'Yen correction weakens ASEAN economies'

'Yen correction weakens ASEAN economies'

TOKYO (AFP): The competitive position of Southeast Asian economies has been "somewhat weakened" by the recent correction of the yen against the dollar, a senior official from the Organization for Economic Cooperation and Development (OECD) said yesterday.

Kumiharu Shugihara, head of the economics department at the OECD, said the slowdown in economic growth among members of the Association of Southeast Asian Nations (ASEAN) was due to "a combination of cyclical or very temporary factors which have been working to reduce momentum focus."

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

Shugihara told a news conference: "The correction of the earlier overshooting of the yen vis a vis the dollar has somewhat weakened the competitive positions of ASEAN economies."

The yen has weakened from a peak of 79.75 to the dollar in April last year to around 113 yen.

The most important elements for the ASEAN economies, however, were "endogenous forces which have been supporting growth, particularly investment in both infrastructure and business fixed investment," he said.

"Most recently there has been a little bit of excessive expansion of consumer spending, which is not the most desirable way of sustaining growth over the medium term," Shugihara said.

"Over the longer term it is not really the exchange rate which does matter for growth performance of the region," he added.

Shugihara said it was important "to continue to have high savings rate of the household sector," and to achieve fiscal soundness.

He said it was also necessary that markets be made more transparent and competition be encouraged "both at home and abroad ... ensuring foreign access to the ASEAN market" which would be the "basic forces for growth in the medium term."

Shugihara was speaking at a news conference held by OECD secretary general Donald Johnston, who was appointed to the post in June and who arrived in Tokyo last Friday for talks with Japanese government business leaders.

Johnston, former Canadian finance minister and external affairs minister, met Foreign Minister Yukihiko Ikeda and Finance Minister Hiroshi Matsuzuka on Friday, and had talks with International Trade and Industry Minister Shini Sato on Monday during a symposium on regulatory reform.