Saturday, May 2, 2009

Asia Must Do More to Fight Crisis, Asean Draft Says

Asia will require “more concerted efforts” to prevent its economies from deteriorating further, finance ministers from 13 nations said in a draft statement.

An outbreak of the swine flu virus adds to “downside” risks posed to Asia by the financial crisis and prospects of increasing protectionism, according to the draft of a statement due to be released later today and seen by Bloomberg News. Finance ministers from the 10-member Association of Southeast Asian Nations, along with their counterparts from Japan, China and South Korea are meeting today in Bali.

Economists are raising their estimates for the region’s growth this year amid expectations of a recovery in China and as indicators show production declines may have bottomed. The region’s governments have pledged to pump more than $950 billion into their economies through increased investment, tax cuts and cash handouts to boost consumer and business spending.

“The current global situation requires more concerted efforts to enhance confidence, maintain financial stability, and prevent further decline in economic growth,” the draft said. “In addition, the spread of the new threat of swine influenza requires us to stay vigilant on the possible impact inflicted upon economic activities.”

Cases of swine flu have been reported in 17 nations after an outbreak in Mexico that has left at least 16 dead. There are signs that the virus is spreading among people unconnected to Mexico, increasing concern among health officials that the outbreak will turn into the first influenza pandemic since 1968.

Health Emergency

South Korea confirmed its first case yesterday, and Hong Kong declared a public-health emergency after detecting the virus in a 25-year-old traveler from Mexico. The World Health Organization raised its six-tier pandemic alert to 5 on April 29 and may move soon to the highest level.

The finance officials have gathered in the resort town of Nusa Dua, Bali, to complete discussions on a currency pool agreement that can be used to defend their exchange rates in times of turmoil. The nations decided in February to increase the size of the foreign-exchange reserves pool to $120 billion from $80 billion, speeding up their plans to respond to the global crisis.

Japan will contribute $38.4 billion to the fund, while China and Hong Kong together will add another $38.4 billion to the pool, South Korea’s Deputy Finance Minister Shin Je Yoon said today. South Korea’s contribution will be $19.2 billion, he said.

Nations’ Contributions

The Southeast Asian nations will contribute 20 percent of the total amount, while the bulk is divided between Japan, China and South Korea. Thailand, Indonesia, Malaysia and Singapore, the four biggest Southeast Asian economies, will contribute $4.77 billion each, and the Philippines will provide $3.68 billion.

Officials will next work on the implementation of the pool, which is expected to be completed by the end of the year, the draft showed.

An official involved in the meetings confirmed the text of the draft statement. The language in the finance ministers’ statement is subject to change.