SE Asian finance chiefs to explore common strategy
SE Asian finance chiefs to explore common strategy
BANGKOK (AFP): Southeast Asian finance ministers will attempt here to forge a united front ahead of the global monetary talks in Hong Kong, officials said, as the region reels from an unprecedented financial crisis.
Ministers from the region are to meet Thursday on the sidelines of an Asia-Europe conclave hosted by Bangkok, before flying to Hong Kong at the weekend for the International Monetary Fund (IMF)-World Bank annual talks.
"They are already in agreement that they should have a kind of a common position on monetary and finance matters," an Indonesian diplomat said, citing recent contacts between Southeast Asian authorities.
The diplomat, who requested anonymity, said the Bangkok meeting came as a timely opportunity for regional policy-makers to firm up a joint strategy going into the IMF-World Bank talks.
"I think they will focus on ways to bring the turbulent currency markets back to stability and of course what more the IMF and the World Bank could do to solve this situation," he said.
The Asia-Europe meeting will be attended by seven members of the Association of Southeast Asian Nations (ASEAN) -- Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
Also present will be economic chiefs from 15 European countries and the finance ministers of Japan, China and South Korea for the inaugural meeting.
Analysts said a common Southeast Asian approach could include a call for steps to rein in offshore speculators blamed for the regional financial crisis sparked by the Thai baht's float on July 2.
"The kind of domino effect which has happened after the forced devaluation of the baht should in theory be a strong common ground," said Gerard Kruithof, economist at Deutsche Morgan Grenfell in Bangkok.
He noted that Malaysia has been especially vocal in attacking hedge funds and was playing "such a big role in steering this common approach."
But Kruithof said: "If they want to press the IMF to prevent the hedge funds from doing their business, they are on the wrong path."
"If you want to commit yourself to open financial markets, that is the game you have to play," he said. "You have to admit that speculators are there (as a part of the system)."
Analysts said regional authorities could also seek press the global monetary agencies to institute a common pool of funds as a source of liquidity in times of financial crisis.
Southeast Asian currency and stock market have gone through non-stop turbulence since Thailand floated the baht, with its economy in deep crisis amid bad debt fears surrounding its beleaguered finance sector.
The Philippine peso, the Indonesian rupiah and the Malaysian ringgit have all hit all-time lows under speculative attacks while even the normally robust Singapore dollar has not been spared from the regional contagion.
Central banks have abandoned expensive currency defense after suffering a hefty depletion of their foreign exchange reserves. Stock prices, meanwhile, have plunged sharply wiping billions of dollars off regional bourses with foreign funds fleeing the region amid a crisis of confidence in Southeast Asian economies.
Some officials have criticized the IMF and the World Bank for failing to prevent the crisis from snowballing.
But economists say that the crisis only reflects weak economic fundamentals such as heavy current account deficits which were masked by years of heady growth.
"They should look in the mirror and they would know whom to blame," an economist with a European investment bank here said. "If you want to become a financial power, then you have to take into account that capital will flow in and out and you have to take measures to (weather) the impact of that on your economy," he said. "They never did that."
World Bank president James Wolfensohn called in Tokyo Tuesday for the development of financial markets to accommodate investment in Asian countries to avert similar crises.
Wolfensohn said the development of capital markets was also important for infrastructure investment and avoiding heavy dependence on foreign capital inflows.
With capital markets functioning effectively, savings "can be directed to infrastructure investment through various investment instruments," he said.