Asian finance ministers meet on economic crisis

Agence France-Presse

Posted at Feb 22 2009 04:35 PM | Updated as of Feb 23 2009 12:35 AM

PHUKET - Finance ministers and top officials from Southeast Asia, China, Japan and South Korea met here on Sunday to discuss how the region can soften the blow from the global financial crisis.

Topping the agenda is a proposed multi-billion-dollar credit line to help Association of Southeast Asian Nations (ASEAN) countries cope with the crisis, which members want to see expanded from 80 to 120 billion dollars.

"The meeting will send a very strong signal to the world that we are committed to alleviating the global economic slowdown," Thai Finance Minister Korn Chatikavanij said at the meeting on the southern resort isle of Phuket.

"Finance ministers in all countries need to work to find the base and most effective solutions and measures to tackle and underlie uncertainty."

Ministers and officials from ASEAN's Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam are meeting with Chinese and South Korean finance ministers and a top Japanese official.

ASEAN Secretary General Surin Pitsuwan said the long-discussed regional fund would be used to help members "badly affected" as the global economic downturn hits Asia's key trading partners in the United States and Europe.

"It is one of the mechanisms -- it is not to replace or compete with the IMF (International Monetary Fund), but it will be an alternative for Asian countries," Surin said on Thai television.

"If it materializes, it will be one of ASEAN's most tangible achievements."

ASEAN members plus China, Japan and South Korea agreed after the 1997-98 Asian financial crisis to set up a bilateral currency swap scheme known as the Chiang Mai Initiative to prevent a repeat of the turmoil.

Asian nations now want to expand that agreement into a multilateral fund pool to help ASEAN members as the current economic climate threatens millions of jobs as well as the recent robust growth in Asia's developing economies.

Regional officials had previously discussed an 80-billion-dollar emergency pool, but last year mooted expanding that figure to 120 billion dollars.

"Unfortunately our region is currently facing enormous challenges including global economic slowdown and ... financial turbulence," said South Korean Finance Minister Yoon Jeung-Hyun.

"The environment calls for stronger cooperation among the ASEAN countries ... I believe the Chiang Mai Initiative and its multilateralization is a prime example of such regional collaboration efforts."

Thai premier Abhisit Vejjajiva said the fund would "serve as a cushion against future weaknesses at the time of the crisis."

He told reporters that Sunday's talks also touched on how Asia can best monitor the world economic situation and the possibility of expanding bond markets in the region.

After the morning session, ASEAN's Surin said the meeting was "good and positive," and said all ministers agreed in principle to expand the fund.

He said ASEAN members would contribute to make up 20 percent of the pool, with the remaining 80 percent coming from the big three Asia economies.

The idea would be submitted at ASEAN's annual summit starting on February 27, which current chair Thailand will host at the seaside resort town of Hua Hin, he told reporters.