Zeti Akhtar Aziz: Expanding ASEAN-EU economic links - the role of the euro
Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Euro Conference -
"Expanding ASEAN-EU Economic Links - The Role of the Euro", Kuala Lumpur, 14 July 2005.
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Your Excellency Ambassador Thierry Rommel, Head of the EU Commission Delegation in Malaysia,
Your Excellencies,
Distinguished Guests,
Ladies and Gentlemen,
Good morning. It is my great pleasure to welcome you to the "Euro Conference: Expanding
ASEANEU Economic Links -- The Role of the Euro".
Bank Negara Malaysia is indeed honoured to co-host this event and would like to especially thank the
European Commission for the opportunity. The purpose of this Conference is to bring together
recognised experts to discuss the important issues affecting economic, monetary and financial
interests in ASEAN and the EU. I believe that the exchange of ideas and views over the next two days
would contribute towards an increased understanding of the developments and issues important to our
respective regions. Our agenda is for the further strengthening of the close ASEAN-EU partnership
that offers mutually reinforcing benefits to both regions. It is our hope that this Conference would serve
as a catalyst to promote greater appreciation of the potential for an expanded ASEAN-EU economic
relationship - a relationship in which trade and investment flows between our regions can be
enhanced.
The ASEAN-EU partnership has developed steadily over time through a number of well-established
forums. This has taken place in a global environment in which the world economies and financial
systems are increasingly becoming more integrated. As a result, it can be expected that there is
increased interdependence, events that take place in one part of the world will have implications on
other parts of the world. This is likely to be more pronounced in the ASEAN economies and financial
systems, given their openness and their high degree of integration with the global economy and
international financial system. As the ASEAN and the EU continues to evolve as strategic partners,
new opportunities can also be realized. An enhanced relationship will also contribute towards more
effective management of the new challenges in the ever-changing global environment. Indeed, this
Conference takes place at an important time when it becomes even more constructive and meaningful
for our two regions to strengthen our associations, our inter-linkages and our relationships.
Learning from the experiences of the EU
Ladies and Gentlemen,
The unification of Europe on many fronts is a major structural enhancement to the global economic
and financial landscape. It is very likely however, that in view of our diversity and different structures
and stages of development, the route for the integration process will be significantly different. It can be
stated with certainty however, that integration will nevertheless occur. Indeed, the process has already
commenced and it is likely to gain momentum as we advance forward. The motivation being the
greater stability it brings and the increased growth potential it generates.
The European experience offers valuable insights in synchronising and pacing the integration process
in the ASEAN region. The European path to integration -- based on trade integration, with the removal
of restrictions on the movements of goods and all factors of production at the early stages, followed by
increased monetary and financial linkages at the subsequent stages - presents ASEAN with an
important reference point in our own monetary and financial integration efforts, in particular, in relation
to the trade and investment liberalisation initiatives to facilitate greater regional economic integration.
Tremendous opportunities in ASEAN for the EU
There is certainly much that ASEAN can learn from the EU experience. The EU is now the world's
largest single market and with the introduction of the Euro. The EU has become the ASEAN's third
largest trading partner. Of its total trade, the trade of the ASEAN 5 (that is, of Indonesia, Malaysia, the
Philippines, Thailand and Singapore as a group) with the EU accounted for 12.4% in 2004.
Meanwhile, the EU's trade with the ASEAN 5 accounts for 4.5% of the EU's total trade. Against a
backdrop of sustained growth and macroeconomic and financial stability in ASEAN, there is significant
potential for expanding the trading and investment links between our two regions. Focusing on the
areas of complementarities would maximize the mutual benefits to be gained from the strengthened
relationship.
The ASEAN Vision Statement is "to create a stable, prosperous and highly competitive ASEAN
economic region in which there is a free-flow of goods, services and investments, a freer flow of
capital, equitable economic development and reduced poverty and socio-economic disparities" by
2020. The ASEAN economies have for more than a decade now experienced growth that is above the
global average. While this growth momentum was interrupted during the Asian currency crisis in 1997
and 1998, the ASEAN economies demonstrated their resilience to resume its strong growth within a
short period of a year for many of the affected countries. Opportunities are fast emerging in our region
reinforced by the more intensified regional integration that is taking place. In ASEAN, efforts are
already being accelerated in the implementation of trade and investment action plans under the
ASEAN Free Trade Area (or AFTA, for trade in goods), the ASEAN Framework Agreement on
Services (or AFAS, for trade in services) and the ASEAN Investment Area (or AIA, for investment
liberalisation).
The initiatives to enhance trade and investment flows to ASEAN have also been accompanied by
efforts to strengthen monetary and financial stability. The ASEAN countries have also reinforced
efforts in regional financial co-operation, including in the surveillance processes. These has brought
together policy makers from the ASEAN ministries of finance and central banks to constantly engage
in discussions on regional and global economic developments which have implications on the ASEAN
region. In April this year, the ASEAN countries also doubled the size of its regional financing facility,
the ASEAN Swap Arrangement (ASA), from US$1 to US$2 billion. The ASA is a further initiative to
maintain regional economic and financial stability through a mechanism that provides short-term
liquidity support to member countries facing temporary balance of payments difficulties.
Strengthened strategic partnership as a natural way forward
Ladies and Gentlemen,
As we advance forward, both the EU and ASEAN through the rebalancing of global growth have the
potential to contribute towards alleviating the imbalances in the global landscape.
The process of increased inter-linkages between our two regions has already begun. As a pre-cursor
to the establishment of a Free Trade Agreement (FTA), our regions have embarked on the
TransRegional European Union-ASEAN Trade Initiative in 2003. Work is also already underway to expand
trade and investment flows through closer ASEAN-EU co-operation in trade, investment and
regulatory issues, among others.
While barriers between our regions will continue to be lowered under a future FTA, it is also important
to maintain coherence between liberalisation and economic stability. New areas in specific sectors of
mutual interest that would complement the path to greater growth for both regions need to be
explored. This would contribute towards reinforcing the sustainability and effectiveness of the
ASEANEU partnership and, thereby, increase the potential to contribute to global economic stability.
Allow me to conclude my remarks here. Thank you for your participation in this Euro Conference. I
hope the sessions ahead will challenge your thinking and present you with many new ideas and
perspectives on the prospects of an expanded ASEAN-EU relationship.