POLICY AND INFRASTRUCTURAL CHANGES TO FACE FUTURE CRISIS?
issue is how to manage crisis; how to reduce its
economic, social and political costs?
: -first and second generation liberalization
policies; the first generation liberalization in
the tradition of Washington consensus required
some adjustments and revisit after the crisis (
sequencing, the need for prudent process of
liberalization, especially in financial
liberalization, new thoughts on exchange rate
policies, substance and process of liberalization
). Second generation of liberalization,
the need for strengthening institution or
infrastructure in finance: independence central
banking, supervision and regulation, transparency
rough assessments about what happened in Asia.
Liberalization of capital and what happened in
Malaysia. Fixed exchange rate with CB and
floating rate. The role of banking in the
corporate debts. Recent development; is there new
tendency toward protectionism? What is the
prospects of new trade round in Seattle?
Liberalization in finance and in trade?
consensus on : go slow with capital inflows,
especially short-term, better monitoring in the
recipient countries and supervision in lender
countries; international standard. But, social
safety nets, poverty reduction. Changes in
multilateral institutions (IMF) . In general
weakness in banking system and imprudent
corporate borrowings. Strengthening financial
institutions: robust banking industry,
independent central banking, good banking
supervision and regulation, legal base and
judiciary system. Corporate and state governance
: macro and short run combined with micro and
long run, are they doable? Are there
liberalization fatigues after the crisis?
PERCEPTIONS OF THE AMERICAN ROLE?
(Treasury) conspiracy? The news about what
alleged to be Mr Camdessus confirming IMF
role in the downfall of Suharto government
didnt help the situation. For Suharto IMF
was just going to spoil his fun ( what does clove
have anything to do with monetary policy? ) IMF
received more than proportional criticisms for
what was done facing Asian crisis. But, IMF
received more than proportional credits as well.
of anti foreign intervention or foreign ownership:
social problems of corporate and banking
restructuring involving multilateral institutions
dominated by the US and industrial countries and
issues: anti dumping excesses? Agriculture?
Textile ? IPR?
assessments about IMF and US Treasury role
during the crisis and its resolution
MORE SHOULD THE US DO?
over generalization and stereotyping. Shallow
analysis ; wrong assessments about Suharto in the
past and Habibie later. What about Gus Dur?
at the concept but not the process of its
implementation: privatization (Stiglitz in new
paradigm of development : not just good concepts
are important, but also the process
of globalization and liberalization after the
crisis. Capital control?
be proactive not reactive out (euphoria
during Habibie administration. What about Gus
in first and second generation of liberalization;
Washington consensus needed some correction and
adjustment (Stiglits: the consensus is wrong!).
The second generation of liberalization drive
needs to pay attention to the processes, the
details (the devil is in its detail) and
institution or infrastructure. But it implies
long terms, involving micro issues, not just
macro and short-term. A balanced economic policy,
easier said than done.
December 1, 1999.