Japan, it seems, is still struggling with the concept. Asia's domestic private investors, for the most part, have taken such an enormous hit to net worth that it is difficult to imagine them being an early or substantial source of new capital for banks. That leaves only foreign investment in Asian financial systems and industry as a substantial and available avenue for prompt recapitalisation and rapid economic recovery. Foreign investment would bring more than just capital. The region needs skills, experience, risk management systems, accounting and auditing systems, diversification of ownership risk and, perhaps beyond all else, high reputation and confidence in credit-worthiness.
Foreign investors can provide all of that.
Certainly, foreign investment in the region's financial systems is already occurring. However, my impression is that it is not always openly welcomed. I am well aware of all of the national reservations about foreign investment, and I don't approach this issue with a strongly ideological view of the subject. Before private investors, of either domestic or foreign origin, are enticed into recapitalising the region's banks, there will have to be substantial progress on issues of accounting standards, audit standards, transparency, and legal underpinning of bankruptcy proceedings and commercial law more generally. Reducing those risks is one of the most productive activities that governments in the region can now engage themselves in.