MANILA (Bloomberg): The Association of South-East Asian Nations (Asean) will reinforce supply chains and keep trade flowing to ensure the region can weather the impact of the Middle East war on food, fuel and vital supplies.
"To mitigate the economic impact of the global and regional developments, including the situation in the Middle East, we remain committed to keeping the Asean market open for trade and investment, by maintaining a transparent and predictable regional economic architecture,” Asean economic ministers said in a joint statement during their meeting in Manila on Friday.
The regional group said it will need to cooperate on oil reserves, both within the bloc and with dialogue partners. It will also continue working on the establishment of an Asean power grid. The bloc also committed to minimize disruption in regional food supply chains to reduce price spikes.
The latest pronouncements come as nations scrambled to ensure their own domestic supplies. Vietnam said crude not yet committed for export must be sold to local refineries, while Thailand halted outbound shipments of oil and on Friday said it will also suspend rice shipments to the Middle East.
Southeast Asia, which is mostly reliant on imports for oil, has been hard hit as the Middle East conflict deepens on its second week. Nations have been taking on innovative and drastic measures to conserve energy, secure alternative supplies and cushion the price shock, wary that the war could lead to a prolonged fuel crunch.
Amid the disruption of key maritime routes, heightened freight, insurance and logistics costs will contribute to inflationary pressures on energy, food and other essential goods, according to the Southeast Asian bloc.
"It will also impact economic security and stability, the livelihoods of millions of people in the region, and hinder economic progress in Asean,” it said, adding that responses should consider the needs of more vulnerable economies.
Economic ministers called for sound fiscal management, saying measures should be targeted to households and businesses, without compromising the sustainability of government finances. This will help preserve fiscal space to respond to potential economic shocks should global conditions deteriorate, they said.
The Asean is a grouping of 11 nations, including some of the fastest-growing in the Asia-Pacific region, with a combined population of nearly 700 million.
The bloc is also monitoring the US’ recently launched trade probes that affects most of the bloc’s members, adding that they will engage proactively to ensure that the investigation is consistent with international trade rules.
Earlier on Friday, the Philippines, the host country, urged the Asean to position itself as a safe haven for investment amid worsening global volatility.
"Geopolitical tensions are no longer distant headlines. They are immediate economic shocks,” Philippine Trade Secretary Cristina Roque said before the economic ministers met. "Asean resilience is no longer aspiration, it is our primary shield.”
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