November 21, 1997
The annual Asian Pacific Economic Cooperation meeting (APEC) begins in Vancouver this weekend. World leaders will consider what to do about the growing financial crisis in Asia. An international investment analyst explains the details of the South Korean bailout, and the President of the Philippines talks about the challenges facing his country's economy.
ELIZABETH FARNSWORTH: Mr. President, thank you very much for being with us.
A RealAudio version of this segment is available.
A RealAudio version of a report on the troubles of Asian economies.
November 21, 1997
The details of the IMF South Korean bailout .
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FIDEL RAMOS: Quite happy to be here.
ELIZABETH FARNSWORTH: How are people the Philippines, in Thailand, in Malaysia, how are they viewing the problem? Are they blaming anybody for it?
Philippine exports continue to grow despite Asian economic problems.
FIDEL RAMOS: Well, I can only really speak for the Philippines. But in the Philippines, people are really concerned, but they're not overly worried because they are still able to afford what they need to have on a daily basis. Our productivity continues, and the export of the Philippines during the first 10 months of 1997, including this--in July, have grown up 25 percent as compared to the performance in 1996.
ELIZABETH FARNSWORTH: Nevertheless, the currency crisis and the dangers that could lie ahead, with everything happening in Korea now, is potentially--even if the Philippines so far is escaping the worst of it--potentially very grave. And as you well know, some of the newspapers in the region are reporting that some people are blaming the United States, blaming money managers. What do you hear in the Philippines?
FIDEL RAMOS: The finger pointing is not really taking place there. If at all, it is--no one's asked their national officials--but then, you know, it is election season in the Philippines now. If there's a blow out there in Southeast Asia, there's election fever in the Philippines. On the other hand, the economy is very, very important to us, and during my presidency I made sure that since they won in June 1992, that we started putting in this needed reform to open up, to liberalize, to deregulate, to privatize, and that appears to be among the recommended prescriptions that came out of this meeting of the deputies in Manila just three days ago.
What can be done to open up the troubled banking systems in Southeastern nations?
ELIZABETH FARNSWORTH: So do you think that is going to affect other Southeastern nations too, that they will also deregulate, open up, have banking laws that everybody can see and reveal more about how banks are doing? Do you think that's the end result here?
FIDEL RAMOS: I think it's very important that the banking institutions and the investment houses and all the other financial institutions, whatever kind, be put on a stable, transparent, and predictable basis.
ELIZABETH FARNSWORTH: And by transparent you mean people can look and see the--
FIDEL RAMOS: Yes.
ELIZABETH FARNSWORTH: Revealing what their figures are and all that.
FIDEL RAMOS: We have that in the Philippines because three years ago we created an entirely new subtle bank system. And this is mandated by our constitution. And so we did away with the crony or the behest loan arrangements that used to take part in our own banking system. We haven't had a bank failure during my time, as I mentioned, but more importantly, our bank lending policies were regulated by the new central bank. For instance, the loans for property development in the Philippines have been kept at a level of about 15 to 16 percent, unlike in some countries where that is as high as 90 percent.
ELIZABETH FARNSWORTH: And that's part of what created that bubble that made them then crash.
FIDEL RAMOS: Yes, unfortunately. Our central bank has put a cap of 20 percent on that kind of lending, but we haven't even reached it even without this turmoil.
ELIZABETH FARNSWORTH: Looking at the situation generally again, you've been so much involved in all the changes that have happened in Asia in the past 10 years, do you have a feeling--I mean, you must have--you knew when something really historical was happening. Do you have the feeling that this is a really historic moment, what you're going through right now with the economies and with Korea and perhaps even Japan in some danger?
FIDEL RAMOS: Yes. This is a real defining moment in the history of Asia Pacific, but I am very confident that Asia Pacific will recover.
Imagining the future of money in Asia and the world.
ELIZABETH FARNSWORTH: But tell me why it's a defining moment. Explain. Give me a sense from all that you've seen why it's a defining moment.
FIDEL RAMOS: Well, it's because we are all preparing to enter into the new century, the new millennium, with a very vigorous condition, a big push, with a big leap, and then the turmoil happens, because of, I suppose, mistakes catching up with our region. And due to the accessibility of means to transfer big funds from here to there with the new technologies, and this is probably something that was not well anticipated, the--the region--the whole world, in fact, must now--see what remedies can be instituted, considering that you have almost instantaneous means to transfer money. It's just as fast as news broadcasting, your news broadcasting.
ELIZABETH FARNSWORTH: Do you think there may have to be some kind of limits on money managers' ability to shift their funds that fast?
FIDEL RAMOS: The APEC and the World Trade Organization are looking at financial services, and that which the certain thing would come under, and maybe some agreements must be arrived at so there is no wild happenings or fluctuations of currency markets around the world.
Why this year's APEC meeting is very important.
ELIZABETH FARNSWORTH: How important is the APEC meeting coming up in Vancouver?
FIDEL RAMOS: It's very important. It could be the most important of all, although each one was important in its own way, indication--the UN--in Manila last year. It was when we had to make a map for the future, we call it--'96.
ELIZABETH FARNSWORTH: Why is this one so important?
FIDEL RAMOS: Well, first because of this financial crisis; secondly because we would not be reviewing the 1008 individual action plans agreed to in Manila and see what has happened during the past year. Are we really in the right direction? Are we really undertaking the right missions? Are we focused on the real goals that we must accomplish in 21st century? We'll have to analyze ourselves again.
ELIZABETH FARNSWORTH: Well, thank you, Mr. President, for being with us.