ASEAN ministers to focus on reform program

ASEAN ministers to focus on reform program

By Martin Abbugao

BANDAR SERI BEGAWAN (AFP): Southeast Asian finance ministers are set to gather here this weekend to review the pace of economic reforms three years after the region's financial crisis.

But the Asian Development Bank (ADB), whose Vice President Peter Sullivan will be attending certain sessions, has warned that some countries may be lulled into sacrificing reforms for economic growth.

Tiny oil-rich Brunei is hosting a weekend meeting of finance ministers from fellow Association of Southeast Asian Nations (ASEAN) members Cambodia, Indonesia, Laos, Myanmar, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

The gathering is to be preceded by a series of meetings by finance and central bank deputies on Thursday and Friday.

Finance deputies from China, Japan and South Korea, as well as representatives from the ADB, the World Bank and the International Monetary Fund (IMF) are also to attend the sessions.

"One always has to be watchful and take lessons from past experiences," a senior official at Brunei's finance ministry said when asked about the post-crisis deliberations.

The Brunei meeting -- the fourth after Phuket, Jakarta and Hanoi -- was cheered by an IMF report to central bank deputies on Wednesday that the region rebounded strongly in 1999, just two years after the crisis, although risks remained.

Details of the report were not immediately released.

Organizers said this year's meeting was expected to take stock of measures to strengthen financial systems, whose major weaknesses, glossed over by decades of spectacular economic growth, were unraveled by the 1997 turmoil.

ASEAN members Indonesia, Malaysia, the Philippines and Thailand, as well as South Korea, were the hardest hit.

The ministers are to tackle progress in capital markets development, improving the use of regional currencies to promote intra-regional trade, financial sector liberalization, as well as the establishment of common standards for the insurance and customs sector.

The ASEAN surveillance process, a peer review mechanism designed to monitor each other's economic data to detect potential problems and nip them in the bud, is also on the agenda, organizers said.

Tokyo's revived proposal for an Asian Monetary Fund was expected to figure prominently in the discussions with the deputies from Japan, China and South Korea, said the senior Brunei official, who asked not to be named.

Former Japanese vice finance minister Eisuke Sakakibara renewed his calls in a forum in Singapore earlier this month for such a fund as a defense mechanism against future crises.

Japan floated the idea in 1997 but it failed to fly due to strong opposition from the United States and Europe, which both argued it would undermine tough fiscal conditions imposed by the IMF.

Discussions about a common ASEAN currency were not on the agenda, although it could be brought up, the source added.

But he said discussions were likely to be preliminary, noting that it took Europe 30 years to agree on a single currency, the euro.

"ASEAN has a more diverse economic landscape so it may take longer," the source said, apparently referring to the wide gaps in economic development between the group's original members and new entrants Cambodia, Laos and Myanmar.

In a report released on March 10, the ADB acknowledged East Asia was recovering from turmoil faster than expected, but should resist calls to slow down on reforms in the headlong pursuit of economic growth.

"A 'growth first' strategy is not only risky, it may invite recurrence of problems at a later date, particularly if underlying structural difficulties are not tackled," the report cautioned.

Reforms include sometimes bitter political decisions to shut down ailing banks and corporations owned by the government and friends of those in power, as well as measures to ensure transparency and good governance.