Downturn casts sahdow over ASEAN meeting

Downturn casts sahdow over ASEAN meeting

SINGAPORE (AFP): An economic downturn in Southeast Asia sets a
gloomy backdrop to annual talks in Vietnam next week of the
region's foreign ministers and dialogue with top trading
partners.

Although the Association of Southeast Asian Nations (ASEAN)
meeting in Hanoi is largely a forum on security issues, officials
said the ministers could not escape discussing renewed threats to
economic growth whipped up by the slumping U.S. economy and the
global electronics downturn.

"Troubled economies are a potential source of instability and
conflict, both within and between countries," said Singapore
Foreign Minister S. Jayakumar.

"These difficulties must be managed carefully if we are to
avoid conflict and maintain a global peace and stability which
would aid economic recovery."

Singapore, ASEAN's strongest economic dynamo, has fallen into
recession and economists have raised the possibility that gross
domestic product (GDP) growth this year could swing into negative
territory due to weak exports and falling industrial production.

Other export-dependent countries in the region have also
sharply lowered growth projections.

The Asian Development Bank (ADB) projected Southeast Asian
growth to slowdown to 4.0 percent this year from 5.1 percent in
2000. The bank also warned that the prospect of capital flight
from East Asia may worsen the downturn.

ADB said net private capital flows -- which were at the heart
of the 1997-1998 Asian financial crisis -- to Indonesia, South
Korea, Malaysia, Philippines, and Thailand were likely to turn
negative this year.

"As the ASEAN foreign ministers prepare to meet in Hanoi next
week, the need to restore the confidence of the international
community and investors must remain high among our priorities,
along with enhancing the integration of ASEAN members," Jayakumar
said.

"One key factor is to keep existing ASEAN projects on track,
such as the ASEAN Free Trade Area or AFTA.

"If ASEAN is able to meet the trade liberalization targets it
has set for itself, it would send a good signal to investors that
our region means business."

AFTA commits ASEAN's more developed members -- Brunei,
Indonesia, Malaysia, the Philippines, Singapore and Thailand --
to tear down trade barriers to between zero and five percent by
2003 and at a later date for poorer members Cambodia, Laos,
Myanmar and Vietnam.

Thai Foreign Minister Surakiart Sathirathai said ASEAN
"remains an integral player in enhancing peace and prosperity"
and it was in the region's interest that ASEAN members return to
a sustained growth path.

At next week's meeting, "the ministers will reaffirm their
political commitment to the AFTA process and to intensify
economic integration," said Surakiart in a speech to the
Institute of Defense and Strategic Studies here.

Helping ASEAN's poorest members to catch up with their more
developed neighbors is crucial to selling the region as an
alternative investment site amid tougher competition from an
emerging China, officials said.

After meeting among themselves, the ASEAN foreign ministers
will hold talks with their counterparts from Australia, Canada,
China, the European Union, India, Japan, North Korea, Mongolia,
New Zealand, Papua New Guinea, Russia, South Korea and the United
States.

The talks with their dialogue partners will be held under the
umbrella of the ASEAN Regional Forum (ARF), Asia's top forum on
security issues.

Singapore's Jayakumar said these regular meetings were
important because they facilitate an exchange of views and better
understanding of each others concerns "thereby keeping ASEAN's
dialogue partners engaged and involved in Southeast Asia for the
long term."