ASEAN holds meeting on currency swap<\/p>\n
By Eileen Ng<\/p>\n
KUALA LUMPUR (AFP): Southeast Asian finance ministers will
\nmeet in the Malaysian capital this week as regional currencies
\nundergo another beating amid expectations of a global slowdown.<\/p>\n
The Association of Southeast Asian Nations' (ASEAN) plan for
\nan expanded web of currency swaps with China, Japan and South
\nKorea to avert future crises is expected to dominate talks,
\nofficials and analysts said.<\/p>\n
Southeast Asian currencies have weakened in recent weeks
\ndragged down by a weak Japanese yen, exacerbating an expected
\neconomic downturn in the region amid the US slowdown, analysts
\nsaid.<\/p>\n
Only Malaysia has been spared currency instability due to its
\nringgit peg of 3.80 to the dollar, imposed in 1998 as part of
\ncapital controls.<\/p>\n
But Malaysia last week cut its growth forecast to between five
\nand six percent this year, down from seven percent previously,
\nciting an expected sharp fall in manufacturing and exports.<\/p>\n
Most analysts have also revised downwards their economic
\nforecast for ASEAN countries.<\/p>\n
ASEAN finance ministers at their meeting in Chiang Mai last
\nyear agreed to expand the ASEAN Swap Arrangement (ASA) to include
\nChina, Japan and South Korea and to enlarge the facility to one
\nbillion dollars.<\/p>\n
The scheme, which gives financial aid to member nations facing
\nshort-term liquidity needs, is designed as a safeguard against
\ncurrency raids similar to the one that brought on the 1997
\nregional crisis sparked by the devaluation of the Thai baht.<\/p>\n
But the scheme reportedly ran into problems amid Malaysia's
\nreluctance to give the International Monetary Fund (IMF) a
\nproposed key role.<\/p>\n
Prime Minister Mahathir Mohamad in November last year said
\nmost ASEAN countries were not keen to let the IMF oversee the
\nswap arrangement.<\/p>\n
Japan, which is leading the plan, last month sent Vice Finance
\nMinister Haruhiko Kuroda to Malaysia to meet with Finance
\nMinister Daim Zainuddin to seek a solution to the disagreement.<\/p>\n
But Daim stressed that Malaysia would oppose the proposal to
\nlink the disbursement of funds in the ASA to the IMF.<\/p>\n
"We are not under the IMF, why should they impose IMF
\nconditions on us?" he said recently. He added that ASEAN finance
\nministers would review the terms of the scheme at their meeting
\nthis week.<\/p>\n
Daim will host the ASEAN finance ministers meeting, which will
\nalso be attended by central bank governors from the region, at a
\ntop hotel in Kuala Lumpur from Saturday.<\/p>\n
The ministers will conduct a "peer review" on economic
\ndevelopments in the region, and hold dialogues with the Asian
\nDevelopment Bank and the US-ASEAN business council, officials
\nsaid.<\/p>\n
On Sunday, they will sign an agreement on a protocol for an
\nASEAN scheme on motor vehicle insurance. No other details were
\navailable.<\/p>\n
ASEAN deputy finance ministers will also hold a three-hour
\nmeeting with their counterparts from China, Japan and South Korea
\non Sunday afternoon.<\/p>\n
Senior officials will be meeting Wednesday, and finance and
\ncentral bank deputies on Thursday and Friday to lay the
\ngroundwork for the two-day ministerial talks.<\/p>\n
Ramon Navaratnam, a former finance ministry official and now a
\ncorporate figure, said progress of the ASA scheme could be
\nstalled amid Tokyo's preference for IMF involvement.<\/p>\n
"The IMF has not proved successful in recent years. Its
\ncredibility is low because of its recent poor professional
\nperformance and perceived American domination," he told AFP.<\/p>\n
"IMF involvement may hold ASEAN back rather than let it move
\nforward."<\/p>\n
The Business Times daily, in a recent editorial, said ASEAN
\nnations should "take charge of their own destiny" and confine the
\nIMF's role to that of an advisor or observer.<\/p>\n
"If these ASEAN countries would rather have someone else
\ndetermine their collective future, that future will only continue
\nto be uncertain and be dependent on what happens elsewhere in the
\nworld," it added.<\/p>",
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