ASEAN optimistic on 1999 economic outlook

ASEAN optimistic on 1999 economic outlook

HANOI (Reuters): Southeast Asian finance ministers said on
Saturday they were confident prospects for the region's embattled
economies would improve this year, although they cautioned that
challenges lay ahead.

A statement from the finance ministers of the Association of
Southeast Asian Nations (ASEAN) welcomed recent developments such
as stability in regional foreign exchange markets, healthy
current account surpluses and lower interest rates.

"Notwithstanding these encouraging signs... we recognize the
pace of recovery will be determined to a large extent by further
progress in economic and financial restructuring," said the
statement, issued after nearly two days of talks in Hanoi.

Senior officials from the International Monetary Fund and the
World Bank attending the meeting have largely shared ASEAN's
cautious optimism about recovery, but worry that some governments
may be tempted into complacency.

ASEAN, representing a once high-flying region confronting its
biggest economic challenge since its inception more than 30 years
ago, comprises Brunei, Indonesia, Laos, Malaysia, Myanmar, the
Philippines, Singapore, Thailand and Vietnam.

Ministers said any recovery faced several potential hurdles,
including the risk of protectionism, a sharp reversal in the U.S.
stock market, further weakness in the Japanese economy and the
uncertainty of external financial flows.

"We therefore urge the industrial countries to take the lead
in sustaining global demand and to coordinate their macroeconomic
policies, particularly to minimize excessive volatility among the
major currencies," it added.

The ministers also listed 12 points that comprised ASEAN's
views on reform of the world financial architecture. It included
calls for a review of the roles of international financial
institutions and regulatory bodies, along with less reliance on
credit rating agencies.

"Given the important role credit rating agencies play in the
international financial markets, there should be greater
transparency in the rating process," it said.

Some ASEAN countries have criticized the rating agencies over
their country reports, which influenced the decision of many
investors to withdraw portfolio funds.

The 12 points included ASEAN's view that each country was
entitled to choose its own exchange rate regime and that there
needed to be closer and more coordinated monitoring of short-term
capital flows.

The final communique also highlighted a one-year-old regional
economic surveillance mechanism designed to act as an early
warning system for future financial turmoil.

Ministers have said the mechanism, the ASEAN Surveillance
Process, would be a key plank in warding off more financial
misery.

Economists have welcomed the monitoring body, but ASEAN has
yet to finalize details of the system. ASEAN officials have yet
to decide what type of macroeconomic and capital flow data would
be compiled under the mechanism. At this stage member countries
will not be compelled to supply data.