Text of Asia Pacific Economic Cooperation leaders' statement
Text of Asia Pacific Economic Cooperation leaders' statement
KUALA LUMPUR (Dow Jones): Following is the text of the Asia-
Pacific Economic Cooperation forum statement, released at the
conclusion of the sixth leaders' summit in Kuala Lumpur.
APEC comprises Australia, Brunei, Canada, Chile, China, Hong
Kong, Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New
Guinea, Peru, the Philippines, Russia, Singapore, South Korea,
Taiwan, Thailand, the U.S. and Vietnam.
1. We, the Economic Leaders of APEC, meeting in Kuala Lumpur
Nov. 18, 1998, renew our resolve toward creating a prosperous
Asia-Pacific community where economic disparities among our
peoples will be bridged by strengthening the foundations for our
economies for growth, providing the environment necessary for the
efficient flow of trade, investment and technology and by
enhancing the capacities of our economies to participate and
benefit fully from liberalization.
2. Our meeting in Kuala Lumpur takes place at a critical time.
We need to deal urgently with the financial crisis which has
spread beyond the APEC region. It has resulted in far reaching
social costs, with the affected economies experiencing rising
unemployment and falling real incomes, setting back decades of
progress achieved in eliminating poverty and increasing education
opportunities, as well as access to basic health and
infrastructure facilities. We are resolved to work together to
support an early and sustained recovery in the region, to contain
the risks of contagion and prevent the possibility of a global
recession.
3. We reaffirm our confidence in the strong economic
fundamentals and prospects for recovery for the economies of the
Asia-Pacific. We believe our emphasis on prudent, growth-oriented
macroeconomics policies, strengthened financial institutions and
markets, trade and investment liberalization, and capacity
building are cornerstones for renewed and sustainable growth. In
particular, our emphasis on "Capacity Building" across the broad
range of APEC activities this year is particularly relevant in
addressing the challenges confronting the region during this
time. APEC's emphasis on human resources development, including
skills development, technological upgrading, infrastructure
improvements and wider outreach to SMEs (small and medium-size
enterprises) will strengthen our resilience and capability in
overcoming these challenges and restoring stability and
confidence to the region.
4. Since we meet in Vancouver in November last year, the
outlook for the global economy has weakened considerably. The
regional financial crisis has had economic and social aftershocks
more severe than earlier anticipated and similar problems have
appeared in other parts of the world.
Nevertheless, there have been several encouraging developments
in our economies and in the international financial system in
recent months. The progress made by Indonesia, (South) Korea, the
Philippines and Thailand in the implementation of strong reform
programs, backed by an unprecedented degree of financial
cooperation and support from the international community, has
resulted in a substantial degree of finance stability, thereby
laying the foundation for recovery in the APEC economies most
directly affected by the crisis.
In these economies:
- Exchange rates have remained relatively stable, and have
strengthened in many of these economies over the past several
months. This has permitted substantial reductions in nominal
interest rates to levels which, in some cases, are below those
prevailing before the crisis.
- Fiscal policies have been adjusted with support from the IFIs
(international financial institutions) to allow increased
spending to support demand and employment.
- The initial acceleration in inflation that accompanied
devaluation has been contained to moderate levels in most
emerging Asian economies, and the rate of inflation is now
decelerating across the region.
- Short-term external debt burdens have been reduced and
reserves have begun to be replenished in many economies.
- Current account balances have moved into surplus, although
most of the adjustments have come from reduced imports.
- Output declines have been more extensive than many had
anticipated, but are now moderating.
- Several other economies including Indonesia, (South) Korea
and Thailand, have made impressive efforts to strengthen and
restructure their respective corporate and financial sectors.
5. In China, interest rates have been eased and an
expansionary fiscal package is being implemented to further
stimulate economic growth. Maintenance of the renmimbi (yuan)
exchange rate has provided an important anchor to help secure
regional financial stability.
