eddie yue : structural reforms needed to improve asia ’ s economies statement by mr eddie yue, deputy chief executive of the hong kong monetary authority, and head of delegation, hong kong, for the 47th asian development bank annual meeting, astana, kazakhstan, 4 – 5 may 2014. * * * i would like to express my gratitude to the government of kazakhstan for hosting the 47th annual meeting of the asian development bank ( adb ) and the people of kazakhstan for their hospitality. i would also like to thank the management and staff of adb for the excellent organisation of the event. since the last adb annual meeting, we have seen a modest and uneven global recovery, with the advanced economies showing a pickup in economic activities while emerging market economies ( emes ) generally experiencing a moderation in growth. financial markets have turned more volatile in response to the changing pattern of global growth and expectations of a turning point in us monetary policy, and a number of emes have seen a sharp reversal of capital flows. regional economies have remained relatively resilient in the recent bouts of financial market volatility, thanks mainly to the stronger fundamentals of the region nowadays. since the asian financial crisis, many regional economies have implemented reforms to improve their macroeconomic management and fiscal positions, built up foreign reserves and strengthened their financial sectors. for some economies that were more affected by the recent financial market turmoil, they have also taken credible policies to address domestic imbalances and have been successful in restoring investors ’ confidence so far. nevertheless, we cannot afford to be complacent as what we had experienced in the past year was probably a prelude to, rather than the end of, a period of heightened market volatility. the sentiment of global financial markets has turned more sanguine recently amid expectation of prolonged low interest rates in the us. however, the pace of monetary normalisation in the us is very much uncertain and data dependent. with a large part of the cumulated capital inflows to asia since 2009 still in the region, it is possible that regional economies with domestic vulnerabilities built up during the period of ultra - loose global monetary conditions could experience sharp corrections when capital flows ultimately reverse. it is therefore imperative that regional economies should make use of the current breathing space to put their own house in order, take credible measures to reduce macroeconomic and financial imbalances, step up surveillance and ready contingency plans and liquidity backstops such as the use of foreign reserves and bilateral

– 98 asian crisis, 2005 mini - crisis, and 2008 global financial crisis when indonesia responded “ procyclically ” by raising interest rates and tightening fiscal policies. this edited volume prepared by imf staff, entitled indonesia : sustaining growth during global volatility, elaborates the substantial improvement in the quality of macroeconomic management and banking regulation that indonesia has achieved in the midst of a volatile global environment. in addition, this book also highlights the most binding constraints that need to be addressed to sustain and increase economic growth as well as to further lower vulnerability going forward. overall, this book provides a deep and balanced perspective on the indonesian economy that might help to further enrich the framework of macroeconomic management in indonesia. we appreciate the thorough analysis of imf staff on various issues regarding indonesia ’ s economy. this in - depth and balanced analysis benefited from candid discussions between the indonesian authorities and imf staff during the article iv consultations. their analysis has provided insight to our policy discussions which should contribute to improving indonesia ’ s economic performance. i sincerely hope that publication of this book will help to better understand the progress made by indonesia in macroeconomic management and policy that can be used to further strengthening not only indonesian economy but also other economies. distinguished guests, ladies, and gentlemen needless to say, we cannot and may not assume that our macro stability will definitely continue in the future. this assumption can lead us to comfort zone that would reduce our ability to anticipate future challenges early on. i believe this seminar will be the right place to discuss both global and domestic challenges and how we should deal with them. at the global perspective, the immediate policy challenges is certainly how to mitigate the impacts of global economic slowdown and uncertainties. meanwhile, at the domestic front, a lot of domestic unfinished issues to be addressed which most of them are structural issues we never solve and thus have created inefficiencies both in the financial and real sectors. i hope this seminar will give us various perspectives on how to strengthen indonesian economy amidst those global and domestic challenges. may allah almighty always be with us, bless us and lighten our way towards a better future. thank you. bis central bankers ’ speeches