SE Asia can overcome currency gloom: Downer

SE Asia can overcome currency gloom: Downer

MANILA, Philippines (AP): Australian Foreign Minister Alexander Downer said Saturday he was optimistic that the basic strength of Southeast Asian economies would allow them to weather the currency crisis sweeping the region.

"The message I give to those who doubt regional economies is look long term and do not forget the fundamentals," Downer said in an address to the First Philippines-Australia Dialogue attended by Filipino and Australian business and academic leaders.

"Despite the current volatility, the long term prospects for Southeast Asian economies remain good," he added.

But the currency problems pose a major challenge for the nations to adhere to "prudent economic policies," he said.

Downer said A$ 1 billion contribution to the International Monetary Fund's financial aid package for Thailand is an indication of his country's confidence in the region.

In addition to the Thai baht, the Philippine peso, the Malaysian ringgit and the Indonesian rupiah have fallen to record lows recently. The crisis has also affected the Singapore dollar.

On Friday, the Philippine government reduced its target for gross national product growth to between 5.5 percent and 6 percent from the previous 7 percent to 8 percent of an expected economic slowdown caused by the weaker peso and higher interest rates. GNP grew by 6.8 percent last year.

Downer said the leaders of the 18-nation Asia-Pacific Economic Cooperation forum who will attend a summit in Vancouver, British Columbia, in Canada, in November should also include the currency crisis on its agenda.

"A positive statement coming out of the leaders' meeting could do a great deal to help stabilize the markets, which is important in terms of investor confidence," he said.

Philippine Foreign Secretary Domingo Siazon said he expects the financial crisis in the region to be thoroughly discussed by APEC ministers and leaders and also expressed optimism that by that time, the currency turbulence would have subsided.

He said APEC leaders would look at the factors that have led to the crisis and propose solutions to prevent its repetition.

Siazon also said there would be "serious consideration" about the possibility of establishing an "APEC fund" within the IMF to help APEC members who may undergo the same currency problems.

Downer said establishing such a fund without addressing the structural causes of the currency crisis would not solve the problem.

"It's all very well to talk about establishing funds and the like, but if you try to prop up a currency against market sentiments... then all you will do is blow your money," he said.

"If your fundamentals are strong and if you are making reforms... then, market sentiment can turn around and turn around more quickly."

APEC groups Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, the Philippines, Singapore, South Korea, Taiwan, Thailand, and the United States.