THE ASSOCIATION of Southeast Asian Nations (ASEAN), with its avowed aim of integration, would do well for now to not go down the single currency path, a visiting International Monetary Fund (IMF) official last week said.
ASEAN’s plans do not extend to such but with the European Union’s continued woes highlighting possible integration pitfalls, IMF Deputy Managing Director Naoyuki Shinohara said the region’s diversity and lower development level would argue against a common currency.
“Regardless of what is happening in Europe, if you consider the current situation that the countries in Southeast Asia are in, it is difficult to imagine a common currency at this moment,” Mr. Shinohara said.
“In case of Southeast Asia, I do not detect that type of strong political will among those countries. The level of economic development is different, larger in this region than in Europe,” he added.
Instead of a single currency, “It is important for this region to try to improve, try to promote and accelerate the economic integration among countries,” Mr. Shinohara said, adding that efforts to remove trade barriers and ease international transactions should continue.
A central bank official agreed, saying the 10-member ASEAN needed to pursue work to improve cooperation. The regional bloc’s schedule is for its capital and financial markets to be integrated by 2015.
“I agree that considering a common ASEAN currency is not advisable at this time. What we need instead is greater regional economic and financial cooperation,” said Diwa C. Guinigundo, deputy governor of the Bangko Sentral ng Pilipinas, in a text message yesterday.
“ASEAN should ensure economic growth within the region by expanding opportunities frontier and internal source of growth,” Mr. Guinigundo added.
Specifically, cross-boarder transactions should be encouraged while rules on capital market development, capital account liberalization and provision on financial services can be harmonized and information sharing can be strengthened, Mr. Guinigundo said.
Mr. Shinohara, meanwhile, said the Philippines should improve its tax administration to support investments in infrastructure and social safety nets.
“We believe it is important that strengthening of the tax administration and broadening the tax base are important for these purposes,” he said, adding that investments and more domestic consumption will lessen the impact of the global slowdown.
Lower exports and reduced government spending resulted in meagre 4% gross domestic product (GDP) growth in the first semester, way below the then “fighting” target of 7-8% for the year.
Economic managers last month cut the GDP growth target for 2011 to 5-6% — a range previously used only for national budget purposes — and said they expected the economy to expand by 4.5-5.5%. — NJCM
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