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.