Asia must retool to boost domestic demand

INDONESIA: Asia must boost domestic consumption and end its dependence on exports as external demand plunges in the world economic slump, the Asian Development Bank said Sunday.

The call was echoed by regional finance ministers gathered at the ADB's annual meeting on the Indonesian resort island of Bali, where strategies for overcoming the worst financial crisis in 70 years took centre stage.

Meanwhile the finance ministers of the Association of Southeast Asian Nations (ASEAN) plus China, Japan and South Korea moved closer to the creation of a regional currency pool designed to bolster crisis-hit economies.

Japanese Finance and Economy Minister Kaoru Yosano said Japan and China had each agreed to chip in 38.4 billion dollars for the 120-billion-dollar scheme known as the Chiang Mai Initiative.

ADB President Haruhiko Kuroda said Asia's main export markets had experienced a "massive contraction in demand" since the implosion of the US mortgage market triggered the global banking crisis last year. The flow-on effect had seen interest rates on bonds spike higher and Asian currencies depreciate with the flight of foreign capital out of emerging markets, he told a seminar alongside Asian finance ministers including Yosano.

Nusa Dua, Sunday, AFP