Transcript Survey of Recent Developments - Agricultural & Applied Economics

Southeast Asian Commercial Policy: Outwardlooking Regional Integration
Hal Hill
Australian National University
Jayant Menon
Asian Development Bank
Prepared for the Ian Coxhead book writing project, Bangkok
conference, March 21-23, 2013.
(note: the views expressed in this presentation are those of the authors alone)
Contents
(1)Introduction
(2) ASEAN Economic Integration and Cooperation
(2.1) ASEAN and ASEAN Economic Development
(2.2) ‘Old Issues’: Merchandise Trade
(2.3) ‘New Issues’: Services, FDI and PTA’s
(2.4) Retrospect and Prospects
(3) ASEAN, CMIM, and Financial Safety Nets
(2) ASEAN Economic Integration and Cooperation
Bangkok Declaration, August 1967:
‘To accelerate the economic growth, social progress and cultural
development in the region … To promote regional peace and
stability…. To promote active collaboration and mutual assistance …’
ASEAN is durable. Four defining characteristics:
a) Diversity – greater than any other major regional grouping. History,
language, politics, and especially economics (50:1 GDP/cap),
population, resource endowments.
b) Generally rapid economic economic development.
But ASEAN membership no guarantee (Myanmar)
c) Avoidance of strong supra-national organization; deliberately underpowered secretariat; the ‘ASEAN Way’ – strengths & weaknesses.
d) Unlikely to ever be an EU-style organization; or a customs union with
common macroeconomic policies.
(2.1) ASEAN and ASEAN Economic Development
The Evolution of ASEAN - four phases:
I) 1967-76: Early days, building understanding, 5 members.
Adoption of the Kansu Report.
II) 1976-92: Bali Summit, Feb 1976: Began formal programs, AIJV’s,
APTA, AIP’s, AIC.
ASEAN beginning to caucus effectively on economic and strategic
issues. But economic programs made little progress; APTA
concessions minimal.
III) 1992-97: Adoption of AFTA a major breakthrough – ‘free trade’,
timetable (CEPT 0-5% by 2008), negative list.
Drivers:
• recognition that 1976 measures largely cosmetic;
• fast changing global and regional landscape;
• increased domestic confidence after 1980s reforms;
• competition from China.
From 1994 remaining 4 mainland states joined, with phased in CEPT.
ASEAN useful in cementing outward orientation in these economies.
By mid 1990s, moving into services trade (AFAS), FDI (AIA) and labour
(ALA).
IV) 1997-98 - : Period since the AFC. AFC had two principal effects.
a)Economies weakened, over-shadowed by China, policy makers
distracted, ASEAN unable to play a role.
b)Rethink about economic cooperation; more than trade; macro &
finance increasingly dominating the agenda.
Four issues characterized the current phase:
• Spread of extra-regional PTA’s.
• Macro, international finance dominating the agenda.
• ASEAN completed the ‘easy phase’ of CEPT. Remaining areas
sensitive.
• Rapid rise of ‘fragmentation trade’, now almost half of ASEAN
manufactured exports; fundamentally incompatible with PTA’s.
(2.2) The ASEAN Economies: an Overview
See summary indicators.
Great economic and social diversity, even excluding Singapore-Brunei.
Large differences in economic structure, resource endowments.
Demographic diversity.
Economic composition differs from other groupings: not a NAFTA, EU,
SARC, Mercosur, SADAC.
By the far the richest ASEAN country is small, ‘vulnerable’ (Leifer).
The largest economy low profile, often pre-occupied, low-income.
Trade, commercial policy regimes also highly diverse.
Singapore, Malaysia, Thailand ‘always open’; others increasingly so
(unilaterally) only since the mid 1980s. Also FDI.
CLMV catching up, some quickly.
Regulatory regimes, etc generally follow pci rankings.
