Singapore backs Asian currency plan: Mahathir

Singapore backs Asian currency plan: Mahathir

SINGAPORE (Reuters): Malaysian Premier Mahathir Mohamad said on Saturday he had agreed at a meeting with Singapore Prime Minister Goh Chok Tong about "the use of our own currencies for the purpose of trade between ASEAN countries".

Mahathir said in a statement issued on his behalf by Singapore's Ministry of Information at the Arts (MITA) that he and Goh had also agreed on "the need for us to have a meeting of governors of central banks to work this out".

"We agreed that ASEAN itself should present a united front in dealing with currency issues and not deal with each one by itself, because then we will not get the full effect," he said.

The statement was issued after a four-hour meeting between the two leaders in Singapore.

Mahathir said they had gone into detail on how they could cooperate, "in particular with regard to the economic problem and currency turmoil", on what role Singapore could have on investments in Malaysia and "generally how to improve relations between Singapore and Malaysia".

"One of the issues was the regional problem and how it is going to affect us and what we can do about (it)," Mahathir said in the statement. "We are generally agreed that there are certain things we may be able to do, but that will require some elaboration later on."

Mahathir said he and Goh had agreed on a number of issues and decisions which would be taken up when the Singapore leader visited Malaysia on Feb. 16.

The statement said Mahathir was asked about "some reports of Singapore currency being used as peg for trade". Mahathir had replied: "There are some reports but we are studying that."

The statement gave no context for the question or details of Mahathir's views on the Singapore currency.

Singapore was Mahathir's last stop on a three-nation tour of Southeast Asia. He visited Thailand on Thursday and then flew on to the Philippine capital Manila on Friday.

The Malaysian leader was due to leave Singapore later on Saturday and fly home to the Malaysian capital, Kuala Lumpur.

Mahathir had been expected to raise with Goh a Malaysian proposal that a payment system be developed for intra-regional trade in Southeast Asia to reduce dependence on the U.S. dollar and revive the region's weakened currencies.

He said in Manila on Friday that the Association of Southeast Asian Nations (ASEAN) might consider using the Singapore dollar as a common trading currency among its members.

The Singapore dollar gained sharply last week after the Thai Bankers Association said it supported its use as the common currency for trading among the nine ASEAN members.

But economists said the proposal was unrealistic and unlikely to get a warm reception from Singapore.

They argued Singapore's economy was too small and not representative enough of the region for such a proposal to work. The Monetary Authority of Singapore (MAS), the de facto central bank, has long resisted the internationalization of the Singapore dollar and would be unlikely to accept such an idea.

Mahathir said on Friday that a core group of ASEAN countries, which may include Malaysia, Thailand and the Philippines, could set the framework for the new payment scheme as well as get the views of other ASEAN economies.

He said he would initiate a meeting of regional central bank governors to discuss the issue more thoroughly.

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