Ministers to take firm steps on capital flows
Asia-Pacific finance ministers hope to take firm steps toward reaching a consensus on regulating short-term capital flows and developing the region's bond markets, when they meet in the Malaysian island resort of Langkawi this weekend.
Some developing Asian nations have felt shut out of Group of Seven discussions on reforming the world's financial architecture and see the Asia-Pacific Economic Co-operation (Apec) summit as an opportunity to have their voices heard.
Host Malaysia is emboldened by signs of support and sees the ministerial meeting as a chance to press its case that speculative short-term capital flows must be regulated.
Mustapa Mohamed, Malaysia's second finance minister, said he was hopeful there would be 'some movement' towards getting an agreement on regulation.
'This is an area where Malaysia can play a role in getting the international community to understand our views, and importantly, come to a consensus,' Mr Mustapa said.
But the United States, in a delegation to be led by Treasury Secretary-designate Lawrence Summers, remains opposed to new barriers to capital flows and wants more economic reforms in Asia.
Hong Kong is among the Apec members to have expressed concern that some of the larger developed nations may be backtracking on the need to reform.
Japanese Finance Minister Kiichi Miyazawa is expected to use the two-day gathering to unveil a new initiative for fostering development of domestic bond markets in the region.
A Japanese ministry spokesman said details were still being finalised, but it would fall within the US$30 billion Miyazawa Plan for aid proposed last October.
A senior official said Mr Miyazawa would 'talk about bond market development and strategic linkages between Japan and neighbouring countries'.
By nurturing bond markets in East Asia, ministers hope to reduce the region's dependence on foreign capital and thereby avoid fresh financial crises.
Hong Kong has been heading an Apec working group on the issue.
Tom Engle, programme director at Apec's permanent secretariat in Singapore, said Hong Kong might also put forward some bond market proposals.
Ministers from the 21 member economies taking part are also expected to use the meeting to assess the social impact of the recent Asian crisis, possibly drafting a set of common principles on social safety nets.
They will also be assessing the region's economic health.
Mr Engle said: 'We expect them to conclude that while there may now be good news with regards to the financial crisis, there is no room for complacency and members should stick to their restructuring effort.' This was the conclusion arrived at by the Asian Development Bank (ADB) annual governors meeting in Manila earlier this month.
World Bank president James Wolfensohn, International Monetary Fund managing director Michel Camdessus and ADB president Tadao Chino will be attending the Apec forum.
VOICE OVER Malaysia hopes for larger policy role United States seeks further reform in Asia Hong Kong fears possible backtracking
