asean supports stimulus measures to boost global demand

As the Asean chair, Prime Minister Abhisit Vejjajia has coordinated and put together the positions and proposals drawn from discussions and contributions from Asean members, especially Indonesia, which is a G-20 member.

These positions are also in line with the grouping's dialogue partners China, Japan, South Korea and Australia. The following are summaries on key issues and policy recommendations.

Asean agrees on the need to stimulate global demand through initiation of well-coordinated stimulus programmes by all countries and multilateral development financial institutions.

Asean welcomes expansionary macroeconomic policies adopted by the member countries to stimulate domestic demand, including fiscal stimulus, monetary easing, access to credits through trade financing, and measures to support the private sector, particularly small and medium enterprises (SMEs).

It is imperative that there must be policies coordinating and joint action at the regional and global levels. Asean urges that more coordinated actions by both developed and developing countries be taken to restore financial stability, to encourage credit extension, and to generate demand in order to provide support for growth.

Asean stands firm against protectionism as well as refrains from introducing and raising new barriers, which would worsen the global economic downturn.

Asean needs to be more attentive to the blurry distinction between the countries' crisis resolution measures and "protectionism in disguise" when governments formulate their policies and measures, or choose to target their financial support for specific industries. As a grouping with a 575 million population, Asean countries must continue to advance a trade creation agenda that is supportive of an open and rule-based global trading system and urge G-20 members to ensure a strong and successful Doha Development Agenda outcome.

It is imperative that Asean moves forward to establishing the Asean Economic Community (AEC) by 2015 with a Single Market and Production Base and free flow of goods, services, and investment, which will eventually transform the grouping into a complementary development partner in the global economy.

Asean supports the reform of the global financial architecture and financial regulations.

Several issues related to the reform of international financial architecture must be discerned. Asean thinks it is essential to revamp the regulatory regime to rein in non-financial firms that lack good governance.

The grouping encourages macro-prudential surveillance of the financial system that concentrates on monitoring the system's overall performance and emerging risks and counter-cyclical financial regulations.

As a precaution, Asean must not go over the board by regulating markets, which could hamper the effective flow of credit over the medium to long term.

Asean supports the reform of International Financial Institutions.

 It is crucial to ensure that financial resources are sufficient to assist the international community in weathering the crisis. Asean welcomes Japan's move to provide an additional US$100 billion (Bt3.5 trillion) to bolster the International Monetary Fund's total lending resources to $350 billion. It is crucial that IMF should have sufficient resources available to serve the financing needs of member countries. Asean strongly supports initiatives by member countries with large holdings of financial resources to increase their support for the IMF.

 On the IMF's operation, Asean welcomes its recent initiative to overhaul the lending and conditionality framework. Asean supports the introduction of "Flexible Credit Line" (FCL) as a new crisis prevention mechanism for countries with strong fundamental, policies, and track records of policy implementation. The IMF should further consider how it can effectively provide support to member countries experiencing balance-of-payment problems that may not meet the set criteria to qualify for the FCL.

Stronger and more accessible IMF-supported programmes and the realignment of voice and representative of the developing countries would increase confidence and facilitate countries in dealing with balance-of-payment problems and reflect their contributions to global output.

Asean supports IMF to enhance its cooperation with the Financial Stability Forum (FSF) and to complement each other's role in promoting financial stability, and strengthening the regulatory authorities' responsiveness to risks, including works on an early warning system.

Asean wants to ensure that the Asian Development Bank (ADB) will play a bigger role in mitigating the impact of the global financial turmoil and providing necessary capital for regional growth. Therefore, the ADB should be given a substantial capital boost to fulfill its developmental role in Asia.