ASEAN moves to avert future financial shocks

ASEAN moves to avert future financial shocks

HANOI (AFP): Southeast Asian finance officials were attempting to firm up a proposal on Tuesday for an early warning system to avert future crises of the kind that has left regional economies in tatters.

The ASEAN Select Committee -- composed of finance ministry and central bank officials -- discussed a plan prepared by the Asian Development Bank (ADB) to alert member-nations well in advance of impending financial perils, delegates said.

"The ADB gave us a presentation on the plan, which is still under discussion," said Bambang S. Wahyudi, an Indonesian delegate. "The early warning system is part of the surveillance process."

He said officials from the Manila-based institution also briefed delegates on the ADB's assessment of the region's economic prospects as it battles to emerge from the crisis that has ravaged the region since mid-1997.

The ADB is providing technical assistance to ASEAN on plans to put an early warning system in place.

Tuesday's meeting is part of a series of preparatory talks leading up to a meeting of finance ministers from the Association of Southeast Asian Nations (ASEAN) here on Friday and Saturday.

An ADB official here for the talks said the bank hoped the ministers would endorse the planned early warning system, which would entail member-nations making their financial systems more transparent.

"We are here to present our report," the official said.

Asked whether it was likely to be endorsed by ASEAN ministers, he said: "We hope so."

The scheme was first proposed in late 1997 after international financial agencies failed to detect the advent of the Asian crisis and its magnitude.

Currencies across the region tumbled after Thailand floated the baht in July that year, leading to a massive outflow of capital that has plunged several ASEAN members into recession.

But progress in instituting the early-alert scheme was stymied by the reluctance of some ASEAN governments to provide financial data they deemed to be intrusive.

It would involve "peer monitoring" of each other's economies and bringing "peer pressure" to bear in order to force a member- nation to put its financial house in order before a problem threatens the entire region.

A delegate to Tuesday's meeting said ASEAN officials would provide individual inputs on the status of their financial systems, and to the "peer surveillance program."

He said that the plan would then be put to deputy finance ministers before it is submitted to the full-fledged ministerial talks.

Meanwhile officials in Tokyo said that Asian nations will press their claims to a share of a huge Japanese aid package at a regional finance ministers' meeting in Vietnam this week.

Finance Minister Kiichi Miyazawa last October unveiled a 30- billion-dollar aid package for Asia and in December Tokyo promised an additional five billion dollars.

The pledges answered the West's criticisms that Japan was doing too little to help its troubled neighbors and also extended Tokyo's influence in the region.

Some $14.5 billion has already been committed, most in medium and long-term loans, with the first aid going to Thailand and Malaysia.

Finance ministers from the Association of Southeast Asian Nations (ASEAN) meet in Hanoi on Friday and Saturday and Japan will be an observer.

"What we will do with the balance of the fund will likely be on the agenda at the ASEAN finance ministers' meeting," a finance ministry official said.