6. In recent weeks, these developments have been reinforced
by:
- the reduction of short-term interest rates in a number of
industrialized economies.
- Japan's commitment of substantial public resources to
strengthen its financial system. The authorities have made clear
their intention that the essential swift and effective action in
the banking sector, including the recapitalization of banks, with
appropriate conditions, will be taken as a matter of urgency.
This action, together with a sustained boost to domestic demand
is key to the restoration of market confidence and growth not
just in Japan but in the whole Asian region.
- The progress made towards providing additional resources to
the IMF.
- The G-7's agreement to support the establishment of a new IMF
facility to deal with contagion by providing a precautionary line
of credit for economies with sound policies supported by the IMF.
7. But important challenges remain. To meet these challenges,
we are committed to pursuing a cooperative growth strategy with
the following dimensions:
- Growth-oriented, prudent macroeconomic policies, appropriate
to the specific requirements of each of our economies.
- Expanded financial assistance from the international
community to generate employment and to build and strengthen
social safety nets to protect the poor and vulnerable.
- A comprehensive program of support for efforts to strengthen
financial systems, restore trade finance, and accelerate
corporate sector restructuring.
- New approaches to catalyze the return of stable and
sustainable private capital flows into within APEC.
- Looking towards the long-term, urgent work among ourselves
and with other economies and institutions to develop and
implement measures to strengthen the international financial
system.
In this context, we welcome Japan's proposed financial package
of US$30 billion to support economic recovery efforts in Asia. We
also welcome the multilateral initiative to revitalize private
sector growth announced this week by Japan and the U.S. in
conjunction with the Asian Development Bank and the World Bank.
We believe these initiatives will significantly aid our joint
efforts to promote recovery and growth in the region and we look
forward to their early implementation.
8. Each APEC economy has a role to play in accelerating
recovery in the region by directing policies with the objective
of maintaining or achieving robust growth, contributing to a
supportive external environment, and keeping markets open.
- The major industrialized economies need to create or sustain
conditions for strong domestic demand-led growth.
- For the APEC economies most directly affected by the crisis,
it is important to continue and accelerate structural reforms
within a framework of prudent, growth-oriented macroeconomic
policies.
- Other economies in the region where growth may be moderate or
slowing also need to continue efforts to implement appropriately
stimulative macroeconomic policies which maintain financial
stability and sound levels of domestic savings, while also
working to address financial sector reforms in ways that build
investor confidence.
International Support for Employment and Social Safety Nets
9. We note that the financial crisis has resulted in far
reaching social costs. In addition to rising unemployment and
falling real incomes, the financial crisis could lead to a
substantial increase in poverty in the most seriously affected
economies.
We therefore endorse the greater flexibility of International
Monetary Fund program and welcome efforts by the World Bank to
triple and the Asian Development Bank to double their social
sector lending.
Financial and Corporate Sector Restructuring
10. Revitalizing the private sector by helping to recapitalize
financial institutions, addressing companies' heavy debt burdens
and restoring their access to trade and working capital financing
are critical to achieving renewed economic growth in the
economies most severely affected by the crisis.
In this regard, we will encourage financial and corporate
sector restructuring through mechanisms to:
- Mobilize additional assistance to support implementation of
accelerated financial and corporate sector restructuring,
including through use of multilateral development bank guarantees
and other innovative mechanisms.
- Increase the availability of working capital and trade
finance, including through cooperative efforts between export
credit and insurance agencies and between such bilateral
institutions and the multilateral development banks.
- Such efforts to mobilize significant private sector equity
capital and investment to help distressed companies and financial
institutions in the APEC region successfully restructure both
their finances and their operations.
- Review and, in line with the respective circumstances, remove
regulatory and legal impediments to the ability of private
financial institutions to participate constructively in the
restructuring of the debt of private sector borrowers, while
encouraging export credit and insurance agencies to play a more
catalytic role in encouraging such restructuring.
