Asean leaders coordinating on financial crisis

Southeast Asian leaders say they back stimulus plans, oppose protectionism and will co-ordinate policies to confront a deepening global financial crisis battering their economies.

The 10 leaders of the Association of South East Asian Nations (Asean) did not spell out any specific actions the group would take in a chairman's statement issued after their summit in the Thai seaside resort of Hua Hin.

They said they endorsed expansionary policies, including fiscal stimulus plans, monetary easing, access to credit and trade financing, and measures to stimulate domestic demand.

Export-dependent Asian economic growth is slowing rapidly as consumers and companies cut back spending amid the worsening global downturn.

In Southeast Asia, Singapore is in recession and economists say Malaysia and Thailand are on the brink, while Indonesian growth has slowed to its weakest pace in more than two years.

Many Asian countries have announced stimulus plans in a bid to stem the economic damage, but exports will not stage a major recovery until consumers in the West start spending again.

The leaders also agreed to stand firm against protectionism and refrain from introducing or raising new trade barriers and called for "bold and urgent reform" of the international financial system, the statement said.

"We will be severely tested from now on, both as a group and as a part of the broader Asia region," Thailand's Prime Minister Abhisit Vejjajiva told the summit opening on Saturday.

"As the financial crisis deepens, the world will look towards our region for action and for confidence."

ROADMAP TO COMMUNITY

Asean has begun, with this summit, implementing a roadmap that will turn what used to be a consensus-based group long derided as a talk-shop into a single economic community of 570 million people with a combined GDP of US$2 (NZ$4.02) trillion in six years.

Economic ministers this week agreed to reduce trade barriers and open up some service industries.

The most tangible outcome of the meetings was the signing of a free trade agreement between Asean, New Zealand and Australia that could eventually add $48 billion to economies in the region.

In the run-up to the meeting, Asean along with China, South Korea and Japan agreed to enlarge their pool of foreign reserves to $120 billion to defend their currencies from the fallout of the financial crisis.

But while Asean leaders made a stand against protectionism, they have defended their own buy-local campaigns, saying those conform with trade rules, and are similar to the "Buy American" clause in the $787 billion US stimulus package.

The summit, whose theme this year was "Asean Charter for Asean Peoples", held talks with civil society groups, part of its drive toward creating an integrated socio-cultural community.

The dialogues, which will become a regular feature of these meetings, got off to a shaky start when Cambodia and Myanmar refused to recognise the groups representing their countries.

Activist groups said the incident showed Asean was still succumbing to its tradition of non-interference in each member's affairs and taking decisions by consensus.

Abhisit told reporters: "This is something new. This is the first time and we will continue to make more progress".

The leaders also agreed on the contours of a much-debated human rights body and will make it operational by the end of this year. But it will not have the power to punish violators, Asean Secretary-General Surin Pitsuwan said.

The leaders urged military-ruled Myanmar "to be as inclusive as possible" in preparing for elections next year, allow all political parties to participate, and free political prisoners.

They did not mention detained opposition leader Aung San Suu Kyi, Malaysia's Prime Minister Abdullah Badawi said.

"Myanmar has told us before they would rather deal with the UN, rather than Asean. We do not have to be the interpreter for Myanmar any more."

The problems with Myanmar illustrate the challenges Asean faces in becoming an integrated political community. The group includes two communist states, a military dictatorship, an absolute monarchy, and young democracies.

- Reuters