Daily News- April 07- 2002- Sunday

  • ASEAN finance ministers leave Burma after 3.5-4.0 percent growth tipped
  • Out-of-step Burma faces ASEAN pressure to change

  • ASEAN finance ministers leave Burma after 3.5-4.0 percent growth tipped

    Rangoon, (Reuters)- - Southeast Asian finance ministers departed Burma after a meeting where they tipped regional growth of 3.5-4.0 percent in 2002, due to global recovery and integration of member nations' economies.

    At the conclusion of their annual talks, held in the Burmese capital for the first time, the Association of Southeast Asian Nations (ASEAN) ministers said the outlook for the global economy has now improved.

    "We are confident that, after registering moderate growth in 2001, the ASEAN economies will grow more strongly at 3.5-4.0 percent this year," they said in a joint statement released Saturday.

    "This is based on the projected recovery of the global economy, our sound domestic macroeconomic policies and ongoing structural reforms, and the closer economic cooperation that ASEAN has fostered."

    The ministers said the global slowdown, exacerbated by the September 11 terrorist attacks, had hampered the grouping's efforts to sustain economic recovery in the wake of the 1997-98 financial crisis.

    "External demand, particularly the demand for electronic goods, which has underpinned strong export growth in our economies since 1999, slowed significantly," they said.

    That factor, together with a general decline in foreign direct investment, resulted in modest growth of 2.8 percent for ASEAN countries in 2001.

    However, positive developments in the United States pointed to a brighter year ahead, they said.

    "Although the outlook for the Japanese economy remains uncertain, there are signs of a turnaround in the US and some European economies in the first quarter."

    "The signs point towards a gradual recovery in the global economy, with increased momentum in the second half of 2002. We therefore expect our exports to perform better in 2002."

    Asian Development Bank president Tadao Chino told the meeting that the impact of the attacks on the United States and the subsequent Afghan conflict had been less disruptive than expected.

    "There is a growing consensus that the region will experience a moderate rebound this year, in contrast to the gloomy picture one foresaw in the immediate aftermath of the 11 September attacks," he said.

    "Going forward, this year's moderate rebound in the region's growth is expected to strengthen in 2003."

    At their two-day meeting, the 10 ministers looked at strategies to achieve better integration and cooperation in a region of wide wealth disparities.

    They reviewed the progress of financial cooperation measures including the "Chiang Mai Initiative" as well as liberalisation of the financial services sector and development of capital markets.

    The Chiang Mai Initiative proposes linking the international reserves of ASEAN countries with those of China, South Korea and Japan, to avoid a repetition of the 1997-98 crisis when currencies came under speculative attack.

    Six bilateral swap agreements have already been signed, with a combined size of 14 billion dollars, and eight more are being negotiated.

    The ministers also agreed to launch a third round of negotiations on financial services liberalisation, which is expected to be concluded in 2004.ASEAN secretary-general Rodolfo Severino downplayed the low-level representation from dialogue partners China, Japan and South Korea, saying their finance ministers would meet the group in Shanghai next month.

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

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    Out-of-step Burma faces ASEAN pressure to change

    Rangoon(Reuters)- - Burma's military rulers, marching completely out of step with regional efforts to boost trade and investment, could soon face pressure from Southeast Asian allies to embrace political change, diplomats say.

    Burma has been a troublesome partner in the Association of South East Asian Nations (ASEAN) ever since it joined in 1997, and its generals went a stage further last week by announcing a ban on all foreign trading firms, most of which are from ASEAN states.

    The move, which Rangoon said was aimed at protecting local businesses, has raised hackles in ASEAN, which is trying to ensure sustained growth by liberalising trade and investment.

    Thailand's Foreign Minister Surakiart Sathirathai brought up the issue with his counterpart Win Aung on Saturday and Thai officials said ASEAN would try to persuade Burma to reverse the decision.

    They said Win Aung had replied that foreign trading firms would have to enter joint ventures with Burmese companies if they wanted to continue operating.

    Although ASEAN is still far from a collection of model open economies and sticks to a policy of non-interference in the affairs of member states, Burma's increasingly introspective line is testing its patience, diplomats in Rangoon say.


    "A number of the firms are from ASEAN, especially Singapore," said one. "It's going to be taken as a very unfriendly act...another in a long string of insults to investors and traders."

    "It hurts ASEAN's investments -- they don't have a lot of spare money -- and ASEAN's reputation."

    Foreign businesses in Burma already face pressure from human rights groups who say their presence props up the military regime, and are hampered by offbeat economic policies which blend mysticism and communist-style central planning.

    "People have been pulling out for five years," said a Western diplomat. "You can make money on deals -- gems, petrochemicals, teak or drugs -- but fixed investment isn't worth it."

    Foreign business people in Rangoon warn the ban will cause imports of essentials such as medicines to dry up. Exports of Burma's main agricultural produce, grains and pulses, will also suffer and jobs will inevitably be lost, they say.

    Burma is already slipping down the ranks of the world's poorest countries, but its ruling generals deny anything is wrong. They say frequent day-long power cuts are due to newly prosperous people buying electrical appliances. A slumping currency and near hyperinflation are blamed on speculators.

    Shunned by the West, the generals value the legitimacy ASEAN membership confers, and clearly revelled in their role as hosts to a weekend meeting of the group's finance ministers, even if their uniforms and medals looked curiously out of place among the sober business suits of visiting delegates.

    Escorted to the meeting by scores of machinegun-wielding soldiers, military intelligence chief Lieutenant-General Khin Nyunt told ministers Burma's economy was "vibrant" and should grow by more than six percent annually in the next five years.

    But countries like Malaysia, Singapore and Thailand, which invested heavily when Burma began opening its economy in the early 1990s, are starting to see it as a burden which not only offers poor returns, but hurts ASEAN's ties with Western countries pressing for change.

    "These countries have bigger fish to fry," said the Western diplomat. "Their relations with other countries -- the EU, Japan and United States -- are very important."


    Western diplomats predict that as ASEAN patience with Burma wears thin, key members will start to put pressure on the regime to press ahead with political change.

    The junta has been engaged for the last 18 months in U.N.-brokered talks with Nobel laureate Aung San Suu Kyi and her National League for Democracy (NLD), which swept democratic elections in 1990 by a landslide but was never allowed to rule.

    Although the junta has released more than 250 political prisoners since the talks started and eased some restrictions on the NLD, progress has been painfully slow. Suu Kyi herself remains under house arrest and up to 1,600 political prisoners still languish in jail.

    Diplomats say Malaysian Prime Minister Mahathir Mohamad is perhaps the only figure who could persuade Burma's generals to move forward in the talks.

    He is thought to have much influence among Burma's top brass and is the main backer of compatriot and U.N. envoy Razali Ismail, who is due to visit Rangoon again on April 23.

    Diplomats say Mahathir could quietly encourage change without it appearing to be imposed from outside. "He's the elder statesman of ASEAN and he's combative as far as ASEAN's relations with the West are concerned," one said.

    "And Malaysia should be an attractive model for them, as in many ways are China and Vietnam. The models there mean you preserve national unity and get development as well."

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