MANILA, Philippines - Finance ministers from the Association of Southeast Asian Nations (ASEAN), which is set for economic integration starting 2015, have affirmed the ability of member countries to withstand shocks from tapering in the United States and threats of rising interest rates.
Enjoying sound macroeconomic fundamentals and favorable demographics, ASEAN countries expect to perform well vis-Ã -vis other emerging markets in the changing global economic landscape, they said.
“The ASEAN region has fared well in the aftermath of the 2008 global financial crisis. With strong fundamentals and improved regional cooperation, resiliency has further improved,†U Win Shien, Finance and Revenue Minster of the Union of Myanmar, said during the 10th ASEAN Finance Ministers’ Investor Seminar (AFMIS) held at the Manila Peninsula hotel.
Finance Secretary Cesar Purisima of the Philippines cited indicators of strength of the region.
Together, he said, ASEAN countries last year cornered higher foreign direct investments compared with other countries in Asia. FDI inflows to Southeast Asia amounted to $110.29 billion in 2013.
Purisima likewise said ASEAN enjoys comparative advantage in a wide range of sectors, including electronics, garments, medical tourism, tourism, and ship building, among others.
He said the benefits of having a bigger economy serve as a case for ASEAN member countries to accelerate the realization of a fully integrated region. As one regional economy, he said, ASEAN can attract even more investors who are in search of huge markets and operational hubs.
“We have to accentuate the strengths of ASEAN,†he said.
Emerging markets, including ASEAN members, are confronted with the threat of capital outflows resulting from the tapering of the bond-buying program by the US Federal Reserve.
The gradual withdrawal of the stimulus and possible hike in interest rates by the US central bank come amid views of an improving US economy.
With over 600 million people, ASEAN has the third biggest population next to China and India. Its relatively young workforce gives it an advantage over advanced economies suffering from aging population.
Josephin Teo, senior minister of state at the Ministry of Finance and Transport in Singapore, said that while ASEAN is not expected to be fully spared from adverse effects of the tapering, any impact would be temporary.
At the end of the day, Teo said, investors would look at fundamentals in shaping their investment decisions. She said the strengths of ASEAN will eventually drive in more investments.
“If you look at FDIs to the region, you will see that what is driving those is the prolonged period of macroeconomic stability. That has been boosting investor confidence,†Teo said.
ASEAN is composed of Brunei, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
Member countries are targeting to integrate their economies starting next year and to realize a fully integrated regional economy within the medium term.
The 10th AFMIS served as curtain raise for the World Economic Forum, which will also be held here on May 21 to 23.