Kerangka Kerja Kebijakan Moneter dengan Sasaran Akhir Kestabilan Harga

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Asia-Pacific Finance and Development Center
Biennial Forum Shanghai, 22 September, 2006
Regional Cooperation and Innovation Development
Dr. Aslim Tadjuddin Deputy Governor Bank
Indonesia
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Outline

1. Introduction
2. Financial Cooperation
3. Initiatives and Suggestions to Foster the Asian
   Financial Integration
4. Sustainable Development and Innovation
5. Conclusion

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• Introduction

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Economic Integration

• Economic and financial regional integration are
  vehicles to achieve the ultimate goal of economic
  cooperation which is the stable and prosperous
  region.
• Geographical proximity and strong economic
  relations among countries have been the main
  driving force behind the establishment of
  regional economic integration.

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• Financial Cooperation

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Driving factors for integration

• Politic
• Market
• Asian financial integration should mainly be
  driven by market force.

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Economic Integration is no panacea

• Economic and financial integration will increase
  the flow of capital within the region.
• The increasing financial integration also
  contains risks that relate to the possibility of
  sudden and huge capital reversal.

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Financial integration among Asian economies is
still limited

• Financial market integration in Asia has lagged
  substantially behind the trade integration.
  Therefore, surpluses of saving are largely
  intermediated through financial markets outside
  Asia.
• Major foreign lenders in Asian banking industry
  are mainly American, European, and Japanese
  Institutions.
• Major foreign investors in Asian capital market
  are still from non-Asian economies.

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Approaches for financial integration

• Through establishment of Regional Financial
  Arrangement, or
• By establishment of currency union as in Europe

• Due to the large differences in the structure and
  economic performance of Asian countries remain,
  the launching of the RFA is more appropriate for
  the first stage that latter on could be followed
  by other measures, including the adoption of a
  common currency.

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Three types of RFA

• RFA with single currency basket
• RFA without a uniformed of fixed exchange rate
  system
• RFA that focuses only on strengthen the financial
  system
• Adopting the RFA with the support of a single
  currency basket (Asian Basket Currency/ABC) as a
  reference for each local currency would promote
  intra-regional exchange rate stability and that
  in turn would promote intra-regional economic
  growth.

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• Initiatives and Suggestions to Foster the Asian
  Financial Integration

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Initiatives to establish resource
pooling

• The Asian Money Fund (AMF)
• Chiang Mai Initiative (CMI)
• Bilateral Swap Agreement (BSA)

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Capital market development

• EMEAP countries launched the Asian Bond Fund
  program
• ABF1
• ABF2

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Suggestions to improve
monetary policy coordination in the region

• Creating a forum to formally the exchange rate
  policy dialogue and information exchange among
  East Asia economies.
• Strengthening cooperation and coordination among
  central banks in maintaining exchange rate and
  financial market stability by looking possibility
  of conducting coordinated and concerted
  intervention in the foreign exchange market.

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• Sustainable Development and Innovation

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Innovation and the role of government

• With innovation, an effective and efficient
  technique or method would be continually created.
• Government and private sector must create a good
  climate for growing innovation.
• In Indonesia, the central bank obligate banks to
  spend certain amount of fund to enhance human
  development.
• Sharing knowledge among countries in the region
  plays a key role as well in propping up
  innovation.

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The Importance of Intellectual Property Right
System

• A good system will provide confidence to
  innovators that their rights will be respected.
• A balance must be pursued between intellectual
  property protection and sharing innovation
  benefit.
• Adoption of Anti-Counterfeiting and Piracy
  Initiatives by APEC economies will reduce trade
  of counterfeit goods, protect against
  unauthorized copies, and prevent the sale of
  counterfeit goods.

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Indonesias measures in establishing and
improving the intellectual property right system

• Member of the World Intellectual Property
  Organization (WIPO) and in 1997 became full party
  to the Paris Convention for the Protection of
  Intellectual Property.
• Signing
• The Trade Related Aspect of Intellectual Property
  Right (TRIPS Agreement).
• The Nice Agreement for the International
  Classification of Unclassified Goods and
  Services, the Strasbourg Agreement Concerning the
  International Patent Classification.
• The Budapest Treaty on the International
  Recognition of the Deposit of Microorganisms.

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Conclusions

• The regional economic cooperation and
  coordination becomes more relevant than before,
  because Asian economies are facing new external
  risks like global imbalances, US dollar
  depreciation, and raising volatility in capital
  markets.
• Securing of world wide intellectual property
  protection is an important element to foster
  innovation development that in turn will bring
  considerable economic benefits to the region.
• The APEC member economies to work hand in hand to
  promote public awareness through education and
  sharing of knowledge.

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Thank you