ASEAN Summit in Pattaya
Economic integration
essential after collapse of western exports
By Jon Fernquest 
Asian
export revenues from rich western countries have collapsed. Economic cooperation and integration among ASEAN and ASEAN+3 states has become even more important now than it has ever been
(Read Regional Financial Cooperation among ASEAN+3 from Japan's Ministry of Finance for background).
This weekend's ASEAN Summit will be focusing on key aspects of economic cooperation within Asia.
The meeting will continue the work that began at the G20 Summit in London last week.
Asia has to find new untapped sources of export demand and investment funds within the region (Read article).
Under the so-called decoupling theory, many believed that Asian states were immune and insulated from sudden downturns in export demand from rich western states such as the US and Europe.
This turned out not to be true.
But this is exactly the problem that Asia now faces, how to decouple Asia and ASEAN from deeply troubled western "advanced" economies.
How to find demand within Asia and ASEAN, is the question of the moment. Economic cooperation will be essential to this task.
The Chiang Mai Initiative bilateral swap programme is designed to provide Asia what the IMF failed to provide in 1997, quick liquidity to prevent spiralling devaluations. The IMF even seems to be changing with the times to provide just that. According to the Economist this week:
Part
of the reason that the IMF needs more money is the flight of private
capital from emerging economies. The Institute of International
Finance, a bankers’ group, expects capital flows to emerging economies
to be 80% lower than in 2007. This means that many more will have to
turn to the IMF (or other official sources) to avoid drastic cuts in
domestic spending. In addition, the fund wants to provide crisis
insurance to large emerging economies suffering a temporary loss of
liquidity but with basically sound policies.
Rather than negotiate a loan once a country is already in dire straits, the IMF would offer a contingent line of credit. This would have none of the policy strings attached to the usual IMF loans. The country would not have to draw down the line of credit unless it needed to; but the credit’s existence would give investors confidence in its ability to ride out the storm. (Source: Economist)
Rather than negotiate a loan once a country is already in dire straits, the IMF would offer a contingent line of credit. This would have none of the policy strings attached to the usual IMF loans. The country would not have to draw down the line of credit unless it needed to; but the credit’s existence would give investors confidence in its ability to ride out the storm. (Source: Economist)
(Photo on right of security details at Pattaya Exhibition and Convention Center the venue for the summit)
economic cooperation
- when different countries work together towards shared goals
integration - combine, join, unite, become closely linked with other parts in the system
economic integration - when barriers are removed so that the economies of separate countries can work closely with each other
ASEAN - the organisation for regional cooperation between Southeast Asian states (Thailand, Vietnam, Singapore, Malaysia, Laos, Brunei, Indonesia, Cambodia, and Myanmar) (See Wikipedia)
Asean+3, ASEAN Plus Three - the Southeast Asian countries of ASEAN plus China, South Korea, and Japan (See Japan Ministry of Finance)
regional financial cooperation - when the states in a region (Asia, Southeast Asia) help each other with banking and financial arrangements
a summit - a high level meeting between the leaders of countries
key aspects - one of the important parts or qualities of something
G20 - the group of 20 major economies from around the world (See Wikipedia)
G20 Summit, G20 meetings, G-20 Leaders' Summit on Financial Markets and the World Economy - the meeting starting this week on finding solutions to the economic crisis (See website and Wikipedia)
untapped - unused, not yet used
demand, aggregate demand - total purchases of a country’s output of goods and services by consumers, businesses, governments, and foreigners during a given period (Source: Congrssional Budget Office glossary)
export demand - foreign companies buying good produced for export (one of several sources of aggregate demand in an economy)
