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ASEAN UPDATE (r)



MEETING ON DEVELOPMENT COOPERATION:
                     RESPONDING TO THE ASIA CRISIS

                                 Communiqué
                            Sydney, 5 March 1999 



1. Ministers and senior representatives from 27 countries and 9
international institutions met in
Sydney on 5 March 1999 to develop strategies to address the economic and
social impacts of the
Asia crisis.

2. The Hon Alexander Downer MP, Minister for Foreign Affairs of Australia,
chaired the meeting.
Delegates welcomed Australia?s initiative in convening this high level
meeting to focus on what
needs to be done to restore sustainable economic growth and alleviate
poverty in the Asia-Pacific
region. 

STATE OF THE REGION 

3. Delegates reviewed economic and social developments in the region. They
noted that many

regional countries, through their own reform efforts and with assistance
from the international
community, have made progress over the last year in restoring macroeconomic
stability and in
mitigating the devastating social impacts of the crisis. But the region
remains vulnerable to economic
shocks and the social implications of the crisis continue to unfold. 

4. Recent analysis indicates that economic and social impacts have been more
varied, among and
within countries, than previously assessed. The impact of the crisis is
hitting urban areas hard. While
rural areas have absorbed some of the impact, hardship is likely to
increase. Accurate and timely
information is vital to ensure effective, well-targeted responses. 

5. Delegates recognised the consequences of the crisis are likely to
constrain the development
outlook for most countries in the region for several years. Development
cooperation strategies must
be adjusted accordingly, while maintaining attention to the close links
between growth and poverty
alleviation. 

DEVELOPMENT CHALLENGES AND RESPONSE STRATEGIES 

6. Delegates emphasised the importance of strengthening governance
frameworks. In particular,
building more effective and accountable institutions will promote high
quality growth and enable the
people of East Asia to benefit more equitably from development. 

7. Concerted efforts at national and international levels, including by the
international financial
institutions, must be maintained to restore growth and reverse the decline
in welfare experienced by
the people of affected countries. Increasing the momentum of recovery will
help build community
support for reform as well as reinforce social cohesion and tolerance. 

8. Delegates highlighted restoration of growth and strengthening of social
protection as the two core
challenges for recovery efforts over the medium to longer term. 

Restoring strong and sustained economic growth. 

9. The key to overcoming the crisis is strong economic growth accompanied by
increased
employment. This will require sustained efforts to: 

      implement appropriate macroeconomic adjustment programs which promote
fiscal and
     monetary stability, employment growth, social protection and increased
aggregate demand 

     restore trade and investment flows 

      strengthen financial, legal and corporate regulatory systems and
institutions, with emphasis on
     openness, transparency and accountability 

      develop the policy environment, infrastructure and technical
capabilities necessary for robust
     private sector development and more stable foreign capital flows,
especially foreign direct
     investment 

     invest in human skills development, particularly to build policy-making
and institutional capacity

      pursue reform of the international financial system to enhance the
capacity of countries to
     benefit sustainably from globalisation. 

10. Well-coordinated development cooperation strategies must underpin these
efforts by providing
resources, including technical/capacity building assistance, to strengthen
the policy and institutional

framework necessary for a return to sustained growth. This will also require
greater engagement
with the private sector to enhance the functioning of markets and to reflect
the changing roles and
responsibilities of business, including the need for improved corporate
governance. 

11. There must be mutual commitment from affected countries and the
international community to
maintain open trade and investment policies. Concerted efforts will also be
needed to adapt the
international financial system to the realities of global markets in order
to reduce the frequency and
size of future crises and to mitigate their impact on the most vulnerable. 

Protecting and reinforcing social investment systems, including expanding
safety nets to
protect the most vulnerable. 

12. Delegates noted that, while growth is essential, it is not sufficient to
guarantee comprehensive
social improvement. Delegates therefore emphasised the importance of social
investment, especially
in basic health and education, in improving welfare, promoting growth and
maintaining support for
reform. Publicly-provided social services are under stress due to competing
demands for budgetary
resources, thereby affecting the quality and accessibility of services for
poor households.
Appropriately targeted and cost-effective safety nets are required to
protect the most vulnerable
from the ongoing effects of the crisis and from future shocks. 

13. Key challenges include the need to: 

     mobilise well-targeted resources to maintain broad-based access to
social services 

      refocus public expenditures towards basic social services that benefit
the poor and vulnerable
     groups 

     improve social monitoring to help target responses 

      develop and expand formal safety net systems in ways which are
socially and culturally
     appropriate, fiscally prudent, and complement informal safety nets 

      strengthen institutions and administrative capacity to deliver well
targeted social programs and
     safety nets 

      expand the role of the private sector in the delivery of social
services and safety net provision.

14. Response strategies for the medium to longer term should ensure that
adjustment programs
continue to emphasise adequate and sustainable financing for social
investment, basic services and
safety nets. External financial or in-kind support to underpin
implementation of specific programs will
be important. Technical assistance to strengthen institutional capacity will
be vital. It will also be
important to expand partnerships with and strengthen civil society and
community groups as key
collaborators in the design, implementation and monitoring of social
policies and programs. This may
include a more direct engagement with the public and private sectors and
civil society in
decision-making processes. Enhanced dialogue should also be undertaken with
the private sector to
develop stronger partnerships, including to supplement public sources of
financing and provision of
services. 

15. Recognising the priority of effective information in guiding strategies
and response measures,

delegates welcomed a proposal that an Asia Recovery Information Centre be
established to facilitate
the collaborative exchange of information and analysis. The Centre will
operate primarily using
electronic communications and will focus on economic and social impacts,
emerging needs, national
and international responses and sources of available expertise. The facility
will augment, not
duplicate, other information mechanisms. 

16. Delegates expressed their conviction that the countries of East Asia
possess a solid platform of
human resource, economic and institutional strength on which to build a
strong recovery. Delegates
reaffirmed the commitment of their countries and organisations to work more
closely together and in
partnership with the governments and peoples of the affected countries to
overcome the impacts of
the crisis, strengthen governance and achieve resilient development in East
Asia. 

17. Delegates welcomed the plans of the World Bank and Asian Development
Bank to hold a
further meeting later this year to assess progress in addressing the social
impacts of the crisis. This
meeting will consider social safety net design and implementation, including
the role of the private
sector. 

18. Delegates concluded by expressing their gratitude for the hospitality
extended by the Australian
Government in hosting the meeting.