ASEAN can weather shocks from US tapering, interest rate hike – Finance ministers

Strong macroeconomic fundamentals and improved resiliency presently characterize the Association of Southeast Asian Nations (ASEAN), allowing it to weather external shocks as the US unwinds its monthly bond purchases that would lead to higher interest rates by next year, Finance ministers of the 10-nation bloc said Tuesday.

 

The region will not be fully isolated from the effects of tapering, and the impact will only be temporary on ASEAN, Josephine Teo, senior minister of state at the Ministry of Finance and Transport in Singapore, said during the 10th ASEAN Finance Ministers’ Investor Seminar in the business and financial district of Makati.

 

Market differentiation will take place and investors will focus on economies that have strong fundamentals, she said.

 

“If you look at FDIs (foreign direct investments) to the region, you will see that what is driving those is the prolonged period of macroeconomic stability. That has been boosting investor confidence,” Teo said.

 

As of end-2013, the foreign direct investments in the ASEAN region reached $110.29 billion.

 

This has surpassed that of China which is the second largest economy in the world, Philippine Finance Secretary Cesar Purisima said in his speech at the same meeting.

 

ASEAN has a strong consumer market and a wide range of sectors that include electronics, garments, medical tourism, tourism, and ship building, among others, Purisima noted.

 

“We have to accentuate the strengths of ASEAN,” he said.

 

ASEAN resiliency is reflected by its leap from the 1997 Asian financial crisis and the 2008 global financial crisis, said U Win Shien, Finance and Revenue minster of the Union of Myanmar.

 

"With strong fundamentals, the region is very ready to conduct a more integrated economic zone that will further improve resiliency and economic cooperation among member countries,” Shien, who is also the ASEAN chair, said.

 

By 2015, the ASEAN Economic Community (AEC) sets in motion the creation of single market for the 10-nation bloc.

 

ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.

 

With the impending integration, Purisima said the region must address gaps in standards, reporting requirements, rules, infrastructure, development and governance to be able to "create an Asean class of investment instruments."

 

"We are competing with China, Japan, India, and with other big economies," he said.

 

"That's why we have to position ourselves as a reasonable alternative to these investors," he added. – VS, GMA News