COLOMBO, Nov 16: South Asian economies have the potential to match the best growth of the Asian tigers if they adopt the right policies, delegates at a regional foreign exchange conference said.

``By the middle of the 21st century, South Asia could have succeeded in catching up if in the interim it manages to focus on organising economic progress with the same single-minded determination that Singapore brought to the task,'' a top World Bank economist said. ``The real issue is what policies the democratic governments of the region will choose to pursue,'' said the bank's chief economist for South Asia region, John Williamson.

Williamson was in Colombo along with more than 200 delegates from Sri Lanka, Pakistan, India, Nepal and the Maldives to attend a conference of foreign exchange dealers which ended on Friday. The delegates set up an interim committee to forge a regional association of foreign exchange dealers to step up cooperation and exchange of technology among the member countries.

Bangladesh, though not represented at the conference, will be part of the association.

``Economic policies will have to be drawn up in such a way that all sectors of the economy grow,'' said the president of the Singapore Forex Association, Ronny CT Tan.``There is a danger of people being carried away by rapid growth in financial services sector,'' Tan said.

``If you have a situation where the financial services sector is growing too fast while the other sectors are lagging, you have trouble brewing for the future,'' he said.The conference also stressed the need for caution in implementing reforms in the light of the turmoil in other Asian markets.

``This is just the wrong time for a dogmatic commitment to unhindered capital account convertibility,'' Williamson said.

He said one of the reasons why countries in the region had escaped speculative attacks on their currencies was because they were not yet fully convertible. Bankers at the conference agreed.

``This is one area where progress has to be slow. We believe we have to be very cautious and should not take steps which may prove to be indefensible later.'' said Sri Lanka Central Bank deputy governor S Easparathasan.

Delegates said countries in the region could look at a long-term objective of setting up a common regional market and currency on the lines of the European model but the decision will have to be taken by governments and not bankers.``

That is not a decision that we bankers can take,'' said executive director of the Reserve Bank of India, C Harikumar.``It is a long-term objective,'' said president of the Pakistan Forex Association, MH Akhai. ``Each of the countries in the region has its own problems to grapple with such as budget deficits, current account deficits, inflation,'' Akhai said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.