Use of ASEAN monies not viable: RP official

Use of ASEAN monies not viable: RP official

MANILA (AP): A proposal to use local currencies instead of
U.S. dollars in trading within Southeast Asia is not viable, a
Philippine official said Tuesday.

Officials in the Association of Southeast Asian Nations have
proposed the scheme as a way to lessen the region's reliance on
U.S. dollars and strengthen its economic and financial
integration.

Economic Planning Secretary Felipe Medalla said Southeast
Asian governments could establish procedures for using regional
currencies, but the process would be too cumbersome and would not
be viable in the long run.

He said businessmen would prefer dollars because they are
easier to convert and not likely to lose value rapidly.

Medalla compared holding a regional currency to owning an
expensive painting.

"If you have two months to sell it you're OK, but if you are
forced to sell it today because your kid is in the hospital,
you're likely to lose a lot," he said.

He said central banks in the region would have to maintain
substantial reserves of ASEAN currencies to make trading with
those currencies viable. However, doing so would be risky because
the currencies could lose their value and result in huge losses.

In the case of the Philippines, the peso can be readily
swapped with the dollar because it is traded in large volumes on
the foreign exchange market, Medalla said.

A leading Filipino businessman, Jose Concepcion, said recently
that the Philippines, Thailand, Indonesia, Malaysia, Singapore
and Brunei plan to have a framework ready for bilateral trade
payments using local currencies by the end of the second quarter
of 1999.

Concepcion, who heads a committee representing ASEAN's
chambers of commerce and industry, said the less developed
members of ASEAN - Myanmar, Laos and Vietnam - are not expected
to participate in the scheme for some time.

Medalla said he was aware the Philippines is supporting the
scheme and said he has told other Philippine economic officials
that it is not viable.

In a report to ASEAN trade ministers who met recently in
Manila, ASEAN secretary-general Rodolfo Severino said the group
recognized the initiative isn't a "cure-all" for the continued
volatility of regional currencies.

But he said there was good reason to hope the bilateral
payments would help, given the magnitude of intra-ASEAN trade,
which totaled US$86 billion in 1997.