KL, Bangkok near accord on trade

KL, Bangkok near accord on trade

KUALA LUMPUR (Dow Jones): The Malaysian finance ministry deputy secretary-general said yesterday negotiations to sign a payments agreement with Thailand were in advanced stages.

The agreement would permit the two countries to use each other's currencies to trade, Abdul Aziz Mohd Yaacob said.

He said Indonesia and Myanmar have also indicated their interest in arranging a bilateral payment agreement. He added that he expects other Association of Southeast Asian Nations to follow suit.

Malaysia has already signed similar agreements with the Philippines, Vietnam and Laos.

"However, the proposal to use local currencies in bilateral trade will not be confined to ASEAN countries," Abdul Aziz said.

"Malaysia has also proposed this idea to non-ASEAN countries like China, Japan and India, which have shown strong interest."

About 70 percent of Malaysia's trade settlements are done in dollars, against which regional currencies have dropped dramatically in value since the economic crisis kicked in last July. The ringgit is down roughly 40 percent against the dollar.

Around 15 percent the country's trade is conducted in ringgit and 6.5 percent in Japanese yen, Abdul Aziz added.

Abdul Aziz said the use of ASEAN currencies will enhance trade within the region because of the reduction in exchange rate uncertainty and transaction costs as the values of the ASEAN currencies relative to one another are more stable than they are relative to the dollar.