Southeast Asian Commercial Policy: Outward-looking Regional Integration

Hal Hill

Australian National University

Jayant MenonAsian 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 under-powered 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 (current US$)

GDP per capita, PPP (current international $)

GDP per capita 2010 (current US$) 1990=100

GDP per capita 1970 (current US$) 1990=100

Population (Millions)

Land area (1000 sq. km)

Population density (people per sq. km of land area)

Agriculture, value added (% of GDP)

Employment in agriculture 2008 (% of total employment)

Labor force (Millions)

Poverty headcount ratio at $2 a day (PPP) (% of population)

Brunei Darussalam 31,008 50,506 222 na 0.4 5.27 76 0.8 na 0.2 na

Cambodia 795 2,184 na na 14.1 176.52 80 36 72.2 8 53.3

Indonesia 2,952 4,312 475 13 239.91811.5

7 132 15.3 40.3 118 46.1

Lao PDR 1,158 2,567 562 na 6.2 230.8 27 32.7 na 3.2 66

Malaysia 8,373 14,666 346 16 28.4 328.55 86 10.6 14 12 2.3

Myanmar na na na na 48 653.52 73 na na 28 na

Philippines 2,140 3,952 298 26 93.3 298.17 313 12.3 35.3 38.7 41.5

Singapore 41,987 57,902 354 8 5.1 0.7 7252 0 1.2 2.8 na

Thailand 4,614 8,516 309 13 69.1 510.89 135 12.4 42.5 39.4 4.6

Vietnam 1,224 3,191 1249 na 86.9 310.07 280 20.6 na 51.1 43.4

Figure 1: GDP per capita (constant 2000 US$), ASEAN 9, 1990=100

Indicator BruneiCambodia China

Indonesia Lao PDR Malaysia

Myanmar

Philippines

Singapore Thailand Vietnam India

Ease of Doing Business, 2012, rank/183 83 138 91 129 165 18 136 1 17 98 132Index of Economic Freedom, 2012, rank/179 102 138 115 150 53 173 107 2 60 136 123Corruption Perceptions Index 2011, rank/182 44 164 75 100 154 60 180 129 5 80 112 95World Governance Indicators 2010

Voice and Accountability 29.4 24.6 5.2 48.3 5.7 31.3 0.9 46.9 37.4 30.3 8.5 59.2

Political Stability, Absence

of Violence 92.9 25.9 24.1 18.9 36.3 51.9 11.3 6.6 89.6 12.7 51.4 10.8

Government Effectiveness 77.5 22.5 59.8 47.8 16.7 82.3 2.4 51.7 100 58.4 44 55

Regulatory Quality 82.3 35.4 45 39.7 17.7 71.3 1 44 98.6 56.5 31.1 39.2

Rule of Law 73.5 12.8 44.5 31.3 21.3 65.4 3.3 34.6 93.4 49.8 38.9 54.5

Control of Corruption 78.5 7.7 32.5 27.3 13.9 61.2 0.5 22.5 98.6 46.9 33 35.9GDP per capita 2010, PPP (constant 2005 international $) 1968 6816 3880 2288 13214 1749 3560 51966 7673 2875 3073

GDP per capita growth (average annual, 1990-2010) -0.62 5.97 9.22 3.63 4.54 3.72 8.21 1.65 3.90 3.80 5.82 4.73

Table 3: Trade, Tariff, FDI stock

Country Trade (% of GDP), 2010/11

Tariff rate, applied, simple mean, all products (%), 2008/9/10

FDI inward stock (% of GDP), 2011

Brunei Darussalam 114.3 3.8 76.2Cambodia 113.6 12.4 53.4Indonesia 55.9 4.8 20.5Lao PDR 81.6 9.3 32.2Malaysia 176.8 6.8 41.1Myanmar 4 16.9Philippines 62 5.3 12.3Singapore 391.2 0 203.8Thailand 148.1 11.2 40.4Vietnam 167.9 7.1 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

0

5

10

15

20

25

30

0

5

10

15

20

25

30

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

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

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:

From:

Indo Malaysia Phils Sing Thai VN

Indonesia 4.8

Malaysia 13.2 4.5

Singapore 13.2 18.9 2.7 6.0 2.9

Thailand 3.5 4.5

(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

-20%

0%

20%

40%

60%

80%

100%

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

COUNTRY Proposed

Under NegotiationSigned but not yet In Effect

Signed and In Effect

TOTALFramework Agreement

Signed/ Under Negotiation

Under Negotiation

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 17Source: 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 Japan Korea Indonesia Malaysia Philippines Singapore Thailand Total

China   3.0 4.0 4.0 1.5 2.0   2.0 16.5

Japan 3.0   13.0 6.0 1.0 6.0 3.0 6.0 38.0

Korea 4.0 8.0   2.0 1.5 2.0   1.0 18.5

Indonesia     2.0           2.0

Malaysia     1.5           1.5

Philippines   0.5 2.0           2.5

Singapore   1.0             1.0

Thailand   3.0 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

Source: The Joint Statement of the 15th ASEAN+3 Finance Ministers and Central Bank Governors' Meeting (2012), 3 May, Manila, Philippines

Countries FinancialContribution(billion US$)

Share (%) PurchasingMultiple

MaximumSwap

Amount(billionUS$)

BasicVotes

Votes Basedon

Contribution

Voting Power

%

Plus Three 192.00 80.00 117.30 9.6 192.00 201.6 71.59

China China (excl. Hong Kong) 76.8

68.4

32.0

28.5 0.5 34.2 3.2 68.4 71.6 25.43

Hong Kong, China

8.4 3.5 2.5 6.3 0.0 8.4 8.4 2.98

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

Total 240.00 100.00 243.50 41.60 240.00 281.60 100.00

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 Partner Country Amount Effectivity

Japan Korea $30 billion won-to yen-swap Additional $30 billion dollar-to-local currency swap

Oct 2011–Oct 2012 (one year)

Philippines Philippines: $6 billion from JapanJapan: $500 million from the Philippines

May 2012–May 2015 (3 years)

Korea Japan $30 billion won-to-yen-swap Additional $30 billion dollar-to-local currency swap

Oct 2011–Oct 2012 (one year)

PRC $56 billion Oct 2011–Oct 2014 (3 years)

PRC 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 Amount Last BSA Signed (Year)

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

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 CountriesLatest Available Data

Country Total Reserves As of

Brunei Darussalam 1,693 2011 Aug

Cambodia 3,640 2012 Feb

Hong Kong, China 294,493 2012 Mar

China, P.R. 3,326,602 2012 Mar

Indonesia 106,611 2012 Mar

Japan 1,248,875 2012 Apr

Korea, Republic of 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

Total 5,931,952

Source: IMF International Financial Statistics

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.