ASEAN to work closely to avoid future crises<\/p>\n
HANOI (AFP): ASEAN member-states have pledged to boost
\ncooperation to ward off financial contagions that may be lurking
\nin the future, but face the task of overcoming a reluctance to
\nshare sensitive data.<\/p>\n
Asian Development Bank vice president Peter Sullivan said the
\nAssociation of Southeast Asian Nations (ASEAN) needed to balance
\nconfidentiality with disclosure in moving the scheme along.<\/p>\n
"Confidentiality is needed to soothe concerns that might
\notherwise inhibit the needed exchange of information," Sullivan
\nsaid at a meeting with ASEAN finance ministers who ended two days
\nof talks here Saturday.<\/p>\n
"But disclosure can also have a useful role to play in helping
\nto discipline markets, and making them work more effectively," he
\nsaid.<\/p>\n
"Striking a balance between the confidentiality needed to
\nbuild support for and credibility in the process, and the
\ndisclosure required to nurture market confidence, will not be
\neasy," he conceded.<\/p>\n
The Manila-based ADB is providing technical support for the
\nASEAN Surveillance Process which member-states agreed to
\nestablish last year to minimize future financial risks.<\/p>\n
The surveillance scheme was proposed after the Thai baht's
\nJuly 1997 de facto devaluation plunged the entire region into
\ncrisis, as short-term capital fled in panic.<\/p>\n
But the process is voluntary and it is not binding on member-
\nstates to disclose any particular data, diluting its
\neffectiveness, analysts say. The disparity between the
\ninstitutional structures of more and less developed economies is
\nalso a deterrent.<\/p>\n
Strengthening the system would require the exchange of
\ninformation such as private capital flows, which would be closely
\nmonitored for any signs of financial problems with potential
\ncross-border impact.<\/p>\n
"Everybody agrees it is a very important issue but everybody
\nalso agrees that it can only be beneficial if disclosures are not
\nonly limited to public sector disclosures but also private sector
\ndisclosures," said Miranda Goeltom, a director of the central
\nBank Indonesia.<\/p>\n
ASEAN secretary-general Rodolfo Severino said the ministers
\nwere "fully supportive of the idea of strengthening the
\nstructure" of the surveillance system.<\/p>\n
"The early warning system could evolve into something that not
\nonly includes macroeconomic indicators," Severino added, and data
\non private capital flows was "one of the things that we hope it
\nwill include as it evolves."<\/p>\n
Severino said strengthening the surveillance system would
\ninvolve reinforcing "people, hardware and software" but added
\nthat the grouping had yet to decide on such aspects.<\/p>\n
How to deal with volatile short-term capital flows figured
\nhigh at the finance ministers' meeting.<\/p>\n
World Bank vice president Jean Michel Severino said any
\nproposal for joint measures to deal with capital flows, which may
\ninclude putting a limit on short-term money, was potentially
\ncontentious.<\/p>\n
"My sense is they wouldn't probably agree on that. There are
\nvery different feelings in the region (on how to deal with
\ncapital flows)," he said.<\/p>\n
Singapore Finance Minister Richard Hu said that while ASEAN
\nwas proposing that capital flows such as hedge funds "should be
\nsubject to regular and timely transparency and disclosure
\nrequirements" this did not mean the grouping sought to regulate
\nthem.<\/p>\n
Philippine Finance Minister Edgardo Espiritu said the
\nministers would discuss further how hedge fund managers could
\nshare in bearing the burden of their "imprudent decisions."<\/p>\n
It was "partly accepted that certain emerging economies have
\nmade mistakes" that exacerbated the crisis, "but what about the
\nresponsibility of imprudent decisions made by hedge funds
\nmanagers as well as portfolio investors," he asked.<\/p>\n
ASEAN groups Brunei, Indonesia, Laos, Malaysia, Myanmar, the
\nPhilippines, Singapore, Thailand and Vietnam.<\/p>",
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"sponsor": "Okusi Associates",
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