ASEAN, partners try to surveillance plan consensus

ASEAN, partners try to surveillance plan consensus

HONOLULU, Hawaii (AFP): Senior southeast Asian finance and
central bank officials labored into the night here Tuesday to
forge a consensus on expanding a regional surveillance mechanism
to serve as a tripwire against future financial crises.

Officials began discussing a draft communique in the early
afternoon on the eve of a finance ministers meeting of the
Association of Southeast Asian Nations (ASEAN) and their
counterparts from China, Japan and the United States.

The closed-door session drifted into the evening with some
signs of exasperation during increasingly periodic breaks. One
ASEAN official told AFP that "the discussion seems to be going
round in circles."

Malaysia is chairman of the meeting, which would be a follow-
up to a similar conference in Kuala Lumpur last month that
examined the region's preparedness for another financial crisis
of the sort that struck in mid-1997.

"Tomorrow is the ministers'. We have to finish it tonight," a
member of the Malaysian panel said.

A key issue is the inclusion of Beijing, Seoul and Tokyo in an
ASEAN surveillance process, designed by the now 10-member
grouping in late 1998 to help each other detect signs of
recurring vulnerability, delegates said.

The monitoring process, which is supported by the Philippines-
based Asian Development Bank (ADB), releases a twice-yearly
surveillance report to ASEAN finance ministers and also provides
a forum under which the ministers can exchange views to consider
unilateral or collective action.

Finance ministers of ASEAN -- Brunei, Cambodia, Indonesia,
Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and
Vietnam -- and those of China, Japan and South Korea are to hold
a single meeting here on Wednesday on the sidelines of the ADB
annual meeting.

The overall objective is to keep up the level of investor
confidence in the Far East, where massive foreign direct
investment flows have transformed formerly plantation-based
economies into manufacturing powerhouses until capital all but
dried up in 1997.

Observers said difficulties could also be due to the different
levels of economic development among the participating countries.

Japan is the world's second largest economy while Myanmar is
just emerging from a hermit status, Cambodia is rebuilding from
civil war, and Vietnam is scrambling to complete the shift from a
command economy to one more closely based on the free market
system.

The surveillance process takes on an added significance amid
the specter of a cooling US economy, the main market for many.

The ADB last month forecast economic growth in Southeast Asia
would slow to four percent this year from 5.1 percent in 2000.

Growth for the newly industrialized economies including South
Korea would be almost halved to 4.3 percent from 8.4 percent last
year, but with China just mellowing slightly to a 7.3 percent
clip from eight percent previously.

Officials said the finance ministers would also continue
discussions on a network of bilateral swap arrangements involving
ASEAN and their three major Asian trading partners.

The initiative -- named after the northern Thai resort of
Chiang Mai where it was formed last year, would link the reserves
of these countries as a defense against future crises.