By MARTIN VAUGHAN
PHNOM PENH, Cambodia—Southeast Asian finance ministers predicted the region’s economies will expand more quickly in 2012 than the previous year, and pledged vigilance against sharp movements in capital flows.
They predicted gross-domestic-product growth for the region as a whole at between 5.6% and 6.3% for this year, compared with 4.5% in 2011.
Downside risks to the region include weak global demand, tight liquidity, rising oil prices and volatile capital flows, finance ministers of the Association of Southeast Asian Nations said in a statement Friday after meeting in Phnom Penh.
Growth in the Southeast Asian region soared in the aftermath of the 2008 global financial crisis, only to cool off last year as the European debt crisis flared up, spooking investors. The finance ministers’ assessment reflects expectations that the global economy has returned to firmer footing.
The 10-nation Asean group includes Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. Officials from those countries also agreed with representatives of China, Japan and Korea at a separate meeting in Phnom Penh to strengthen a regional crisis fund and make it less reliant on the International Monetary Fund.
The ministers finalized some details of the Asean infrastructure fund, which they plan to launch in April. The maximum award for a single project will be $75 million, the ministers said. The fund is being set up with an initial equity of $485 million, with Asean countries and the Asia Development Bank pooling resources.
The Southeast Asian officials also took aim at a recent U.S. rule that would require financial institutions to report to the U.S. government the identity of their U.S. account holders. They agreed to formulate a common approach in responding to that rule.
“We are all concerned about FATCA,” said Singapore Finance Minister Tharman Shanmugaratnam, referring to the U.S. Foreign Accounts Tax Compliance Act. The U.S. Treasury issued proposed rules on the law in February.
Mr. Tharman said Asean officials want “to ensure that business continues to operate in a smooth and efficient fashion, and to ensure that our goals and rules are respected.”
“There are international standards when it comes to tax cooperation, and when an individual country sets out its own requirements, we need to ensure that this complies with international standards,” he added.
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