Catalyzing Private Capital Flows
11. In order for the region to fully recover from the crisis,
we must be able to attract growth-enhancing, stable capital flows
into the region. The increased risk aversion by investors as well
as by major private financial institutions has led to a sharp
reduction in the flow of capital into East Asian and other
emerging market economies without respect to the diversity of
prospects among the economies and their long-term growth
potential.
In response to this challenge, we support efforts by the
multilateral development banks to use innovative financial
instruments to help catalyze and leverage private sector capital
flows.
In light of the concerns expressed about the role of the
recent performance of the international credit rating agencies,
we call for a review of their practices to promote greater
effectiveness and to contribute to sustainable capital flows.
In particular, we also need to strengthen the preparedness of
our own domestic financial systems to withstand the potentially
destabilizing impact of short-term flows and to ensure the
allocation of long-term capital to productive uses.
Strengthening the International Financial Architecture
12. While our immediate priority must be to mitigate the
adverse social impacts of the crisis and to restore financial
stability and economic growth, we must strengthen the
international financial architecture so as to better prevent
future financial instability and to resolve crisis more
effectively when they occur.
We agree that now is the time to effect changes aimed at
strengthening the international financial system, so as to
capture the full benefits of international capital flows and
global markets, while minimizing the risk of destructive
disruptions.
We fully agree that strengthened global arrangements are
important to enable us to benefit from increased globalization
while avoiding the difficulties many of our members are currently
facing.
In particular, we welcome and support the establishment of the
new IMF facility for a precautionary line of credit for economies
with sound policies supported by the IMF that are threatened by
contagion.
The close collaboration and participation of the
industrialized economies and the emerging market economies is
vital to the success of these efforts to strengthen the
international financial system.
APEC has already played a major role in this regard notably in
promoting improvements in the international community's ability
to respond to crises, through instruments such as the IMF's
Supplemental Reserve Facility.
We pledge to continue such collaboration.
Challenges to Trade and Investment Liberalization and Facilitation
13. The expansion of trade and investment remain essential
elements of our economic recovery and we reiterate the need for
liberal and open markets and an enabling environment for
investment.
We consider it particularly important that in the current
circumstances, early progress be made on broad-based multilateral
negotiations in the WTO, achieving an overall balance of
interests of all members.
We reaffirm our commitment to uphold and strengthen the
multilateral trading term to ensure fair rules and benefits for
all.
We urge the prompt accession to the WTO of applicants in
accordance with WTO rules, with a view towards achieving the
universality of WTO membership.
Challenges to Economic and Technical Cooperation
14. Given APEC's diversity and differing levels of
development, globalization and liberalization must be
complemented by initiatives that build confidence and increase
capacity to benefit fully from these processes in order to narrow
the disparities in income and wealth.
Such initiatives will not only strengthen systemic capacities
but will also support APEC's liberalization and facilitation
efforts. The challenge will be to continue to achieve a balance
in all three pillars of APEC cooperation to ensure sustained
economic growth and development. Economic and technical
cooperation has acquired added urgency in the wake of the
financial crisis.
Key Achievements in 1998
15. We in APEC have continually given emphasis to result and
outcome-oriented individual and cooperative efforts through the
APEC approach. As we move into the third year of implementation
after Subic and Vancouver, we note the substantial achievements
made in advancing APEC cooperation in our trade and investment
liberalization and facilitation agenda as well as progress in
capacity building efforts on economic and technical cooperation.
16. We have reflected on the progress and the results achieved
throughout the year as reported to us by our ministers and we
express satisfaction in fulfilling the tasks we set for ourselves
when we last met in Vancouver. We welcome the outcomes of the
various sectoral ministerial meetings held throughout the year
and direct APEC fora to follow up on the recommendations.
17. Towards realizing the goal of free trade and investment in
the region in accordance with the principles of the Osaka Action
Agenda, we pledge to continue improvements and implementation of
our individual action plans.
