ASEAN finance ministers to focus on averting crises

ASEAN finance ministers to focus on averting crises

HANOI (AFP): Finance ministers of the Association of Southeast
Asian Nations will meet in Hanoi this week to discuss greater
regional financial integration and an early warning system to
avert new crises.

Analysts say the financial crisis which left many ASEAN
countries devastated could have been avoided through greater
macroeconomic and financial cooperation between countries.

In Davos in January Indonesia's Coordinating Minister for
Finance and Economy Ginandjar Kartasasmita stressed the need for
"better and more current information on private capital flows" to
limit the risks of future crises.

At the ASEAN summit here in December, leaders called for
stronger Japan economic and financial cooperation within the
group which comprises Brunei, Indonesia, Laos, Malaysia, Myanmar,
the Philippines, Singapore, Thailand and Vietnam.

Cambodia, which is likely to become the 10th member soon,
possibly as early as next month, will attend as an observer.
Senior finance officials from China, South Korea and Japan will
also take part in the two-day meeting.

The lack of information about short-term debts of Asian
countries was a key factor in sparking the Asian crisis, and
greater transparency and fiscal discipline among financial
institutions is a centerpiece of economic reforms under way.

The Indonesian government won kudos from International
Monetary Fund for Saturday's announcement that it had closed 38
ailing banks and taken over seven others as part of its drive to
restore the health of the crippled financial sector.

Malaysia's Second Finance Minister Mustapa Mohamad is likely
to echo Prime Minister Mahathir Mohamad's call for a new global
financial architecture and explain any misconceptions about
Malaysia's capital controls, ministry officials said.

The finance ministers, who meet in Hanoi on March 19 and 20,
are also expected to discuss a surveillance system for capital
flows and major economic indicators.

"The surveillance process would be high on the agenda," said
Supparat Kavattakul, director-general of the fiscal policy office
of Thailand's finance ministry.

The Asian Development Bank is providing technical assistance
to establish a type of peer review system based at the ASEAN
secretariat, said Hanoi-based ADB representative Jean Pierre
Verbiest.

ASEAN leaders have also called for a study into the
feasibility of a common currency as part of a plan to promote
economic recovery and free trade in the region of 500 million
people.

The meeting will also include discussions with Japan on how to
share some US$35 billion with which it promised to help Asian
nations reform their economic structures and turn around their
economies.

This sum includes the $30 billion promised by Japanese Finance
Minister Kiichi Miyazawa in October initially targeting
Indonesia, Thailand, the Philippines, Malaysia and South Korea
and an additional $5 billion unveiled at the ASEAN summit last
December.

ASEAN members will also be looking for promises from China
that it will not devalue its yuan currency, a move that would
deal a serious blow to their beleaguered economies, observers
say.

The World Bank and IMF and ADB will also attend the meetings,
and will explore possible additional assistance to ASEAN
countries to cope with the social effects of the crisis.

"The social dimension of the crisis is much, much wider than
one imagined, even six months ago. That's obviously a major
concern of all," said Verbiest.