ASEAN currency plan not instant cure: Analysts<\/p>\n
TOKYO (Reuters): A proposal to promote the use of local
\ncurrencies for trade between ASEAN members may not be an instant
\npanacea for the region's financial problems and could also face
\nresistance from key members, economists say.<\/p>\n
While they agree that over-reliance on the U.S. dollar puts a
\nstrain on Southeast Asian countries, particularly since Asia's
\nfinancial crisis has sent the value of their currencies
\nplummeting, they say the yen might be a better counterweight.<\/p>\n
Finance ministers of the nine-member Association of Southeast
\nAsian Nations (ASEAN), which groups Brunei, Indonesia, Laos,
\nMalaysia, Myanmar (Burma), the Philippines, Singapore, Thailand
\nand Vietnam, agreed last weekend on the use of local currencies
\nto promote intra-regional trade.<\/p>\n
In a joint communique after an ASEAN meeting, the ministers
\nendorsed the idea of using of bilateral payment arrangements as
\nproposed by a special task force of ASEAN central banks.<\/p>\n
It has been proposed that regional central banks would act as
\nclearing houses for trade payments and would offset each other's
\nreceivables and pay the difference in dollars.<\/p>\n
"This plan may not be able to solve the region's problems.<\/p>\n
Regional trade between ASEAN nations may have grown, but the
\namount is still very small compared with their trade with the
\nindustrialized countries," said Fumiyuki Sasaki, an economist at
\nNomura Research Institute's Asian Economic Research Group.<\/p>\n
With trade among themselves representing only about 20 percent
\nof their total commerce, the plan, even if it comes to fruition,
\nmay not have much impact, Sasaki said.<\/p>\n
Analysts said the ASEAN nations should consider conducting
\ntrade settlements in yen rather than their own currencies.<\/p>\n
"It will be possible in the future when intra-ASEAN regional
\ntrade rises to about 50 to 60 percent (of total trade by those
\ncountries), but until then it may be better to consider the idea
\nof using the yen as the currency to settle trade," Sasaki said.<\/p>\n
In Kuala Lumpur on Tuesday, Japanese Vice Finance Minister for
\nInternational Affairs Eisuke Sakakibara said Asian nations depend
\ntoo much on the U.S. dollar and should use the yen more widely in
\nregional trade.<\/p>\n
"Use of local currencies for intra-regional trade, I think, is
\nan effective countermeasure to cope with the situation,"
\nSakakibara said after meeting with Malaysian Deputy Prime
\nMinister Anwar Ibrahim.<\/p>\n
"For the Japanese-ASEAN trade, more use of the yen may be
\ncommendable and we will investigate ways (for them) to use more
\nyen in trade with Japan," Sakakibara said.<\/p>\n
Analysts said ASEAN members would need time to turn the idea
\ninto something more solid. The finance secretary of the
\nPhilippines, Salvador Enriquez, has himself said as much.<\/p>\n
Hisatoshi Funada, an economist at Nikko Research Center's
\ncountry research group, said: "I can't be optimistic that this
\nidea will receive full support from all the members of ASEAN."<\/p>\n
Analysts said the plan could also invite strong resistance
\nfrom members such as Singapore, which has long opposed
\ninternationalization of its currency.<\/p>\n
"I wouldn't be surprised if Singapore rejects the plan, as it
\ncontains elements that would disrupt the underlying stability of
\nits own currency," an analyst at a Japanese brokerage said.<\/p>\n
Nikko's Funada said the idea may also contravene an agreement
\nmade between Indonesia and the International Monetary Fund in
\nmid-January that would give full autonomy to the central bank,
\nBank Indonesia, on monetary policy.<\/p>\n
"The plan could become an obstacle for Indonesia in achieving
\nthe goals set by the IMF," Funada said.<\/p>",
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