1. We, the Finance Ministers of ASEAN, China, Japan and theRepublic of Korea (ASEAN + 3) convened our meeting in Makati chaired by H.E.Jose Isidro N. Camacho, Secretary of Finance, the Philippines.

2. The Finance Ministers of China, Japan and the Republic of Koreajoin their ASEAN colleagues in expressing their sadness at the loss of lives inthe Jakarta bombing on 5 August 2003. We condemn this terrorist attack in thestrongest possible terms and re-affirm our fullest support for Indonesia. Wereiterate our full commitment to the global fight against terrorist financingand money laundering.

3. We discussed recent economic and financial developments andpolicies. We also reviewed the progress of regional financial cooperationinitiatives, including, the Chiang Mai Initiative (CMI), Monitoring of CapitalFlows, the Early Warning System (EWS) and the Asian Bond Market Initiative (ABMI).

Recent Economic andFinancial Developments in the Region

4. We are pleased to note the stronger than expected growth in theregional economies in 2002 which was supported by a revival in domestic demandand exports in some countries. The robust performance continued into the firstquarter of 2003. The region remains resilient and is expected to register highergrowth as global recovery picks up.

5. We had the opportunity to hear the report of ADB PresidentTadao Chino on the economic outlook of the region. The positive developments inthe ASEAN + 3 economies are supported by the improvements in the economicindicators in some of the developed countries. Mr. Chino identified three keylong-term challenges for the ASEAN +3 countries: (1) reforms in the bankingsystem; (2) restructuring of the corporate sector; and (3) deeper financial andmonetary cooperation.

6. We are confident that our accommodative monetary policy andfiscal stimulus will enable the SARS-affected economies among us to recover. Weresolved to intensify structural reforms, particularly on the regulatory andsupervisory system, and the ongoing financial and corporate sectorrestructuring.

Strengthening East AsiaFinancial Cooperation

7. On regional financing arrangements, we are pleased to notesignificant progress since we last met in Shanghai in May 2002. The number ofBilateral Swap Arrangements (BSAs) has doubled from six to twelve, and the sizeof the network has increased from USD 17 billion to USD 31.5 billion. Four moreBSAs (ChinaIndonesia, China-Philippines, Korea-Indonesia and Japan-Singapore)are expected to be concluded before the end of this year.

8. To strengthen the current peer review process, we agreed to implement the recommendations made by the ASEAN+3 Study Group toExamine Ways of Enhancing the Effectiveness of Economic Reviews and PolicyDialogues.

9. We also agreed to set up the ASEAN+3 Finance Cooperation Fund(the Fund) to support our on-going economic review and policy dialogue. The Fundwould complement our efforts to enhance the effectiveness of our economicsurveillance in support of the CMI and the ABMI. The Fund would be administeredby the ASEAN Secretariat.

10. We agreed to intensify our efforts to develop regional bondmarkets. This will further strengthen our financial systems by better utilizingthe aggregate savings in the region and minimizing the risk of maturity andcurrency mismatches. Voluntary working groups have been established to furtherdiscuss a range of key issues crucial to further development of the domestic andregional bond markets, such as, securitization, credit guarantee, promotion oflocal currency denominated bonds, credit rating, and foreign exchangetransactions and settlement issues.

11. We welcomed our Deputies’ initiative in setting up avoluntary research group to explore ways to further strengthen financialcooperation and promote financial stability in the region. Japan is prepared tomake a significant financial contribution to this research activity and we lookforward to a fruitful outcome of this collaboration.

12. We conducted a useful dialogue with the ADB President. Wewelcomed the ADB’s technical support for ABMI as well as for the capacitybuilding to set up the EWS in participating member countries. We support theestablishment of the EWS to strengthen our participating members’ surveillancecapacity.

13. We welcomed the workshop that was jointly organized by Japanand the ASEAN Secretariat on Monitoring System for Short-term Capital Flows –Phase II. The workshop was held in Kyoto and was attended by ASEAN+3 finance andcentral bank officials. We also welcomed the training course organized by Chinaon Economic Reforms and Development.

14. We agreed to meet in Jeju, the Republic of Korea, in 2004 wherewe look forward to further progress on the ASEAN+3 initiatives.

15. We express our thanks to the Philippines for hosting the 6thASEAN +3 Finance Ministers Meeting.