ADB Korea Seeks to Increase Role for Asia’s Development
By Na Jeong-ju
Staff Reporter
South Korea, the eighth largest shareholder of the Asian Development Bank (ADB) with a 5 percent stake, will engage in a series of discussions during the bank's 41st annual meeting in Madrid, Spain, to increase its role in regional financial integration.
Since joining the bank in 1966, Seoul has increased its contributions in line with its economic development.
Strategy and Finance Minister Kang Man-soo, the governor for South Korea in the ADB, will discuss ways of promoting the country's currency swap agreements with the 10 member countries of the Association of Southeast Asian Nations (ASEAN) and China and Japan.
The ``ASEAN+3'' countries are expected to take steps to develop the so-called Chiang Mai Initiative, which was adopted in 2000 to prevent a recurrence of something like the 1997-98 Asian financial crisis, with the aim of creating a multilateral regional financial framework.
The anti-crisis system is called the Asian version of the International Monetary Fund, as crisis-hit countries can use its common pool of currency reserves to overcome a financial disaster.
Kang is expected to appeal to the member nations for the need to fight speculative currency transactions. Kang, a key architect of South Korean President Lee Myung-bak's growth policies, has called for a larger role by the government to stabilize currency rates.
He has said the value of the Korean currency has risen too sharply in the past years, compared with other Asian currencies, raising speculations in the market that he prefers a weaker won to spur the country's economic growth.
On the sidelines of the ADB meeting, presidents of financial firms will meet with investment bankers and representatives of regional banks to seek opportunities to invest.
Among them are Kookmin Bank CEO Kang Chung-won, Shinhan Bank CEO Shin Sang-hoon, Woori Bank CEO Park Hae-choon, Hana Bank CEO Kim Jung-tai, Export-Import Bank of Korea CEO Yang Cheon-sik and Industrial Bank of Korea CEO Yun Yong-ro.
Representing the Korea Development Bank, its executive director Rhee Sung-joon will fly to Madrid as Governor Kim Chang-lok tendered his resignation last month.
The top financiers plan to hold a series of consultations with representatives of Merrill Lynch, UBS, Lehman Brothers and other global firms.
Although most ADB lending is made to governments and public firms, the bank also provides direct assistance to private enterprises of developing countries through equity investments and loans. The ADB may offer investment opportunities to South Korean lenders through the government.
Rising global inflation, concerns about food and energy crisis and a U.S. recession will also be on the agenda.
The Korean government cut taxes on gasoline and other oil products by 10 percent, as well as freeze public services and transportation fees to rein in surging consumer prices in the wake of high costs of crude oil and other raw materials. Included in the price control list are bus fares, telecommunication and apartment utility fees.
For the first time in a decade, the incumbent head of state instructed the Cabinet to take all possible measures to tame inflation.
The government picked 52 daily necessities whose prices will be monitored and controlled to stabilize the livelihood of the working class amid global inflation pressure.
Major institutes have warned prices will grow at a faster pace.
``The administration should be quick to initiate a range of measures aimed at curbing rises in consumer prices, particularly those of daily necessities for ordinary people,'' Samsung Economic Research Institute said in a report.
The think tank has lowered its forecast for the country's economic growth to 4.7 percent from its earlier projection of 5 percent. Rising oil prices are pouring cold water on the country's economic recovery, it said.
Adding fuel, a U.S. recession is having a spillover effect on many countries, forcing them to cut this year's growth forecasts. Negative external factors are likely to dampen the country's exports and cut economic growth rates.
Prices of wheat, corn and rice are continuing their upward march due to growing demand in China, India and other rapidly growing economies. Drought and climate change have also contributed to price hikes. Soaring oil prices and increasing production of ethanol from corn have put additional pressure, creating ``agflation'' ― the global phenomenon of a price surge in agricultural products.
Rice prices have shot up, forcing rice producing countries such as China, India and Vietnam to restrict their rice exports.
Rising rice prices have raised fears of possible riots across many Asian countries, but Korea is considered safe from the rice turmoil as its rice stockpile is sufficient and produces enough locally to meet full demand.
The fast rises in global rice prices, however, may put upward pressure on domestic prices as the government is poised to gradually increase imports of rice based on trade agreements with some countries.
``The local rice market is unlikely to be affected by the global trend. However, the country may face an upward pressure on domestic rice prices in line with rises in global prices,'' according to the Korea Agro-Fisheries Trade Corp.
