Asian finance ministers agreed Friday to speed up regional integration and pledged to press ahead with plans for a disaster insurance fund in the wake of Japan's tsunami disaster. They also warned that rising food and oil prices could threaten the global economic recovery, and expressed concern about massive inflows of destabilising "hot money" from abroad.
Indonesia's rupiah hit four-year highs against the greenback earlier this week and inflation is running at more than 6.5 percent, underlining concerns that the region's more successful economies may be close to boiling point. "In contrast (to developed countries), emerging and developing economies have led the global economic recovery," Indonesian President Susilo Bambang Yudhoyono said at the start of the talks on the Indonesian island of Bali.
"The increasing linkage of Asean to the global economy has enhanced the potential spillover from external shocks into our region," he told finance ministers and central bankers from the 10-member Association of Southeast Asian Nations (Asean). A joint statement released at the end of the talks said the ministers had "discussed concerns about the current surge in capital flows, (and) emerging inflationary pressures combined with strong commodity price vulnerability".
Yudhoyono said the best protection from external shocks was closer regional co-operation and the creation of a planned Asean common market of almost 600 million people by 2015. Indonesia is the current chair of the grouping and its biggest economy. The block also includes Brunei, Cambodia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
The ministers said they had agreed to implement a $700 million credit guarantee and investment facility next month as previously promised under a broad range of initiatives to more closely link the region's economies. Along with the Asian Development Bank, they also pledged initial contributions of $482 million towards a Malaysia-based Asean infrastructure fund. The Asean region grew at around five percent last year, up from 1.5 percent in 2009 in the aftermath of the global credit crunch, yet Yudhoyono said it still counted almost 120 million people who live on less than $1.25 a day.