APEC finance ministers meeting opens today

APEC finance ministers meeting opens today

DENPASAR, Bali (JP): Most delegates to the second annual
meeting of the APEC finance ministers arrived yesterday but the
ministers of the United States and Japan, who are expected to be
the center of attention, will fly in just a few hours before the
opening session tonight.

Japan's Finance Minister Masayoshi Takemura, who will be
accompanied by 30 delegates and supporting staff, and U.S.
Secretary of the Treasury Robert Rubin, with a 15-member team,
are expected here this afternoon.

An official of the organizing committee said yesterday that
differing from the original agenda, the conference would be
opened by Vice President Try Sutrisno and not by President
Soeharto who arrived in Jakarta on Thursday morning from two
weeks of travel to Germany and Central Asia.

The official hastily denied the notion that the change and the
fact that the meeting would open without an address from the
President would affect the significance of the conference.

Thirteen of the 18 members of the Asia Pacific Economic
Cooperation forum will be represented by their finance ministers
and the other five -- Chile, Malaysia, Mexico, New Zealand and
Papua New Guinea -- by their deputy finance ministers.

A delegate from an Asian member, which like Indonesia has been
feeling the brunt of the excessive swings in the Japanese yen
since last month, saw the forum as a great opportunity to
directly tell the Japanese and American ministers of the impact
of the volatility of their currencies.

Indonesia and Thailand and, to a lesser degree, China, Hong
Kong, South Korea and Taiwan, have been hurt by the steep
appreciation of the yen against the U.S. dollar, which over the
last five weeks alone has reached as high as 18 percent.

"I think Japan and the U.S. have done nothing more than fire
brigade operations to cope with the gyrations of their
currencies," the Asian delegate noted yesterday.

He said his observation was shared by the delegates of other
of APEC's developing members.

He put great importance on the meeting in light of the
forthcoming summit of the Group of Seven industrialized countries
in Halifax, Nova Scotia, Canada, in June.

However, Jusuf Anwar, secretary-general of the Indonesian
Ministry of Finance, said yesterday the issue of exchange rate
volatility would only be one of the items on the agenda.

"We should remember that this meeting is the follow up of the
first conference of the APEC finance ministers in Honolulu,
Hawaii, in March, 1994," said Jusuf, who also serves as the
deputy chief of the Indonesian delegation.

Jusuf said the other topics of discussion will include the
general economic development in APEC members over the past year,
financing for infrastructure development, capital flows within
the region and actual issues such as the exchange rate gyrations.

"The first finance ministers' conference asked the
International Monetary Fund to study the impact of portfolio
investments into and within the region and we will take up the
report of the study," he said.

Jusuf said APEC also had assigned its Economic Committee to
study the impact of excessive currency swings on trade and
investment, but he was not sure whether the final report would be
taken up at the meeting on Sunday.

Similar to the issue of exchange rate volatility, the question
of portfolio investments has become a great concern, especially
to emerging economies, after the financial crisis in Mexico in
December and January.

Mexico's troubles have rudely reminded monetary policy makers
in emerging economies that portfolio capital, though badly needed
to fuel domestic growth, could be fickle, footloose and
merciless. Such investments could leave as quickly as they come,
depressing stock markets and undermining currencies and raising
the specter of devaluation.

The fallout of the Mexican financial crisis even reached
several Asian countries, notably Indonesia, Thailand, Hong Kong
and Malaysia, where jittery fund managers pulled out of funds in
January, sending speculative attacks against their currencies.

The finance ministers therefore will discuss the kind of
strategies needed to manage capital inflows in manners which
foster both growth and macroeconomic stability.

"Of course, we expect more concrete measures out of this
second round of consultation meetings," Jusuf said in referring
to the conference here which is to end tomorrow evening. (vin)