The Philippines and its neighbors should not relax their guard and become complacent, according to economists and finance experts, who all believe that another crisis, similar to that of the late 1990s, may hit the region at any time.
Masahiro Kawai, dean and chief executive officer of the Asian Development Bank Institute (ADBI), said in a forum last week that regional economies must observe at all times policies that minimize market risks.
“There is always risk of a crisis, especially when economies are growing. It is important for countries to minimize those risks,” Kawai said in one of the forums of the 45th Annual Meeting of the ADB Board of Governors held in Manila last week.
While emerging Asian countries are currently enjoying high growth rates, experts said policymakers should constantly monitor developments within and outside their jurisdictions to determine the appropriate policy adjustments needed to sustain and improve their respective economies.
Pamela Cox, vice president of the World Bank for East Asia and the Pacific, said in a separate forum during the week-long ADB event that one of the lessons learned from past crises—such as the Asian financial crisis of the late 1990s and the latest in 2009 when the United States and other advanced economies went into recession—was that prudent regulation of the financial markets is indispensable.
“It is important for financial markets to be regulated,” Cox said.
There is no room for lax regulation even at a time when economies are booming, she added.
Lack of prudent regulatory policies for banks and other financial institutions led to the Asian crisis in the late 1990s and the most recent global turmoil.
During the Asian crisis, speculative activities involving currencies and real properties by people from the financial sector were said to have caused the problem. In the most recent global crisis, excessive bank lending even to high-risk borrowers and investments in unsafe portfolio assets by banking giants in the United States and Europe were the determining factors.
Asian policymakers have tightened regulation of the financial sectors in their jurisdiction following the crisis. Similarly, Western policymakers have instituted reforms after realizing banks can’t be left unregulated.
“Although things look good right now [for Asia], prudent banking is required because there is always uncertainty in the world,” Neeraj Swaroop, Standard Chartered Bank’s chief executive officer for Southeast Asia, told the Inquirer at the sidelines of the ADB meeting.