Financial liberalization to top ASEAN meet

Financial liberalization to top ASEAN meet

Martin Abbugao, Agence France-Presse, Singapore

Southeast Asian finance ministers meeting here this week are
expected to take stock of work done to liberalize the region's
financial sector, seen as a cornerstone for an envisioned single
ASEAN market, government sources said.

The review will come six months after the leaders of the
Association of Southeast Asian Nations (ASEAN) agreed during
their annual summit on a roadmap to achieve a European Union-
style common market by 2020 or earlier.

Among the measures endorsed at the October meeting on the
Indonesian island of Bali was a series of bold steps to develop,
liberalize and integrate the region's capital markets and
financial services.

Finance ministers drew up the measures during their annual
meeting in Manila in August.

Singapore government sources involved in preparing this year's
finance ministers' meeting, to be held on Tuesday and Wednesday,
said the delegates were expected to "take stock" of work done
since their last gathering in the Philippine capital.

"I don't think that you can expect any major breakthroughs. I
don't think you're going to see any new initiatives that are
going to come up," the official said.

Another official said discussions would look at progress on
initiatives in four key areas, namely the development of capital
markets, liberalization of financial services, the feasibility of
an ASEAN common currency and liberalization of capital accounts.

These initiatives are aimed at bringing about a free flow of
goods, services and investments as well as capital within ASEAN,
which groups Brunei, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Business executives say an integrated ASEAN market would do
better to compete with China and a fast-rising India in terms of
trade and attracting foreign investments.

A delegation from the U.S.-ASEAN Business Council, an American
corporate lobby group, will also hold talks with the ministers.

Council sources said the delegation was expected to discuss
the financing of small and medium enterprises and press the
importance of financial services liberalization in free-trade
agreements.

The finance chiefs will meet in an informal setting during a
"retreat" on Tuesday ahead of their formal gathering on
Wednesday.

On Monday, deputy finance ministers and central bank governors
from ASEAN as well as China, Japan and South Korea will meet
under the ASEAN Plus Three dialogue process.

Sources said a key topic at this meeting would be how to
strengthen a mechanism called the Chiang Mai Initiative, which
allows central banks from the 13 countries to swap foreign
exchange reserves to fight speculative attacks on their
currencies.

Bilateral swap arrangements, now totaling US$35 billion, have
been signed under this scheme.

The initiative was launched in the northern Thai city of
Chiang Mai in May 2000 as a response to speculative currency
attacks that triggered the 1997/98 Asian financial crisis.

Any changes in the Chiang Mai accord are expected to be
announced on May 15 after a meeting of the ASEAN Plus Three
finance ministers in Jeju, South Korea, on the sides of the Asian
Development Bank annual conference.

One ASEAN source said the ministers may also discuss improving
exchange rate co-operation amid U.S. pressure on China to revalue
the yuan against the dollar to reflect its supposed true value.

The United States, faced with a weakening dollar and a
widening current account deficit, alleges the yuan rate is
artificially suppressed to boost China's export economy.

Haruhiko Kuroda, a special adviser to the Japanese cabinet,
said at a conference in Washington last month that East Asia
should have an effective mechanism for exchange rate co-operation
that can resist U.S. pressure on currency and trade policy.