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Interview: ASEAN meets with challenge to drive up domestic investment for 2015 target

Source:   Time:

KUALA LUMPUR, April 27 (Xinhua) -- The Association of Southeast Asian Nation faces a task to build the fiscal space and the environment to drive up domestic investment ahead of the bloc's 2015 target to be an integrated economy, director of the International Monetary Fund's Asia Pacific department, Anoop Singh said on Friday.

"In many countries in ASEAN, investment is coming back. In the last decade, the investment-to-GDP ratio has not gone up that much and that is beginning to happen now," Anoop told Xinhua in an exclusive interview after launching IMF's Asia Pacific Regional economic outlook in Malaysia's capital Kuala Lumpur.

"I would say the challenge for ASEAN is twofold that one is to build the fiscal space to allow public investment to go back up and the second is to build an environment to attract private investment," he added.

On average, investment ratios in 2010 of three emerging ASEAN economies namely Thailand, Malaysia and Indonesia are about 10 percent of GDP below the pre-crisis levels in the 1990's.

The IMF report attributed ASEAN's low investment ratios to its weak investment climate, risky environment and regulatory factors among others.

Anoop said the 10-member bloc is already attracting a large chunk of capital inflows but to use the capital in sustainable growth as opposed to short-term speculative areas is a challenge.

The group's growth is projected to hit five to six percent next year, up from the projected 5.2 percent this year and 4.6 percent last year.

IMF expects reconstruction activity to give strong spur to domestic demand in Thailand to spice up its economy this year and next.

Strong government spending, robust remittances and the initiation of public-private partnership projects would trigger strong growth in the Philippines while gradual implementation of a series of projects under an economic transformation programme would boost Malaysia's economy.

"As part of Asia, ASEAN's economic growth is doing extremely well... There is a lot they have planned, I'm sure they will achieve it," Anoop said.

"The integration is ongoing reality. As the world changes as the links between advanced economies and emerging market changes, in that way, the kind of trade that is taking place within Asia, the intra-ASEAN trade will also need to change," he added.

ASEAN consists Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam.

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