ASEAN has reaped a triple play by finalizing deals with India, China, Australia and New Zealand in end-August 2008, including a comprehensive deal with goods, services and investments with Australia and New Zealand.
The Bush administration also welcomed the decisions of Peru and Australia to join the US, Singapore, Chile, New Zealand and Brunei in negotiating a regional free trade pact that has grown out of the APEC organization.
But, beyond state to state free trade arrangements, the private sector from East Asia will probably have a big role to play in the current global financial crisis.
After all the East Asian governments have shown their cards on what they can do to prime-pump or encourage spending in their respective economies, the rest is up to the private sector or Government-linked firms like HSBC, Singapore’s Temasek Holdings and Beijing’s China Investment Corp to buy up the assets of distressed Western, particularly American, banks and also provide capital for Southeast Asian entrepreneurs.
The need for capital and liquidity includes Southeast Asian countries which are seen as vulnerable to financial crises. Vietnam for example has given its approval to HSBC and Standard Chartered to become the first foreign banks to open fully owned subsidiaries in the country.
Jakarta, also realizing the potential financial power of the private sector to tide over the global financial crisis, has also removed a regulation that could potentially block Maybank’s US$2.7 billion takeover of an Indonesian bank.
In Northeast Asia, China will also give foreign banks greater access to its bond markets in return for US support for China’s membership in the Financial Stability forum, a grouping of central bankers and finance minister from the developed world.
Au Yong, Jeremy, “Resist the lure of protectionism: Bush” dated 23 November 2008 in the Straits Times (Singapore: the Sunday Times), 2008, p. 17.
Foo, Alvin and Bryan Lee, “ASEAN Triple Play” dated 29 August 2008 in the Straits Times (Singapore: The Straits Times), 2008, p. B40.
Gale, Bruce, “Who will ride out the storm” dated 1 October 2008 in the Straits Times (Singapore: the Straits Times), 2008, p. A28.
Peh, Shing Huei, “US, China Pledge S$31b to spur trade” dated 6 December 2008 in the Straits Times (Singapore: Straits Times), 2008, p. C28.