Asean monetary union ‘possible’
S’pore don thinks this could happen in 2 decades
CONSIDER this scenario: An Asean Monetary Union by the year 2020.
A Singapore don said yesterday that this could be a distinct possibility in the next two decades as trade links between Asean member countries intensified.
Dr Tan Kong Yam of the National University of Singapore told academics and policymakers at a roundtable conference in Singapore marking Asean’s 30th anniversary that regional currencies would one day float collectively with a basket dominated by the US dollar, the Japanese yen and eventually the Chinese renminbi.
“An Asean currency union would be the natural outcome of economic and political considerations of the grouping by 2020,” he said.
He sounded the optimistic note given the region’s current economic trends, saying that as Asean nations increasingly industrialised, intra-regional trade would expand.
This would be aided by the “flying-geese” pattern of development within the Asean 10 countries at different stages of development. In addition, slower growth in the US, Japan and Europe would lead to rising intra-regional trade in the Asean region.
Dr Tan noted: “As intra-regional trade and the unified market progresses, there would be greater urgency and benefits in ensuring intra-regional currency stability – some sort of European Monetary type of arrangement could evolve.”
He said this would complement an emerging unified market in goods and services and ensure greater stability in intra-regional exchange rates.
“Would Asean then move from being ‘satellites’ revolving around the US and Japanese economies into a significant ‘solar system’ of its own?” he said, noting that this was not a far-fetched possibility.
He indicated, however, that to achieve a single currency union, Asean states needed to undertake various initiatives to strengthen financial integration.
Forces that could act against such a development would include Asean’s heterogenous religious and ethnic foundation and the possibility that some of the larger economies would not be able to sustain growth and industrial upgrading due to a poor technological base.
Sceptics have also pointed out that it was difficult to consider an Asean Monetary Union without political unification in the region.
“It is unlikely that Asean countries would want to surrender their economic and political independence,” said one conference participant.
The three-day conference has been organised by the Institute of South-east Asian Studies and the Asean Secretariat.