The Formal AFDM+3 was held during 2 days 2-3 April 2008 under the co-chairmanship of Vietnam Vice Finance Minister Tran Xuan Ha and Japan’s Vice Finance Minister Naopuki Shinohara, with full participation of Vice Finance Ministers and Central Bank Deputy Governors of 13 ASEAN + 3 countries (ASEAN plus Japan, China and South Korea).
Delegates focused their discussion on the review of the financial cooperation in East Asia through the implementation of cooperation initiatives such as the Asian Bond Market Development Initiative ABMI and the Chiang Mai Initiative CMI, activities of the ASEAN + 3 research group and other cooperation aspects.
The ABMI was launched in 2003, aiming at comprehensive and effective development of the regional bond market, and strengthen cross border cooperation among markets. So far, ASEAN+3 have established 7 working groups to conduct research and other activities of bond market development in each period, with focus on the following: (i) Research on the development of debt instruments to raise capital for infrastructure projects; (ii) research and promote the issuance of domestic currency-denominated bonds and in the region’s currency basket; (iii) study the feasibility and possibility of the establishment of the region’s bond investment and guarantee mechanism; and (iv) encourage activities to enhance harmonization and competitiveness of each country’s credit rating agencies.
Vice ministers acknowledge the encouraging results of ABMI activities in the promotion of bond markets in the region. In addition, Vice Minnisters understand that despite the progress made, the ABMI implementation has not reflected the true cooperation potential of ASEAN+3 countries.
To enhance effectiveness of regional cooperation of bond market development, Vice Ministers have discussed about the development of a Strategic ABMI Roadmap for the years to come, which aims at a more comprehensive and effective implementation of the ABMI, toward a common bond market for the region. The Meeting reached agreement that a new Roadmap for the ABMI will be submitted for adoption at the AFMM+3 in Madrid – Spain this May.
The CMI was introduced in 200 aiming at promoting bilateral swap arrangements among ASEAN+3 countries to provide short-term financial support to member countries in the face of temporary balance of payment difficulties, and establishing a mechanism to identify uncertainties and risks in the region and preventing possible crisis.
In implementing this initiative, the bilateral swap arrangement network includes 17 arrangements with total capital of more than 85 billion USD. In addition to these bilateral arrangements, vice ministers are also discussing the possibility of multilateralizing CMI toward the establishment of a regional financial support mechanism along with existing international support mechanisms to provide short term support when countries have balance of payment difficulties. Issues that need further exploration are the size of the fund, pooling mechanism, surveillance process and decision making rules. These issues will continue to be discussed within ASEAN+3 for submission to the AFMM+3 in the months to come.
At the Meeting, delegates have acknowledged the progress made and results of the working groups, and encourage them to move more actively to achieve more tangible results, by enhancing information and experience sharing among member countries.
Informal ASEAN+3 Finance and Central Bank Deputies’ Meeting (Informal AFDM+3) held on 2 April, 2008 is one of the preparation Meetings for the 12 ASEAN Finance Ministers’ Meeting which is organized on 4 April, 2008 in Da nang City, Vietnam.
The informal AFDM+3 was a great chance for the ASEAN countries and the 3 partner countries China, Japan, and Korea to discuss about the regional economic review, as well as the economic developments of each member country.
To follow the common procedures for ASEAN+3, this AFDM+3 was co-chaired by Vietnam ’s Finance Vice Minister Tran Xuan Ha and his counterpart, Japan ’s Finance Deputy Naoyuki Shinohara. Finance and Central Bank Deputies of all the 13 ASEAN countries were attending the Meeting.
During the discussion session held after the presentations made by the international financial institutions, Finance and Central Bank Deputies shared views on the following issues:
- The global economy is slowing down, the economic outlook is not clear due to the complexity of recovery from the subprime mortgage turmoil and solutions for related financial accounts in the US . The global GDP growth is estimated to decline from 4.9% of 2007 down to 3.7% in 2008.
- The global price level, especially the oil, food, and commodity prices continue to go up. However, the price tension seems to be defused, and prices are likely to go down by the end of 2008.
- The ASEAN+3 economies will be influenced by the significant developments in the context of trade liberalization and foreign investments. However, despite a slower rate of growth compared to 2007 (5.4%), the region is expected to maintain reasonably high growth rate of 4.7%. The lower demand for exports will be partly offset by the stably rising domestic demand.
- Inflation in ASEAN+3 is rising in the face of high international price levels.
The Meeting ended with a session on economic review and policy dialogue for each ASEAN+3 member – a surveillance mechanism for the region. This is an important item of the informal AFDM+3 to promote the sharing of experience and policy stance, enhance financial and monetary policy coordination, and strengthen the region’s financial system.
