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Asean Does Not Need Single Currency, Current Model Fits

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KUALA LUMPUR: Asean’s current development model is appropriate at this point in time and it does not need a single currency, said Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar.

He said the current development model, which consisted of three main pillars, namely political-security community, economic community and socio-culture community, fitted well for the region.

“The European Union has its own set of models, which goes beyond a single market.

“They have a single currency, European Parliament, European Court and others. That was never the intention for Asean,” he told reporters after the Association of Chartered Certified Accountants President’s Debate 2016 yesterday.

He added that Asean did not believe in having a single currency like the European Union (EU) does.

“When it comes to monetary policy that is certainly not in the agenda.

“I believe there is a lot more we can do. I believe the opportunity is great if we follow through with our commitment towards success without the need to adopt the EU model,” he noted.

Unlike the EU, in which the formation of a monetary union with a single currency represents a major element in realising its economic integration, the Asean region had come to a decision some time ago, in the early 2000s based on a study by Asean central banks, that a common currency would not be pursued.

Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz had earlier mentioned that this is because the Asean economies did not have the pre-conditions to achieve such a monetary union, and the effort to achieve such pre-conditions would involve immense cost to our economies.

“It was therefore concluded that the region would instead be better served by greater regional financial integration to achieve the very same objective of a shared economic prosperity for the region,” she said.

The Asean region has experienced a long term annual average growth of more than 5%, much higher than the global average, and this is expected to be sustained going forward, she said.

Collectively, Asean is now the sixth largest economy in the world, with a population of 630 million and a combined GDP of US$2.5 trillion.

With a young population, Asean has the third largest labour force in the world, after China and India. By 2020, Asean is expected to account for more than US$2 trillion of additional consumption to the world economy.

However, Wahid explained that Asean can be made more effective if there are improvements on strengthening institutions, such as the Asean Secretariat.

Currently, the Jakarta-based secretariat only has 300 international staff, a budget of just US$16mil.

In comparison, the EU has 30,000 staff and a budget of US$120bil

“Perhaps we can strengthen it with more funding and resources which will in turn help drive all the initiatives to grow the region better,” he said.

Meanwhile, Wahid added that the minimum wage for employees that will increase by RM100 to RM1,000 per month in the peninsula is reasonable.

“I don’t think a thousand ringgit per month is unreasonable.

“I think its a reasonable level and my view is that if businesses felt that its a bit too high then they have to look at ways on how to improve the productivity and review the business model to reach out to customers and so on,” he added.

He said that the Government took into account various factors, including recommendations from the committee that has been set up before making the decision to increase wages.

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