BANKING: ADB: No early warning for Asean
Far Eastern Economic Review
Sept 17, 1998
By Salil Tripathi
Early this year, Southeast Asian leaders agreed to create an "economic
surveillance unit" to give them early warning of financial woes before
they escalated. The International Monetary Fund approved the idea, and
the Asian Development Bank offered its trends-analysis expertise. It
would tip off member countries to potential dangers, such as overvalued
currencies, enabling them to take defensive measures. "That would
prevent contagion and help nip the crisis in the bud," says H. Satish
Rao, the assistant chief in the ADB's policy division.
At the request of the secretariat of Asean, the Association
Southeast Asian Nations, the ADB set aside office space and deployed
staff to set up the surveillance unit. But six months later, it has
still to issue a single report. The reason? Asean states are unwilling
to share sensitive data with one another. New members Vietnam and Burma
cite security concerns, while Singapore and Malaysia worry that they may
overstep local banking secrecy laws.
TD To predict economic trends and make a surveillance unit work,
economists need access to reliable economic information. To judge the
strength of the financial sector, they need to analyze policies that
govern interest rates, the money supply, banks and stockmarkets. They
need insights into the manufacturing and service sectors, to see how a
country's companies operate.
With strong data, economists can evaluate the cause of inherent
weaknesses and compare the findings across Asean member-states and
across industries within Asean. Asean's performance can then be compared
with that of the world's leading economies and companies, enabling Asean
members to seek improvements by adjusting policies.
Given the mutual suspicion among Asean states, sharing such
information is a tall order. Little wonder the surveillance unit has
staff, offices and computers -- but no data to analyze.