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The 2008-2009 global economic crisis was of a greater scale and impact than the 1997-1998 financial crisis with ASEAN economies responding better than others according to a recent article in Singapore’s Strait Times. The following is a summary of the article posted on the Strait Times detailing how some ASEAN countries dealt with the crisis:

Firstly, the countries quickly released economic stimulus packages through flexible financial policies, often cutting interest rates and contributing a large amount of money to the commercial banks system. In early 2009, the Singaporean and Malaysian governments announced financial stimulus packages of over 4% GDP.

The Monetary Authority of Singapore (MAS) cut its interest rate for the first time in 4 years. Cambodia spent USD100 million establishing a fund to assist banks to respond to the crisis and maintain their operations. Thailand approved 6 stimulus measures to improve their economy’s financial capacity, including a priority to exports to raise its turnover in 2009 to USD184.7 billion. Aiming to recover economic growth, Indonesia also released a stimulus package worth USD6 billion.

Secondly, the countries encouraged investment, consumption and promoted production, business, and exports through budget tools and created favorable conditions for small to medium-sized businesses to access the credit markets. Aiming to encourage people’s consumption, in March 2009, the Thai government provided 2,000 Baht a month for people with income lower than 15,000 Baht a month. Singapore offered favorable conditions for businesses to expand their export markets and pledged an additional USD1.5 billion in aid to help small-sized businesses access the credit market. Indonesia made efforts to seek export and investment opportunities and intensified cooperation between the government, the Central Bank and banks, the private sector.

Thirdly, ensuring social welfare and increasing subsidies for low-income people and farmers. Agricultural development is central to raising the living standards of farmers in ASEAN countries because agriculture employs 161 million people accounting for 44.5% of total workers in the region. Agriculture is both an impetus for economic growth and provides protection against poverty.

Thailand carried out agricultural stimulus packages by delivering food vouchers for the poor, assisting jobless people, and encouraging farmers to rotate rice cultivation with three crops a year.

The Philippines spent USD6.8 billion from its 2009 budget on social welfare and infrastructure programs.

Cambodia doubled its budget for its transportation, irrigation, and other infrastructures in 2009.

Malaysia invested USD1.9 billion and capital in expanding its rice cultivation areas and productivity.

Moreover, ASEAN intends to establish the “rice reserve store and fund” with nearly 3 million tonnes to prevent rice shortages in the region. Each country in the region will contribute capital or rice for the fund and self-supporting food through investment for sustaining agricultural growth and offering social welfare assistance for farmers.

Lastly, the countries increased international and regional cooperation and timely establishment of the “regional finance fund” and “investment cooperation fund”. Aiming to respond to financial crises and assist countries that lack funds, ASEAN countries agreed to set up a fund aided with USD10 billion by the World Bank (WB). The fund will be used to buy bad assets and provide capital to financial organizations as well private companies.

Moreover, ASEAN together with China, Japan and the Republic of Korea (ASEAN+3) set up the “regional finance fund” worth USD120 billion along with China’s participation in the “investment cooperation fund” worth USD10 billion to respond to economic crises.

(CPV)