Table 1: Key Indicators, ASEAN
GDP
per
capita
(curren
t US$)
Brunei
Darussala
m
Cambodia
GDP per
capita, PPP
(current
internation
al $)
31,008
795
Indonesia
2,952
Lao PDR
1,158
Malaysia
8,373
Myanmar na
na
Philippine
s
2,140
Singapore
41,987
Thailand
4,614
Vietnam
1,224
GDP
per
capita
2010
(curren
t US$)
1990=1
00
GDP
per
capita
1970
(curren
t US$)
1990=1
00
50,506
222 na
2,184 na
na
Populatio
n
(Millions)
0.4
14.1
4,312
2,567
14,666
475
562 na
346
na
na
13
3,952
57,902
8,516
3,191
298
354
309
1249 na
26
8
13
16
Land
area
(1000
sq.
km)
239.9
6.2
28.4
48
5.27
176.52
1811.5
7
230.8
328.55
653.52
93.3
5.1
69.1
86.9
298.17
0.7
510.89
310.07
Populatio
n density
(people
per sq.
km of
land area)
Agricultur
e, value
added (%
of GDP)
76
80
132
27
86
73 na
313
7252
135
280
Employm
ent in
agricultur
e 2008
(% of
total
employm
ent)
0.8 na
36
72.2
15.3
32.7 na
10.6
na
40.3
12.3
0
12.4
20.6 na
35.3
1.2
42.5
14
Labor
force
(Millio
ns)
Poverty
headcoun
t ratio at
$2 a day
(PPP) (%
of
populatio
n)
0.2 na
8
53.3
118
3.2
12
28 na
46.1
66
2.3
38.7
2.8 na
39.4
51.1
41.5
4.6
43.4
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Figure 1: GDP per capita (constant 2000
US$), ASEAN 9, 1990=100
350%
300%
250%
Vietnam
200%
Cambodia
Lao PDR
Singapore
150%
Malaysia
Thailand
100%
Indonesia
Philippines
50%
0%
Indicator
Ease of Doing
Business, 2012,
rank/183
Index of
Economic
Freedom,
2012, rank/179
Corruption
Perceptions
Index
2011, rank/182
World
Governance
Indicators 2010
Voice and
Accountability
Political
Stability,
Absence
of Violence
Government
Effectiveness
Regulatory
Quality
Rule of Law
Control of
Corruption
GDP per capita
2010,
PPP (constant
2005
international $)
GDP per capita
Brunei
83
Cambod
ia
China
Indonesi
Myanma Philippine Singapo
a
Lao PDR Malaysia r
s
re
Thailand Vietnam India
138
91
129
165
18
136
1
17
98
132
102
138
115
150
53
173
107
2
60
136
123
44
164
75
100
154
60
180
129
5
80
112
95
29.4
24.6
5.2
48.3
5.7
31.3
0.9
46.9
37.4
30.3
8.5
59.2
92.9
25.9
24.1
18.9
36.3
51.9
11.3
6.6
89.6
12.7
51.4
10.8
77.5
22.5
59.8
47.8
16.7
82.3
2.4
51.7
100
58.4
44
55
82.3
73.5
35.4
12.8
45
44.5
39.7
31.3
17.7
21.3
71.3
65.4
1
3.3
44
34.6
98.6
93.4
56.5
49.8
31.1
38.9
39.2
54.5
78.5
7.7
32.5
27.3
13.9
61.2
0.5
22.5
98.6
46.9
33
35.9
1968
6816
3880
2288
13214
1749
3560
51966
7673
2875
3073
Table 3: Trade, Tariff, FDI stock
Country
Brunei
Darussalam
Cambodia
Indonesia
Lao PDR
Malaysia
Myanmar
Philippines
Singapore
Thailand
Vietnam
Trade (% of
GDP), 2010/11
114.3
113.6
55.9
81.6
176.8
62
391.2
148.1
167.9
Tariff rate,
applied, simple
mean, all
products (%),
2008/9/10
3.8
12.4
4.8
9.3
6.8
4
5.3
0
11.2
7.1
FDI inward
stock (% of
GDP), 2011
76.2
53.4
20.5
32.2
41.1
16.9
12.3
203.8
40.4
60.3
(2.2) ‘Old Issues’: Merchandise Trade
Three features dominate:
a) Extra-regional trade much larger than intra-regional; unlike EU. See
Figure. Intra-ASEAN generally 15-30% of total; generally increasing,
reflecting the countries’ increased share of global trade.
b) Singapore still dominates intra-ASEAN trade, about 70%. See Table.
