Asean economies remain very open to capital inflows
and that augurs well for Asean, Heng Swee Keat, managing
director of the Monetary Authority of Singapore, told
Finance ministers from Indonesia, the Philippines and
Thailand said they hope to continue liberalization and
financial markets development, as a means to achieve poverty
reduction and sustained growth.
Agus Martowadojo, the new Indonesian finance minister, said
he was committed to a free trade agenda and would work to
prevent protectionism, as part of plans to tackle the
unacceptable level of people living in poverty.
Exports from the Asean nations are under pressure as their
currencies have soared this year, in part because of their
strong growth prospects. According to the IMFs latest
figures, Asean will see growth of 6.6% this year, compared to
1.7% last year. In contrast the global economy will expand 3.7%
this year and 3.3% the next.
The peso has been trading near a two-year high, the baht at
its strongest levels since the 1997 financial crisis and the
rupiah at its highest since 2007. The Singaporean dollar has
burst through the $1.30 level against the US dollar.
Cesar Purisima, the newly appointed finance minister for the
Philippines, said he hoped to issue zero-coupon bonds soon, to
help fund infrastructure projects such as water supply and
The government is keen to raise funds from capital markets
to bolster its finances and last month sold its first global
Purisima outlined a comprehensive platform that includes
infrastructure projects including water, streamlining
bureaucracy, improved tax collection and pursuit of tax
Purisima said he hoped to learn from the success of Thailand
and Malaysia in growing their tourism industry, partly because
the Philippines has 27,000 square kilometers of coral
As of 2006, around 20 million Filipinos lived below $1.25 a
day, while 40 million survived on less than $2.
Inflation is another key issue on the agenda for Asean, as
accelerating growth has prompted many central banks to put on
the brakes by hiking interest rates.
Heng called for Asean nations to consider buying commodities
in response to the recent surge in prices. Since 30 June, sugar
has soared 40%, wheat 59% and barley 49%.
Supplies of wheat are under pressure as bad weather in key
producing countries has hurt crop yields. US farmers are
expected to harvest less corn than expected and the stockpile
has shrunk to its lowest levels in seven years due to strong
demand for grain.
We have to think about investing on the supply side,
particularly on food, before it becomes a problem like it did
in 2008, Heng said.
Two years ago food prices spiked and staples such as rice
and wheat hit record levels, sparking social unrest
Food security is also a priority for the Philippines, which
needs to ensure that prices stay low, said Purisima.