The regional economies recognize the importance of developing these markets thus co-ordinated efforts through various initiatives have been undertaken to remove impediments to these developments. With further lowering of trade barriers under the ASEAN Free Trade Area and ASEAN+3 initiatives, intra-regional investment flows would further increase. The intensification of regional co-operation has been enhanced in recent years. In the aftermath of the Asian financial crisis, there has been an increase in the level of financial co-operation among the Asian countries. These efforts have revolved around swap facilities to provide emergency liquidity assistance, regional surveillance and peer review to enhance regional financial and monetary co-operation, regional capacity building and the enhancement of skills and capabilities of regional financial regulators and policymakers. Regional surveillance and peer review in particular is an important step forward as it will contribute to confidence building and would complement the implementation of the various regional financing schemes. Significant progress has been made in achieving the objectives of the Chiang Mai Initiative to create swap facilities to provide emergency liquidity assistance for the region. Closer co-operative efforts in the standardisation of systems and documentation procedures would also contribute to facilitating intra-regional trade and investment among economies within the region, as well as with the rest of the world. Effective co-operation in these areas will augment the foundations for realising the tremendous potential that this region possesses for future growth and prosperity.

Indeed, the East Asian region has the potential to enhance its capacity to deal with the risks and vulnerabilities and the potential to continue its growth process. While countries in the East Asian region have many common characteristics, they are also diverse in several aspects. Common features include openness and export orientation and a high rate of growth of manufactured exports. Most countries have a high rate of capital accumulation supported by a high rate of savings. Macroeconomic stability has prevailed in most countries. Inflation has been relatively low and any external imbalances were of manageable proportions while the fiscal deficits have been modest and Government debt levels have been kept low. The countries in the region are, however, diverse in terms of natural resource endowments, the stage of financial sector development, the degree of market orientation of their economies, the choice of exchange rate regime and the degree of public policy activism. The overall growth strategy of the region has essentially been based on an export -oriented industrialisation drive. This model, which is based on high savings and investments, has indeed served the region well. In the current environment of slower growth, the strategies adopted by several of the East Asian economies have been to implement a series of pro-growth policies to contain the impact of the global slowdown on the domestic economy. The strong initial conditions in an environment of an improving outlook in the major economies, lends support for increased optimism for stronger growth in the near term.