18. We commend the work of our Ministers to facilitate the
flow of goods, resources, capital and technology among our
economies. We will improve the facilitation process to promote
efficiency and cost reduction through strengthening members'
capacities including adopting policies to harness the potential
of new technologies.
19. We welcome the progress achieved on the EVSL, package of
nine sectors. We instruct Ministers of participating economies to
implement the agreement reached on these sectors and further
advance work on the remaining six sectors demonstrating our
commitment to the liberalization process amidst the financial
crisis in the region.
20. We affirm that progressing all three pillars of
cooperation in APEC will strengthen the foundations for further
growth. We commend progress in the priority areas of human
resources development and harnessing technologies of the future.
We note the improvements in the management of the economic and
technical co-operation process including the work underway in
infrastructure and sustainable development. We instruct ministers
to give further focus to strengthen coordination in Ecotech
activities and intensify work in the priority areas. We believe
the contribution of the business/private sector in Ecotech
activities will enhance and strengthen our efforts to advance the
economic and technical cooperation agenda and welcome ABAC's
commitment in this area through the Partnership for Equitable
Growth.
21. As the APEC community enters its 10th year of cooperation,
we recognize the need to review its activities, structure and
mechanisms in order to ensure that APEC delivers focused and
outcome-oriented results in the most effective and efficient
manner. We observe the proliferation of APEC fora and meetings
and endorse work to further streamline the APEC management
process. We instruct Ministers to complete the review of the APEC
process by 1999 and for implementation of measures in 2000
22. We recognize that the involvement of the business/private
sector is an important feature of APEC work and endorse its
broader participation in APEC activities. We direct Ministers to
enhance business/private involvement, within existing guidelines
in relevant APEC activities. We welcome efforts to improve
business mobility through the APEC Business Travel Card Scheme
and the collective commitment to expand the availability of
multiple entry visas or permits to business travelers. We also
welcome the recommendations by ABAC and instruct our ministers to
study ABAC'S proposals, including the APEC Food System.
Strengthening The Foundations For Sustained Growth Into The 21st
Century
23. We are firmly resolved to strengthen social safety nets,
financial systems individually and globally, trade and investment
flows, the scientific and technological base, human resources and
development, economic infrastructure, and business and commercial
links so as to provide the base and set the pace for sustained
growth into the 21st century.
Strengthening Social Safety Nets
24. Given the ramifications of the crisis and the importance
of addressing social vulnerabilities, we agree that as a matter
of high priority, APEC should intensify efforts to address the
social impacts of the crisis. In particular, we direct our
Ministers to work with the World Bank, the ADB, the Inter-
American Development Bank and, where appropriate, public and
private institutions to formulate strategies of concrete actions
aimed at strengthening social safety nets. We look forward to
receiving a report at our next meeting.
Strengthening Financial Systems Individually and Globally
25. We recognize that the development and strengthening of the
financial system is fundamental to the realization of APEC's goal
of free and open trade and investment by the year 2010/2020.
We welcome the work undertaken in several fora to strengthen the
international financial system and in particular take note of the
proposals made to improve transparency and accountability; to
strengthen national financial systems and market infrastructure;
and improve coordination and involvement of the private sector in
the prevention and orderly resolution of international financial
crises. We believe that there would be considerable value in
continuing this work in a process involving both industrialized
and emerging markets economies.
We agree that a forum such as an expanded G-22 would be
appropriate for this purpose. We also call on our Finance
Ministers to develop, on an expedited basis, measures to
implement these proposals. We ask for a report at our next
meeting on the outcomes of such deliberations within APEC and
elsewhere.
We attach special urgency to examine the scope for
strengthened prudential regulation of financial institutions in
industrialized economies to promote safe and sustainable capital
flows, to encourage sound analysis and better risk assessment; to
examine the questions of appropriate transparency and disclosure
standards for private sector financial institutions involved in
international capital flows, such as investment banks, hedge
funds and other institutional investors; and to examine the
implications of operations of highly leveraged and off-shore
institutions.
