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Hanoi - Now is the best time to establish the Asian Monetary Fund--first proposed during the 1997 Asian financial crisis-- to mitigate the impact of the US mortgage crisis on the region, Dr Supachai Panitchpakdi, secretary general of the United Nations Conference on Trade and Development, said on Friday.

"Global emerging markets should work together to avert a global crisis," Supachai told businessmen, economists and other participants at the second Vietnam Economic Conference held in Hanoi. "In the short run, actions should be taken including injecting funds and keeping interest rates from going up."

Supachai--Thailand's commerce minister at the height of the Asian financial crisis--eased concerns that the US crisis will impact on Asia despite the "worrying trend" of Asian banks' exposure in the US market.

"It remains to be seen whether the bankruptcy of the Lehman Brothers and the troubles of Merrill Lynch are the end of the crisis, yet a number of analysts are also worried about other companies such as AIG," he said. "The precise impact on Asian markets will also depend on the exposure of Asian investors to these wider ripple effects."

He projected that Asia will grow at only 6 percent by end-2008 at 6 percent and growth could remain stagnant in 2009, but the impact will not be as big compared to Europe. He added that the 6 percent growth is achievable only if China and India can sustain their growth.

"Everything will slow down but it does not mean the end of the world," Supachai said, adding that it will take a "longer time" for the global economy to weather the crisis and nurse itself back to health.

However, he expressed confidence that while Asia in general will feel the effects, it will sustain itself given that it has become a huge investor in the world market.

As for smaller Asian economies, he said they may be hurt in the process but only in terms of lesser investments coming from Europe or the US. "The impact may not be critical... but this is the good time to set up a collective effort to address the crisis."

The former director-general of the World Trade Organisation also advised Asian governments to "bend a little bit and not stand stall against the storm". He noted that it is all right to adapt policies to guard against stagflation but governments should not overdo its monetary policies and should also accompany them with fiscal, income and foreign exchange policies.

He also said governments should not be too proud in revising their growth prospects for next year and instead target a level that is achievable. "There is a need to overhaul the financial system. Asian financial authorities should take the opportunity to enhance financial cooperation in the region."

"When this crisis is over, we will enter into the second generation of globalization where we will see the emergence of the new south. It will be more inclusive and no longer a one-way street where only the first world pour in investments," he added.

The second Vietnam Economic Forum was organized by Vietnam's Ministry of Planning and Investment, in cooperation with Vietnam News Agency and the Asia News Network. Six hundred delegates participated in the forum that also discussed ways on sustaining Vietnam's growth.