Top 10 account for over 70%.
Hence: customs union not feasible; if ASEAN to adopt common external
trade regime, would have to be Singapore’s, ie, free trade.
c) These trade shares reflect mainly country shares in the world.
Adjusting for world trade shares, ie, trade intensity indices, trade
already very high. See Table.
Intra-ASEAN Exports and Imports as
a Share of Total Exports and
Imports, 1970-2011
30
30
25
25
20
20
15
15
10
10
5
0
0
19
70
19
72
19
74
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
5
Export Share (%)
Import Share (%)
Sources: UNCTAD, 2009. Handbook of Statistics Online (1970-1989 data), and ARIC Integration Indicators Database
Intra-ASEAN Trade Intensity
Index, 1990-2011
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0
Trade Intensity Index
Notes:
Trade intensity index is the ratio of trade share of a country/region to the share of world trade with a partner. An index of more than one indicates
that trade flow between countries/regions is larger than expected given their importance in world trade.
Source: ARIC Integration Indicators Database
Table 4: Major Intra-ASEAN Trade Flows
(10 major flows in 2006, % of total intra-ASEAN Trade)
Exports to:
Indo
Malaysia
Phils
Sing
Thai
VN
From:
Indonesia
4.8
Malaysia
13.2
Singapore
Thailand
13.2
18.9
3.5
2.7
4.5
6.0
4.5
2.9
(2.4) ‘New issues’: Services, FDI and Regional Economic
Architecture
Received attention from mid 1990s; ASEAN evidence mixed.
Deepening Integration: services trade, FDI, Labour
Various agreements signed in the 1990s, implementation commenced
after 2000.
AFAS: Limited progress, in part because services last sector to be
liberalized. Services trade very strong within the region (proximity
matters); though difficult to measure.
Almost entirely market-driven.
AIA: Rapid growth in intra-regional FDI, mainly from Singapore.
Virtually all market driven; influence of AIA marginal.
Most FDI comes from outside the region. See Figure.
ASEAN FDI by Source
(% Share of Total), 1995-2010
100%
80%
60%
40%
20%
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
0%
-20%
ASEAN
ROW
Unspecified
Note: Data for 2010 preliminary
Sources: Asian Community in Figures, 2011, and Asian Statistical Yearbook, various years
ALA: Here also major complementarities. Driven by market forces;
reinforced by proximity and ethnic/linguistic similarities. ALA appears to
play a very minor role. May change after 2015 with AEC?
For the region’s largest labour exporter, the Philippines, extra-regional
destinations are the most important.
The Rise of PTA’s
ASEAN countries generally unilateral/multilateral until around 2000.
Then rapid growth in PTA’s: by September 2012, 98 signed and/or
implemented; 41 under negotiation; 46 proposed. See Table. Range
from comprehensive to ‘trade-lite’.
Singapore the major adopter, reflecting its impatience with pace of
ASEAN, and quick response to behaviour of majors.
Hence the well known ‘spaghetti bowl’. See Figure.
Will these PTA’s collapse into a ‘plurilateral’ Asian FTA centred around
ASEAN?
Unlikely: different ROO’s, exemptions, myriad trade-plus issues in
each. The majors unlikely to agree to ‘consolidate’ these.
Little evidence of ‘open regionalism’ outside ASEAN itself.
ASEAN Countries’ FTAs by
Status, as of September 2012
Under Negotiation
COUNTRY
Proposed
Framework
Agreement
Signed/ Under
Negotiation
Under
Negotiation
Signed
but not
yet In
Effect
Signed
and In
Effect
TOTAL
Brunei
Darussalam
5
2
1
0
8
16
Cambodia
3
0
1
0
6
10
Indonesia
5
1
5
2
7
20
Lao PDR
3
0
1
0
8
12
Malaysia
7
1
4
2
11
25
Myanmar
3
1
1
0
6
11
Philippines
5
0
1
0
7
13
Singapore
5
1
9
3
18
36
Thailand
6
3
4
0
12
25
Viet Nam
4
1
4
1
7
17
Source: ARIC FTA database, Asia Regional Integration Center
FTA Noodle Bowl Effect,
East Asia
Note: FTAs as of 2006 only
Source: Baldwin, R. 2007. Managing the Noodle Bowl: The Fragility of East Asian Regionalism. ADB Working Paper on Regional
Economic Integration No. 7. Manila:ADB.
