1. The ASEAN Finance Ministers met in Jakarta, Indonesia on 28 February 1998 to discuss, among other things, the financial situation in the region. The Meeting was preceded by the Second ASEAN Senior Finance Officials Meeting held on 27 February 1998, in Jakarta.
2. The Second ASEAN Finance Ministers Meeting was chaired by H.E. Mr. Mar’ie Muhammad, Minister of Finance, Indonesia who assumed the chair of the ASEAN Finance Ministers Meeting (AFMM) after Thailand. The Meeting was also attended by
H.E. Pehin Dato’ Ahmad Wally Skinner, Deputy Minister of Finance, Brunei Darussalam;
H.E. Mr. Yao Phonevantha, Vice Minister of the Ministry of Finance, Lao People’s Democratic Republic;
H.E. Dato’ Seri Anwar Ibrahim, Deputy Prime Minister and Minister of Finance, Malaysia;
H.E. U Khin Maung Thein, Minister of Finance and Revenue, Myanmar;
H.E. Mr. Salvador Enriquez, Jr., Secretary of Finance, Philippines;
H.E. Dr. Richard Hu Tsu Tau, Minister for Finance, Singapore;
H.E. Mr. Tarrin Nimmanahaeminda, Minister of Finance, Thailand;
H.E. Mr. Nguyen Sinh Hung, Minister of Finance, Vietnam;
H.E. Mr. Rodolfo C. Severino, Jr., Secretary-General of ASEAN;
and their respective delegations.
Financial Situation in ASEAN
3. The Ministers exchanged views on the financial and economic situation in the region. In particular, they noted that the financial markets in the region had begun to stabilise in the past weeks. They agreed that while the financial crisis had affected the short-term economic and business conditions in ASEAN, the long-term prospects in the region remained attractive and sustainable.
4. The Ministers expressed their confidence that the region, in particular the affected countries, would overcome the crisis quickly as the economic fundamentals remained strong. The savings rate of the region remained one of the highest in the world and while the rates of inflation had increased recently, they were within manageable levels. In addition, the adjustments in the ASEAN Member Countries would make ASEAN economies more competitive and strengthen their financial systems.
5. The Meeting acknowledged that the new ASEAN Members had also been affected by the financial crisis and urged that all possible assistance be extended to them to enable them to deal with the impact.
6. Recalling their decision made at the Kuala Lumpur meeting on 1 December 1997 and in line with the implementation of the Manila Framework, the Ministers agreed that the ASEAN Surveillance mechanism would be established immediately within the general framework of the IMF with the assistance of the Asian Development Bank. The Ministers also agreed that the Surveillance Secretariat would initially be based at the ADB, and thereafter, the ASEAN Secretariat would take over the surveillance activities.
7. The Ministers supported the use of regional currencies for promoting intra-ASEAN trade. They endorsed the use of Bilateral Payments Arrangement (BPA) as proposed by the Special Task Force of the ASEAN Central Banks. The approach will initially be implemented on a voluntary basis, with a view to evolving this facility into a multilateral arrangement.
8. On the ASEAN bond market, the Ministers would continue to pursue its development with the help of other economies in Asia with more developed bond markets.
9. The Ministers reiterated the commitment, made by the ASEAN Heads of Government in Kuala Lumpur on 15 December 1997, to maintain an open trade and investment environment in ASEAN. The Ministers expressed their strong commitment to ensure the early realisation of regional initiatives, such as the ASEAN Free Trade Area (AFTA), ASEAN Investment Area (AIA), the ASEAN Framework Agreement on Services (AFAS) and the ASEAN Industrial Cooperation (AICO) Scheme. The Ministers reiterated ASEAN’s commitment to the WTO liberalisation process and welcomed the landmark achievement in the financial services sector negotiation at the end of last year despite the difficult times.
Call for International Support for ASEAN
10. The Ministers welcomed the structural and financial reforms undertaken by ASEAN countries to strengthen their economies and called on the international community to recognise and respond to these initiatives. They welcomed the greater flexibility of conditionalities attached to the IMF support programmes and urged the IMF to accelerate the implementation of its programmes of support.
11. The Ministers also urged the IMF and other multilateral institutions to look into the possibility of subjecting the hedge funds operations to full disclosure and greater transparency in their operations.
12. The Ministers urged the G7 countries to open their markets further to products from ASEAN and to adopt a more proactive approach to enable the affected countries to overcome the crisis. In particular, the Ministers welcomed Japan’s pledge to stimulate domestic demand and called on Japan to take lead in bringing the region out of the present crisis. In addition, the Ministers urged the G7 Governments to encourage their banks to maintain credit support for ASEAN economies.
13. The Ministers also welcomed the decision of the People’s Republic of China not to devalue the RMB.
14. They further urged the international financial institutions and concerned agencies, in devising their support programmes, to take full account of the need to protect the poor, particularly in terms of education, health and livelihood. In this regard, the Ministers noted the ASEAN Food Security Reserve Agreement could be used to mitigate the sporadic shortfall in the availability of basic commodities.
Date and Venue of the Next Meeting
15. The Ministers agreed that the Third Meeting of the ASEAN Finance Ministers would be held in early 1999 in Vietnam. The Ministers further agreed to meet informally as and when necessary.