New Strategies Sought to Boost New Economy in Asia

While a vigorous recovery is underway in the former crisis countries in Asia, investors confidence is still fragile, as the substainability of the recovery depends on the successful completion of structural and institutional reforms, participants to a regional financial forum in Hong Kong said on Thursday.

Up to 150 Asian business leaders attended the Business Week's CFO Forum in Hong Kong from April 26 to 28, focusing their attention on issues on remaking Asian business, aligning information technology strategy with business objectives, treasury and risk management, and e-commerce in Asia.

"We are starting to see new growth all around Asia and that includes the advent of some sweeping changes in corporate finance and treasury services, including banks and service centers," said Sam Moon, managing director of dumStrategies and organizer of the forum.

"This is a truly exciting time as the economy is starting to change, to reflect, and take advantage of, these new developments in the corporate financial landscape," Moon stressed.

Business leaders believed that while the recessionary environment in much of Asia is abating, many markets are fraught with the inconsistencies that indicate the reforms and governance efforts in many companies were incomplete and not thorough enough. The recession saw dramatic changes to corporate structure. Now, the surviving firms are faced with interpreting the lessons learned and reading the landscapes that faces them, with fewer resources, new rules and practices in the acquisition of capital, and often newly empowered shareholders among other unique consequences.

As investors scrutinize Asian companies and closely monitor the inflow and outflow of funds, companies with solid business infrastructures will be more likely to regain investor confidence during the economic recovery.

The participants also explored the roles of government and business in ensuring best practice corporate governance, financial transparency and disclosure, and investor relations to work to the best interest of investors in Asian portfolios and businesses.

(...in Asian portfolios and businesses.) As about 80 percent of corporate bankruptcies are due to illiquidity, it's important to have funding available at the right place at the right time. The three areas that need to be considered for effective liquidity management and financial control structure are rationalization, coordination and centralization, some participants said.

Different corporate structures and distribution of resources across the globe require different models of treasury and finance operations. While centralization may work for one organization, process distribution and service centers may be the right approach for another.

The business leaders stressed in an open discussion that Asia's recovery depends on both the world economy including a sustained growth in the United States and the domestic policies on fiscal consolidation and institutional structure reforms. Improvements should be made in at least four areas, including financial sector, corporate sector, competition, and legal system, they said.

The forum is being held at a pivotal juncture - almost two years after the initial economic downturn, and in the mist of a very encouraging regional recovery that sees new capital and a new dotcom economy blossoming in the region.

Analysts believed that as e-commerce continues to gain momentum, it is beginning to impact and change business practices worldwide. They cautioned that when developing the e-business strategy, one must consider his or her tax risks and planning opportunities at each phase of the e-business life cycle and must be aware of the accounting implications when operating the business under an "e- mode."

"As information and services move more and more toward the Internet, we see large migration from traditional business measurement and operational parameters," said Byram Johnston, managing partner of the business consulting department of Arthur Andersen.

Compliance with various governments is an oxymoron in a borderless marketplace, people no longer adhere to traditional principles in valuation of corporate entities, and new revenue streams must be developed constantly, as first to market has become the standard grail of new initiatives and new services, Johnston said.

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