SE Asian countries to examine emergency fund next wek

SE Asian countries to examine emergency fund next wek

KUALA LUMPUR (Reuters): Southeast Asian nations will consider creating a special emergency fund to shore up confidence in the region's economies at a meeting next week, a senior Malaysian official said on Thursday.

Treasury Secretary-General Clifford Herbert said finance ministers and senior officials of the Association of Southeast Asian Nations (ASEAN) will discuss linking the new standby facility to the International Monetary Fund (IMF).

"We'll be stressing to get the ASEAN ministers to begin to present their views on trying to establish an ASEAN fund," Herbert told a news conference in the Malaysian capital.

Earlier this month, senior officials from Asia and beyond agreed in Manila to offer bilateral aid to countries in trouble on a case-by-case basis.

But faced with strong U.S. opposition, they stopped short of supporting a permanent "Asia fund" of up to US$100 billion.

Japan had initially suggested the self-contained Asia fund to stabilize the region's economies, arguing that IMF resources were not enough to deal with Asia's mounting problems.

The IMF has in the last few months masterminded international rescue packages for Thailand, Indonesia and South Korea.

But Western nations, led by the United States, fear that the region's economies would fail to get their house in order if they knew they could get financial help without having to go to the IMF and submit to its lending conditions.

Herbert said the ASEAN standby fund would be part of the initiative agreed to in Manila earlier this month to restore confidence in the region's economies.

"It won't be very large, but it will just be there for confidence building," Herbert said, adding there appeared to be little opposition to the proposal provided the fund was linked to the IMF. He did not give a figure for the fund's size.

"The Asian supplementary finance facility is not a fund, really, it's a commitment. But the ASEAN fund can be different, and this is what they're going to discuss," Herbert said. "Most probably it will be in conjunction with the IMF."

ASEAN groups Brunei, Myanmar, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Finance ministers from Australia, Myanmar, Hong Kong, Indonesia, Malaysia, Philippines, Singapore and Thailand will attend the meeting in Kuala Lumpur on Dec. 1-2, Herbert said.

Deputy finance ministers from Brunei, China, Japan, Laos, South Korea, Vietnam and the United States will also participate.

A Malaysian official said Japan and the United States were opposed to a permanent Asian fund to rescue economies, but that ASEAN members seemed determined to create their own facility as a symbol of their commitment to stability.

"We are looking at ways we can restore stability in the region," Herbert said.