Asean Pledges to Protect Falling Currencies

By MICHAEL CASEY / AP WRITER

BANGKOK — Asian finance ministers pledged on Sunday to uphold free trade and investment in the midst of the global economic slowdown and said they would allocate an additional $40 billion to protect falling currencies.

The ministers from 10 Southeast Asian nations as well as China, Japan and South Korea agreed to boost funding for the Chiang Mai Initiative—an arrangement forged after the 1997 Asian financial crisis to address foreign reserve deficits through bilateral currency swaps—from $80 billion to $120 billion.

The 10 members of the Association of Southeast Asian Nations (Asean) will provide 20 percent of funding, with 80 percent from China, Japan and South Korea.

The plan is expected to be approved at an Asean summit in Hua Hin, Thailand, from February 27 to March 1.

"We reaffirm our determination to dedicate ourselves to increasing the free flow of trade and investment, to standing firm against protectionist measures which would worsen the economic downturn," the ministers said in a statement.

The commitment to free trade echoed comments made earlier in the day by Thai Prime Minister Abhisit Vejjajiva.

"I hope that Asean will send a signal that in this economic downturn it will not favor protectionism," Abhisit said. "Asean will not survive alone while causing trouble to other countries."

In October, Asean finance ministers expressed confidence that the group would weather the global downturn, noting its economic fundamentals remained sound even though growth might not match last year's 6.7 percent.

But in recent months, many countries have begun to feel the effects of the downturn on their export-driven economies.

Thailand reported on Thursday that exports posted their steepest fall in 12 years in January as demand for the country's cars, hard drives and electrical goods evaporated amid the global slump.

Thailand, Singapore, Malaysia and the Philippines have all announced multibillion-dollar stimulus packages that include a mix of infrastructure projects, cash handouts or tax cuts aimed at creating jobs and boosting consumer demand.

Asean was founded during the Cold War as an anti-communist political coalition, later evolving into a trade bloc. It consists of Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam.