ADB chief raps protectionism

The global recession should serve as a stark reminder for Asian countries about the need to increase their commitment to economic cooperation, according to Haruhiko Kuroda, the president of the Asian Development Bank.

Mr Kuroda, who met with the Asean+3 finance ministers in Phuket last weekend, said Asia should avoid resorting to protectionist trade measures such as subsidies or higher import tariffs in hopes of boosting their economies.

He also called for the region's nations to strengthen their co-ordination of foreign exchange policies. Most regional currencies have fallen in value against the US dollar since the crisis erupted last September.

But Mr Kuroda noted that there was a worrying divergence in rates, with the Japanese yen rising 20% over the period against a 35% decline in the value of the Korean won.

Mr Kuroda said regional co-operation could become even more important in the future, as Asian currencies would face pressure to appreciate if demand for dollars by US institutions eased and  capital flows to the region resumed.

He welcomed the effort toward regional financial co-operation made over the weekend as the Asean+3 group agreed to boost the size of the Chiang Mai Initiative (CMI) programme by 50 per cent to $120 billion.