funds - money to be used for a special purpose
investment funds - money to be used for investment
decoupling - the idea that European and Asian economies, especially emerging ones, have broadened and deepened to the point that they no longer depend on the United States for growth, leaving them insulated from a severe slowdown or recession (See Wikipedia)
immune - cannot be affected by negative events, able to escape from negative events
insulated from Y - protected from Y
deeply troubled - have many very bad, difficult to solve problems
the question of the moment - the important question that has to be solved now, that everyone is trying to find an answer to
a security detail - a group ordered to do a job (especially used in the military)
Pattaya Exhibition and Convention Center (PEACH) - Thailand's newest convention center located in Pattaya (See article descibing center when it was opened in November, 2008)
a venue - the place where a large event is held
integration - combine, join, unite, become closely linked with other parts in the system
economic integration - when barriers are removed so that the economies of separate countries can work closely with each other
ASEAN - the organisation for regional cooperation between Southeast Asian states (Thailand, Vietnam, Singapore, Malaysia, Laos, Brunei, Indonesia, Cambodia, and Myanmar) (See Wikipedia)
Asean+3, ASEAN Plus Three - the Southeast Asian countries of ASEAN plus China, South Korea, and Japan (See Japan Ministry of Finance)
regional financial cooperation - when the states in a region (Asia, Southeast Asia) help each other with banking and financial arrangements
a summit - a high level meeting between the leaders of countries
key aspects - one of the important parts or qualities of something
G20 - the group of 20 major economies from around the world (See Wikipedia)
G20 Summit, G20 meetings, G-20 Leaders' Summit on Financial Markets and the World Economy - the meeting starting this week on finding solutions to the economic crisis (See website and Wikipedia)
untapped - unused, not yet used
demand, aggregate demand - total purchases of a country’s output of goods and services by consumers, businesses, governments, and foreigners during a given period (Source: Congrssional Budget Office glossary)
export demand - foreign companies buying good produced for export (one of several sources of aggregate demand in an economy)
funds - money to be used for a special purpose
investment funds - money to be used for investment
decoupling - the idea that European and Asian economies, especially emerging ones, have broadened and deepened to the point that they no longer depend on the United States for growth, leaving them insulated from a severe slowdown or recession (See Wikipedia)
immune - cannot be affected by negative events, able to escape from negative events
insulated from Y - protected from Y
deeply troubled - have many very bad, difficult to solve problems
the question of the moment - the important question that has to be solved now, that everyone is trying to find an answer to
a security detail - a group ordered to do a job (especially used in the military)
Pattaya Exhibition and Convention Center (PEACH) - Thailand's newest convention center located in Pattaya (See article descibing center when it was opened in November, 2008)
a venue - the place where a large event is held
Here is a summary of issues that will be addressed at the Pattaya ASEAN Summit tthis weekend (April 10-12), an extract from:
Asean to consider sustainable growth
By WICHIT CHANTANUSORNSIRI8/04/09
Chiang Mai Initiative: From bilateral swaps to multilateral pool
Officials hope to further progress on plans to upgrade the Chiang Mai Initiative bilateral swap programme into a larger, multilateral pool to serve as a financial lifesaver against future crises. They want to increase it by 50% to $120 billion [4.24 trillion baht].China, Japan and Korea will provide 80% of the funds for the pool, with the remainder financed by Asean. The five largest Asean economies - Singapore, Malaysia, Indonesia, the Philippines and Thailand - will contribute $4.5 billion each, with Laos, Burma, Cambodia, Vietnam and Brunei the rest.
Discussions will include details of pool operations, with officials tentatively agreeing that countries could borrow for terms of 90 to 360 days at interest rates set at LIBOR plus 150 basis points.
