SM: Choppy waters ahead?

ASIA is plotting a bigger role in the world economy and regional stability is expected to prevail, but the waters ahead could get choppy.
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Ten years after the 1997 Asian financial crisis, new threats such as the sub-prime mortgage crisis could rock the boat of sustained growth, Senior Minister Goh Chok Tong said yesterday at the Barclays Asia Forum.
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The still-unfolding sub-prime fiasco that began in July in the United States has rattled financial markets from Europe to Asia, with banks and other financial-services companies having to write off losses amounting to the billions. The crisis also sparked fears of a full-blown US recession, which would drag down the rest of the world.
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Mr Goh said Asia has so far escaped the sub-prime crisis relatively unscathed because it had not embraced sophisticated structured credit financing in a big way.
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But he added that Asia should press on with efforts to develop capital markets to complement the banking system and improve financial robustness and efficiency.
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Global financial imbalances also pose political and economic risks for Asia, with the region's large surpluses giving rise to protectionist responses in the West.
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With Asian and Middle Eastern countries setting up sovereign wealth funds, Western countries are also increasingly nationalistic over the prospect of losing their strategic assets to foreign sovereign investors, Mr Goh said.
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Among other challenges highlighted by Mr Goh were growing income disparities within Asian economies and the threat of environmental degradation caused by unrestrained economic growth.
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Political wild cards that could pose problems for the region include the "long and difficult" road to denuclearising the Korean Peninsula, and cross-straits relations between China and Taiwan ahead of the Taiwanese presidential election next year, Mr Goh said.
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On Myanmar, Mr Goh said the country could not return to the status quo after the military government's crackdown on the monk-led protests in September.
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"National reconciliation and an agreement on phased changes and power sharing is the only way to prevent another widespread protest, which may end up in a bloody uprising to bring about change," he warned.