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While they are still fresh, here are some immediate thoughts on the ASEAN 100 Leadership Forum which I was indeed fortunate to be invited to attend…

First off, it’s pretty clear that ASEAN as a project is a shared journey, not any particular destination. Pulling together a group of 520 million people as diverse as this – financial, political, cultural, ethnic, linguistic, historical – was always an ambitious thing to undertake. The bold approach was to just begin the search for consensus, 41 years ago. This year will see the ASEAN Charter ratified, forming an international legal entity, but while an important milestone this document is clearly more of a platform to build upon than an end in itself. To the extent the project succeeds in geo-political and economic integration ASEAN will become a force to be reckoned with in the same way that the EU has made Europe more powerful and wealthy as a whole than the individual countries would have been. One of the debates was whether ASEAN was getting far enough, quickly enough; but this mistakes the nature of the enterprise in my view. It is where it is, at every point along the way, and each point is better than the one before provided everyone is still content to be engaged. To pre-judge the outcome would be to defeat the purpose of the exercise.

Some of the speakers I was most impressed by…

• President Macapagal-Arroyo - Philippines leader, ex economics professor, daughter of a former President
• Shaukat Aziz - ex Citibanker, finance minister (1999) and PM (2004-2007) of Pakistan
• Timothy Ong - forum convenor, chair of Brunei Economic Development Board
• Jamaludin Ibrahim - CEO of TMI Malaysia, a local, now regional, mobile telco
• John Prasetio - ex Andersen Asia Pacific managing partner, Chair of CBA in Indonesia
• Azman Mokhtar - chair of the Malaysia SWF
• Senator MAR Roxas - leader of the Philippines opposition

Along with these headliners there were many keen students, business people and salsa dancers (you know who you are) from around the Asia Pacific; all working to understand one another’s views and experience. A great thing.

Investment implications

These countries on the whole – while still facing the huge development challenges of wealth inequality, bureaucracy, corruption, and political turmoil – have been very cautious financially since the Asia Crisis in the late 90’s and so are ‘cashed up’ going into the US/Europe led global recession; and they ultimately have demographics and latent productivity gains on their side. If they can somehow keep their foreign exchange reserves and trade surpluses out of the hands of the US government and/or Wall Street they may be able to use the crisis period to strengthen their real economies and set the conditions for a period of transition from the US/EU debt-funded binge to an Asia-led recovery.

My advice during my 30 seconds of fame was to advocate the following priorities in order to prevent Wall Street’s follies from dragging down the real economy here, as they are already in the USA and Europe:

1. act fiscally to keep poor people in jobs, and food, by investing in infrastructure, education, health;
2. keep the ‘plumbing’ connecting savers and borrowers intact, either by offering a government alternative or nationalising the operations (but not the balance sheets) of failing banks, SWF’s and intact banks could possibly coordinate on the lending side;
3. come back to assessing legacy financial balance sheets and leverage once the real economy has stabilised, simply writing off equity and converting debt until solvent balance sheets are achieved, without any government subsidy;
4. come up with a plan to provide liquidity for whatever troubled assets are still left without a market, if any.

It won’t escape close readers that this is exactly the opposite of the priorities the US administration has chosen to pursue, sacrificing the real economy and fiscal budget to preserve the management who made the mess. It is this that Main Street suspects, and so has no confidence. It is not just the cost, but the opportunity cost, of doing the wrong things first.

If approached from the bottom up, the real economy – Main Street – will be preserved so taking pressure off of assets and without the game of playing favourites or rewarding folly. There will then be plenty of time to make regulatory and personnel changes to ensure the banking industry returns to its historical function of connecting borrowers and savers rather than running a rigged casino on behalf of management.