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Sydney, 9 August 2007 - The globalisation of services and a move away from an export-based economy will develop a more robust and resilient financial services sector in Asia that can withstand the new risks to economic stability and avoid a repeat of the Asia Crisis, according to MasterCard Worldwide's chief Asia economist.

The assessment comes in a special report issued to mark the 10th anniversary of the Asian financial crisis, entitled Asia/Pacific 10 Years After the '97 Crisis.

During a recent visit to Australia, Dr Yuwa Hedrick-Wong, economic advisor, Asia/Pacific, MasterCard Worldwide, highlighted the strength of Australia's position to capitalise on the development of the Asian economy since the Asian financial crisis and in the coming decade as the globalisation of services becomes vital to securing a robust Asian economy.

Speaking at the International Credit Card Summit in Sydney, Dr Hedrick-Wong said, "Asia is on track to become a fully developed economic region in the coming decade; however the financial services sector has some battles to win before becoming globalised."

"Australia has already leveraged trade into Asia and it is ideally positioned as a high end supplier of services to Asia. Yet Australia has only moderately entered the financial services sector in the region and the impact of a move into this sector will have on Australia's economy, combined with other factors such as employment, will be significant," said Dr Hedrick-Wong.

Asian markets will have to embrace a globalisation of services in the future, and move away from the globalisation of trade that has served the Asian markets so well.

"Instead of focusing on exporting to the global market, globalisation of services means in the first instance opening the domestic market to global service providers – a step that would cause many policymakers in Asia to pause for a deep breath," said Dr. Yuwa Hedrick-Wong. "However, such a move would not only boost private consumption in Asian markets, but would also serve as the most effective means of protecting the region from future financial crises."

While many analysts have commented on Asia's high household savings, Hedrick-Wong warns that few have considered the implications of Asia's weak and often unreliable financial services providers. Unsophisticated financial institutions have meant that households in many Asian markets very often cannot tap effectively into their assets and future earnings to fund current consumption.

While the devastation caused by the Asian financial crisis in July 1997 triggered major policy responses, which have shaped the current Asian financial environment, Asia's private consumption still remains small. Japan's private consumption in 2005 was only 28 per cent of that of the US. China's private consumption was a tenth of that of the US and India's less than half of China's.

However, Asia today is wealthier and economically healthier, and is playing a much bigger global role than ever before. In the past five years, while the US has accounted for about 13% of global real GDP growth on purchasing power parity terms, Asia has contributed over 50%.

The report outlines that successful globalisation of services will in turn facilitate strengthening of a number of key institutions that are the prerequisites for a robust, resilient and efficient financial sector. These include:

• An efficient and impartial legal system, which can enforce contracts quickly and fairly, reducing moral hazard problems and encouraging lending.
• Strong private property rights to encourage productive investment and help create collateral, especially for smaller businesses and low-income households.
• High-quality financial information via an effective credit registry and credit bureau to vastly improve the efficiency of the financial sector. This would be especially beneficial for lending to small businesses and households.
• Strong corporate governance – participation in the equity market raises the requirement for proper corporate governance. Globalizing the region's equity markets in turn both raises regulatory standards and enhances the enforcement of rules.
• Reduced government intervention, which in credit allocation inevitably leads to distortion and inefficiency, contributing to the boom-bust cycle. At worst, it could become a key factor leading to a crisis like 1997 in Asia.

This report is part of the MasterCard Insights series of ongoing research and analysis of business dynamics, financial policies and regulatory activities in the Asia/Pacific region. Among the 7 reports in the MasterCard Insights series that have been released in 2007 are titles including:

• Household Debt in Taiwan: An Analysis of the Consumer Debt Crisis
• Understanding the Affluent Consumers of China
• The Dynamics of Global Cities and Global Commerce
• The Sun Also Rises: Japan's Long Term Growth Prospects and Regional Implications
• Myths and Reality of Household Debt in Korea
• Interchange Regulation: Lessons Learned from RBA Intervention in Australia

All MasterCard Insights reports are available at www.masterintelligence.com.

MasterCard Worldwide advances global commerce by providing a critical economic link among financial institutions, businesses, cardholders and merchants worldwide. As a franchisor, processor and advisor, MasterCard develops and markets payment solutions, processes over 16 billion transactions each year, and provides industry-leading analysis and consulting services to financial institution customers and merchants. Through its family of brands, including MasterCard®, Maestro® and Cirrus®, MasterCard Worldwide serves consumers and businesses in more than 210 countries and territories. For more information go to www.mastercard.com.

Statements in this press release which are not historical facts, including statements about MasterCard's plans, strategies, beliefs and expectations, are forward-looking and subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date they are made. Accordingly, except for the company's ongoing obligations under the U.S. federal securities laws, the company does not intend to update or otherwise revise the forward-looking information to reflect actual results of operations, changes in financial condition, changes in estimates, expectations or assumptions, changes in general economic or industry conditions or other circumstances arising and/or existing since the preparation of this press release or to reflect the occurrence of any unanticipated events. Actual results may differ materially from such forward-looking statements for a number of reasons, including those set forth in the company's filings with the Securities and Exchange Commission (SEC), including the company's Annual Report on Form 10-K for the year ended December 31, 2006 and Current Reports on Form 8-K that it has filed with the SEC during 2007, as well as reasons including difficulties, delays or the inability of the company to achieve its strategic initiatives set forth above. Factors other than those listed above could also cause the company's results to differ materially from expected results.

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Melissa Devine, 02 9818 0950, mdevine@ppr.com.au
Michael Pooley, 02 9818 9310, mpooley@ppr.com.au