Asia urged to continue financial reforms for better futureUPDATED: 16:03, June 25, 2007
Asia must continue to reform banking and broaden capital markets to push ahead the region's remarkable recovery from the financial crisis a decade ago, a Singapore senior financial official said Monday.
Speaking at a conference marking 10th anniversary of the Asian financial disaster, Lim Hwee Hua, Minister of State for Finance and Transport, expressed her confidence that Asia will continue to make good progress in the reforms of its corporate and financial sectors.
But there are key challenges ahead, so she suggested that "regulators and market players must remain committed to banking reforms and seek to further broaden and deepen capital markets."
Today, Asia's economies are once again experiencing robust growth, at a rate much faster than the rest of the world. According to Lim, in 2006, Asia's combined gross domestic product grew by over 5 percent, the strongest expansion pace in the ten years since the 1997 crisis.
One important lesson Asia have learned, Lim said, is the need to maintain high standards of institutional quality, governance and transparency of the financial system.
Another development is to strengthen bond market, once the weakness area in the financial system. Back in 1997, only 15 percent of private sector financing was raised through the bond market while it is almost a quarter now, according to Lim.
But much more work remains to be done, she said, pointing out that one challenge that many ASEAN (the Association of Southeast Nations) countries face is surges in capital flows, which reflects optimism on Asian growth and the diversification it offers, on the other hand also exerts strong upward pressure on currencies and potentially contributes to asset price bubbles.
Growing competition from the emerging players such as China, India and the Middle East, is another challenge facing the region, added Lim.
So she called on the regional nations to create a more integrated ASEAN market to increase attractiveness to investors.
"With our concerted efforts, we can build a financial system that is resilient, efficient and innovative enough to help propel Asia onto the next lap of growth," she said.
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