KUALA LUMPUR, April 30 — Prime Minister Datuk Seri Anwar Ibrahim’s call for the establishment of an Asian Monetary Fund (AMF) as an alternative to the International Monetary Fund (IMF) is pragmatic, in view of the current needs of many Asian countries, said an economist.
Juwai IQI global chief economist Shan Saeed said that now is the time for policymakers to consider setting up a new multilateral organisation that can provide and bolster development, growth and stability.
“The alchemy of global financial markets has changed over the last 16 years. The global economic instability and financial fragilities are getting deeper into the markets, and the ructions in markets such as equity and bonds are of a magnitude not seen for a decade.
“The global economy now stands at a critical juncture and many economies would see either slow growth or zero/negative growth, so the question is, how will global leaders bring stability and growth to the economies?” he said.
Speaking to Bernama, Shan highlighted that many global and institutional investors rely heavily on insights from established banks like Blackrock, JP Morgan, Bank of America, UBS, Goldman Sachs, and Citibank, to make strategic decisions for their future investment portfolios.
“It is very important for sophisticated and smart investors to fathom the global macro picture to fully comprehend the dots in order to make economic and financial sense,” he said.
Founded in 1944 at the end of World War II, the IMF and the World Bank Group are two central institutions that underpin the United States’ (US) dominance in the global financial system.
The World Bank works with developing countries to reduce poverty and increase shared prosperity, while the IMF serves to stabilise the international monetary system and acts as a ‘monitor of the world’s currencies’.
However, critics claim the IMF and the World Bank are institutions that operate at the behest of the US, which seeks to maintain its hegemonic position as the world’s sole superpower, both in terms of military and financially via the US dollar.
Shan added that as global growth pivots to Asia, the Gulf Cooperation Council and Africa, Asian economies are increasingly in need of support, particularly in the areas of infrastructure, technology, education, manufacturing and e-commerce.
He noted that Asia requires an investment of about US$2 trillion in infrastructure, education (US$300 billion to US$500 billion), technology (US$3 trillion), manufacturing (US$1 trillion to US$2 trillion) and e-commerce (US$500 billion).
“Only an institution like the AMF can bolster the regions for development and growth for Asian economies.
“These investments can only come from an Asian-based institution that understands the local economies, culture and the people to support Asian economies’ outlook in terms of growth, development and stability without any strings attached,” Shan said.
He opined that China, Japan, Korea, Brunei, Singapore, Malaysia, Saudi Arabia, Qatar, the United Arab Emirates and Kuwait could be the founding members to establish the AMF, aiming to ensure regional stability and prosperity.
AMF can become one of the preeminent multilateral financial institutions committed and dedicated to the growth of Asian economies, thus ushering in an era of prosperity and the upliftment of masses at the macro level, he said.
Shan stressed that investing in education is the key to the strategic development of the region, and strongly advocates female education which has a direct correlation with a country’s gross domestic product growth.
“We have live case studies of China, Korea and Japan where female literacy has contributed immensely to the country’s growth parameters,” he said.