ASEM finance ministers' meeting gets underway<\/p>\n
Dadan Wijaksana, The Jakarta Post, Nusa Dua, Bali<\/p>\n
The fifth Asia-Europe Meeting (ASEM) for finance ministers
\nopened here on Saturday amid the current uncertainties and
\nchallenges facing the global economy.<\/p>\n
Coordinating Minister for the Economy Dorodjatun Kuntjoro-
\nJakti stressed in his opening speech, the importance of the two-
\nday meeting for the development of economic and financial
\ncorporation between the two continents to overcome those
\nchallenges.<\/p>\n
"Having a solid start in the first half of 2002, the global
\neconomy turned out to be less assuring in the second half of 2002
\nand first half of 2003. Growth was affected by several
\nunfavorable factors, such as higher oil prices and the general
\nuncertainty associated with the Iraq crisis, volatility in the
\nfinancial markets and the outbreak of SARS in Asia," he
\ntold the 31 participating delegations.<\/p>\n
As a result, he went on, the economic outlook for the European
\nUnion had been revised downward, while Japan's economy, which had
\nbegun to recover last year, had again slowed.<\/p>\n
The economic outlook in East Asian countries will be more
\nsober than initially thought, with growth expected to average 5
\npercent, he added.<\/p>\n
Dorodjatun was speaking on behalf of President Megawati
\nSoekarnoputri, who was initially scheduled to open the meeting.
\nNo explanation was available for the President's absence.<\/p>\n
The meeting has put forward a number of issues to discuss,
\ncovering topics such as sharing information on the outlook of
\nAsia, Europe and the world economy, the prospect of strengthening
\nfinancial corporation between the two continents and combating
\nthe financing of terrorism and money-laundering activities.<\/p>\n
Regarding financial corporation, while Europe is planning to
\nestablish an integrated single financial market by 2005, Asia has
\njust begun to develop its regional bond market as an important
\nfinancial investment tool.<\/p>\n
"We're hoping to learn from the European experience on how to
\ndevelop a strong and liquid bond market," Dorodjatun said.<\/p>\n
Only recently, Asia launched the Asia Bond Fund, worth US$1
\nbillion, to be used to buy out bonds issued by Asian countries as
\npart of those efforts (to strengthen the bond market), he said.<\/p>\n
The participants will wrap up their meeting today and are
\nexpected to formulate a ministerial declaration on the issues
\ndiscussed.<\/p>\n
For Indonesia, however, the meeting will be of a greater
\nimportance, as the government could use the opportunity to
\nstrengthen its bilateral relationships with the participating
\ncountries -- many of which are its main donors -- in light of its
\nscheduled graduation in December from the current program with
\nthe International Monetary Fund (IMF).<\/p>\n
Without the IMF, Indonesia will be forced to turn to bilateral
\ncooperation in order to offset its financing needs, especially to
\nhelp cover the deficit in the state budget.<\/p>\n
Although the IMF's funds are never intended for budget
\npurposes as it can only be used as reserves, the absence of the
\nIMF would mean that Indonesia will lose its foreign debts
\nrescheduling scheme. The government had traditionally obtained
\nthe rescheduling facility from the Paris Club of creditor
\nnations, which is willing to provide debt relief only if the
\ncountry remains under the IMF's program.<\/p>\n
The absence of such rescheduling, which some analysts estimate
\nat around $3 billion, may further increase the budget deficit.
\nThe bilateral commitments Indonesia is seeking are meant to help
\nplug that gap.<\/p>\n
The Japanese government, the country's number one donor,
\nwelcomed Indonesia's graduation from the IMF, saying that it
\nwould send signals that the country was moving towards recovery.
\nHowever, it also urged Indonesia to maintain good synergy and
\ncommunication with the IMF after the current program ends.<\/p>\n
"We are going to continue to support Indonesia even after it
\ngraduates from the IMF program, but we also want the country to
\nmaintain good communication with the IMF after the program. It's
\nimportant to maintain the very good environment between Indonesia
\nand the IMF; it's good for the investment climate," Japanese
\nfinance minister Masajuro Shiokawa told reporters on the
\nsidelines of the meeting.<\/p>\n
Dorodjatun believes that the country could secure deficit
\nfinancing without the IMF through bilateral pledges, especially
\nfrom Japan, the World Bank and the Asian Development Bank.<\/p>\n
"All three have been very supportive of Indonesia, and I think
\nthey will remain so, post-IMF program. From the three alone, I
\nbelieve it (the commitment) will make up more than 70 percent of
\nour annual deficit."<\/p>\n
ASEM, which was first held in Thailand in 1996, is a biennial
\ninformal meeting of heads of state and government of 10 Asian
\ncountries and 16 EU member states, including the president of the
\nEuropean Commission.<\/p>",
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