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Economic reform 'crucial' to Japan, here

Erich Parpart

Former ADB ambassador notes 'progress' against corruption

REFORMS are the key to solving economic problems in Japan and Thailand, the former US ambassador to the Asian Development Bank said, while steps taken against corruption by the Kingdom's private sector are making great progress, according to the Thaipat Institute.

"QE [quantitative easing], whether it's QE 1, 2, 3 or 4, is not the solution for Japan's problems. The critical challenges for most countries in Asia are reforms, and that point was echoed by the Bank of Thailand governor [at the 'Bloomberg Asean Business Summit' on December 3], and so where Japan is faltering is not on QE, since governor Kuroda [Bank of Japan chief Haruhiko Kuroda] has been very aggressive in QE for Japan," said Curtis Chin, Asia fellow at the Milken Institute and trustee at World Education Services.

Japanese Prime Minister Shinzo Abe "has now slowed down the pace of any future [sales] tax increase, but where we are still seeing no real significant movement is on the third era of 'Abenomics', which is critical reform. Therefore, quantitative easing is not the long-term solution for Japan's ills, since the solution is critical structural reform to its economy," he said.

The former US diplomat said the real challenge remained what he called "the little BRIC" - the challenge of bureaucracy, regulation, interventionism, and especially corruption, which is the real constraint to economic growth in Japan, Thailand or Europe.

The current situation is not about having a more flexible monetary policy, and the focus should be on the underlying financial infrastructure if countries want to spur change, create jobs and build economies, he stressed.

"The answer in the long term is not more monetary easing," Chin said.

"I have confidence in Thailand and my hope is that the country will become a hub for innovation, and that it will move up the value chain and that Thailand will not seek to build its economy on cheap labour from neighbouring countries - and the key is greater commitment to reforms."

Meanwhile, Thailand this past week moved up Transparency International's Corruption Perception Index (CPI) of 175 nations, from 102nd to 85th place.

Pipat Yodprudtikan, director of the Thaipat Institute, said the new data that TI received from Thailand had led to the improvement in the country's ranking in the CPI.

If excluding the changes in the country's political administration from an elected parliament to one led by a military junta, the private sector has taken steps in the right direction and made substantial progress in terms of the fight against corruption, he said.

"The capital market and the Thaipat Institute have joined forces with registered companies [listed on the stock exchange] to campaign and fight against corruption and great progress has been made, including the introduction of the Anti-corruption Progress Indicator and the announcement of its first results this year," said the director.

The new index allows listed companies to join the anti-corruption campaign first-hand, since they now know what they can do to tangibility fight against corruption, instead of just joining a campaign without any measurement that can be evaluated, he said.

The first Anti-corruption Progress Indicator's results show that 344, or 60 per cent, of listed companies have given greater importance and commitment to non-involvement in any corruption schemes, while 19 companies have received the highest evaluations of levels 4 and 5 and gained approval to become members of the Collective Action Coalition in October, Pipat said.

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