UN should manage globalization: Soeharto

UN should manage globalization: Soeharto

KUALA LUMPUR (AFP): Indonesian President Soeharto called yesterday for an urgent effort by developing countries to stabilize financial markets and suggested that economic globalization should be "managed" by the United Nations.

"The sharp fluctuations of international financial flows and currency trading have crushed the economic and social achievements of developing countries," Soeharto told a summit of the Group of 15 (G-15) developing countries in the Malaysian capital.

In his first major appearance since a massive bailout for Indonesia was launched by the International Monetary Fund (IMF), Soeharto said "the hard work, diligence and sacrifices over several decades were wiped out overnight."

"Many of us in this hall have their own bitter experience with the harsh impact of currency turmoil," the elder statesman said in his strongest remarks so far on the financial turmoil which has forced Indonesia to take bitter medicine to nurse its ailing economy.

"This meeting has provided us with the opportunity to exchange views on these issues. We should cooperate effectively in stabilizing our money market. We must immediately find the most efficient means to dampen the adverse impact of sharp currency fluctuations on our development," he said.

Economic globalization "should therefore be managed so as to soften its impact on vulnerable economies," Soeharto added.

"We firmly believe that the United Nations is the only international organization that has the universal mandate and democratic orientation to assume with credibility the task of ensuring justice and equity in the economic relations between and among nations."

"Hence, current endeavors to reform the United Nations should be pursued without sacrificing or undermining the economic and political rights and interests of the developing countries," he added.

Malaysian Prime Minister Mahathir Mohamad opened a Group of 15 (G-15) summit yesterday with a sharp attack on currency and stock speculators who he said had impoverished Southeast Asia in the space of a few months.

Mahathir said in a speech prepared for delivery to the opening ceremony of the three-day G-15 summit that new global rules were needed to protect against "unethical and unfair" currency trading.

The Malaysian leader said foreign investors had pushed up regional share prices, only to pocket high profits, and urged developing countries to invest in their own productive capacities and not depend on "hot money inflows".

Mahathir's swipe at speculators followed a severe decline in currency and stock prices through much of Southeast Asia, and was expected to set the stage for a G-15 statement later this week underlining concern over foreign exchange volatility.

As Soeharto attended the G1-5 summit, monetary authorities in Japan and Singapore announced that they, along with Indonesia, had intervened in the currency market to bolster the rupiah.

The IMF-led bailout plan for Indonesia announced over the weekend involves US$23 billion in a "first line" of support for Jakarta and another 14 billion dollars from donors including Japan and Singapore as well as the United States.

Dealers in Singapore said the Bank of Japan and the Monetary Authority of Singapore had collectively poured in $100 million to support the rupiah.

Singapore Finance Minister Richard Hu and his Japanese counterpart Hiroshi Mitsuzuka said in separate statements that the joint intervention was aimed at correcting excessive depreciation of the Indonesian currency.

"Singapore's participation in this joint intervention reflects our confidence in the macroeconomic policies of the Indonesian government," Hu said.

"Today's joint intervention is aimed at promoting a strengthening of the rupiah to levels more consistent with the fundamentals of the Indonesian economy," he added.

The currency, which has fallen some 50 percent against the US dollar since the start of the year and 35 percent since July, traded in late afternoon at 3,292.50 against the greenback, slightly falling after strengthening midday to 3,280. Its Friday close stood at 3,580.