WHAT IS ASEAN UP TO THESE DAYS?

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ASEAN Finance
SOURCE:ASEAN


   1.At the First ASEAN Finance Ministers Meeting (AFMM) held on 1 March
1997 in Phuket, the Ministers
     signed a Ministerial Understanding (MU) on Finance Cooperation. The MU
lays down the foundation and
     framework for strengthening cooperation in finance in the respective
areas which include banking, financial
     and capital markets development, customs matters, insurance matters,
taxation and public finance matters,
     monetary policy cooperation, and human resources development. 

   2.Since then a number of finance bodies have been established to support
the AFMM process and to
     strengthen ASEAN finance cooperation. These bodies are: 

          (i) ASEAN Senior Finance Officials Meeting (ASFOM)

          (ii) ASEAN Select Committee (comprising the representatives from
ASFOM and ASEAN Central
          Banks)

          (iii) ASEAN Insurance Regulators Meeting (AIRM)

          (iv) Working Group of the ASEAN Senior Finance Officials Meeting
(ASFOMWG)

          (v) Working Group of the ASEAN Select Committee

          (vi) ASEAN Central Banking Forum (ACBF)

   3.The ASFOM is supported by the ASFOM-WG and the Select Committee is
supported by the Select
     Committee's Working Group. The ACBF provides inputs to the Surveillance
Process through the ASEAN
     Select Committee Meeting. The AIRM reports to the AFMM through the
ASFOM on insurance matters. 

   4.At the Third AFMM, the Ministers agreed that the ASFOM and the Select
Committee should be emerged
     into one body to be refered to as "ASEAN Finance and Central Bank
Deputies Meeting" so as to avoid
     overlapping of finance activities and issues under the two former
bodies. 


     ASEAN Surveillance Process

   5.The ASEAN Surveillance Process (ASP) has been formally established
according to the Terms of
     Understanding adopted at the Special Meeting of the ASEAN Finance
Ministers on 4 October 1998 in
     Washington DC. The ASP will involve peer review process and frank
exchange of views and information on
     important finance matters. The ASP is supported by the ASEAN
Surveillance Coordinating Unit (ASCU)
     based at the ASEAN Secretariat in Jakarta and the ASEAN Surveillance
Technical Support Unit (ASTSU)
     to be established at the Asian Development Bank in Manila. A director
has been recruited to oversee the
     unit. 


   6.The ASTSU will involve secondees from the Member Countries who will be
trained on surveillance matters
     at the ADB over a period of 24 months. Each group of secondees will be
trained between 3-6 months at
     the ADB. A letter of Agreement between the ADB and the ASEAN
Secretariat is ready for signing to
     implement the Regional Technical Assistance (RETA) Programme. 

   7.The First Report of the ASEAN Surveillance Process has been prepared by
the ASEAN Select Committee
     and presented to the Ministerial Peer Review Process on 19 March 1999
at the 3rd AFMM in Hanoi. The
     Ministers exchanged views and information on the economic situation and
the policy measures taken to
     revive the economies in the respective member countries. The Ministers
agreed with the assessment of the
     report on the economic situation in the region and the possible
downside risks that could affect the pace of
     recovery. The Ministers' views on these matters were reflected in
paragraphs 4 to 9 of the Joint Ministerial
     Statement. 


     Cooperation in Enhancing Greater Use of ASEAN Currencies

   8.In facilitating greater use of ASEAN currencies for trade settlement
purposes, one bilateral payment
     arrangement (BPA) between Malaysia and the Philippines has been
concluded while two more BPAs are at
     different stages of discussion. The latter include Malaysia and
Thailand, and Malaysia and Indonesia. 

   9.The BPAs may differ between two countries but they will invariably
involve the netting process to the
     amount of the trade transactions between the two countries. The
balanced amount could be settled using the
     currencies of one of the countries (e.g. Thai Baht). 


     International Financial Issues

  10.At the 3rd AFMM, the ASEAN Finance Ministers agreed to a set of common
issues in which ASEAN
     could present collectively on the subject of international financial
architecture. These twelve points common
     position are listed in paragraph 11 of the Ministerial Statement of the
Third AFMM. The Ministerial
     Statement is attached. 


