[The Jakarta Post]
The Association of Southeast Asian Nations (ASEAN) should “learn from
the mistakes” of the crisis-stricken European Union as finance ministers
agree to go ahead with the plan to integrate the region’s economy by
2015, the World Bank says.
Visiting World Bank managing director
Sri Mulyani Indrawati, who is also Indonesia’s former finance minister,
said the plan was still relevant in spite of the troubles the EU
grouping is facing right now.
Debt-battling Greece may leave the
union while other heavily indebted members like Portugal, Italy,
Iceland and Spain may strain the other member states’ finances.
“Inconsistency
in macroeconomic policy and fiscal management must be avoided,” she
told reporters on the sidelines of the ASEAN Finance Ministers’ Investor
Summit (AFMIS) at the Shangri-La Hotel in Jakarta on Tuesday.
There
are concerns that the 10 Southeast Asian nations may decline like the
EU as their economies are not equal and ASEAN leaders have different
political agendas. Home to 600 million people, ASEAN has a combined
gross domestic product (GDP) of US$1.8 trillion with total trade valued
at $2 trillion among the countries.
“Some countries are advanced,
some still need to catch up, but it’s our commitment to reach this
ASEAN economic integration by 2015. And we are still on track,”
Indonesian Finance Minister Agus Martowardojo told a press briefing.
Singapore,
Malaysia and Thailand are more advanced, but the rest are still lagging
while some, like Cambodia and Laos, are far behind, as highlighted in
several competitiveness surveys.
Malaysian Second Finance
Minister Ahmad Husni Hanadzlah said the ASEAN grouping “fully
understands the position of each country”.
“The capital market
integration is a challenge. In terms of trade we have done well. We have
to really make sure that we know the non-trade barriers between
countries. Investment-wise, it’s very strong,” Ahmad sad.
ASEAN
would “cautiously” move forward to establish a single currency once the
ASEAN Economic Community had solved its disparity issues, as the region
would learn from eurozone failures, Cambodia’s Minister of Economy and
Finance, Kong Vibol, said.
“We learned those problems in the 1997
Asian financial crisis. We are now more resilient in terms of the
financial system of the ASEAN members. That’s why the Chiang Mai
Initiative took place,” Kong added.
The $120 billion Chiang Mai
Initiative is a multilateral currency swap arrangement among ASEAN
countries and China, Japan and South Korea, allowing members with cash
flow problems to withdraw from the account at times of crisis, with the
ASEAN+3 Macroeconomic and Research Offices (AMRO) having a surveillance
function to offer early warnings.
As the world economy “enters a
dangerous new phase”, Sri Mulyani said it was important for ASEAN states
to “always focus on creating healthy environments for investment” in
order to strengthen domestic economies and offset weaker exports due to
slowing global demand.
ASEAN’s finance ministers agreed to
address investors’ concerns through better policies as they saw the need
to accelerate investment, given that the global economic uncertainties
will affect respective economic growth, they said.
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