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."