progress - move
forward and advance
upgrade - improve
Chiang Mai Initiative (CMI) - an arrangement of currency swaps between Asian states to help each other out when they have liquidity difficulties, began in 2000 (Read history)
liquidity difficulties, a credit crunch - a state in which there is a short supply of cash to lend to businesses and consumers and interest rates are high, a sudden reduction in the availability of loans (or "credit") or a sudden increase in the cost of obtaining a loan from the banks, a period when credit and investment capital is difficult to obtain causing a shortage of liquidity (See Wikipedia)
multilateral - relation involving many countries
bilateral - relation involving two countries
swaps, currency swaps - a contract that commits two parties to exchange, over an agreed period, streams of interest payments denominated in different currencies, used by businesses doing business internationally to protect themselves from the risk of currencies changing value (See Wikipedia)
bilateral swap arrrangements (BSAs), bilateral swap programme - currency swap arrangements between two countries to help them in case of liquidity problems
a pool, a shared pool - a shared set of resources gathered together by a group for the group to use
a multilateral pool - when several countries put money together for a shared purpose
reserves, foreign exchange reserves - amounts of foreign currencies held by the central bank of a country
multilateral reserve pooling mechanism - a way for many countries to gather together and share part of their foreign exchange reserves
shared pool of foreign-exchange reserves -
remainder -
the interbank market, interbank lending market - the market for lending temporary funds between banks, a high-level foreign exchange market where over 1000 banks can exchange different currencies for short periods time (See Wikipedia)
LIBOR, the LIBOR rate -the most important inter-bank lending rate, interest rates for more risky lending set by adding a risk premium to LIBOR, full name is the "London Inter Bank Offer Rate" which is interest rate of London's wholesale money markets, also a standard interest rate used in US financial markets, used to set variable-rate loans including credit cards and adjustable-rate mortgages (Source: DebtConsolidation.com, Wikipedia and another simple article)
LIBOR plus 150 basis points - the LIBOR rate plus a risk premium of 1.5%
upgrade - improve
Chiang Mai Initiative (CMI) - an arrangement of currency swaps between Asian states to help each other out when they have liquidity difficulties, began in 2000 (Read history)
liquidity difficulties, a credit crunch - a state in which there is a short supply of cash to lend to businesses and consumers and interest rates are high, a sudden reduction in the availability of loans (or "credit") or a sudden increase in the cost of obtaining a loan from the banks, a period when credit and investment capital is difficult to obtain causing a shortage of liquidity (See Wikipedia)
multilateral - relation involving many countries
bilateral - relation involving two countries
swaps, currency swaps - a contract that commits two parties to exchange, over an agreed period, streams of interest payments denominated in different currencies, used by businesses doing business internationally to protect themselves from the risk of currencies changing value (See Wikipedia)
bilateral swap arrrangements (BSAs), bilateral swap programme - currency swap arrangements between two countries to help them in case of liquidity problems
a pool, a shared pool - a shared set of resources gathered together by a group for the group to use
a multilateral pool - when several countries put money together for a shared purpose
reserves, foreign exchange reserves - amounts of foreign currencies held by the central bank of a country
multilateral reserve pooling mechanism - a way for many countries to gather together and share part of their foreign exchange reserves
shared pool of foreign-exchange reserves -
remainder -
the interbank market, interbank lending market - the market for lending temporary funds between banks, a high-level foreign exchange market where over 1000 banks can exchange different currencies for short periods time (See Wikipedia)
LIBOR, the LIBOR rate -the most important inter-bank lending rate, interest rates for more risky lending set by adding a risk premium to LIBOR, full name is the "London Inter Bank Offer Rate" which is interest rate of London's wholesale money markets, also a standard interest rate used in US financial markets, used to set variable-rate loans including credit cards and adjustable-rate mortgages (Source: DebtConsolidation.com, Wikipedia and another simple article)
LIBOR plus 150 basis points - the LIBOR rate plus a risk premium of 1.5%
ASEAN infrastructure fund
Dr Somchai said Thailand, which holds the Asean chair this year, will push for an Asean infrastructure fund to channel the region's savings into infrastructure investments across the region.Finance Minister Korn Chatikavanij proposed each country contribute to the fund based on their readiness, with financing from direct budget allocations, foreign reserve holdings or even private sector investments.
