Ex-Im Chief Cautiously Optimistic on Asia

In the nearly two years since Thailand’s economy went into meltdown, U.S. Export-Import Bank Chairman James Harmon has witnessed enough signs of improvement to voice “cautious optimism” that Asia’s battered economies have hit bottom.

But the former Wall Street investment banker has also encountered enough cases of “Wild West-style” corruption, cronyism and poor management to know the region’s problems are far from over.

Harmon, in Los Angeles to speak to the Asia Society, warns the world not to put the region’s hardest-hit economies on the “recovered” list too quickly or risk setting them up for another crash the next time the global economy goes into free fall.

He points out that even Asia’s most aggressive reformers must still overhaul their banking systems, pass and implement tough bankruptcy laws, open up their books and strengthen their judicial systems so they can avoid a repeat of the financial debacle that shaved as much as 14% off their growth rates and impoverished millions.

As the head of the U.S. Ex-Im Bank, which supports sales of U.S. goods and services to the developing world, Harmon has been directly involved in some of Asia’s messiest corporate meltdowns.

Ex-Im has lent about $1 billion to firms in Asia that are undergoing restructuring, including Philippine Airlines and the giant Thai Petrochemical Industry.

Harmon said being one of Asia’s largest creditors has given him clout at the bankruptcy restructuring table. Just a few weeks ago, he delivered a stern message to Indonesia’s beleaguered leaders that they had better come clean or risk being frozen out of any more cash.

South Korea, however, has been rewarded handsomely for its progress. In the nine months ended Dec. 31, U.S. Ex-Im supported nearly 2,500 export transactions to that country, compared with just 50 the previous year. In total, South Korea is in line to get nearly $5 billion in additional Ex-Im funds.