Mon, May 13, 2002 - Page 17 News List

Asian economic integration drive hits speed bump


Asia's ambitious drive for economic integration, launched amid great fanfare just two years ago, is running into the sand, according to officials attending a development meeting here.

Officials said an ingrained wariness of nosy neighbours is hampering the development of an information-sharing and economic-monitoring network needed to underpin an embryonic web of central bank swap agreements, designed to avert a re-run of the financial crisis that devastated Asia in 1997.

A weekend meeting of finance ministers from the 10-member Association of South East Asian nations plus Japan, China and South Korea (ASEAN plus three) produced a pledge of further cooperation but a conspicuous absence of firm new undertakings.

"I'm a little disappointed with the slow progress of regional integration but some members said they would feel dizzy if it went too fast," Kwon Tae-shin, a senior South Korean finance ministry official, told Reuters.

Japanese officials would also have liked the meeting, held on the sidelines of the Asian Development Bank's annual conference in Shanghai, to have yielded more.

"We're making progress step by step. But each country has its hidden agenda so it's hard to reach consensus," he said.

The idea for a network of central bank swaps was hatched at the ADB meeting in Chiang Mai, Thailand in 2000, when the wounds inflicted by the 1997 crisis were still raw.

Two years on, the pain is fading, and with it the urgency to put in place institutional mechanisms that would be vital in the event of another financial crunch.

A communique issued by ASEAN-plus-three ministers highlighted the absence of a common political will by listing only seven countries as being willing to share crucial data on short-term capital flows -- Asia's undoing in the 1997 crisis.

The seven are Brunei, Indonesia, Japan, South Korea, the Philippines, Thailand and Vietnam.

The six hold-outs are Singapore, Malaysia, China, Laos, Myanmar and Cambodia.

Sources from several countries said that, of the six absentees, Singapore was especially reluctant to exchange data. Singaporean officials in Shanghai could not be reached for comment.

Some Asian officials also expressed concern that China was unwilling to join in, given the large and growing flow of capital in and out of the country.

Officials have always stressed that regional integration would be a laborious effort given Asia's wide range of economic, political, religious and cultural backgrounds. Historical antagonisms are never far from the surface either.

Chinese Finance Minister Xiang Huaicheng said that a recent visit by Japanese Prime Minister Junichiro Koizumi to a controversial shrine honouring some World War II war heroes had damaged political relations between Asia's two biggest economies.

"The visit to the shrine certainly hurt the Chinese people's feelings. I feel it has affected our relations, but our meeting was not focused on identifying historical, social, political, territorial, marine, economic and cultural differences," he said.

Xiang said the visit would not prevent China from seeking to strengthen regional cooperation.

Officials said it was not surprising that not all ASEAN plus 3 governments were willing to subject themselves to the sort of peer pressure that is a mark of more coherent groups, such as the EU or the G7 industrial nations.

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