Role must match contributionThe Association of Southeast Asian Nations Plus Three will likely create an agency to oversee and manage a new regional fund in a Southeast Asian city.
All the government’s hyped-up rhetoric on “new Asian diplomacy” is lacking in substance, it seems.
On March 24, the Chiang Mai Initiative Multilateralisation (CMIM) - a $120 billion fund that will help address short-term liquidity difficulties in the region - is set to launch. The fund is the first regional financial framework built with the help of Asean Plus Three members, and the standing secretariat will oversee it. Some $97 billion, or 80 percent of the seed capital, is funded by Korea, China and Japan, while the rest is divided among Asean members. The three countries should contribute to the secretariat role according to their stakes in the fund, which will likely benefit Asean countries more.
The monitoring work on the macroeconomic situations of each market to appropriate and expedite financial support requires dexterous know-how and skills. East Asian countries are more qualified than their Southeast Asian neighbors in this area.
China and Japan are currently unfit to house the secretariat due to their rivalry. The two countries equally shoulder 32 percent of the fund. Korea, with a 16 percent stake in the fund, can best serve as a neutral home for the secretariat office.
Relations among the three East Asian countries have lately been friendlier than ever, with leaders agreeing to meet regularly to discuss regional affairs. Yet Seoul has failed to capitalize on its new status and has been reserved in pursuing efforts to host the secretariat.
The secretariat office for another nascent regional fund - the Credit Guarantee and Investment Mechanism, or CGIF, a part of the Asian Development Bank created to support the issuance of local currency-denominated bonds - will likely be set up in the Philippines. If Korea aggressively sought the CMIM secretariat, it could have ended up managing either one of these two funds.
The only secretariat responsibility still up for grabs is the Regional Settlement Intermediary, which is focused on reducing the costs of cross-border bond and foreign exchange settlements. Korea should demand a function tantamount to its regional contribution.