1. We, the ASEAN Finance Ministers, convened our 10th Annual Meeting in Siem Reap on 4-5 April 2006 under the chairmanship of Sr. Minister Keat Chhon, Minister of Economy and Finance, the Kingdom of Cambodia.
2. HE Samdech Hun Sen, the Prime Minister of the Kingdom of Cambodia, officially opened our Meeting. He stressed that a well integrated and smoothly functioning regional financial system is sine qua non for achieving the ASEAN Economic Community (AEC), and accelerating ASEAN progress towards realising a unified vision of prosperous and peaceful Southeast Asia.
3. We discussed recent global and regional economic developments and outlook for the year 2006. We also assessed the progress of implementation of the Roadmap for Financial and Monetary Integration of ASEAN (RIA-fin) and other regional initiatives on customs, insurance, counter terrorism financing and money laundering as well as reforms of the international financial system.
Recent Economic Developments
4. ASEAN economies registered sustained robust growth of 5.5 percent last year, supported by continued buoyant domestic demand and exports. This demonstrates the resilience of our regional economies given the moderation of growth in some major economies and high global oil prices.
5. We achieved significant progress in the strengthening of the banking system and financial markets, and noted that corporate balance sheets continued to improve. The growth momentum, further reinforced by private sector efforts, allowed ASEAN economies to pursue fiscal consolidation. Signs of rising price pressures prompted the continued removal of monetary accommodation in some countries, although overall macroeconomic and financial policies remained supportive of growth.
6. We expect the strong growth momentum to continue in 2006, with average ASEAN GDP growth to increase to an estimated 5.8 percent this year, bolstered by strengthening ASEAN domestic demand and continuation of structural reform to maintain confidence. The recovery in Europe and Japan is anticipated to contribute to further improvement of the region’s export performance. However, we will continue to be vigilant against risks from sudden and adverse resolution of global imbalances, continued rise of high oil prices and its impact on inflation. We will also pursue prudent macroeconomic policies to maintain supportive macroeconomic environment.
Strengthening Regional Cooperation and Integration
7. We welcomed the progress that ASEAN economies have made in broadening and deepening domestic capital markets. In particular, bond markets in ASEAN-5 have increased by more than three times since 1997. We are also pleased to note the growth of securitised markets in ASEAN and will continue to implement policies to further drive the growing sophistication of ASEAN capital markets. On the equities side, we were greatly encouraged by the launch of the first ASEAN Index, which will serve as a catalyst towards the further integration of ASEAN stock markets. We also welcomed ongoing efforts by Viet Nam and Cambodia to develop their capital markets.
8. We identified four key priorities to further promote the continued competitiveness and depth of ASEAN’s financial sector in a globalised market environment. These are:
i. Development of an ASEAN asset class: Following the successful launch of the FTSE/ASEAN equity index in September 2005, we are encouraged by further private sector interest to develop ASEAN financial products. We will continue to engage the private sector in developing a vibrant ASEAN asset class to raise ASEAN’s profile among international investors. Similarly, policies will be oriented towards enhancing the pace of the regional capital market integration.
ii. Reinforcing financial services liberalisation: We noted the progress in the current fourth round of negotiations on financial services liberalisation within ASEAN. We will reinforce the process for the liberalisation of trade in financial services in the region, including those with our dialogue partners.
iii. Strengthening capacity building: We will strengthen current capacity building initiatives to fully realise the potential of the ASEAN financial markets.
iv. Enhancing infrastructure financing: We recognised that the ASEAN would need to enhance regional infrastructure in order to boost long-term growth potential, and agreed to set up a task force to explore the best framework, mechanism and possible instruments for infrastructure financing in the region.
Protocol to Establish and Implement the ASEAN Single Window
9. We welcomed the progress in customs cooperation, particularly in finalising the Protocol to Establish and Implement the ASEAN Single Window (ASW). Through electronic processing of trade documents and streamlined customs procedures, the ASW is expected to significantly facilitate cross-border trade and investment in the region.
10. Following the success of the inaugural ASEAN Finance Ministers’ Investor Seminar with US investors in New York in 2004, we met with European investors at our second Investor Seminar in London last September to promote investment opportunities arising from closer regional economic integration. In response to the growing interest to participate in ASEAN growth opportunities, we are now planning a third Investor Seminar to be held on 14 September 2006 in Hong Kong and 16 September 2006 during the IMF/World Bank Annual Meetings in Singapore.
11. We recognised that the 2006 IMF/World Bank Annual Meetings in Singapore will be the first time the Annual Meeting is returning to ASEAN after a fifteen year break. The event is an important occasion for us to demonstrate the growth and vibrancy of our economies. International investors can expect to gain insight on the wide investment opportunities in ASEAN Member Countries, including the financial markets, tourism, infrastructure development and other growth sectors.
12. We are also pleased to announce, in Siem Reap, Cambodia, the launching of the ASEAN capital account regime webpage on the ASEAN Secretariat’s website. The webpage is designed to provide up-to-date information on regional capital account regimes. In addition, a book on “ASEAN Capital Account Regime” will be launched at the Singapore leg of the Third ASEAN Finance Ministers’ Investor Seminar in September 2006.
13. We resolved to work towards sustaining our economic growth while strengthening our collective efforts towards greater harmonization and integration of our economies and financial markets.
14. We expressed our thanks to the Government and people of the Kingdom of Cambodia for their excellent arrangements and warm hospitality accorded to all delegates. The 11th AFMM will be held in Bangkok, Thailand tentatively in March 2007.