Singapore - East Asia is struggling with soaring fuel and
food prices threatening robust economic growth, more than one year
after 16 countries in the region agreed to take steps to ensure
energy security.
Economists warned the price spiral would drag down economic growth
in East Asia in the next two years. With price hikes not expected to
subside anytime soon, the problem also threatens political stability
in the region.
Amid such grim prospects, foreign ministers of the Association of
South-East Asian Nations (ASEAN) and their counterparts from China,
Japan, South Korea, India, Australia and New Zealand agreed to
further boost cooperation to ensure food and energy security.
The ministers noted while 'substantive progress' were made in the
areas of energy efficiency and conservation in the region, much
remained to be to done.
'East Asia countries could consider strengthening dialogue and
communication between energy producers and consumers, encouraging the
private sector to participate in the development of alternative
energy sources...as well as to address the problem of oil
speculation,' the ministers said in a statement.
The officials underscored the importance of 'coming up with
longer-term agricultural solutions' to address the problem of food
security, such as the use of hybrid seeds and greater research and
development.
They also planned to pursue 'concrete cooperation' in the areas of
production, transportation and preservation of food, with the
participation of the private sector.
In a new report on Tuesday, the Philippines-based Asian
Development Bank (ADB) said inflation in South-East Asia has risen
sharply due to the increases in the prices of fuel, food and other
basic commodities.
Inflation hit a 26-year high in Singapore at 7.5 per cent, the
report said. In May, inflation rose above 25 per cent in Vietnam and
by June, inflation reached 11 per cent in Indonesia and 11.4 per cent
in the Philippines.
The report projected East Asia's economic growth was to slow down
to 7.6 per cent in 2008 and 2009 from 9 per cent in 2007, as the
region faced off a global economic slowdown and sharp rise in food
and energy prices.
'Rising inflation is a serious threat to the region's sustained,
strong growth as high import costs of food and fuel threaten to
trigger a price and wage spiral, unleashing more inflation,' said
Jong-Wha Lee, head of ADB's Office of Regional Economic Integration.
The ADB noted as the average household in the region spent over 50
per cent of its monthly expenditure on food and fuel, the high prices
would have 'serious implications' and policymakers had to rein in the
increases.
The ASEAN ministers noted earlier that the mounting challenges
posed by unabated fuel and food price hikes were threatening
'people's welfare as well as (their) countries' continued economic
development.'
'To address rising food prices, we stressed the importance of
regional and international efforts to ensure the efficient
functioning of market forces, as well as come up with longer-term
agricultural solutions,' the ministers said.
'We encouraged all countries to do away with price distorting
export subsidies and other protectionist policies and to provide
market to access to competitive food exports,' they added.
Chinese Foreign Minister Yang Jiechi said ASEAN and its partners
must further strengthen their cooperation in order to address the
food crisis.
'We should give priority to cooperation in agriculture,' he told
his counterparts from ASEAN, Japan and South Korea.
Yang said China was to work closely with other countries and
provide support to ASEAN, including sharing agricultural expertise,
expanding agro-technology cooperation and strengthening personnel
training to help improve productivity.
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