26. We call for the early establishment of a task force
including the systemically significant economies to develop
practical proposals in these areas.
We also call for work to proceed immediately in an appropriately
constituted international working group on improved crisis
management including orderly debt workout arrangements with the
private sector.
These proposals can be discussed in the forum for endorsement
at the leaders' level and subsequent implementation.
The financial instability in Asia underscores the importance
of developing strong, resilient, and well-regulated domestic
financial markets within the framework of a stable international
financial system.
We therefore call for the adoption by member economies of
internationally recognized principles for enhancing supervision
of banking systems and securities markets.
Among these are the Basle Principles on Effective Banking
Supervision and those of the International Organization of
Securities Commissions.
In this connection, we welcome work by our Finance Ministers
and Central Bank Governors to explore ways to assess the adequacy
of and to help reinforce efforts to strengthen financial
supervisory regimes in member economies, including by identifying
ways to record in APEC their progress in adopting international
standards/codes/best practices.
We look forward to a report at our next meeting on both these
directives.
We also direct our finance ministers to look for innovative
ways to promote the recovery of capital flows into the region,
including through partnerships among member economies, the
private sector and collaborative efforts with the World Bank, the
Asian Development Bank and other multilateral institutions.
We look forward to concrete results at our next meeting.
27. We record our satisfaction with the progress made by our
finance ministers in promoting the Cebu collaborative initiatives
to develop strong, resilient and stable financial and capital
markets in our region and we look forward to regular updates on
the implementation of these initiatives at the individual and
regional level. We endorse the move by our finance ministers to
address the need for freer and stable capital flows into the
region and in this regard direct our finance ministers to
incorporate the useful lessons of the past 18 months as they
endeavor to develop a pragmatic Voluntary Action Plan as well as
formulate appropriate guidelines for monitoring capital flows,
including short-term flows.
28. We commend increased efforts to assist crisis-affected
regional economies develop sufficient capacity to rebuild their
economies and overcome current difficulties. We welcome the
Australian initiative on Economic Governance Capacity Building
and the areas proposed for enhanced capacity building joint
activities. We also welcome the Singapore initiative which will
provide technical assistance programs at the International
Monetary Fund-Singapore Regional Training Institute and in
collaboration with other interested partners and institutions. We
encourage economies to pursue such capacity building initiatives.
29. We are agreed on the importance of improving economic
transparency and predictability at the national and international
levels. Therefore, we welcome a new collaborative initiative
agreed by Finance Ministers at Kananaskis to examine ways of
strengthening corporate governance in the region. We also welcome
a new initiative on the development of domestic bond markets. We
applaud the initiative of the Financiers Group to create private
sector training and education program for financiers across the
APEC region, which we believe, will complement the effort of the
member economies in this area. We direct our finance ministers to
focus efforts on advancing progress on all these initiatives and
look forward to a report on concrete outcomes at our next
meeting.
Strengthening Trade and Investment Flows
30. We welcome further efforts to strengthen trade and
investment flows in the region. These include work on competition
policy and regulatory reforms as well as rapid implementation of
measures to further enhance an environment conducive for trade
and investment flows. In this regard we welcome the adoption of
the menu of options and measures on investment and Korea's
initiative to host an APEC FDI Mart in Seoul in June 1999.
We note that knowledge-based industries and tourism have
considerable potential to contribute to growth and development in
the next century. We recognize the need for efforts to maximize
the contribution of these sectors to the prosperity of APEC
economies.
Strengthening The Science and Technological Base
31. We endorse the 1998 APEC Agenda for Science and Technology
Industry Cooperation into the 21st century which will facilitate
our vision of enhancing APEC's ability to harness technologies
for the future and catalyze the development of strong sustainable
regional science and technology networks and partnership. We take
note of the principles, mechanisms and areas for joint actions
set out therein and instruct Ministers to undertake due efforts
to implement the agenda. We welcome the establishment of the
China APEC Science and Technology Industry Cooperation Fund.
