08:00am – 08.30am:  Registration

08:30am – 08.40am:  Welcome Remarks by Dr Junhong Chang, Director of AMRO

08:40am – 09.00am:  Keynote Address by Mr. Diwa C. Guinigundo, Deputy Governor, Monetary Stability Sector, Bangko Sentral ng Pilipinas & Mr Yoshiki Takeuchi, Director General of the International Bureau, Ministry of Finance, Japan

08:50am – 10.30am:   Panel 1:  Gaining New Strength for Structural Challenges

The ASEAN+3 region led global economic growth in the past two decades, and many member economies were able to raise income levels and transition to middle-income economies. However, in the context of new normal, ASEAN+3 members are also facing daunting structural challenges to their growth path and growth model, such as ageing population, anemic productivity growth etc. To address these challenges, ASEAN+3 members would need to implement and follow through on structural reforms to set their economies on a solid foundation for continued robust growth.  Enhanced regional economic and financial cooperation among the regional economies would make the best of each economy’s respective comparative advantage while safeguarding regional financial stability.

Moderator: Dr Hoe Ee Khor, Chief Economist of AMRO

Panel Speakers:

• Dr. Yaobin Shi, Vice Minister, Ministry of Finance, China
• Mr. Seilava Ros Under Secretary of State, Ministry of Economy and Finance, Cambodia
• Prof. Yasuyuki Sawada, ADB’s Chief Economist
• Mr. Odd Per Brekk, Deputy Director, Asia and Pacific Department, IMF
• Dr. Robin Brooks, Managing Director and Chief Economist, Institute of International Finance (IIF)

10:30am – 10:45am:  Group Photo Session and Coffee break

10:45am – 12:45pm:  Panel 2: CMIM in the Evolving International Monetary System

The CMIM was established in response to the Asian Crisis when countries in the region were exposed to highly volatile capital flows. However, the reliability and hence credibility of this facility has yet to be tested, with member countries showing admirable resilience during the Global Financial Crisis. This session will discuss developments in the international monetary system and the evolving global financial environment. Against this backdrop, it will explore how the CMIM could be further developed to complement the existing “layers” of the Global Financial Safety Net (GFSN). The discussion will take into account lessons learned from other international policy actions to address balance-of-payments and liquidity crises, as well as recent IMF reforms to its lending facilities. Possible enhancements to the CMIM through liquidity assistance in local currencies will also be considered.

Before the speakers are invited to deliver their presentation, Mr. Yasuto Watanabe, AMRO Deputy Director, will make a presentation on the CMIM in the evolving international monetary system.

Moderator: Dr Yoichi Nemoto, Former AMRO Director

Panel Speakers:

• Mr. Zhengxin Zhang, Deputy Director-General, International Bureau, People’s Bank of China
• Dr. Chalongphob Sussangkarn, Distinguished Fellow of the Thailand Development Research Institute (TDRI)
• Prof. Masahiro Kawai, Representative Director and Director-General, Economic Research Institute for Northeast Asia (ERINA)
• Dr. Deok Ryong Yoon, Senior Research Fellow, Korea Institute for International Economic Policy (KIEP)
• Mr. Hiroshi Watanabe, President, Institute for International Monetary Affairs (IIMA)

12:45pm – 12:50pm:  Closing Remarks by Dr. Akira Ariyoshi, Chair of AMRO Advisory Panel

Opening Remarks by AMRO Director Dr Junhong Chang

2017 ASEAN+3 Financial Forum (ATFF),

11 December 2017, Asahikawa, Japan

Dear ASEAN+3 Finance and Central Bank Deputies,

Co-chairs of 2017,

Distinguished guests,

Ladies and gentlemen – Good morning!

