Signs are mounting that some Asian economies have become increasingly complacent about reform following easier liquidity conditions after a string of US and Asian rate cuts, which spurred regional markets into a widely distrusted rally. Asian stocks have soared by at least 30 per cent since the US Federal Reserve started slashing rates in September.

European nations followed suit last week, chopping rates in unison to conform next month's advent of the Euro.

``This creates a temptation to avoid reform,'' said regional strategist Anand Aithal at Goldman Sachs in Singapore. ``If access to capital is too easy, then they won't reform.''

There are already signs this has happened, said chief economist Geoffrey Barker at Dresdner Kleinwort Benson Asia.

Thailand, where thestock market has rallied about 20 per cent this year in US dollar terms, is struggling to get parliamentary approval for bankruptcy laws essential for a vast banking sector clean-up.

Meanwhile, Thailand's finance company recapitalisation programme has been postponed for an indefinite period. In South Korea, where stocks are up nearly 60 per cent in US dollar terms on the year, few steps have been taken to close excess capacity and force through bankruptcies and job losses. Progress has been made restructuring smaller chaebols, but there has been little change among the top five chaebols.

``Korea has taken a good whack at restructuring its economy -- better than most seasoned Korea-watchers would have guessed -- and still come away with a dulled axe,'', chief strategist Marshall Mays at Nikko Securities, wrote in his November comment.

There are many reasons why the pace of reform in Asia has been so slow, including the continued influence of established elites and vested interests despite strikingpolitical change in much of the region, analysts said.

But the stocks rally has fuelled the foot-dragging on reform.

``This is all politically and socially very difficult and it requires leadership, sometimes a different leadership from the one that got s into a mess in the first place,'' said Barker.

``That's why when money comes in and markets get pushed up, the temptation is just to ease off a bit. We're being bailed out, essentially,'' he said.The weakening global economy makes Asia's reluctance to reform a critical issue, Barker said.

The most important hurdle confronting Asia is its lack of a functioning banking system. Large chunks of capital are required to refinance Asia's banking sector, but remaining sources of funding are expected to dry up quickly.

``While we have relative strength in overseas economies and relatively easy monetary conditions, it's easier to raise money, especially to raise money from overseas sources,'' said Barker.

That strength is not expected to last. Last week,the World Bank said there was a ``substantial risk'' of a global recession, and described the outlook for the world economy as precarious. If the world does fall into recession, Asia will find it extremely difficult to make the changes that are ultimately required for recovery, analysts said.

``It's an irony that countries only tend to reform when they are under tremendous pressure and overseas liquidity isn't there,'' said Barker.Goldman's Aithal agreed.

``The bottom line is that reform is never as fast as our textbooks would suggest,'' he said. ``No one ever reforms in a textbook manner and it's not realistic to expect that.''