Asian ministers agree to promote bond markets

Asian ministers agree to promote bond markets

Grant Peck, Associated Press, Chiang Mai

Foreign ministers from 18 Asian countries on Sunday agreed to
promote bond markets in the region to avoid another financial
crisis of the kind that devastated regional economies six years
ago.

At the end of a two-day Asia Cooperation Dialogue meeting, the
ministers issued a declaration affirming their commitment to
promote "efficient and sustainable Asian bond markets for the
betterment of Asia and its financial system."

Thai Prime Minister Thaksin Shinawatra, who released the
declaration, called for a self-reliant and interdependent Asia
whose prosperity will benefit not just the region but the world
at large.

"Our aim is to create Asia that is more prosperous, more
competitive and a better place for our children," he said.

Proponents hope that regional bond markets will provide stable
supplies of long-term capital for Asia's private sector.

At present, Asian savings often go to global markets before
being channeled back as high-risk premium loans. Sudden changes
in capital flows were a major factor behind the Asian financial
crisis of 1997-98.

The declaration also hailed the establishment on June 2 of a
US$1 billion Asian Bond Fund in which many ACD members, including
Japan, China and Thailand, will pool their reserves to buy Asian
government bonds.

India is eager to set up a second Asian Bond Fund, and is
willing to contribute initial seed money of $1 billion on its
own, Thai Foreign Minister Surakiart Sathirathai told reporters.

Thaksin said that although Asia's $1.4 trillion in foreign
reserves represents half of the world's total international
reserves, Asia has never used that money to create more wealth
within the region.

"These reserves - our own reserves - were used to create and
add more wealth to the western hemisphere," he said.

Asia "must try to manage its own assets, resources and
strengths in such a way that creation of our financial
instruments will serve us best," he said.

The ACD meeting, launched by Thaksin last year, also discussed
ways to promote cooperation in other areas such as energy
security, poverty reduction, information technology, tourism and
human resources development.

The forum brought together foreign ministers from 18 nations -
the 10 members of the Association of Southeast Asian Nations
(ASEAN) plus Japan, South Korea, China, India, Pakistan,
Bangladesh, Bahrain and Qatar.

ASEAN's members are Brunei, Cambodia, Indonesia, Laos,
Malaysia, Myanmar, the Philippines, Singapore, Thailand and
Vietnam.

Kazakhstan, Kuwait, Oman and Sri Lanka will join ACD when it
holds its third meeting in China next year.