Countries could tap the fund to finance domestic infrastructure programmes, with the Asian Development Bank serving as a guarantor for bond issues.
hold the ASEAN chair -
is the head of ASEAN, this rotates among the ASEAN member states
push for Y - try to get some plan chosen and adopted
infrastructure - large investments in basic services that support business and everyday life such as water, electricity, roads, subways, trains, waste removal, telecommunications network
channel X into Y - make or cause X go into Y
allocate - give a part of something to someone for a special purpose
allocation - an amount given for a special purpose
direct budget allocations - proving money from the annual government budget
foreign reserve holdings - other currency assets collected by the central bank (for safety in case of sudden rapid devaluation like 1997 and also for intervention to keep baht from appreciating too much)
private sector investments - money from companies
guarantor for bond issues - promises to pay back the bonds if the borrower (bond issuer) cannot pay back
push for Y - try to get some plan chosen and adopted
infrastructure - large investments in basic services that support business and everyday life such as water, electricity, roads, subways, trains, waste removal, telecommunications network
channel X into Y - make or cause X go into Y
allocate - give a part of something to someone for a special purpose
allocation - an amount given for a special purpose
direct budget allocations - proving money from the annual government budget
foreign reserve holdings - other currency assets collected by the central bank (for safety in case of sudden rapid devaluation like 1997 and also for intervention to keep baht from appreciating too much)
private sector investments - money from companies
guarantor for bond issues - promises to pay back the bonds if the borrower (bond issuer) cannot pay back
Economic cooperation and market liberalisation
Ministers will also discuss ways of facilitating trade and investment across the region to create an Asean Economic Community (AEC) by 2015."Investment and market liberalisation will be the highlight of the meetings," Dr Somchai said.
Capital market integration will also be on the agenda, with ministers hoping to endorse an implementation plan ultimately aimed at building up the region's markets by facilitating cross-border securities listings and investment.
Asean Economic Community (AEC) -
a plan for the econmic integration of ASEAN states by 2015 with a
gradual elimination of barriers to trade and investment in the region
(See introduction
and description
[scroll down])
highlight - the important part that gets people's attention
a capital market - a market for companies raising money for their business operations, through stocks and bonds
integration - bringing together many separate pieces to work together as a unified whole
on the agenda - one the list of things to be discussed in a meeting
endorse Y - give approval supporting proposal Y
an implementation plan - a plan for making a plan into reality, actually work
cross-border securities listings when the stocks in one country are traded in another country's stock exchange
highlight - the important part that gets people's attention
a capital market - a market for companies raising money for their business operations, through stocks and bonds
integration - bringing together many separate pieces to work together as a unified whole
on the agenda - one the list of things to be discussed in a meeting
endorse Y - give approval supporting proposal Y
an implementation plan - a plan for making a plan into reality, actually work
cross-border securities listings when the stocks in one country are traded in another country's stock exchange
Asean finance ministers will also discuss policies and issues raised at the G20 meetings held earlier this month in London, a conference attended by China, Japan, Korea and Indonesia as members and Thailand as Asean representative.
Dr Somchai said Asean ministers will also discuss co-operation in the region's life and non-life insurance sectors, including regulatory standards, customs procedures and work towards the creation of an Asean "Single Window" to facilitate customs clearance as well as initiatives to guard against money laundering and terrorist financing.
Financial sector liberalisation will also be discussed. This will be the fifth round of negotiations towards sector liberalisation under the AEC framework, and the Asian Development Bank has agreed to perform a "financial landscape assessment" to help assess the readiness of different markets for liberalisation.
