Finance ministers and central bank governors of ASEAN on Friday (Apr 6) reaffirmed their commitment to international trade and investment as they remained “vigilant against risks”, according to a joint statement released after a meeting held in Singapore.
The 4th Finance Ministers’ and Central Bank Governors’ Meeting was co-chaired by Singapore’s Finance Minister Heng Swee Keat and Mr Ravi Menon, the managing director of the Monetary Authority of Singapore (MAS). Singapore is the ASEAN chair this year.
Encouraged by last year’s strong economic growth of 5.1 per cent, Southeast Asia’s finance ministers and central bankers said they expect the region’s growth momentum to be sustained into 2018.
This is on the back of factors including a broad-based global economic recovery, expansion in global trade, sustained private consumption and growing infrastructure investment.
Still, they remained “vigilant against risks” and reaffirmed their commitment to international trade and investment, which are “important engines of growth and development”.
The joint statement comes after a week of tit-for-tat tariffs between the United States and China, with US President Donald Trump vowing an additional US$100 billion worth of levies on Thursday. The exchange of retaliatory salvos between the world’s two biggest economies has stirred fears of a full-blown trade war that could hurt global economic growth.
When asked about this, Mr Heng said the ASEAN officials spent “quite a bit of time” discussing trade matters during the meeting. One of which was the rising risk of protectionist sentiments around the world.
But even as globalisation has its negative impact and there should be support for those affected, “the right solution is not to close the economy”, Mr Heng said at a press conference.
Instead, efforts should be made to “integrate economies better to see how we can benefit from free, open trade; how we can restructure our economies; how we can improve financial connectivity; and develop the skills of our people for new jobs and new areas of growth”, he added.
Therefore, ASEAN member states will “continue to work very closely” with one another as the regional bloc strives towards the goals of the ASEAN Economic Community (AEC).
Mr Heng also stressed the need to send a “strong signal” about how an escalation in the trade feud “would not benefit anyone”.
“It is going to be very negative… We must continue to have a strong commitment to trade and openness.”
On whether the mounting trade tensions could derail ASEAN’s growth, Mr Heng said it remains early days to arrive at a conclusion or to do any revision to growth projections.
He added that “very detailed briefings” from various organisations, such as the International Monetary Fund (IMF), and assessments from private-sector economists suggested that the region’s growth momentum will likely be maintained.
“So that gives us confidence that the central scenario remains valid,” said Mr Heng.
PRIORITIES FOR FINANCE COOPERATION WITHIN ASEAN
In the joint statement, finance ministers and central bank governors from ASEAN also reaffirmed their commitment to the AEC Blueprint 2025, which include strategic objectives of financial integration, financial stability and financial inclusion.
Under Singapore’s chairmanship, the overarching theme for the ASEAN meetings this year is a “Resilient and Innovative ASEAN”. For the finance track, the focus was on sustaining growth, boosting resilience and fostering innovation.
Under the three areas of focus, key topics include efforts to plug the gap between ASEAN’s infrastructure development and financing needs, enhancing the region’s disaster resilience and cyber resilience capabilities, as well as support for digital innovations like financial technology (fintech).
On infrastructure, the ASEAN officials said they are committed to accelerating infrastructure development and financing through the mobilising of private capital. One of the ways is to showcase ASEAN’s pipeline of investible projects and raise investors’ understanding of investment opportunities in the region, said the joint statement.
The joint statement also noted progress in the area of financial services liberalisation, as well as the integration of the region’s banking, insurance and capital markets. For the latter, the move by Malaysia and Singapore to connect their stock markets was highlighted as a welcomed initiative.
On the need to ramp up disaster resiliency, finance ministers and central bankers said this was key for the sustaining of growth and protection of people’s well-being.
Philippine Finance Secretary Carlos Dominguez III highlighted this as an important topic for his country given that the Philippines “is the landing place for typhoons (in) Southeast Asia”.
“We are very concerned about the damage to our communities,” he said. “ASEAN’s efforts in developing disaster resilience is very welcomed.”
Another aspect of boosting resiliency addresses the risk of cyber attacks. The joint statement said the region will “facilitate the sharing of information on cyber threat and incidents within ASEAN” to enhance awareness and strengthen cyber resilience in the financial sectors.
Mr Menon said there was a “pretty strong consensus” among the member states on the need for closer cooperation. “We will be working on modalities and frameworks within which we can do this in an efficient and effective way,” he added.
For 2019, the Finance Ministers’ and Central Bank Governors’ Meeting will be held in Chiang Rai, revealed Thailand’s Finance Minister Apisak Tantivorawong towards the end of the media conference. Thailand will take over the rotating ASEAN chairmanship next year.