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Tharman: Low interest rates have led to build-up of financial imbalancesTHE scaling back of United States stimulus measures and the higher interest rates that will likely follow will not be a bad thing for Asean economies, said Deputy Prime Minister Tharman Shanmugaratnam yesterday.儲存Mr Tharman told the inaugural Network Asean Forum at the Shangri-La Hotel that low rates have led to a build-up of financial imbalances in Asia.His comments come as Asian markets are in flux, with investors pulling out their funds from the region in anticipation of the US Federal Reserve's tapering of its bond-buying programme."The unwinding of QE (quantitative easing) would also take place together with a recovery in the US, and is not in itself a negative for Asean economies," Mr Tharman said at the one-day forum, a gathering of Asean business leaders that focused on ways to reduce trade barriers within the region. Their ideas will be presented to Asean policymakers as a set of policy recommendations."Growth among Asean economies has stronger structural underpinnings than in most other regions. Further, the risk of balance of payments crises in the region is relatively low."Still, Asean has to deal with a challenging external environment that will "very likely be less supportive in the next five years and possibly beyond", he noted.There is a real risk of prolonged slow growth in the advanced world, which would dampen exports.Meanwhile, China's move up the value chain in 新蒲崗迷你倉anufacturing will mean greater competition for some Asean countries while its shift from investment-oriented to consumption-led growth heralds the end of the boom in commodity prices, which up to now has benefited Asean economies.In response, Asean will have to create conducive conditions for private investment to grow here, raise productivity and accelerate regional integration, Mr Tharman said."While it is probably true that there was over-investment before the Asian crisis when investment rates were running at over a third of GDP, or over 40 per cent in some individual economies, the current rates among the emerging Asean economies, averaging 25 per cent, are lower than would be expected at their current stage of development."Asean should also take advantage of opportunities in China's evolving economy, by meeting its growing demand for higher value, more sophisticated products.And while import tariffs on goods have in most part been eliminated, intra-Asean trade still has much scope to grow, by reducing or streamlining non-tariff barriers including quotas and complex customs and import licensing procedures, Mr Tharman added.Asean nations made significant progress in harmonising standards and regulations, which have lowered business costs and reduced the time to market in sectors such as electronics, electrical equipment, medical devices and pharmaceuticals.They must now ensure similar progress in services liberalisation, he said.yasminey@sph.com.sgmini storage