Some of the concessions of little value as MoP’s continue to decline.
Eg, within ASEAN itself, less than 10% of trade avails of AFTA
concession.
And does not address the issue of rapidly growing ‘fragmentation trade’
occurring largely outside these PTA’s.
Note that PTA’s also impose a huge burden, distraction on the small
transition economies, limited analytical capacity, big reform agenda.
Macroeconomic Issues, AEC, APT and EAS
The more regional issues involve macro and other coordination
challenges, the more non-ASEAN parties involved.
Although ASEAN economies are small, increasingly over-shadowed by
the giants, adroit balance of power politics, rivalry between giants (esp
China and Japan) means ASEAN still in the driver’s seat.
Major test case will be the CMIM; see next section.
An ACU never seriously on the agenda, even before the Eurozone
crisis.
Not much evidence of major redesign of global or regional economic
architecture originating from the region; nor of an ‘Asian6’ caucus in the
G20.
(2.4) Retrospect and Prospects
ASEAN is durable! Played major role in promoting regional harmony in
a divided region. Enabled govts to promote rapid socio-economic
development.
Regional initiatives take decades to develop (eg, the EU).
ASEAN has been skillful at playing ‘balance of power’ politics with
larger countries.
Effective in multilateralizing concessions; RoO’s relatively liberal.
Its success derives also from outward-looking integration (Hadi), and
economic dynamism of member countries.
Limited progress in fostering formal economic integration. See Table.
Some in merchandise trade, mostly multilateralized; very little on
services trade, investment, labour, or broader macroeconomic policy
coordination.
Too much on summits, charters, declarations? Eg, Severino (2006):
‘Regional economic integration seems to have become stuck in
framework agreements, work programmes and master plans.’
Table: Indicators of Economic Integration
Indicator
ASEAN
EU
NAFTA
CER
Mercosur
Free trade in goods
part
yes
yes
yes
part
Free trade in
services
part
yes
part
yes
part
Capital mobility (FDI)
part
yes
part
yes
part
Labour mobility
no
yes
no
yes
no
Competition law
converging
no
yes
no
yes
no
Monetary union
no
yes
no
no
no
Unified fiscal
no
part
no
no
no
(3) ASEAN, CMIM, and Financial Safety Nets
Motivation: In an uncertain global economic environment, countries –
even those with well managed economies – need ‘insurance policies’ to
manage large negative external shocks.
All the traditional solutions have drawbacks:
IMF – still politically unacceptable in much of Asia.
Bilateral swap agreements – require negotiation, no guarantees that they
will be available when needed.
Large international reserves – very costly, may invite retaliatory action.
Thus regional initiatives are potentially attractive, and they add a layer of
regional cooperation.
ASEAN has been developing such a mechanism, from ASA, to CMI to
CMIM, the latter underpinned by the establishment of AMRO in 2011.
The institutional infrastructure looks impressive, but it has yet to be
tested.
The central question: will the CMIM work in the next crisis?
Early Beginnings: from ASA to the CMI and its Expansion
The 1997-98 AFC was a defining event in ASEAN economic history.
The possibility of an ASEAN financial net was recognized much earlier.
The ASEAN Swap Agreement (ASA) established in August 1977 by the
central banks of the 5 original ASEAN members.
Primarily to provide short-term liquidity support in case of BoP difficulties.
Initially with a $100M fund. No IMF linkage.
Essentially dormant for next 2 decades. When AFC struck, obviously
inadequate. So all but Malaysia resorted to the IMF.
