Despite lots of commitments for cooperation within the ASEAN bloc at the World Economic Forum on East Asia in Myanmar from June 5 to 7, one aspect of an integrated economic community is no longer in the cards: A common ASEAN currency.
During a panel at the WEF on June 7, ASEAN officials and business leaders dismissed the idea of a single currency among ASEAN members, saying it would do more harm than good.
The idea of a single ASEAN currency has been mulled for at least a decade as part of plans to integrate the region’s economies, but the ASEAN economic crisis in 1997/98 has been an eye opener on how important inter-ASEAN currency exchange rates were, Thailand’s Thai Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong said, shrugging off the idea of a common currency or monetary union as “impossible”.
Indeed, the very diverse fiscal conditions of the ten member states make a combined currency regime extremely difficult. To put strong, globally traded currencies such as the Singapore dollar in a basket together with the Indonesian rupiah, the Vietnamese dong or even the Myanmar kyat would very much dilute the strength of a common currency – and also would give the economically weaker states an unfunded creditworthiness that would easily backfire, as could be seen in the euro zone when Greece’s economy collapsed under its debt piles.
It was agreed on at the WEF panel that the recent euro crisis could prove a valuable lesson, namely that countries should not rush the process of financial and monetary integration before the development of an adequate institutional framework, at least for the ASEAN-5, Indonesia, Malaysia, the Philippines, Singapore and Thailand. Brunei with the peg of its Brunei dollar to Singapore’s currency would automatically be part of it.
However, the panelist – officials and business leader – agreed that international trade and fiscal discipline of ASEAN member countries could be upheld and managed within the current system. Ahead of the creation of the ASEAN Economic Community, or AEC, a single currency was not the primary objective, they said.