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Economic Damage Seen in Asia After Latest Terror Attack
Kurt Achin
VOA, Hong Kong
06 Aug 2003, 13:22 UTC

Southeast Asian finance ministers are worried that terrorism could damage their countries' fragile economies. Their meeting in the Philippines is being overshadowed by Tuesday's bombing of a hotel in Indonesia.

Indonesia's finance minister canceled his trip to the meeting of Association of Southeast Asian Nations' finance ministers, to help his government respond to Tuesday's terrorist bombing in Jakarta.

The attack killed at least 10 people and wounded more than 100 others. The ASEAN finance ministers Wednesday acknowledged that such attacks could inflict long-term damage on investor confidence in the region.

In her welcoming speech, Philippine President Gloria Arroyo rallied ASEAN members to take a firmer stance on security issues. "The war against terrorism in the region must be pursued without let up through more intensive, multilateral operation," she said.

The venue for the two-day meeting is itself a reminder of the region's security issues. It is being held in Manila's Makati district, just a short distance from where more than 300 Philippine military personnel commandeered a building in a mutiny last week.

Regional finance ministers are expected to discuss ways to tighten financial controls and cut off the flow of funds to terrorist groups such as Jemaah Islamiyah.

JI is suspected of involvement in last October's Bali bombing that killed 202 people. The group appears to have ties to Osama bin Laden's al-Qaida network. Although Indonesian police have not yet named any suspects in Tuesday's bombing, many terrorism experts say JI may be to blame.

The annual ASEAN finance meeting also will focus on regional trade and finance issues, such as smoothing out customs regulations and establishing a regional bond market to attract international capital.

The finance ministers plan to discuss the dilemma they face as China emerges as an economic superpower.

China's ability to undercut production costs in the region has caused direct investment in Southeast Asia to plunge, especially from the United States. But in the longer run, rising Chinese purchasing power creates opportunities for Southeast Asian exporters. Some Southeast Asian financial leaders want tighter integration with China, arguing that a large Asian trading bloc is needed to offset the power of the United States and the European Union.

ASEAN finance ministers hope to integrate member nations into a regional free-trade zone by the year 2020.