Evolving asean+3 erpd: From Peer Reviews to Due Diligence Masahiro Kawai

Evolving ASEAN+3 ERPD: From Peer Reviews to Due Diligence

• Masahiro Kawai

• Asian Development Bank Institute

• The First OECD-Southeast Asia Regional Forum

• “Peer Review Mechanism for Policy Reform”

• Organized by OECD

• Jakarta, 23-24 January 2007

Outline

• 1. Key Issues

• 2. ASEAN+3 Finance Ministers’ Process

• 3. ASEAN+3 Economic Review and Policy Dialogue (ERPD)

• 4. Three Levels of Policy Dialogue

• 5. Role of Private Sector Assessments

• 6. Enhancing ASEAN+3 ERPD

• 7. Challenges Ahead

Introduction: Key Issues

• What is peer review in East Asia?

• What should be its objectives?

• How does the ADB contribute?

• Is there a role for the private sector?

• What are the major challenges for improving ASEAN+3 ERPD?

ASEAN+3 Finance Ministers’ Process

• Origins in 1997-98 Asian Financial Crisis

• Key Initiatives:

• Chiang Mai Initiative (CMI)
• Economic Review & Policy Dialogue (ERPD)
• Asian Bond Markets Initiative (ABMI)

ASEAN+3 ERPD

• Key elements

• Finance Ministers’ Meeting

• Finance & Central Bank Deputies’ Meeting

• National Surveillance units

Three Levels of Policy Dialogue

• Good economic management needs:

• - objective economic assessments

• - identification of risks and vulnerabilities

• - analysis of policy options

• - implementation of desirable policies

Role of Private Sector Views

• Provide additional perspective

• Strengths (e.g., frank assessments)
• Weaknesses (e.g., sometimes myopic)

• Affect economic performance

• Move markets
• Influence business decisions

• Important input for Policymakers

• Methodology (e.g., due diligence)
• Views

Enhancing the Effectiveness of ASEAN+3 ERPD

• Clarifying objectives

• From “information sharing” to “peer reviews”

• Possible need for due diligence

• Focus on Structural Issues

• Maintain sense of ‘peer review’ among equals

• Greater institutionalization of ERPD desirable

• Central Bank Governors and the private sector
• Strong professional secretariat for objective routine surveillance and possible due diligence assessment

Conclusion: Challenges Ahead

• ASEAN+3 ERPD is in its infancy as “peer review” but is integral to regional cooperation.

• ADB supports the ASEAN+3 FM process, including ERPD.

• Integration of ERPD & CMI requires evolution from “information sharing” to “peer reviews” to “due diligence”.

• Institutionalizing ERPD by involving all key players and ensuring technical competence

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