Department of Foreign Affairs and Trade

Relationships Weakening New Rules

Increasi

ng

Competitio

nNew Finance

Needed

Relations under Strain -Many Loans Not Performing

0

10

20

30

40

50

60

Per

cen

tag

e

Peak of Crisis Dec-98 Dec-00 Sep-01

Relations under Strain -Bank Lending Contracting

-30

-20

-10

0

10

20

30

40

50

60

Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02

per

cen

t ch

ang

e

Hong Kong

Japan

Philippines

Taiwan

Thailand

Competition IncreasingTariff Rates Falling

0

5

10

15

20

25

30

Per

cen

tag

e

1995 1998 1999 2000

Competition Increasing Foreign Direct Investment Inflows Increasing

0

100

200

300

400

500

600

700

800

900

US

$ M

illio

ns

Total China Hong Kong

Indonesia Malaysia Singapore

1980 1985 1990 1995 2000

New Finance Sources Needed -Value of East Asian IPOs Rising

0

5000

10000

15000

20000

25000

30000

35000

40000

Nu

mb

er

Total Japan Hong Kong

Republic of Korea Singapore Thailand

1995 1996 1997 1998 1999 2000

Governments Tightening Rules -Checklist of Reporting Requirements

Mandatory consolidated reporting

Disclosure of derivatives

Disclosure of related party transactions1

Reporting frequency in months1

Mandatory disclosure of extraordinary events1

Japan Yes Yes Yes 6 Yes

Republic of Korea

Yes Yes Yes 6 Yes

China No na Yes 3 (2002) Yes

Hong Kong

Yes Yes Yes 3 Yes

Taiwan Yes Yes Yes 6 Yes

Singapore Yes Yes Yes 6 Yes

Malaysia Yes Yes Yes 3 Yes

Indonesia Yes Yes Yes 12 Yes

Philippines Yes(draft) Yes Yes 3 Yes

Thailand Yes Yes(draft) Yes 3 Yes

Vietnam No No No 3 Yes

Australia Yes Yes Yes 3 Yes

Accounting Standards VariableIndex Based on Annual Report Inclusions

0

10

20

30

40

50

60

70

80

90

Per

cen

tag

e

High income economies leading

Hong Kong

Singapore

Australia

Good progress in middle income economies Japan

Malaysia

ROK

Taiwan

China

Slower progress in emerging economies

Thailand

Indonesia

PhilippinesVietnam

Implications for Business?Implications for Business?

Best opportunities in economies moving to rules based business

Listing and disclosure rules

set to reduce risk

Opportunities to

implement ‘regulation

revolution’

Summing up

• Relationship approach set to decline

• Crisis, competition, finance needs driving

move to rules based business

• Slow progress risky in emerging economies

• Aid program opportunities

• Commercial implications significant