Businesses back currencies for intra-ASEAN trade
JAKARTA (JP): Business representatives of the Association of Southeast Asian Nations (ASEAN) came out yesterday in support of regional currencies for intra-ASEAN trade.
They said this move would help reduce dependence on the U.S. dollar and the transaction cost for intra-ASEAN trade settlements.
"The ASEAN Bankers Association is currently studying possible mechanisms, in consultation with ASEAN central banks, to operationalize the concept," they said in a joint statement issued following a two-day private sector roundtable on the impacts and responses to the financial crisis affecting the region.
Those involved include the ASEAN Chamber of Commerce and Industry, ASEAN Business Forum, ASEAN Federation of Accountants, ASEAN Forum of Credit Rating Agencies and ASEAN Bankers Association.
The ASEAN Bankers Association will submit its proposal to regional authorities for consideration by mid April once the form had been finalized at its next meeting, the groups said.
They added that they expect the measure to be the first step toward an integration of all the currencies into one ASEAN currency in the future.
Most international trading deals in the region are currently made in U.S. dollars.
The greenback has appreciated by over 300 percent against the rupiah since July. The currency crisis plaguing several Asian countries had also caused other currencies in the region to fall sharply against the dollar.
The proposal to use the regional currencies, advocated by Malaysia's Prime Minister Mahathir Mohamad early last month in a bid to reduce dependence on the U.S. dollar, has won wide support from other ASEAN members.
During the two-day meeting, the groups exchanged their views on the crisis and explored alternative measures to resolve the issues.
They recognized the need for uniform accounting and auditing standards and practices in ASEAN to ensure greater accountability and reliability of corporate financial information.
They also urged governments in the region to loosen the liquidity of the ASEAN countries because tight liquidity had further squeezed their economies.
"The present monetary measures being adopted in the region are far too tight and this could seriously hamper the recovery process and dampen the general business environment," they said.
The groups stressed the importance of prudential regulations and effective supervision of the capital market.
They agreed to explore the possibility of promoting a well- managed ASEAN bond market to reduce financial instability and vulnerability to volatile capital flows.
Heads of the delegations at the roundtable meetings included ASEAN Secretary-General Rodolfo C. Severino, ASEAN Banking Council Chairman Olarn Chaiprawat and the secretary general of ASEAN Chambers of Commerce and Industry, Setyanto P. Santosa. (das)