A 3200-km highway is being built across Thailand, Myanmar and India. Planned to be operational by 2016, it is expected to boost trade and commerce between the three countries. The highway is funded by the Asian Development Bank (ADB) and the World Bank, while India has also given Myanmar $500 million loan for the plan. Last week Thai delegates visited Manipur in northeast India to assess the region’s potential.
Economic integration and ADB
At the Third Asian Regional Public Debt Management Forum held on March 19 to 21, Asian Development Bank called for more efficient debt management in the Asian countries. The regional development bank consists of 67 member states, 48 of which are in Asia and the Pacific. Right management of sovereign debt could serve as a cushion against the financial crisis, says the Indonesian Minister of Finance, Agus Martowadojo. Stability would help the countries to issue longer term bonds, which means cheaper means of financing for them. ADB also commits to expanding local bond markets and continue its support for Asian Bond Markets Initiative. ABMI was created by ASEAN+3 to create more liquid bond market.
At the same time, ADB published a report on the risk of asset price bubble as the bond market becomes more liquid. The ease of capital inflows means the increase in dependence of local market to global economic condition. Singapore adopted stricter measures on property ownership on January this year, precisely to reduce speculation by foreigner investors and local residents on its already overheated property market, but experts do not see any signs of asset market bubble in Singapore.
In another occassion, the vice president of ADB, Bindu Lohani, warns that the recent growth in Asia should not decrease cooperation as there are other benefits to cooperation other than crisis prevention, such as inclusive economic growth, promotion of good governance and other benefits gained from spillover effect. Cooperation among Asian countries has increased after the 1997 financial crisis as they built preventive system against future shocks
Moreover, the growth might be triggered by setbacks in eurozone. In which case, Thiam Hee Ng, Senior Economist in ADB’s Office of Regional Economic Integration, warns Asian governments to prepare for outflows of funds when European and the US economies recover.