Phuket, Thailand - Finance ministers from Japan, China,
South Korea and across South East Asia agreed on Sunday to broaden
and increase a regional liquidity fund, in the wake of the global
financial crisis.
The three, plus the ten members of the Association of South East
Asian Nations (ASEAN) penned an agreement at a summit in Phuket,
Thailand, to 'multilateralise' the Chiang Mai Initiative (CMI) fund,
and to increase it to 120 billion dollars.
Until now the CMI has taken the form of multiple bilateral
agreements on currency swapping.
Meeting at Thailand's premier vacation island, 550 kilometres
south of Bangkok, the finance ministers also agreed to beef up the
regional surveillance mechanism for the CMI, by setting up an
independent regional watchdog in conjunction with the International
Monetary Fund.
How long it will take to implement the multilateralisation is not
clear.
Thai Finance Minister Korn Chatinkavanij, who co-chaired the
Phuket meeting with his South Korean counterpart Jeung Hyun Yoon,
pointed out after the meeting that the various countries have
differing approval processes.
'But we expect the approval schedules to be discussed in the next
meeting in Bali [in May],' he added.
Until the surveillance mechanism is in place and all countries
have approved the multilateralisation, the current bilateral system
will remain in place.
It was also agreed at the meeting that the ASEAN countries -
Thailand, the Philippines, Singapore, Malaysia, Vietnam, Myanmar,
Laos, Cambodia, Indonesia and Brunei - will put up 20 per cent of the
120 billion dollar fund, with the remaining 80 per cent being
contributed by China, Japan and South Korea.
The country-by-country breakdown has not yet been finalised, said
China's Finance Minister Xuren Xie said.
'We have a good idea of the splits, both among the Asean
countries and among the plus-3 countries,' Korn noted.
When asked asked whether the absence of the new Japanese Finance
Minister, after the recent resignation of his predecessor in an
alleged drunkenness scandal, had had any effect on the talks, Korn
said, 'As far as we were concerned, the Japanese government was
represented,' he replied. 'There was no negative impact whatsoever.'
The ministers also made a strong plea for Western countries not to
increase protectionist trade barriers in a bid to shield their
domestic industries, and to stabilise their own economies and
financial markets.
'Free and fair trade must be maintained,' Korn said, not only
within Asia but globally.
He also called for the development in Asia of 'relevant policies
for the development of domestic economies in order to counter the
effects of reductions in exports.'
The ministers, in their joint statement at the end of the
conference, noted the importance of the Asian Bond Markets Initiative
(ABMI) and hinted at relaxation of international currency
regulations: 'We recognise the important role of the private sector
in the development of bond markets, particularly in cross-border bond
transactions and settlement issues. We will explore ideas for new
arrangements that would provide development assistance to the region
while addressing unexpected liquidity constraints.'
Finally, the ministers called for 'an immediate and substantial
capital increase' for the Asian Development Bank, calling for
agreement on this before the next annual meeting of the ADB, in three
months' time.
USA
Your Talkback on this Story