'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.