Asian, European leaders pledge 'global teamwork' to tackle crisis

Dadan Widjaksana ,  The Jakarta Post ,  Beijing   |  Sun, 10/26/2008 10:58 AM  |  Headlines

While details remain sketchy, leaders of Asian and European countries reached a consensus at a two-day summit in Beijing that they would work together to tackle the global financial and economic crisis and possible world recession.

In the closing of the seventh Asia-Europe Meeting (ASEM) Saturday, the leaders called for a unified stand to tackle the crisis, an overhaul of the world's financial sector and a leading role for the International Monetary Fund (IMF) to help countries struggling with financial meltdown.

The leaders said they would bring their view to next month's highly-anticipated G-20 meeting - a previously planned summit where representatives of developed and emerging economies could draw up joint measures to limit the damage caused by the crisis.

"Europe and Asia have come together in Beijing at a time of global crisis, and indeed, we are in a moment where we need global teamwork. I'm pleased to confirm a shared determination and commitment of Europe and Asia to work together," European Commission (EU) President Jose Barroso said at a closing news conference.

ASEM brought together the leaders of 43 European and Asian countries, including EU and ASEAN heads, in a meeting many see as a prelude to next month's G-20 meeting in the United States.

In his speech delivered Saturday, Indonesia's President Susilo Bambang Yudhoyono indicated that he shared the views with other leaders on the need to cooperate and to set up concerted and collective efforts to confront the crisis.

In a press briefing held after the event however, Susilo ruled out the possibility of needing to ask the help of the IMF to reform the country's economic and financial systems.

"We had a traumatic experience years ago when the IMF helped us recover from the 1997-1998 crisis. Therefore, I do not think we would need IMF prescriptions again. We would instead believe in our own ability to improve existing systems," Yudhoyono said.

In the aftermath of the devastating Asian regional crisis in the late 1990s, Indonesia was among the crisis-stricken countries that received an emergency funding package from the IMF, but linked to a series of prescriptions including IMF rules applied to the reconstruction of Indonesia's banking system and economy.

Indonesia has now graduated from this IMF program, but to many, the program was a bitter pill to swallow, some even arguing that the IMF gave the wrong medicine for the wrong illnesses. Even today, opposition towards the IMF and its programs are still widespread among the Indonesian public.

Yudhoyono said that while the country agreed that a global financial reform was needed, Indonesia has actually gone through a long and painful reform process in the past ten years to get back on its own feet following the battering of the 1998 crisis.

"Before the current turmoil hit, our economy was actually doing fairly well. So was our banking sector, as is evident from our relatively low non-performing loans (NPLs), robust growth in lending and sufficient capital adequacy ratio (CAR)."

"But the current crisis shows us that we still need to keep improving. We have put in place some measures and if needed, there would be more to follow," he said, without elaborating.

In the face of the global financial meltdown, the government and central bank recently introduced a set of measures to bolster confidence in the financial sector. Chief among them was the rise in the guarantee limit on bank deposits.

The guarantee now covers up to Rp 2 billion for each deposit, far more than the Rp 100 million previously.

Responding to calls for an even higher guarantee limit, Yudhoyono did not rule out such a possibility, although more study would need to be done on the issue.

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