Kathmandu, November 4:

Local currency bond markets in developing Asian economies have come a long way since the 1997-98 financial crisis and now is a good time for regional inves-tors to invest in asset class, top government officials and inves-tors said at a conference today.

Speakers at the Asian Development Bank (ADB)-hosted conference ‘Investing in Asia Bonds — Opportunities for Asian Investors’ said governments across the region had taken significant steps to develop institutions and market infrastructure to stimulate the growth of local currency bond markets. They said active involvement of the private sector can further boost fixed-income markets in the region, according to a press release issued here today by the ADB.

“We see two roles of the private sector: One is contribution to further development of the market through business opportunities. Second is through feedback to Asian Bond Market Initiative (ABMI) efforts on how these markets can best be improved,” said Naoyuki Shinohara, vice-minister for International Affairs at Japan’s ministry of finance.

ABMI was launched by finance ministers from the Association of Southeast Asian Nations (ASEAN) plus Japan, People’s Republic of China and Republic of Korea in 2003. It has set

up working groups to take steps toward creating the infrastructure, regulations and best practices to stimulate the growth of local currency bond markets and encourage use of Asia’s massive savings within the region, states the release.

ADB, in association with Japan’s ministry of finance and Thailand’s finance ministry, hosted the conference to raise awareness and confidence in Asia’s local-currency denominated bonds among investors based in Japan. The conference is being organised in line with the ongoing support extended by ADB to ABMI launched by leaders of ASEAN+three. “The ultimate aim is to recycle funds to private sector. A lot of development has taken place in the past 10 years,” said Thailand’s finance minister Chalongphob Sussangkarn in his keynote address. He said national governments need to develop local currency bond markets to recycle the region’s massive savings and growing foreign exchange reserves.

Speakers said development of local currency bond markets will help region meet its growing infrastructure financing needs and avoid currency and maturity mi-smatches, key factors that led to crippling financial crisis in 90s.

Based on the outstanding balance of cross-border long-term bond investments in Asia, the UK and the US at the end 2005, only 2.6 per cent of investments of Asians and only 0.7 per cent of Japanese funds are invested in Asia. “As opportunities continue to develop within our region, one would expect to see that figure rise steadily,” said Jong-Wha Lee, head of ADB’s Office of Regional Economic Integration.