APEC meeting must focus on solving crisis: Mari

JAKARTA (JP): When the Asia Pacific Economic Cooperation (APEC) forum holds its meeting in Kuala Lumpur later this month it must focus on efforts to restore the economies of its crisis- hit members rather than on trade and investment liberalization issues.

Mari Pangestu, an economist at the Centre for Strategic and International Studies (CSIS), said on Thursday that the forum should encourage member economies to launch sizable fiscal and monetary stimuli to help resolve the region's economic crisis, which has started to hit other parts of the world.

She said that APEC should also act as a pressure group to help solve the problem of the countries' private sectors' massive overseas loans.

"If APEC fails to come up with relevant measures to solve the crisis, there will be a big question mark over the future of APEC," she said on the sidelines of a seminar on APEC.

"If APEC can't help the crisis-hit member economies, their commitment to trade and investment liberalization may fade. This is the danger that we must prevent," she added.

Senior ministers of the 18-member grouping are scheduled to gather in Kuala Lumpur on Nov. 14 to Nov. 15. This will be followed by a two-day summit of the leaders of the member economies.

Several ambassadors of APEC have said that the gathering would focus on how to accelerate trade and investment liberalization, particularly to settle disputes between Japan and the United States over the implementation of the Early Voluntary Sectoral Liberalization (EVSL). The EVSL is a concept hammered out during the 1997 APEC Summit in Vancouver, Canada, in which nine sectors of the economy would be liberalized by 1999 on a voluntary basis. These sectors include environmental goods and services, fisheries, forest products, chemicals, energy and telecommunications.

The U.S. has been putting pressure on all member economies to realize the program as scheduled, but Japan and several other countries insist that the key part for the realization of the program is the "V" for voluntary.

"We have provided too much time and effort on EVSL while it doesn't answer the problem for the crisis-hit countries," Mari said.

"A concerted domestic stimulus package is very important," she said.

She explained that several countries including the U.S. had started cutting interest rates to stimulate their economies, but this kind of effort had to be done in concert so as to avoid capital shifts from one country to another.

She added that although Japan had announced plans to cut taxes, people were still questioning its implementation, and the U.S. was also expected to further cut interest rates.

"So we expect the U.S. and Japan to play a leading role here," she said.

"It is expected that APEC's move will encourage the European Union to follow suit. The goal is to prevent a global recession," Mari added.

She also said crisis-hit countries including Indonesia, Thailand and South Korea expected APEC to help solve the problem of corporate overseas loans possibly by providing a guarantee scheme to reopen international financing to the private sector.

"If APEC can provide some kind of guarantee scheme, at least for viable companies or export-oriented businesses, it would be very helpful," she said.

She pointed out that a guarantee was essential in the wake of the high risk associated with the crisis-hit countries' corporations and banking sectors.

"Many expect the U.S. and Japan to also play a leading role here," she said.

Solving the problem of the private sectors' massive overseas debt is seen as one key to economic recovery. Indonesia has some US$67 billion in corporate overseas debts, in which the prospect of debt restructuring agreements between debtors and foreign creditors is still far off, as indicated by participants of this week's debtors and creditors two-day forum here.

Mari also said the U.S. might raise political issues, especially the importance of democracy in progressing with economic reform programs during the economic cooperation gathering.

Analysts said the fate of Malaysia's jailed former deputy prime minister Anwar Ibrahim, who is being tried on sodomy and corruption charges, might also be raised during the APEC leaders summit.

Indonesia has expressed worries over Anwar's well-being. Some believe that President B.J. Habibie will stay only one day in Kuala Lumpur. (rei)