H.E. Ambassador Rezlan Ishar Jenie
Permanent Representative of the Republic of Indonesia
to the United Nations on behalf of ASEAN
Before the Second Committee
of the 60th Session of the General Assembly
on Agenda Item 50 (b) and (c)
New York, 10 October 2005
I have the honor to take the floor on behalf of the member countries of the Association of Southeast Asian Nations (ASEAN) comprising of Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam.
Allow me first of all to extend on behalf of ASEAN, our deep condolences and sympathies on the loss of life and severe damage suffered by the peoples and governments of Pakistan, India, and other affected South Asian countries caused by the recent earthquake as well as the peoples and governments of Mexico, Guatemala and other affected Central American countries caused by floods and mudslides.
Turning to the related agenda items under our consideration, ASEAN would like to thank the Secretary-General on his reports regarding the international financial system and development and external debt crisis and development as contained in documents A/60/139 and A/60/163. In this context, ASEAN aligns itself with statement made by the distinguished representative of Jamaica on behalf of the Group of 77 and China.
The International Financial System and Development
Development seems to be finding itself on the horns of a dilemma. We only need to look at the numbers indicated in the Secretary-General’s report to understand that story.
The indicators show that the flow of net transfers of financial resources is going to developed countries rather than developing countries. And even though net private flows to developing countries have improved over the past few years, apparently they are not substantial enough.
The consequence is detrimental to developing countries. Their development capacity is weakened as the resources for domestic consumption and investment diminish.
This is where the support of the international financial system is critical.
Although its purpose is to enhance efficiency and stability in financial markets and promote global economic activity, the objective of improving living standards for the poor cannot be overridden.
T he international financial architecture must be sufficiently flexible to accommodate the different levels of economic development in various regions. In concrete terms, this means developing countries should have a greater voice in international economic decision making and norm-setting.
These same views were expressed by the ASEAN+3 Finance Ministers, which consist of ASEAN member countries, China, Japan and the Republic of Korea. Their recent meeting in Istanbul on 4 May 2005 urgently called for a review on the quota of Asian countries in the International Monetary Fund.
In relation to that, ASEAN looks forward to more concrete steps pursuant to the Communiqué issued by the International Monetary Fund and Financial Committee of the Board of Governors on 25 September 2005.
At the same time, ASEAN is taking its own steps to offset the negative financial flows in the region. However, we would like to emphasize that regional approaches are not a substitute for a multilateral approach. In fact, they are meant to be complementary.
The Asian Bond Market Initiative launched in 2002 by the ASEAN+3 is one initiative. Foreign reserves in the region have been significantly built up and now exceed the pre-crisis level. Financing for productive investment in the region is looking brighter, although challenges still remain.
The ASEAN Roadmap for financial integration charts an encouraging path in the areas of capital market development, capital account liberalization, financial services liberalization, and currency cooperation among member countries. Included in the integration process is the Initiative for ASEAN Integration (IAI) to help bridge the development gap in the poorer sub-regions in ASEAN.
The ASEAN Surveillance Process set up by the ASEAN Finance Ministers since 1999 is another effort. Through close dialogues and peer support, ASEAN has been able to significantly improve its fundamentals and maintain strong macroeconomic balances.
Greater confidence and robustness through regional self help and support mechanisms, are being promoted. One such example is the network of bilateral swap arrangements under the Chiang Mai Initiative or CMI, put in place to provide short-term liquidity support when needed.
External debt crisis and development
It is imperative that developing countries should not lose the momentum to find a comprehensive, durable and development-oriented solution to the debt problem. This is a commitment expressed by the Second ASEAN-United Nations Summit held in New York on 13 September 2005.
Indeed, debt servicing, which entails principal and interest payments of a country’s debt, is one of the biggest drains on the resources of a developing country and would certainly have an effect on succeeding generations.
Future generations that includes, those living on less than one and two dollars a day, face the unwanted “inheritance” of being trapped in the debt repayment cycle.
Therefore, more can be done in the service of the poor when less is being spent on paying interest to developed countries. Debt savings can be used to increase spending on better infrastructure, education and health.
A step in the right direction is the G-8 proposal for 100 percent debt cancellation for eligible HIPCs. But it has to be said, that debt is a problem of middle-income countries as well. In this regard, additional measures and initiatives to ensure the debt sustainability of middle-income countries would be encouraging particularly with regards to the attainment of the MDGs.
Innovative debt schemes could provide countries faced with staggering debt servicing with adequate resources available for specific development projects outlined in their respective national development plans or strategies. There have been a number of proposed innovative mechanisms related to debt relief that deserve serious consideration such as the debt swap mechanism for MDGs and debt-for-equity-in MDG projects, among others that will allow developing countries to achieve their national development strategies including the MDGs.
The present dilemma in development can be resolved through collective effort. We have shared our views on what has been said and should be done. It is now a matter of taking the bull by its horns.
Permanent Mission of the Republic of Indonesia to the United Nations, New York
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