Soeharto to propose APEC response to financial turmoil
Soeharto to propose APEC response to financial turmoil
SINGAPORE (AFP): President Soeharto is to propose at an upcoming APEC summit an action plan to avert financial turmoil caused by excessive currency fluctuations which have damaged Southeast Asian economies, an official said yesterday.
The plan hopes to establish an early warning system to avert a future currency crisis and set up a standby fund to cushion the blow suffered by economies saddled by financial problems stemming from such a crisis, said Bintoro Tjokroamidjojo, Indonesia's ambassador for APEC affairs.
"This is an Indonesian position but there are signals of concern coming from everywhere, even from the United States," Bintoro said on the sidelines of a senior officials' meeting here of the Asia-Pacific Economic Cooperation (APEC) forum.
The meeting was to lay the groundwork for the APEC leaders' summit in Vancouver, Canada, on November 25.
Financial turmoil afflicting Indonesia and the rest of the Asian region arising from a debilitating currency crisis was expected to dominate the APEC leaders' meeting, officials said.
Kobsak Chutikul, director-general of the department of economic affairs in Thailand's foreign ministry, said APEC had to emerge with a comprehensive package to help overcome the Asian financial crisis.
He said the regional exchange-rate turmoil, if left unattended by APEC, would make the grouping's key objective of trade liberalization meaningless because there would be less goods and services to be traded.
"As the crisis hits corporations and the public, consumer demand will suffer, less goods will be traded and liberalization is affected," Kobsak said.
Thailand's decision to float the baht on July 2 sparked off turmoil in Southeast Asian financial markets as economies in the region decoupled currencies pegged to the US dollar or gave up defending them against persistent speculative attacks.
The Southeast Asian crisis has spread to North Asia, with the South Korean won as well as the Taiwan and Hong Kong currencies also coming under attack.
The attack on the Hong Kong dollar and the subsequent plunge in stocks rocked Wall Street and came full circle Tuesday, affecting markets nearly all over the globe.
Bintoro said an APEC early warning system would, for instance, be able to detect "danger signs" over economies whose fundamentals might be eroding and then alert them before their currencies come under attack.
On the standby fund, he said APEC member-economies could contribute to such a facility as a reflection of solidarity.
"Already Indonesia has received firm support from Malaysia and Singapore to help us. This is solidarity," Bintoro said. "So, the fund can be a supplement to facilities offered by the IMF (International Monetary Fund)."
Negotiations are underway between the IMF and Jakarta on an aid package to help Indonesia weather the financial turmoil caused by the rapid depreciation of the rupiah against the U.S. dollar.
Thailand has already been offered a 17.2-billion-dollar IMF- led aid package to put its house in order.
US coordinator for APEC affairs John Wolf, here for the APEC senior officials meeting, on Monday ruled out swift action by APEC leaders next month to resolve the financial turmoil.
"Anybody who thinks that the 18 leaders getting together will then bash in one silver bullet which will then kill the crisis are anticipating too much," he said.
Wolf said there was "a lot to be done and a lot of issues to be looked at and some of them will take time to mature."
"The answers to the region are not going to be worked in a week, two weeks or three weeks," he added.
APEC comprises Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, the Philippines, Singapore, Taiwan, Thailand and the United States.