Treasury secretary calls for reforms

By Glenn Scott
Advertiser Staff Writer

U.S. Treasury Secretary Paul O'Neill yesterday formally opened the business sessions of the Asian Development Bank's annual meeting in Honolulu, calling for the bank to accelerate its efforts to raise income levels through higher productivity growth.

O'Neill, serving this week as chairman of the bank's board of governors, pressed bank leaders to seek reforms not only in Asian countries but in the bank itself through greater efficiencies and more open and responsive governance.

O'Neill is acting this week in place of President Bush, who as head of the meeting's host country would normally act as chairman.

Bush sent a prepared statement in which he challenged the bank to maintain the highest standards of accountability.

"We look for concrete, measurable results, as we do with all multilateral development banks," Bush said.

In his speech to about 2,000 delegates and guests inside a third-floor ballroom at the Hawai'i Convention Center, O'Neill said he had "full confidence" in the resilience of the U.S. economy to regain speed. He said that the fundamentals such as productivity growth and flexibility in labor and capital markets remain strong.

Looking to Japan, O'Neill welcomed recent comments from new Prime Minister Junichiro Koizumi suggesting that he'll seek reforms to trigger economic growth.

In a press conference later, O'Neill said the United States, while pleased with the indication of potential change, will not press Japan to change more quickly than its leaders consider possible because "only they can judge the appropriateness of the pace."

However, the secretary did use the opportunity yesterday to offer a polite boost to the development bank to put a priority on lifting income levels for Asia's poor.

"I'm an optimist," he said. "People around the world want higher living standards — and they will get there if they are exposed to the right incentives and opportunities."

"The differences between living standards in adjacent countries all over the world dramatizes how important certain fundamentals are," he continued. "With the right policies, there is no good reason why such drastic differences in living standards need to be permanent."

O'Neill did not mention the bank's pervasive theme this week: poverty reduction. He explained afterward that higher productivity and rising income levels would, in effect, lead to the same end.

"I think these things all go together," he said.

Bank President Tadao Chino, in a comprehensive speech on the bank's policies and philosophies, stressed the organization's goal to reduce Asian poverty in half by 2015. He noted that the bank is pushing more private-sector development as an engine of economic growth.

Gov. Ben Cayetano, in spotlighting Hawai'i as a place for world business, noted that 70 percent of the state's residents trace their ethnic roots to Asia and the Pacific.

He invited the assembled business and government leaders to rethink their image of the Islands, and drew applause when he reminded them that Hawai'i's diversity "produces the most beautiful people one can find anywhere."

In fact, the governor's reference was more pointedly aimed at some residents who earlier in the event performed Hawaiian cultural dance and song. Among them was the Kamehameha Schools Children's Choir, who appeared to move audience and speakers alike with poignant songs such as "We Make a Rainbow."

The choir ended up figuring significantly in the speechmaking when O'Neill, too, paused from his prepared speech to comment on the children. He said their song about diversity and hope helped to capture the meaning for the bank's discussions this week.

"What we're in the business of doing," he pointed out, "is making a rainbow."