     Cooperation in Insurance

  11.Following from the decision of the ASEAN Finance Ministers that other
areas of finance should establish
     their own forum to strengthen cooperation in their respective fields,
the ASEAN Insurance Regulators met
     on 28-29 October 1998 in Brunei Darussalam. The insurance regulators
established their forum "ASEAN
     Insurance Regulators Meeting (AIRM)" and agreed to strengthen insurance
cooperation to support ASEAN
     finance development under the AFMM process. The areas of insurance
cooperation included among others
     the following: 

          (i) harmonisation of insurance laws;

          (ii) Exchanging information on insurance development and on
insurance statistics;

          (iii) insurance education and training for the staff of insurance
supervisory authorities;

          (iv) consultation with the ASEAN Insurance Council (a private
sector Organisation on insurance
          matters;

          (v) enhancement of the role of ASEAN Re Corporation Limited to
further promote regional

          cooperation in reinsurance business;

          (vi) establishment of ASEAN Insurance Training and Research
Institute by 2003;

          (vii) formulation of a Protocol to establish a common "ASEAN
Scheme of Compulsory Vehicle
          Third-Party Liability Insurance"; and

          (viii) development of a plan of action to guide future work on
insurance cooperation.


     Implementation of the Hanoi Plan of Action and 6th Summit's Decisions
on Finance Matters

  12.A work programme detailing specific activities and schedules for the
commencement and completion of the
     work activities is being prepared to implement the various finance
programmes enlisted in the Hanoi Plan of
     Action and the 6th Summit's decisions on finance issues. The work
activities would cover, among others, the
     following programmes area: 

          (i) Enhancing Greater Use of ASEAN Currencies and/or Promoting
Greater Use of Counter/Barter
          Trade;

          (ii) Capital Markets Developments;

          (iii) ASEAN Surveillance Development;

          (iv) Strengthen Regular Monitoring of Capital Flows and Conduct a
Study on Short-ten-n Flows;

          (v) International Financial System;

          (vi) Liberalisation and Coordination in the Areas of Finance;

          (vii) Single ASEAN Currency and Exchange Rate System;

          (viii) Intensify Cooperation in Tax and Public Finance Matters;

          (ix) Intensify Cooperation in Insurance Matters;

          (x) Strengthening Financial Systems; and

          (xi) Strengthening Transparency and Governance.

  13.Member Countries and the ASEAN Secretariat have been assigned to be
coordinators to implement the
     finance programmes. The assignment of areas or programmes to
coordinators would help expedite the
     implementation process. 

  14.Following on the ASEAN plus China, Japan and Korea Summit's decision,
the Meeting of the Deputy
     Finance Ministers and Deputy Central Bank Governors of ASEAN plus
China, Japan and Korea was held
     on 18 March 1999 in Hanoi. The Meeting discussed two issues: (i) ways
to monitor short-term capital
     flows; and (ii) international financial architecture. The Meeting
agreed that there is a need to monitor
     short-term capital flows to better manage risk and that developing
countries need to be involved in the
     development process on international financial architecture. At the
Meeting, China, Japan agreed to support
     ASEAN's common position on international financial architecture at
various international fora and at the
     international financial institutions. 

  15.Preparations are being made to convene a Finance Ministerial level
Meeting of the ASEAN + China, Japan
     and Korea in late April 1999 at the fringes of the ADB annual meeting
in Manila. 


     Meeting of ASEAN-Japan Finance and Central Bank Deputies

  16.This forum has been taking place on a regular basis. The Third
ASEAN-Japan Finance and Central Bank
     Deputies Meeting was held on 18 March 1999 in Hanoi. The key issues
discussed under this forum have

     been the following: 

          (i) internationalisation of yen;

          (ii) economic and financial developments in ASEAN and Japan; and

          (iii) Technical Assistance from Japan to ASEAN (Miyazawa Fund)

  17.At various international fora (eg. World Bank/IMF Annual Meeting, APEC
and ADB Annual Meeting), the
     ASEAN Finance Ministers would have side meetings with the Japanese
Finance Minister to discuss finance
     issues of mutual concern to ASEAN and Japan. The issues discussed could
vary but the past few meetings
     have been on internationalisation of the yen, measures taken by Japan
to assist the crisis-affected countries
     in Asian and measures taken by Japan to address its own domestic
economic difficulties. 

     Launching of Euro

  18.The ASEAN Finance Ministers welcomed the successful launch of the Euro,
which would provide an
     alternative currency for trade and investment transactions and reserve
holding aside from the US dollar. The
     Ministers' position on the Euro is reflected in paragraph 16 of the
attached Ministerial Statement. 

  19.The European Commission was supposed to hold a consultation forum on
the Euro with the ASEAN
     Finance Ministers during the Third AFMM in Hanoi. A seminar on the
implication of the Euro was
     earmarked to be held in Hanoi during the Fourth ASFOM. However, the
European Commission
     subsequently informed ASEAN that the forum and the seminar could not be
held because of the situation in
     Brussels. These two events have been postponed to a future date. 
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