ASEAN to form economic surveillance system<\/p>\n
JAKARTA (JP): Finance ministers of the Association of
\nSoutheast Asians Nations (ASEAN) agreed here yesterday to form
\nimmediately a surveillance mechanism to improve financial
\ntransparency and prevent future economic crises.<\/p>\n
The ministers also agreed to expand trade activities among the
\nnine member countries, including through the use of ASEAN
\ncurrencies based on bilateral agreements.<\/p>\n
\"The surveillance mechanism will be established immediately,\"
\nIndonesia's Minister of Finance Mar'ie Muhammad told reporters
\nafter ending the second ASEAN finance ministers meeting.<\/p>\n
Philippine Finance Minister Salvador Enriquez said that under
\nthe surveillance mechanism, each member country would have to
\nprovide transparent information for practically all important
\neconomic indicators. This has been perceived to be one of the
\ncauses of the Southeast Asian currency turmoil.<\/p>\n
He said it would cover things like inflation, exchange rates,
\nand banks' lending policies.<\/p>\n
The monitoring mechanism would force ASEAN countries to be
\nmore transparent, he said, and would provide early signals to
\nhelp prevent future financial crises.<\/p>\n
Enriquez added the monitoring arrangement would help rebuild
\nconfidence in the crisis-hit region. \"That is precisely the
\nobjective,\" he told The Jakarta Post after the closed-door
\nmeeting.<\/p>\n
The Asian Development Bank (ADB) has agreed to play a major
\nrole in helping to establish the mechanism and its first two
\nyears of implementation.<\/p>\n
Enriquez explained that although the bank would provide the
\nsecretariat for the surveillance mechanism for the first two
\nyears, a select committee of ASEAN central bank and finance
\nministry officials would supervise the ADB.<\/p>\n
Enriquez said that all the ASEAN members agreed to provide
\ntransparent economic indicators, stressing that \"nobody made
\nnegative comments about it.\"<\/p>\n
He, however, admitted that the items agreed to be monitored
\nmight be refined later as some countries might not want to reveal
\nparticular information.<\/p>\n
\"I wouldn't be surprised if there will be requests for
\navoidance to submit particular information on particular items,\"
\nhe said.<\/p>\n
The monitoring mechanism is to work on a step-by-step process,
\nand the items to be monitored will be broadened later. \"You have
\nto start with something. For me (what we have at the moment) is
\ngood enough,\" he said.<\/p>\n
Regional currencies<\/p>\n
The finance ministers also supported the use of regional
\ncurrencies for promoting intra-ASEAN trade.<\/p>\n
Mar'ie said that the mechanism would be based on bilateral
\nagreements, in which trade between any two countries would be
\nsettled by each central bank acting as clearing houses for trade
\npayments and offset by each other's receivables with the
\ndifference paid in dollars.<\/p>\n
This mechanism is expected to reduce the use of hard
\ncurrencies like the U.S. dollar.<\/p>\n
The finance ministers also noted that regional financial
\nmarkets had begun to stabilize in the last few weeks. They agreed
\nthat while the financial crisis had affected the short-term
\neconomic and business conditions in ASEAN, the long-term
\nprospects remained attractive and sustainable.<\/p>\n
The ministers expressed confidence that the region would
\novercome the crisis quickly as the economic fundamentals remained
\nstrong.<\/p>\n
They pointed out the savings rate of the region remained one
\nof the highest in the world and while the rates of inflation had
\nincreased recently, they were within manageable levels.<\/p>\n
ASEAN groups Indonesia, Malaysia, Thailand, the Philippines,
\nSingapore, Brunei, Laos, Vietnam and Myanmar.<\/p>\n
The currency crisis started in Thailand in July when Bangkok
\nfloated the baht, and went on to savage the currencies of
\nMalaysia, Indonesia and the Philippines. The turmoil then turned
\ninto an unprecedented economic crisis, especially in Indonesia.<\/p>\n
Indonesia and Thailand have agreed to International Monetary
\nFund economic reform programs in exchange for bailouts arranged
\nby the institution.<\/p>\n
The finance ministers also urged the G-7 developed countries
\nto open their markets further to products from ASEAN and to adopt
\na more proactive approach in helping the crisis-hit countries,
\nespecially through providing credit facilities to import raw
\nmaterials.<\/p>\n
The two-day meeting, which was preceded by a senior officials
\nmeeting Friday, was chaired by Mar'ie, who yesterday formally
\nended his five-year term as Indonesia's finance minister.<\/p>\n
Shortly after attending the opening, Malaysia's Finance
\nMinister Anwar Ibrahim, who is also deputy prime minister, left
\nin a hurry to see President Soeharto at his Jl. Cendana
\nresidence, then returned to the meeting a couple of hours latter.
\nHe refused to comment on his meeting with the President. (08)<\/p>",
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