Capital account liberalisation is on the agenda, aiming to reduce barriers to portfolio investment and foreign direct investment, either through outright capital controls, taxes or other barriers.
life insurance -
an insurance policy to protect a family against the death of the person
who earns money and supports the family, regular payments (life
insurance premiums) are made in exchange for a pay out in case of
death (See Wikipedia)
facilitate - help
customs - the government agency responsible for controlling goods passing into and out of a country, collecting tariffs and taxes on these goods and also checking to see if goods are legal (See Wikipedia)
customs clearance - the process of checking goods entering and leaving a country and collecting tariffs or taxes on them
money laundering - disguising illegally obtained funds so that they seem legal, used in the underground economy to conceal the identity, source, or destination of illegally gained money, a crime committed by people trying to hide wealth such as drug dealers, businesses, corrupt officials, and members of criminal organizations such as the Mafia (See Wikipedia)
financial sector liberalisation - when restrictions on investments foreigners outside the country are eliminated
a round of negotiations - one in a long series of negotiations to solve a problem or reach an agreement
framework - a set of rules, ideas, and beliefs used to deal with problems and make decisions
AEC framework - the set of ideas and rules that the ASEAN Economic Community (AEC) has established
assessment - studying and evaluating something and then making a judgement about it
financial landscape assessment - studying and evaluating the current financial situation
readiness - when the situation and conditions exist so that something can happen, something can be achieved successfully
capital account - investment money flowing into and out of a country (FDI plus portfolio investment in stocks and bonds, loans, bank account, part of balance of payments (See Wikipedia on capital account)
capital account liberalisation - allowing investment money to flow more easily between countries
current account - summarizes foreign trade for a country, roughly exports less imports (part of balance of payments)
balance of payments - measures the payments that flow between a country andother countries, used to summarize all international economic transactions during the year, determined byexports and imports of goods, services, and financial capital, as well as financial transfers (See Wikipedia)
on the agenda - on the list of things to discuss at a meeting, on a list of things to do
portfolio investment - investment in stocks and bonds (opposite of FDI)
foreign direct investment (FDI) - investment in companies that operate in a foreign country
outright - complete and total, open and direct (not hidden)
capital controls - controlling investment coming into and going out of a country, so that large amounts do not pass in and out thuse destabilizing the country
facilitate - help
customs - the government agency responsible for controlling goods passing into and out of a country, collecting tariffs and taxes on these goods and also checking to see if goods are legal (See Wikipedia)
customs clearance - the process of checking goods entering and leaving a country and collecting tariffs or taxes on them
money laundering - disguising illegally obtained funds so that they seem legal, used in the underground economy to conceal the identity, source, or destination of illegally gained money, a crime committed by people trying to hide wealth such as drug dealers, businesses, corrupt officials, and members of criminal organizations such as the Mafia (See Wikipedia)
financial sector liberalisation - when restrictions on investments foreigners outside the country are eliminated
a round of negotiations - one in a long series of negotiations to solve a problem or reach an agreement
framework - a set of rules, ideas, and beliefs used to deal with problems and make decisions
AEC framework - the set of ideas and rules that the ASEAN Economic Community (AEC) has established
assessment - studying and evaluating something and then making a judgement about it
financial landscape assessment - studying and evaluating the current financial situation
readiness - when the situation and conditions exist so that something can happen, something can be achieved successfully
capital account - investment money flowing into and out of a country (FDI plus portfolio investment in stocks and bonds, loans, bank account, part of balance of payments (See Wikipedia on capital account)
capital account liberalisation - allowing investment money to flow more easily between countries
current account - summarizes foreign trade for a country, roughly exports less imports (part of balance of payments)
balance of payments - measures the payments that flow between a country andother countries, used to summarize all international economic transactions during the year, determined byexports and imports of goods, services, and financial capital, as well as financial transfers (See Wikipedia)
on the agenda - on the list of things to discuss at a meeting, on a list of things to do
portfolio investment - investment in stocks and bonds (opposite of FDI)
foreign direct investment (FDI) - investment in companies that operate in a foreign country
outright - complete and total, open and direct (not hidden)
capital controls - controlling investment coming into and going out of a country, so that large amounts do not pass in and out thuse destabilizing the country
(Source: Bangkok Post, business, 8/04/09, Asean to consider sustainable growth, WICHIT CHANTANUSORNSIRI , link)
