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ASEAN explores revival of regional support fund

BANDAR SERI BEGAWAN: Southeast Asian finance ministers kicked off a two-day meeting in Brunei on Saturday to explore ways to revive plans for a regional financial crisis fund and steps to monitor short-term capital flows.

"The question now is what form the regional fund should take?," said a Brunei finance ministry official said.

There have been suggestions of expanding the existing swap arrangement that exists between ASEAN nations, officials said.

ASEAN central banks in January renewed an agreement on currency swaps which provides short-term liquidity financing to ease temporary balance of payments needs.

Some have suggested making the $30 billion Miyazawa plan, set up to help Asian economies through the region's economic crisis, a permanent facility.

"But that would depend upon the Japanese. They have to take the initiative," said Rodolfo Certeza Severino, secretary general of ASEAN.

Severino said finance ministers also discussed steps to boost trade and investment and monetary cooperation within the region.

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

Senior finance officials and central bank deputies, who met ahead of the weekend finance ministers conference, unanimously agreed on Friday to re-open a two-year debate on setting up a regional financial support fund to aid economies in distress.

"The proposal of regional support plan will be put for discussion by finance ministers. I think they will carry over the discussions at their next meeting in Chiang Mai in Thailand," said a Brunei finance ministry official.

The move appeared to have the backing of Japan, China and South Korea, who also attended the meetings in the oil-rich sultanate as dialogue partners.

"The idea of a mutual regional support mechanism was discussed," said Tatsuo Watanabe, deputy director general at Japan's ministry of finance international bureau.

Officials assured that the proposed regional fund, which has drawn sharp criticism from the United States and other Western nations, would be consistent with, and not duplicate, the activities of the International Monetary Fund (IMF).

The IMF extended large fiscal and monetary bail-out packages to Thailand, Indonesia and South Korea in the wake of the Asian economic crisis.

But Malaysia, a strong proponent of the regional financial facility, has voiced resentment at tough economic reforms demanded by the IMF as part of the rescue packages.

The ASEAN finance ministers would also discuss a report on the exchange of macroeconomic data as part of an effort to set up an early-warning mechanism to detect structural weaknesses in the region.

Each country will submit their economic data to the ASEAN secretariat, which will monitor them along with the Asian Development Bank.

The ASEAN economies are also close to finalising a deal on a regional automobile insurance scheme. -Reuters