1. I am honored to welcome you to AMRO’s second ASEAN+3 Financial Forum, or ATFF, held back to back with the ASEAN+3 Finance and Central Bank Deputies’ Meeting here in Asahikawa. The ATFF provides a platform for ASEAN+3 Deputies, academics and high-level representatives from international financial institutions to brainstorm on key challenges and issues relevant to regional economic and financial cooperation. We held our first ATFF at this time last year in Guiyang, China, which was very lively and well received, and many of you were there. Welcome again, and a warm welcome to our guests joining us for the first time this year.

2. Our theme this year, “Adapting to a Changing World”, aptly describes our two panel sessions today. Protectionism, rapid ageing in Asia and the new technological revolution sweeping the global economy have posed new challenges to the region. The forum today will focus on regional policy response to this changing world, including enhancing the regional safety net of the Chiang Mai Initiative Multilateralization (CMIM) in the evolving global financial environment. Let me share some thoughts on these topics.

3. The challenges of a changing economic environment are not new to our region. Indeed, our region has weathered the many external shocks in the past decade well, including the Global Financial Crisis and episodes of risk aversion and capital outflows.  We have become stronger through rising integration in trade and investment. The ASEAN+3 region now accounts for more than a quarter of world GDP at market exchange rates, and 30 percent of global trade.

4. Many risks remain in the short-term – the threat of protectionism, tightening global financial conditions, and the tail risks of geopolitical events. Amidst these immediate concerns, however, let us not forget the global, structural forces that affect our economies and that underlie our theme today. I will touch on two global trends here, technology and ageing populations. The ADB and the World Economic Forum published a White Paper [1] last month on the “Fourth Industrial Revolution” – new and potentially disruptive technologies such as 3D printing, block chain and robotics – and the opportunities and challenges to ASEAN. The opportunities are many, through increasing wealth [2] through higher productivity, improving economic inclusion by lowering fixed investment costs for expanding infrastructure networks such as telecommunications. There are also risks, for example of job losses from automation, that would need to be managed in the economic transition.

5. On ageing populations, the IMF has warned us in a recent study [3] that Asia may be at risk of growing old before becoming rich. It estimated that demographic trends could subtract ½ to 1 percentage point from annual GDP growth over the next three decades in countries such as China and Japan that are advanced ageing societies. However, it could add 1 percentage point to annual GDP growth in countries with a rapidly growing young population such as Indonesia.

6. The risks of protectionism on trade, and the impact of these global trends on the ASEAN+3 region also forms the basis of our thematic chapter of AMRO’s flagship report in 2018, which is “Resilience and Growth in a Changing World”. While exports continue to be an important pillar of growth and source of foreign exchange especially in the small, open developing economies in our region, slow growth in global trade after the Global Financial Crisis has prompted economies to rebalance towards domestic demand. Our economies have also looked towards growing intra-regional trade and investment as a source of growth. As for the global trends of technology and ageing, diversity within the ASEAN+3 region may turn out to be our strength, as economies complement others in the region at different points in the technological and ageing cycles.

7. As these global trends transform the nature of cross-border economic transactions and spillovers, they demand not only a national response, but a coordinated regional response. The demands and expectations placed on the speed of policy reactions and the clarity of policy communication are rising. Take for example capital flows to emerging markets in our region.  With technology facilitating lightning-speed trading, including algorithm trading by computers, sudden shocks in capital flows driven by herd behaviours are risks that policymakers have to grapple with. In this context, policymakers should respond to in a timely manner so as to safeguard regional financial stability, but should not overreact to short-term temporary fluctuations and reversals.

8. At AMRO, in our support of the CMIM, we are always mindful of the rising expectations on the role of regional safety nets as an integral part of the global financial safety net. This year, we have supported a joint test run with the IMF to enhance the operational readiness of the CMIM facility. Recognising the importance of cooperation among different layers of the global financial safety net, AMRO has signed MOUs with the IMF and the ESM, to strengthen partnerships in maintaining macroeconomic and financial stability, and to leverage on each other’s expertise and knowledge.