Strengthening Human Resources Development
32. We reiterate our common belief that human resources
development is a key and integral factor to the realization of
all efforts towards a capacity for sustained growth in the
economies of the Asia-Pacific into the 21st century.
We have made a commitment to a framework to advance human
resources development across the entire spectrum of our work
plan. We therefore endorse the attached 1998 Kuala Lumpur Action
Program on Skills Development in APEC as a significant inroad
into public-business collaborative partnership in skills
development. This program recognizes the value of the
contribution of the business sector and underscores APEC's
continued broadening of its outreach to the business community.
We welcome the initiatives of member economies and further
instruct Ministers to undertake concerted efforts towards the
implementation of this Action Program. In this regard, we welcome
Singapore's technical assistance for the training of healthcare
professionals in the region.
We support continued efforts to further the role of women in
the APEC process. To this end, we instruct Ministers to develop a
Framework for the Integration of Women in APEC.
Strengthening the Economic Infrastructure
33. We reaffirm that strengthening the capacity of our
economic infrastructure is an essential component towards the
realization of our goals of sustainable and equitable growth and
development throughout the APEC community.
We commend in particular commitment given throughout 1998 to
further strengthen and develop economic infrastructure. We
welcome the Natural Gas Initiative approved by the energy
ministers at Okinawa.
We acknowledge the progress that is ongoing in the
implementation of the Vancouver Framework for Enhanced Public-
Private Partnerships in Infrastructure Development. We welcome
progress being made in advancing the initiative of creating the
Asia-Pacific Information Society and endorse work to further
advance the development of the Asia-Pacific Information
Infrastructure.
We reiterate our commitment to advance sustainable development
across the entire spectrum of our workplan including cleaner
production, protection of the marine environment and sustainable
cities.
We endorse the joint actions to be launched in the areas of
food, energy and the environment in relation to the economic and
population growth of the APEC community. We instruct that
ministers undertake efforts to develop the implementation of
these joint actions.
We commend the initiative of Ministers in establishing the
APEC Framework for Capacity Building Initiatives on Emergency
Preparedness, which seeks to foster cooperation in longer-term
capacity building in preventive and responsive measures for
unexpected natural emergency disasters.
Strengthening Business and Commercial Links
34. SMEs are major stakeholder in APEC comprising over 95% of
all enterprises, employing up to 80 percent of the work force
and contribute 30 percent to 60 percent of the GNP of APEC
economies.
We stress the importance of harnessing and increasing the
potential for SMEs to contribute to growth and development in the
region.
We commend Ministers for producing the Integrated Plan of
Action for SME Development that sets out the blueprint of
strategic directions for both enterprise and entrepreneur
development through individual and collective actions.
We instruct ministers to focus on further developing and
strengthening the dynamism of SMEs and to give priority to the
implementation of joint actions of the SPAN and encourage
economies to adopt individual actions to strengthen the
development of SMEs. We look forward to receiving more concrete
outcomes at our next meeting.
35. We commend ministers for formulating the APEC Blueprint
For Action On Electronic Commerce containing broad themes and
cooperative activities for the promotion and development of
electronic commerce in the region.
We recognize that the Y2K problem has the potential to cause
significant economic, trade and financial disruption. We agree
that all economies need to enhance awareness and implement
necessary measures to resolve this problem on an accelerated
basis.
We are confident that APEC, bound together by our commitment
to our goals and our resolve to strengthen the foundations for
growth, will meet the challenges of the 21st century.
Window A: We believe our emphasis on prudent, growth-oriented
macroeconomics policies, strengthened financial institutions
and markets, trade and investment liberalization, and capacity
building are cornerstones for renewed and sustainable growth.
Window B: Each APEC economy has a role to play in accelerating
recovery in the region by directing policies with the objective
of maintaining or achieving robust growth, contributing to a
supportive external environment, and keeping markets open.