ASEAN set to adopt strategy to sustain growth

HANOI, April 9 Thu Apr 8, 2010 10:47pm EDT

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HANOI, April 9 (Reuters) - Southeast Asian leaders were set on Friday to adopt strategies for keeping economic growth on track, bolstering their political and economic community and making common cause on climate change.

The 10 leaders of the Association of Southeast Asian Nations (ASEAN) will keep "supportive policies" in place to consolidate the economic recovery, but will withdraw stimulus measures when private demand returns, a draft of their declaration to be issued when they wrap up an annual summit later on Friday said.

ASEAN finance ministers said at the end of their meeting on Thursday they expected the region to achieve 4.9-5.6 percent annual growth, up from 1.5 percent last year. [ID:nSGE6370FZ]

Economists have warned that large capital inflows pose a risk to the macroeconomic stability of some of the region's economies, and the ministers said they were "cognizant" of those risks.

But Singapore's Finance Minister Tharman Shanmugaratnam told a news conference no specific proposals were made about managing capital flows.

The draft declaration was filled with the usual ASEAN alphabet soup of acronyms, meetings about processes and hopeful homilies about the community they are trying to build.

But the summit, as often happens at ASEAN meetings, has been overshadowed by concerns about Myanmar's widely derided election plans and unrest in one of its members. Thailand's prime minister was forced to cancel his trip to Hanoi after declaring a state of emergency in Bangkok to control anti-government protests.

Myanmar's election plan was not on the agenda, but still occupied the attention of the other nations' leaders, concerned their most truculent member hurts the group's credibility.

Indonesia and the Philippines have publicly criticised Myanmar's election laws, which ban political prisoners, such as opposition leader Aung San Suu Kyi, from running.

Her National League for Democracy, which won the last election in 1990 by a landslide but was denied power by the army, is boycotting this one. That move could make it difficult for the junta to portray the polls as free, fair, inclusive and credible.

Myanmar has so far kept the polling date a secret.

CLIMATE CHANGE

Vietnam's Prime Minister Nguyen Tan Dung told the summit's opening on Thursday that a statement on climate change would be adopted, "sending out ASEAN's strong message on the international negotiating process for an effective climate change regime".

The draft declaration states the leaders will also consider ways to strengthen their charter and community.

Foreign ministers on Thursday signed a protocol establishing a "dispute settlement mechanism" within the charter to resolve arguments between ASEAN member states, such as over territory.

Procedures for the mechanism, to be finalised at a meeting in July, completes the charter's legal framework, ministers said.

The charter, adopted two years ago, will turn a region of 580 million people with a combined GDP of $2.7 trillion into a rules-based political and economic bloc over the next five years.

ASEAN has never censured Myanmar over its rights record and is unlikely to do so this time. But summit leaders may indicate to the junta's representative, Prime Minister Thein Sein, that Myanmar is hurting the group's credibility.

"The Myanmar issue still presents a problem when we want to take ASEAN forward to negotiate and deal with other groupings and countries," Thai Foreign Minister Kasit Piromya said. "It presents a major limitation for us."

ASEAN has always taken a gentle approach to the resource-rich country wedged between India and China -- and a half-century ago, one of Asia's most developed nations.

"We are not in a position to punish Myanmar," Singapore Foreign Minister George Yeo said.

"ASEAN takes a very realpolitik position, which is that if China and India remain engaged in Myanmar, we have to. It is better that Myanmar remain in the ASEAN sphere than being a buffer state in between the two biggest countries on earth."

ASEAN includes an absolute monarchy in Brunei, the junta in Myanmar, one-party communist states in Laos and Vietnam and robust democracies such the Philippines and Indonesia. Finding common ground is not always easy in this group, which also includes Cambodia, Malaysia, Singapore and Thailand. (Additional reporting by Ambika Ahuja and Simon Rabinovitch; Editing by Alex Richardson)

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