9. Building a robust regional safety net is a long-term project, but we need to start building the foundations today. We have circulated a background paper on “The CMIM in the Evolving International Monetary System” for this forum, which provides a historical perspective on the issues of financial crises and financial safety nets. . We hope to contribute to the policy discussions on enhancing the effectiveness of regional safety nets in the medium to long term.  There is significant room to further strengthen the CMIM down the road, and it is time for our members to consider carefully how to mobilise the vast resources of our region to build up buffers against risks in a changing world.

10. I am confident that we will have an insightful and stimulating discussion in these two panels. Thank you.

—

[1] ADB and World Economic Forum, “ASEAN 4.0: What does the Fourth Industrial Revolution mean for regional economic integration?”, November 2017.

[2] Estimates by the ASEAN Secretariat are that increased productivity from such technologies could have an additional US$220 billion to US$625 billion in annual economic impact in ASEAN by 2030. ASEAN Secretariat, “Master Plan on ASEAN Connectivity 2025”, 2016.

[3] IMF, “Regional Economic Outlook: Asia and Pacific”, Chapter 2 “Asia: At Risk of Growing Old before Becoming Rich?”, April 2017.

Structural Reforms and Enhanced Regional Financial Safety Net Needed for Asia to Adapt to a Changing World

ASEAN+3 Finance and Central Bank Deputies, academics, and high-level representatives of international financial institutions discuss challenges and issues relevant to the regional economic and financial cooperation at the 2017 ASEAN+3 Financial Forum hosted by AMRO on December 11, 2017, in Asahikawa, Japan.

ASAHIKAWA, JAPAN, December 11, 2017 – Today, the ASEAN+3 Financial Forum (ATFF) 2017 with the theme “Adapting to a Changing World” was held back to back with the ASEAN+3 Finance and Central Bank Deputies’ Meeting in Asahikawa, Japan.

Hosted by the ASEAN+3 Macroeconomic Research Office (AMRO), the half-day program focused on the regional outlook and policy responses to address structural challenges, and developments in the international monetary system and the role of the Chiang Mai Initiative Multilateralisation (CMIM).

“Protectionism, rapid ageing in Asia, and the new technological revolution sweeping the global economyhave posed new challenges to the region,” said AMRO Director Dr Junhong Chang in her opening remarks. “The forum today will focus on regional policy response to this changing world, including enhancing the regional safety net of the CMIM in the evolving global financial environment.”   

As the Co-chairs of AMRO Executive Committee for 2017, Mr Diwa C. Guinigundo, Deputy Governor, Monetary Stability Sector, Bangko Sentral ng Pilipinas, and Mr Yoshiki Takeuchi, Director General of the International Bureau, Ministry of Finance, Japan, delivered keynote addresses at the forum. Discussants and speakers included high-level policy makers, renowned academics and economists who have strong background and experience on the East Asia region.

Chairing panel of the 2017 ATFF. (From left to right: Dr. Hoe Ee Khor, AMRO Chief Economist; Mr. Diwa C. Guinigundo, Deputy Governor, Monetary Stability Sector, Bangko Sentral ng Pilipinas; Dr. Chang Junhong, AMRO Director; Dr. Akira Ariyoshi, Chair of AMRO Advisory Panel; Mr Yoshiki Takeuchi, Director General of the International Bureau, Ministry of Finance, Japan; and Dr Yoichi Nemoto, Former AMRO Director.)

In the first session moderated by AMRO Chief Economist Dr Hoe Ee Khor, panelists discussed how economies in the region should deal with the rising sentiments of anti-globalization and protectionism, and emerging structural challenges of aging populations and new technologies.

The panelists noted that the conventional export-led growth strategy has enabled many Asian countries to move up the income ladder rapidly. This strategy allows a developing economy to take advantage of its abundant labor to attract foreign direct investment (FDI) to produce goods for exports to global markets, and absorb technology transfers. However, slow growth in global trade following the Global Financial Crisis and the threat of protectionism have raised concerns about solely relying on an export-led growth strategy, and provided impetus for diversification of export markets and rebalancing to domestic demand.  Underlying the backlash against globalization are also new technologies of robotics, automation, digitization, and internet of things, which have raised concerns about implications for growth and job creation in both developed and developing countries.

