Documentation: Statement by the ASEAN Finance Ministers and the Finance Ministers of Australia, China, Hong Kong SAR China, Japan, Korea and the United States: Kuala Lumpur, 2 December 1997

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1. The Finance Ministers of ASEAN and Australia, China, Hong Kong SAR China, Japan, Korea and the United States met in Kuala Lumpur on 2 December 1997 to discuss current developments in the region.

2. The Meeting was chaired by H.E. Dato' Seri Anwar Ibrahim, Deputy Prime Minister and Minister of Finance, Malaysia. The meeting was attended by Their Excellencies Mr Peter Costello, Treasurer, Australia; Pehin Dato' Ahmad Wally Skinner, Deputy Minister of Finance, Brunei Darussalam; Mr Liu Jibin, First Vice Minister of Finance, China, Mr Donald Tsang, Financial Secretary, Hong Kong SAR, China; Mr Mai'ie Muhammad, Minister of Finance, Indonesia; Dr Eisuke Sakakibara, Vice Minister of Finance for International Affairs, Japan; Mr Man Soo Kang, Vice Minister of Finance and Economy, Korea; Mr Bounlith Khennavong, Vice Minister of Finance, Lao People's Democratic Republic; Brigadier General Win Tin, Minister for Finance and Revenue, Myanmar; Mr Roberto F. de Ocampo, Secretary of Finance, Philippines; Dr Richard Hu Tsu Tau, Minister of Finance, Singapore; Mr Tarrin Nimmanahaeminda, Minister of Finance, Thailand; Mr Timothy Ceithner, Assistant Treasury Secretary, United States; Mdm Le Thi Bang Tam, Vice Minister of Finance, Vietnam; Dato' Ajit Singh, SecretaryGeneral of ASEAN; and their respective delegations.

Meeting with the Managing Director of IMF and the Senior Vice President of the World Bank

3. Ministers met with Mr Camdessus, the Managing Director of the IMF who briefed them on the state of the world economy. The Managing Director expressed confidence that the Southeast Asian economies could recover quickly if appropriate policies were taken. He further expressed confidence that the package of measures undertaken by Indonesia and Thailand under the IMF programme should restore confidence in the economies of the region and financial markets. Mr Camdessus also reported on the progress of the study on the role of hedge funds in the recent crisis in South East Asia. Ministers welcomed the preliminary findings of the study, looked forward to receiving the full report and urged the IMF to extend the scope of the study to examine the structure of the global financial markets and shortterm capital flows, including the impact of hedging activities on the banking sector as well as the impact and implications of technology on capital flows.

4. Mr Stiglitz, Senior Vice President of the World Bank, gave the World Bank's perspective on recent events in southeast and northeast Asia, and the measures that would need to be undertaken to restore confidence and growth in the economies. Mr Stiglitz emphasized the importance of minimizing moral hazard, the need to build robust financial systems and the need to enhance surveillance to improve transparency and enable early responses to address any imbalances. Mr Stiglitz reaffirmed the role of the World Bank in the Implementation of the Manila Framework.

Endorsement of the Manila Framework

5. Ministers strongly endorsed and agreed on the rapid implementation of the Manila Framework as a constructive step towards promoting financial stability in the region.

6. In this regard, Ministers noted that Japan would convene a meeting of Finance and Central Bank Officials early next year to carry forward the initiatives under the Manila Framework and work closely with the IMF, World Bank, ADB and the international regulatory bodies.

7. Ministers also noted that the process of surveillance provided a mechanism for economies to identify areas that required technical assistance to enhance the capacity of their domestic financial system to meet the challenges of globalization.

8. Ministers urged IMF members for early ratification of the New Arrangements to Borrow and the Agreement to Increase IMF Quotas reached in Hong Kong SAR, China. …