Published April 11, 2009

Asean emergency fund on its way

By LEE U-WEN
IN PATTAYA

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SOUTH-EAST Asian nations are expected to move one step closer this weekend to their goal of setting up a US$120 billion emergency currency swap fund.

This is after the leaders of 13 countries, who are meeting in Pattaya for the Asean+3 summit, put the finishing touches today on a foreign currency pool that will help shield their respective currencies and manage liquidity problems.

In a joint statement that is expected to be issued this weekend, the leaders are also likely to push for the setting up of an independent regional body that can monitor signs of an impending financial crisis.

There is still no fixed date for the expanded fund, called the Chiang Mai Initiative Multilateralisation, to be launched but observers say that it should happen soon.

At a meeting in the Thai resort town of Hua Hin in February, the Asean+3 finance ministers -Â all 10 from the Association of Southeast Asian Nations (Asean) and their counterparts from South Korea, Japan and China - agreed to expand the crisis fund from its original US$80 billion.

At a press conference yesterday, Thai Finance Minister Korn Chatikavanij said that the individual contributions for each Asean member had been finalised. Asean will contribute 20 per cent of the US$120 billion, while China, Japan and South Korea will account for the rest. Singapore, Indonesia, Malaysia and Thailand will pump in US$4.76 billion each and the Philippines US$3.68 billion.

The other five members - Brunei, Cambodia, Laos, Vietnam and Myanmar - will contribute amounts based on the size of their foreign exchange reserves, said Mr Korn. China, Japan and South Korea will discuss the size of their contributions among themselves.

The expanded emergency fund allows for currency swaps to be multilateral, making it easier for struggling countries to tap on the funds. The exact details of the fund will be fleshed out in May when Asian finance ministers next meet in Bali.

Creating financial stability aside, the three-day Asean summit, which ends tomorrow, will also go a long way to helping the region achieve its long-term aim of creating a European Union-style community by 2015, said Mr Korn.

In one key statement that the leaders are expected to issue this weekend, they will make a greater call to expand regional trade links and reject protectionism. They are also likely to step up preparatory work for a giant free trade zone that would stretch all the way from China to Australia.