Unhappiness with the IMF resulted in establishment of the CMI, May
2000, at the AFMM+3. Two components:
Expanded ASA, for ASEAN10, $200M; to $1B in November.
Network of Bilateral Swap Agreements (BSA’s).
Continued growth: May 2005, ASA doubled to $2B; by May 2008, BSA’s
had increased to $84B. See Table.
Table 1: Swap arrangements under the Chiang Mai Initiative (as of December 2008)
To
From
China
China
Japan
3.0
Korea
4.0
Japan
Korea
Indonesia
Malaysia
Philippines
3.0
4.0
4.0
1.5
2.0
13.0
6.0
1.0
6.0
2.0
1.5
2.0
8.0
Singapore
3.0
Thailand
Total
2.0
16.5
6.0
38.0
1.0
18.5
Indonesia
2.0
2.0
Malaysia
1.5
1.5
2.0
2.5
Philippines
0.5
Singapore
1.0
Thailand
3.0
1.0
1.0
..
4.0
Cambodia
0.0
Lao PDR
0.0
Myanmar
0.0
Vietnam
0.0
Sub-total
7.0
15.5
23.5
12.0
4.0
10.0
3.0
9.0
84.0
ASEAN Swap Agreement (ASA; among the 10 ASEAN countries)
2.0
TOTAL
86.0
Source: Elaborations based on Japan's Ministry of Finance website.
CMIM and AMRO: Basic Structure and Salient Features
Just as the AFC exposed the shortcomings of the ASA, so the GFC
exposed the weaknesses of the CMI. Given its small size and the
absence of rapid response mechanisms, countries resorted to bilateral
swaps with the US, Japan, Australia, and IFI’s.
AFMM+3 decided on major CMIM transformation, beginning 24/3/2010:
• Multilateralization of the CMI – funds under the new CMIM would be a
self-managed reserve pooling arrangement, governed by a single
contract.
• Contributions would be 20% from ASEAN, 80% from ‘+3’.
• PRC (including HK) & Japan each 32%, Korea (ROK) 16%.
• Pool to be expanded to $120B.
CMIM
Is a common US$ liquidity pool, but contributions remain in each
countries’ central bank.
Funds available to each country limited by its quota, defined as its
contributions times its ‘borrowing multiplier’, designed to favour smaller
economies. See Table.
Table 2. Contributions, Borrowing Multipliers, and Voting Power under the CMIM
Countries
Plus Three
China
Financial
Contribution
(billion US$)
192.00
China
(excl.
Hong
Kong)
Share (%)
Purchasing
Multiple
80.00
68.4
76.8
Maximum
Swap
Amount
(billion
US$)
Basic
Votes
Votes Based
on
Contribution
Voting Power
117.30
9.6
192.00
201.6
71.59
%
28.5
0.5
34.2
3.2
68.4
71.6
25.43
3.5
2.5
6.3
0.0
8.4
8.4
2.98
32.0
Hong
Kong,
China
8.4
Japan
76.80
32.00
0.5
38.40
3.20
76.80
80.00
28.41
Korea
38.40
16.00
1
38.40
3.20
38.40
41.60
14.77
ASEAN
48.00
20.00
126.20
32.00
48.000
80.00
28.41
Indonesia
9.104
3.793
2.5
22.76
3.20
9.104
12.304
4.369
Thailand
9.104
3.793
2.5
22.76
3.20
9.104
12.304
4.369
Malaysia
9.104
3.793
2.5
22.76
3.20
9.104
12.304
4.369
Singapore
9.104
3.793
2.5
22.76
3.20
9.104
12.304
4.369
Philippines
9.104
3.793
2.5
22.76
3.20
9.104
12.304
4.369
Vietnam
2.00
0.833
5
10.00
3.20
2.00
5.20
1.847
Cambodia
0.24
0.100
5
1.20
3.20
0.24
3.44
1.222
Myanmar
0.12
0.050
5
0.60
3.20
0.12
3.32
1.179
Brunei
0.06
0.025
5
0.30
3.20
0.06
3.26
1.158
Lao PDR
0.06
0.025
5
0.30
3.20
0.06
3.26
1.158
240.00
100.00
243.50
41.60
240.00
281.60
100.00
Total
Source: The Joint Statement of the 15th ASEAN+3 Finance Ministers and Central Bank Governors' Meeting (2012), 3 May, Manila, Philippines
Conditionality: completed an econ-finance review; compliance with
covenants; submission of surveillance reports; etc.
