1. We, the ASEAN Finance Ministers, convened our Fourth annual meeting in Bandar Seri Begawan to discuss measures to further support our economic recovery, progress made in various areas of financial cooperation including the development of capital markets in ASEAN, and approaches to strengthen East Asian financial cooperation with China, Japan and the Republic of Korea.
2. H.E. Pehin Orang Kaya Laila Wijaya Dato Haji Abdul Aziz Umar, Minister representing the Ministry of Finance, presided over our meeting.
Audience with His Majesty the Sultan and Yang Di-Pertuan of Brunei Darussalam
3. His Majesty Sultan Haji Hassanal Bolkiah, Sultan and Yang Di-Pertuan of Brunei Darussalam, graciously granted an audience to the ASEAN Finance Ministers and the Secretary-General of ASEAN on 25 March 2000 at Istana Nurul Iman. His Majesty was pleased to note ASEAN’s good progress in recovering from the crisis and expressed his satisfaction with the progress made in implementing various decisions of the ASEAN Informal Summit in Manila last November. He noted that the Fourth AFMM would be discussing some of these mandates, which would help sustain the economic recovery. He looked forward to the successful deliberations of this Meeting and the continued prosperity of ASEAN economies.
Recent Economic Developments
4. We conducted a peer review and are pleased to note the continued improvement in our economic performances since our last meeting in Manila. ASEAN economies have performed better than expected, with the whole region growing by 4.4 % in 1999 compared to a contraction of 4.6 % a year earlier.
5. Macroeconomic and financial stability continues to improve with stabilizing exchange rates and declining interest and inflation rates. While growth has been mainly fueled by exports and consumption, improved confidence in the region has led to gradual return of local and foreign investors to the stock markets.
6. We exchanged views on regional and global economic developments with representatives of the ADB, the IMF, and the World Bank. We are confident that the region is poised for sustainable recovery given the economic fundamentals and our commitment to pursue the necessary structural reforms.
Sustaining ASEAN Economic Recovery
7. Notwithstanding this improved performance and the better prospects for this year, there are challenges that need to be overcome to ensure that recovery is sustained, including turning the improvement in domestic demand into self-sustaining growth, stimulating private investment and enhancing regional resilience to external shocks.
8. We have increased our efforts to revitalize domestic demand through retraining programs for the unemployed, the enhancement of social safety net and acceleration of bank and corporate restructuring. While the number of successful debt restructuring exercises has increased and non-performing loans continue their downward trend, the current level of progress can be further improved. We shall expedite legal and other structural reforms to facilitate the on-going banking and corporate restructuring exercises.
9. We have taken a proactive approach towards restoring private investment in the region. A joint ASEAN mission to Japan was undertaken last month to update investors on the current economic situation and investment opportunities in the region. A few more missions are planned to various destinations in the US and Europe.
10. To complement the above efforts to further encourage private investment into the region, we remain committed to creating an environment that is conducive to investment. We will further strengthen corporate governance practices, including transparency and disclosure, and establish a regional framework for the development of the ASEAN bond market. Our aim is to develop and deepen ASEAN’s capital markets, particularly bond markets. This would provide a better variety of financing instruments and facilitate better risk management.
11. To enhance the competitiveness of state-owned enterprises as well as alleviate their burden on the fiscal budget, we are embarking on various reforms, including the privatisation of such enterprises. The benefits here are two fold. While they become more competitive with greater private sector involvement and rely less on the government for support, the proceeds from privatisation would also improve the financial position of the government.
12. All the above efforts shall contribute to our projected economic growth rate of around 4.5 % – 5% growth for the year 2000 and make our economies more robust and resistant to any external shocks that may arise.
ASEAN Finance Cooperation
13. Further supporting our efforts to sustain ASEAN economic recovery is the progress made in various regional finance cooperation activities including capital market development, monitoring capital flows and financial services liberalisation.
14. Recent progress on the capital markets development initiative includes work on cross listing of SMEs and the establishment of a working committee on the adoption and implementation of internationally accepted practices and standards. A workshop is planned for late April to discuss the development of asset-backed securities and bond markets.
15. We are currently examining a possible mechanism to monitor capital flows with a view to establishing a regional monitoring system of capital flows in ASEAN. A study will also be conducted to look at measures that can mitigate the adverse impact of a sudden shift in capital flows. It is expected that a workshop will be organised to discuss its outcome.
16. A working committee was formed to further discuss approaches to facilitate financial sector liberalisation under the ASEAN Framework Agreement on Services (AFAS). Another working committee was established to promote cooperation on tax and public finance within ASEAN.
17. Our ASEAN Insurance Regulators agreed to strengthen efforts to harmonize our insurance laws, develop unified insurance statistics and strengthen human resource development in the insurance sector, including the establishment of an ASEAN Insurance Training and Research Institute.
18. To facilitate the implementation of the Framework Agreement on the Facilitation of Goods in Transit, Protocol 2 on Frontier Posts and Protocol 7 on the Customs Transit System, and Protocol 5 on ASEAN Scheme of Compulsory Motor Vehicle Insurance are being finalised by the relevant authorities.
East Asia Finance Cooperation
19. Following the declaration by the ASEAN + 3 leaders in Manila in November 1999, our finance and central bank deputies met with their counterparts from China, Japan and Korea to exchange views on recent economic and financial developments in the region and to discuss further cooperation on international financial reforms, monitoring of capital flows and development of a self-help and support mechanism in East Asia.
20. The ASEAN + 3 Finance and Central Bank Deputies proposed a set of activities under the self-help and support mechanism to strengthen our mutual assistance efforts. They agreed to establish a network of research and training institutions to strengthen human resources development in the East Asia finance cooperation. They also agreed to establish a network of contact persons to facilitate regional surveillance in East Asia. Recognising the need for the availability of financial resources in times of crisis, they agreed to conduct a study on the modalities and mechanisms for a regional financing arrangement to supplement the existing international facilities.