ASEAN orders study to conserve foreign exchange

ASEAN orders study to conserve foreign exchange

KUALA LUMPUR (Reuters): Southeast Asian leaders yesterday ordered a study into a possible regional payments system that would help member states conserve foreign exchange and protect against a financial crisis.

Leaders of the nine-member Association of South East Asian Nations (ASEAN) released a statement in the Malaysian capital which said ASEAN nations should increase regional trade as a means to overcome the unprecedented devaluation of their currencies.

The ASEAN leaders said their nations "should increase trade interaction within the region as a way to overcome the unprecedented devaluation of their currencies".

"They directed officials to study the possibility of establishing appropriate ASEAN payments arrangements that can assist member countries to conserve foreign exchange", the statement said.

The leaders agreed "consultations should be intensified so as to enable Cambodia to join ASEAN as soon as possible, preferably before the next ASEAN summit".

ASEAN groups Brunei, Myanmar, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam. Cambodia's membership was deferred because of its political turmoil.

ASEAN leaders also strongly endorsed the early implementation of an agreement reached last month in Manila calling for steps to strengthen International Monetary Fund aid to the region.

The IMF, supplemented with cooperative financing arrangements from other ASEAN countries, was called to help Thailand, Indonesia and South Korea.

The Manila Framework, an accord reached in the Philippine capital in November, called for ad hoc aid to ailing economies, to be disbursed in line with economic programs crafted by the IMF.

Meanwhile ASEAN Secretary-General Ajit Singh said on Monday a new fund was required to help economically-backward countries within the regional grouping such as Myanmar, Laos and Vietnam.

"ASEAN should also have another financial mechanism that is distinctly ASEAN which can provide the necessary funds and have the financial resources to help these new members," he said in a speech at a conference held on the sidelines of the group's heads of states summit.

He said this fund should help these countries integrate into the mainstream of economies in the ASEAN.

He was also referring to Cambodia, which is expected to join the nine-member grouping next year.

"The details of this financial mechanism whether you want call it a bank or fund, its nature, size, scope and composition...where it will get its funds from...can all be worked out later," he said.

He said "the mechanism should not seek to supplant but rather complement the activities of other organizations such as the Asian Development Bank and those related to the Mekong Basin Development".