To address these challenges, the panelists highlighted that ASEAN+3 members would need to implement and follow through on structural reforms to set their economies on a solid foundation for continued robust growth. Enhanced economic and financial cooperation among the regional economies would make the best of each economy’s comparative advantage while safeguarding regional financial stability.

AMRO Senior Management team, ASEAN+3 Finance and Central Bank Deputies, and distinguished speakers and participants at the 2017 ATFF.

Moderated by Dr Yoichi Nemoto, former AMRO Director, the second session focused on developments in the international monetary system and the evolving global financial environment.

“Asia has tried to self-insure against future crises by building up foreign-exchange reserves amid increasingly large and volatile capital flows,” said Mr Yasuto Watanabe, AMRO Deputy Director in his presentation. “Greater international financial integration has increased the risk and magnitude of spillovers. Hence, there are clear reasons for having a strong Global Financial Safety Net (GFSN) that is supported by Regional Financial Safety Nets (RFSNs).”

The CMIM was established in response to the Asian Financial Crisis when countries in the region were badly affected by highly volatile capital flows. The facility was multilateralized and enhanced in the wake of the Global Financial Crisis (GFC) in recognition of the vulnerability of member economies to USD liquidity shocks.

Against this backdrop, panelists discussed how the CMIM could be further developed to complement the existing layers of the GFSN, taking into account lessons learned from the GFC and European Sovereign Debt Crisis as well as recent reforms by the International Monetary Fund to its lending facilities. The discussion also focused on how to strengthen the CMIM’s role in the region to meet the challenges ahead. Possible enhancements to the CMIM through liquidity assistance in local currencies were also discussed.

An important initiative of AMRO, the ATFF acts as a flagship platform for ASEAN+3 Deputies, academics and high-level representatives of international financial institutions to brainstorm on challenges and issues relevant to the regional economic and financial cooperation.

—

About AMRO:

The ASEAN+3 Macroeconomic Research Office (AMRO) was established to contribute to securing the economic and financial stability of the ASEAN+3 region, which includes 10 ASEAN countries and China (including Hong Kong), Japan, and Korea. AMRO fulfils its mandate by conducting macroeconomic surveillance, supporting the implementation of the regional financial arrangements, the Chiang Mai Initiative Multilateralisation (CMIM), and providing technical assistance to the members.

ASEAN+3 Finance and Central Bank Deputies, academics, and high-level representatives of international financial institutions discuss challenges and issues relevant to the regional economic and financial cooperation at the 2017 ASEAN+3 Financial Forum hosted by AMRO on December 11, 2017, in Asahikawa, Japan.

AMRO Director Dr Junhong Chang delivers the opening remarks at the 2017 ASEAN+3 Financial Forum (ATFF) hosted by the ASEAN+3 Macroeconomic Research Office (AMRO) on December 11, 2017, in Asahikawa, Japan.

Chairing panel of the 2017 ATFF. (From left to right: Dr. Hoe Ee Khor, AMRO Chief Economist; Mr. Diwa C. Guinigundo, Deputy Governor, Monetary Stability Sector, Bangko Sentral ng Pilipinas; Dr. Chang Junhong, AMRO Director; Dr. Akira Ariyoshi, Chair of AMRO Advisory Panel; Mr Yoshiki Takeuchi, Director General of the International Bureau, Ministry of Finance, Japan; and Dr Yoichi Nemoto, Former AMRO Director.)

AMRO Senior Management team, ASEAN+3 Finance and Central Bank Deputies, and distinguished speakers and participants at the 2017 ATFF.

For more photos of the event, please visit the 2017 ATFF Photo Album on AMRO Flickr account.