APEC business council moves to draw capital back
APEC business council moves to draw capital back
KUALA LUMPUR (AFP): The APEC Business Advisory Council will push for the use of Asian sovereign collateralized bond obligations as a means to attract private capital back to the crisis-struck region, a report said yesterday.
Council chief Shafiq Sit Abdullah was cited by the Business Times newspaper as saying the proposal would be discussed at the Asia-Pacific Economic Cooperation (APEC) summit here later this year.
Shafiq, who released a concept paper on the structure and introduction of the proposed Asian bond obligations, said the mechanism aimed at spurring international private capital could be the grouping's solution to the Asian financial crisis.
The bond obligations allow the injection of liquidity by investors who would not or were unable to participate directly in the debt, he said at a press briefing on the council's summit in November.
The council chief said in the case of Asia, potential equity investors identified were Taiwan, Brunei, Japan, Singapore and the Asian Development Bank.
Shafiq said the mechanism was applied in the aftermath of the collapse of the US high-yield market in the late 1980s and again in the Mexican crisis in 1995 to kick-start private capital flows.
It was an effective way of creating new sources of funds by accessing investors who would not or were are unable to participate directly in Asian debt, he said.
Shafiq said the set-up proposed by the business council would see equity capital being provided by cash-rich members like Taiwan, Singapore, Brunei and Japan, and leveraged up slightly over two times on the international debt capital markets.
Safiq said the proceeds raised should then be lent to fund strategic areas, mostly in the private sector, via development banks, export-import banks and financial restructuring agencies in each country.
The Asia-Pacific Economic Cooperation forum groups Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, the Philippines, Singapore, Taiwan, Thailand and the United States. Russia, Vietnam and Peru are set to join the group in November when the group holds its annual summit in Kuala Lumpur.