Wave of changes must take place

ENGAGING ASIA: The IMF is in the midst of a review of its governance and its quota on the board has shifted


PAINFUL memories always flood people's minds, triggered by an event like the tsunami near-miss of which countries in the region felt last week.

Malaysia is fortunate to have mostly escaped the massive natural disaster eight years ago but the country is not immune to what we call aftershocks from the Asian financial crisis which started in the summer of 1997, causing a series of currency devaluation and other events that spread through many Asian markets.

To countries like Malaysia, the International Monetary Fund (IMF) still stirs up such memories as the region fell victim to the massive financial crisis also known as Asian Contagion, leaving many scarred from the currency turmoil and capital flows.

The IMF has been trying to push forward its human side for a number of years now to engage emerging Asia including those which took up its prescription to get out of the financial crisis and others which chose not to.

Either choice, 14 years on, the financial markets in the region have emerged stronger and resilient to many of the recent shocks including from the banking crisis in the US or the debt crisis in Europe.

Regulators have emerged tougher and the cohesion of the central banks tighter, as seen during the 2008/2009 crisis.

Perhaps the IMF officials who organised a regional media briefing in Singapore last month, which included the brief appearance of its first deputy managing director David Lipton, were a bit taken aback by the wary perception Asians still hold about the fund.

It is all set to change, they attest, during the two-day Chatham House-rule sessions, where reporting is allowed, but only of what was said, without identifying who said it.

The fund is in the midst of a review of its governance and its quota on the board has shifted, correspondingly to the rising shareholding of China, India and Japan.

Having had its fair share of negative publicity and still getting the wind from the French politics, it hopes to make its presence felt in Asia.

IMF chief Christine Lagarde is widely respected in the fund's management circles and Asia awaits for the promised changes now that she has two respected Asians at the helm with her.

The spring meetings for both the IMF and World Bank in Washington will be held this Friday and the new president of the World Bank will be announced.

The competition has been hotting up for the previously US-held top post, probably the first time since the bank was set up at least six decades ago.

Between US-backed Dr Jim Yong Kim, president of Dartmouth College; former Colombian finance minister Jose Antonio Ocampo or Nigeria's current Finance Minister Ngozi Okonjo-Iweala, it will be an interesting face-off - and, hopefully it would be a truly merit-based contest and not just a symbolic one.

Ocampo has since pulled out of the race, leaving fewer choices.

The world economy is on a better footing now compared to June last year, hence one can hope for winds of change at the World Bank, in contrast to when Lagarde was the clear hot favourite to set right the mess in Europe.

Then there were candidates bandied around from Brazil, China and India but there was no compromise and it strikes as odd why capable candidates from smaller countries like Malaysia are not lobbied.

But in all these debates, one view stands clear: emerging markets do not have a united approach like the advanced countries such the US or Europe in spearheading candidates for both international bodies.

As has been said, no crisis is alike and there is no telling where and what form the next one would take which only points to the need of a well-represented development institution.

Already China - the top contributor to the IMF - will certainly play a more important role, especially since Tokyo and Beijing are considering ways to boost fund's resources to prevent Europe's sovereign debt crisis from dragging down the global economy.

Maybe the next wave of changes in the top IMF position would better prepare an Asian for the job.