H.E. Ambassador Rezlan Ishar Jenie
Permanent Representative of the Republic of
Indonesia to the United Nations
on behalf of ASEAN
On Agenda Item 51 Macroeconomic Policy Questions:
51 (b) International Financial System and Development; and
51 (c) External Debt Crisis and Development
of the Second Committee of the 61st Session of the General Assembly
New York, 9 October 2006
1. I have the honour to speak on behalf of the Association of South East Asian Nations (ASEAN) member countries, namely Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. ASEAN also aligns itself with the statement made by the distinguished representative of South Africa on behalf of the Group of 77 and China.
2. I would also like to thank the Secretary General for his useful report contained in document A/61/136 on international financial system and development and A/61/152 on recent developments in external debt.
International Financial System and Development
3. Reading the Secretary General’s report on the international financial system and development, one may conclude two things. The first is that the international financial system is continuing to play an important role in making our economies more interdependent and interconnected. There is therefore every reason for the international community as a whole to foster the strength and health of the international financial system. The second is that while the international community is cognizant of the challenges facing the international financial system and that steps have been taken, more needs to be done. These are conclusions we would do well to take note of, especially in our efforts to ensure that the international financial system is conducive to development.
4. ASEAN is encouraged at the increase in the level of ODA in the past few years. According to the Development Assistance Committee of the OECD, ODA flows reached US$ 106.5 billion in 2005, a 31.4 percent increase compared to 2004. That figure constituted 0.34 percent of the GNI of the developed world. However, we do note that this figure includes one off commitments such as debt cancellation, and the fact that the amount remains fairly unevenly spread. Further, 0.34 percent still constitutes less than half of the 0.7 percent ODA target level, which was set some thirty years ago.
5. Having said that, we also note with satisfaction that some countries, most notably the European Union, have set themselves timetables for the achievement of the target of contributing 0.7 percent of GNI as ODA by 2015. We also welcome the approach taken by the European Union to have intermediate targets, namely to achieve a target of 0.56 percent by 2010. In this regard, ASEAN would also like to urge all developed countries to do the same.
6. However, such efforts would be deficient without reforms in the international financial architecture. This outlook has also been reemphasized by the 30th Ministerial Meeting of the Group of 77 in New York on 22 September 2006.
7. In this connection, ASEAN is supportive of efforts to achieve an improvement in the governance structure of the international financial institutions which are conducive to the interest of the developing countries, in particular the recent revision of the IMF quotas at the recently held meeting of the IMF in Singapore. However, there is still under-representation of members of the developing world, including ASEAN. In this connection, ASEAN underscores the importance of expeditious forward momentum to this long-overdue reform process. Moreover, we cannot overemphasize the need for clear political commitment, especially from the developed world, towards making significant progress on the second stage immediately after the Singapore meeting.
8. In spite of increasing competition, ASEAN as a whole continues to be an attractive place to invest. Factors in this regard include a large population base, strategic location, an abundance of natural resources, and just as important, the commitment by all ASEAN members individually and collectively to become more competitive. Last year, our foreign direct investment (FDI) flows reached US$ 38 billion, a record high. In terms of the stock of investments, some US$ 241 billion of FDIs came into our region between 1995 and 2004. Further, as an important trading region, ASEAN’s external trade reached almost one trillion dollars in 2004.
9. Despite these achievements, ASEAN will not rest on our laurels. We will continue to work towards realizing our vision of making our region an integrated, seamless market, serving as an international production base by 2015. ASEAN is taking practical steps to realize that goal. ASEAN recently agreed to accelerate economic integration from 2020 to 2015. To this end, major efforts and steady progress has been made to implement the Vientiane Program of Action adopted by ASEAN Leaders at the 10th ASEAN Summit in Vientiane in 2004 with the objective of accelerating ASEAN integration and narrowing the development gap among its members.
External Debt Crisis and Development
10. Let me now turn to the issue of external debt and development. One major conclusion that we can draw from the report of the Secretary-General is the need to avoid a prolonged debt crisis. Still, many developing countries continue to struggle for a durable solution to their serious debt problems, which adversely affects their sustainable development.
11. While the report suggested a general improvement in the external debt situation, it also pointed to individual countries’ problems with debt. We are concerned that severe indebtedness still burdens a large number of developing countries, while very high ratios of external debt to GDP with current account deficits plague a number of middle income developing countries. And let us not disregard the looming risks including rising oil prices that threaten developing countries’ efforts to achieve the Millennium Development Goals.
12. Against this background, more can be done in the service of the poor when less is being spent on paying interest to developed countries. In this regard, additional measures and initiatives aimed at ensuring long-term debt sustainability is necessary through: increased grant-based financing; cancellation of 100 per cent of the official multilateral and bilateral debt of heavily indebted poor countries (HIPCs) and; significant debt relief or restructuring for low and middle-income developing countries with an unsustainable debt burden that are not part of the HIPCs Initiative, as well as exploration of mechanisms to comprehensively address the debt problems of those countries.
13. Moreover, in assessing debt sustainability criteria, consideration should be given to allow a country achieve its national development goals, including the MDGs in 2015, without an increase in its debt ratios. In this regard, while we keep on improving governance and reducing corruption, debt sustainability analysis should consider more of the long term development needs of developing countries rather than rely too heavily on governance indicators.
14. In line with the call for significant debt relief, the suggestion for more expeditious implementation of the HIPCs and Multilateral Debt Relief (MDR) Initiatives to allow more countries to benefit from the debt reductions is a constructive input meriting further consideration. Likewise, the HIPCs and MDR Initiatives would be significantly enhanced with the implementation of the additionality mechanisms. Other innovative options such as debt swap schemes including debt swap in the field of education, poverty eradication, health, clean water and environmental protection are also worth exploring further.
15. The role of finance in development and debt sustainability is more critical than it was ever before. ASEAN is certainly encouraged by the recent developments. Given this and the increasingly interconnected and interdependent world, the international community must do all that it can to fulfill the commitments made in Monterrey four years ago. ASEAN stands ready to participate effectively and meaningfully in these efforts.
Permanent Mission of the Republic of Indonesia to the United Nations, New York
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