Compliance not difficult; issue is not stringency but time involved –
especially during a rapidly developing crisis.
Process: Submit request to the 2 ‘Coordinating Countries’; passed on to
the executive ELDMB, a body of country deputies; required to respond
within 2 weeks. Decisions made by 2/3 majority, a weighted voting
system. When approved, the swap providers transfer the funds, and
receive local currency equivalent from the recipients.
The IMF remains crucial – countries could only receive 20% of quota
without IMF conditionality; recently relaxed.
AMRO
Established after the 2009 Bali AFMM+3 in Singapore in May 2011, as
an independent surveillance unit. Conventional management structure,
with a small professional staff (currently 16).
AMRO has both ‘peace time’ and ‘crisis time’ functions, ranging from
general economic surveys to crisis assessment and monitoring.
Post-CMIM Developments
Ongoing international uncertainty led to further changes in May 2012:
doubling size to $240B; increasing delinked IMF portion to 30% (and
later possibly 40%); and introducing a ‘crisis prevention facility’
(analogous to the IMF’s Flexible Credit Line, etc).
Also, importantly, AFMM+3 meetings broadened to include CB
governors.
So CMIM now has 2 instruments, a ST liquidity support facility, and a MT
crisis resolution facility. These are the CMIM-PL (Precautionary Line) as
a crisis prevention mechanism, and the CMIM-SF (Stability Fund) for
crisis resolution.
To access the CMIM-PL, the criteria include external position and market
access, fiscal and monetary policy, financial sector soundness, and data
adequacy.
Limits defined as 6 months, extendable up to 2 years; differences
between IMF-linked and non-IMF funds.
Country quotas continue to apply.
Borrowing at LIBOR plus premium.
The Way Forward: Filling in the Remaining Gaps
The 2012 measures constitute major progress. But is CMIM usable?
Focus here on a liquidity crisis, as a deep fiscal crisis (a la Greece etc) is
beyond its capacity at present.
Two options:
CMIM as a Complement to the IMF
This a common arrangement elsewhere, with co-financing; see Table.
Regardless, the speed and efficiency of requests for assistance need to
be addressed. Also some uncertainty re procedures, since never
employed.
The CMIM is not a fund, but a reserve pooling system.
Decisions lie with a high-level, non-resident body.
Needs to be demonstrated that CMIM is superior to quick-disbursing
bilateral swaps.
Countries already reluctant to apply for the IMF crisis fund, signal effects.
May be a case for delinking from the IMF for very ST (Chalongphob,
2011); ie, IMF linkage only applies to the CMIM-SF. Could also be a
policy discipline. But would Japan and PRC, the major ‘creditors’, agree?
CMIM as an Alternative to the IMF
That is, the CMIM operates independently of the IMF, or at least is
dominant. Three inter-related reforms are required.
a) Further increase in the size of the CMIM: Even though its origins are
different, the Eurozone crisis is a reminder of the bail-out magnitudes
required.
$240B almost certainly inadequate. Eg, the original ASEAN 4 countries
have a non-IMF quota of about $7B, but during the AFC the Indonesian
and Thai packages were about $17B and $40B respectively.
So either the size or the non-IMF limit need to be increased.
See Table on current status of various bilateral swaps; these are more
likely to be called upon. Several more up for negotiation; see Table.
These plus national reserves likely to be the first line of defence.
Moreover, the ‘+3’ countries unlikely to use the CMIM, and they are also
making direct sub-regional arrangements.
Table 4. Bilateral Swap Agreements , +3 Countries, In Force
Country
Japan
Korea
PRC
Partner Country
Amount
Effectivity
Korea
$30 billion won-to yen-swap
Additional $30 billion dollarto-local currency swap
Oct 2011–Oct 2012 (one year)
Philippines
Philippines: $6 billion from
Japan
Japan: $500 million from the
Philippines
May 2012–May 2015 (3 years)
Japan
$30 billion won-to-yen-swap
Additional $30 billion dollarto-local currency swap
Oct 2011–Oct 2012 (one year)
PRC
$56 billion
Oct 2011–Oct 2014 (3 years)
Korea
$56 billion
Oct 2011–Oct 2014 (3 years)
Hong Kong
$63 billion
Nov 2011-Nov 2014 (3 years)
Malaysia
$ 28.6 billion
Feb 2012-Feb 2015 (3 years)
Singapore
$ 22.12 billion
July 2010-July 2013 (3 years)
Thailand
$11 billion
Dec 2011-Dec 2014 (3 years)
Sources: Bank of Japan, ROK Ministry of Foreign Affairs and Trade, and various news articles
Table 5. Bilateral Swap Agreements, Up for Renegotiation
Country
Partner Country
Japan
Indonesia
$12 billion
2009, but under the CMI
Korea
Philippines
$ 2 billion
2008
PRC
Indonesia
$16 billion
2009
Philippines
$ 2 billion
2007
Sources: Bank of Japan, various news articles
Amount
Last BSA Signed (Year)
What about the new ASEAN members? For these, their quotas are quite
a substantial share of their reserves. See Table.
Eg, Cambodia: non-IMF quota of $360M; reserves in Feb 2012 of $3.6B.
So in crisis, likely to look beyond the CMIM.
Also, if the crisis is a regional one, these poorer economies would be
expected to contribute to other rescue packages (see Table 2,
‘contributions’ column), including to richer neighbours. (eg, like Slovakia
contributing to Greece.)
One proposal is for countries to shift from own reserves to pool
contributions, and attaching bilateral swaps to a CMIM swap. If this is to
circumvent CMIM procedures, better to address the CMIM problem
directly.
Moreover, if the CMIM is unusable, it may increase member countries’
vulnerability to a crisis, to the extent that – for a country with only
moderate reserves – it reduces their uncommitted reserves.
For the CLMV countries, also, there will be a tendency for the others to
discount the value of their CMIM commitments. There are opt-out
provisions, but if employed these could have domino effects, and lead to
a general break down.
Table 6. Total reserves minus gold (current US$ million), CMIM Countries
Latest Available Data
Country
Total Reserves
As of
Brunei Darussalam
1,693
2011 Aug
Cambodia
3,640
2012 Feb
294,493
2012 Mar
3,326,602
2012 Mar
106,611
2012 Mar
1,248,875
2012 Apr
313,801
2012 Mar
Lao PDR
703
2010 Dec
Malaysia
133,991
2012 Apr
Myanmar
6,732
2011 Sep
Philippines
65,685
2012 Mar
Singapore
243,582
2012 Mar
Thailand
170,729
2012 Apr
Viet Nam
14,815
2011 Oct
Hong Kong, China
China, P.R.
Indonesia
Japan
Korea, Republic of
Total
Source: IMF International Financial Statistics
5,931,952
Also not clear whether then the recent increase in bilateral swap
arrangements from the ‘+3’ countries will be extended to other CMIM
members to bolster their swap lines, and under what conditions.
b) Expanding CMIM Membership: Although complex, this is important,
and has more to do with diversifying the source of funds than simply
expanding its size of the fund. To include countries less directly
connected to the East Asian business cycle.
Could evolve into some sort of Asian Monetary Fund.
Candidates could include the original ‘+3’ added to the EAS, ie,
Australia, NZ, India. Although closely tied to East Asia, they add some
diversification and financial strength.
The current EAS, ie, ‘ASEAN + 8’ is unlikely.
c) Strengthening AMRO’s Credibility: This is crucial for CMIM; perhaps
more important than diversifying membership, ie, capacity to lead – or be
a key partner in – a credible rescue package is the key.
AMRO currently lacks research capacity, skills, experience and the
institutional set up to effectively serve as the CMIM secretariat.
Leading a regional rescue package is currently a remote possibility.