Olarn to woo China, Japan, ASEAN to set up forex reserve pooling fund
Written by Writer on Friday, October 24th, 2008
Olarn to woo China, Japan, ASEAN to set up forex reserve pooling fund
The Thai deputy premier will encourage China, Japan, and ASEAN to jointly establish a 150 billion dollar fund from parts of their foreign exchange reserves to ensure sufficient liquidity to prevent untowards financial crisis in Asia.
Dr. Olarn Chaipravat, Deputy Prime Minister, told National News Bureau of Thailand that the Thai Government, as chairman and host of ASEAN summit meeting to be held in December this year, will propose at ASEM summit meeting in Beijing between October 23-25 to establish foreign exchanges reserve pooling jointly with other ASEAN member nations, East Asian nations including China, Japan, and South Korea, to be prepared for untowards incidents economically.
The move is part of the Thai Cabinet-endorsed six measures Thai economy stimulus package
Dr. Olarn joined Prime Minister Mr. Somchai Wongsawat to attend the Asia-Europe Meeting (ASEM) in Beijing.
The proposal calls for all member nations to pool parts of their foreign exchanges’ reserves, currently dominated by US dollars, to be established as separate fund initially worth 150 billion dollars to strengthen Asian financial community. The size would be amplified from earlier agreed amounting to 80 billion dollars so as to boost members’ nations financial liquidity in case of untowards situation, said Dr. Olarn.
He noted, however, that all member nations must jointly ensure that there would be no collapse among big Asian financial institutions any longer.
Each respective government must also implement proper levels of deposit guarantee for general public. They must also encourage private sector to invest more in their respective capital markets.
Regarding earlier implemented six measures Thai economy stimulus package plan, Dr. Olarn said that although all the measures may involve some 1.2 trillion baht altogether, the national budget would be a mere 180 billion baht. It was an ongoing budget already allotted in fiscal 2008. While the remaining money was already available in the local financial markets, including that belonging to investors, and credit lines from local financial institutions.
“We just want to speed up distribution process to ensure that the money will be effectively and swiftly distributed to concerned agencies to further stimulate local economy,” he said.
The other four measures included:
1. Funds established to shoring up good return and cheap Thai stocks. This was immediate short term measure regarded as being successful to shore up investors’ confidence, especially following some 10% plunges of Thai stocks and elsewhere on October 10 which have somewhat regained grounds up til now, said the Deputy Prime Minister.
The shoring up funds included : five matching funds amounting to two billion baht jointly established by local securities firms and the Stock Eexchange of Thailand (SET), matching funds amounting to 10 billion baht jointly set up by financial institutions and SET, funds buying back stocks amounting to 30 billion baht established by about 20-25 listed companies, and amplifying long term equity funds and retirement mutual funds from 500 billion baht to 700 billion baht.
2. Specific state-owned banks to extend loans amounting to a combined about 50 billion baht or about 5% increase from their existing loan portfolios to general public, coupled with encouraging private commercial banks to increase their credit extension to general public.
3. Ministries of Commerce and Tourism and Sports will team up as “Team Thailand” to jointly host road shows to expand new export markets in the Middle East, Australia, Africa, and America, coupled with sufficient credits for exports and local market’s trade.
And 4. Investment acceleration for mega infrastructure projects will be done. An additional 100 billion baht to 350 billion baht will be spent, including additional 60 billion baht from sky train projects, 10 billion baht from nationwide logistics system, and 30 billion baht from PTT Plc’s energy project.
National News Bureau of Thailand
