean economy even before the country's financial markets were hardest hit by the so-called "China shock" last week.

"The importance of China to the Korean economy has grown over the years, as is evident from the rise in intra-regional trade. Any changes to the Chinese economy will therefore definitely have an impact on local business sentiment," he told The Korea Herald in late April.

On Monday, China's vice minister of finance, Li Yong, is scheduled to give a presentation on China's economic development and outlook. It is one of three planned country presentations during the conference. On the same day, the ASEAN+3 Finance Ministers' Meeting will discuss ways to promote monetary cooperation.

At the conference's first seminar yesterday, the top economic policy advisor voiced strong support for a full free-market economic system in Korea.

Market principles powered Korea's corporate and financial reforms and to this day, they remain the country's best guide for economic survival, he said.

Although the government's role in economic reform is certainly crucial, Cho stressed that it should be limited to the extent of establishing a favorable corporate climate, possibly in the areas of bankruptcy law, taxation or accounting practices.

"Korea's corporate distress stemmed from a lack of rational business decision-making and a lack of the market's ability to discipline such behavior," he said.

The influx of representatives from the global financial industry to the meeting is expected to provide a great opportunity to local banks that have been seeking strategic alliances with foreign counterparts as a means of survival, industry insiders say. Korean banks fear that Citigroup's imminent takeover of KorAm Bank, the country's seventh-largest lender, will bring more fierce competition to the country's once cloistered banking industry.

Major commercial banks such as Kookmin, Woori and Hana are expected to set up one-to-one meetings with representatives from overseas financial institutions to explore the possibility of forming strategic tie-ups, industry insiders say.

The impact of the imminent U.S. interest rate increase and high-flying oil prices on Asian economies will be another major topic during the five-day conference.

(jungmin@heraldm.com)

(jemmie@heraldm.com)

(ram@heraldm.com)