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CHIANG MAI, Thailand : ASEAN finance ministers meet here Thursday, aiming to strengthen measures to head off any repeat of the 1997-98 financial meltdown that traumatised the region for years afterwards.
Thailand, the epicenter of the turmoil, hosts the one-day meeting of the 10-member Association of Southeast Asian Nations (ASEAN), home to some of the world's most dynamic economies and a market of 500 million people.
Apart from discussing how to help a member out of economic problems, ASEAN also aims to address concerns affecting the region's export-driven economy such as slowing global demand and rising oil prices, a senior Thai official said.
"In this region, we are still doing better than others but we have to be very cautious about the factors affecting our economy, such as a slowdown in the world's growth and the possibility of rising oil prices," Suparut Kawatkul, permanent secretary of the Thai finance ministry, told AFP.
Suparut said ASEAN would discuss recent gains in regional currencies against the dollar and ways to boost economic integration in the group ranging from wealthy Singapore to impoverished Cambodia and Myanmar.
Over the past year, major ASEAN currencies such as the Thai baht, Indonesian rupiah, Singaporean dollar and Philippine peso have all sharply appreciated against the dollar amid concern over the slowing US economy.
"I believe the situations of ASEAN member countries are similar. We are all affected ... We will discuss how best to handle the situation," Suparut said.
Thailand has taken some of the most draconian steps to halt the rise in its currency, imposing capital controls in December which required 30 percent of all incoming investment to be withheld for up to one year.
Foreign investors saw the rules as a steep tax on equity investment and quickly dumped shares, triggering a massive sell-off that month.
The debacle forced Thailand to reverse some of the controls but senior officials, including Finance Minister Chalongphob Sussangkarn, have repeatedly insisted that some measures are necessary to curb the baht's rise.
The fear is that stronger currencies will make Thai exports, a key driver for the economy, more expensive and other ASEAN members are similarly dependent on overseas markets.
In 1997, the Bank of Thailand spent billions of dollars in foreign reserves to defend the baht, which came under heavy attack from international speculators when its current account tumbled into the red.
Unable to cope with the onslaught, the central bank allowed the currency to float, setting off a chain reaction of collapsing Asian currencies and soaring interest rates throughout the region.
In a bid to prevent a repeat of 1997, ASEAN, Japan, China and South Korea agreed in 2000 to set up a bilateral currency swap scheme known as the Chiang Mai Initiative.
Under this umbrella accord, an Asian country in trouble can borrow foreign currency -- usually US dollars -- from another country to bolster its international reserves until the crisis passes.
Japan has bilateral currency swap measure worth one billion to three billion dollars each with several ASEAN members, with South Korea also supporting a similar scheme.
Suparut from the Thai finance minister ministry said ASEAN finance ministers hoped to expand the scheme to a multi-lateral system to make the region better prepared for a future economic crisis.
"We have decided to move to the second stage. Under our plan, all ASEAN members will put forward their own reserves for the multilateral scheme. We believe it's a step forward for ASEAN," he said.
- AFP
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