IMF Takes Lessons From Malaysia And ASEAN To Strengthen Global Policy Framework - Chief

By M. Saraswathi

KUALA LUMPUR, Oct 28 (Bernama) -- The International Monetary Fund (IMF) has drawn key policy insights from Malaysia and the wider ASEAN region to manage external shocks as the Washington-based agency works to strengthen its global policy frameworks amid growing economic uncertainties.

Its managing director, Kristalina Georgieva, said the region’s resilience in managing external shocks has offered valuable lessons on how nations can balance growth and stability.

“At the IMF, we take some of the lessons from Malaysia and ASEAN to integrate into our overall policy approach.

“More specifically, we have been looking at how this part of the world deals with exogenous pressures, and as a result, we actually came up with an integrated policy framework, which is to bring monetary policy, fiscal policy and financial policy more closely together and make it more adaptable and more agile for a world of rapid change,” she told BERNAMA in an interview.

Georgieva also acknowledged the bloc’s innovative fiscal and monetary management and said that the IMF is now placing greater emphasis on regional experiences and collaboration to design more inclusive and flexible macroeconomic tools.

“Going forward, we are trying to significantly increase our regional engagements.

“In a multipolar world, we have to reflect the realities of our membership,” which means listening more closely to regions like ASEAN, which have demonstrated resilience, innovation, and leadership in times of uncertainty, she explained.

The IMF managing director noted that it is remarkable how quickly ASEAN mobilised to address these shocks, identify the risks posed by trade uncertainties, and determine how to resolve them.

She said that despite the region’s different levels of development, the sense of unity plays a greater role in facing challenges.

“And what I admire here is the sense of unity.  Symbolically, this unity has been demonstrated with the acceptance of a new member, Timor Leste,” she said.

Timor-Leste’s accession as ASEAN’s 11th member was a much-touted highlight of the summit in KL.  It was a long journey for Dili, which officially applied for ASEAN membership all the way back in 2011.

“And while countries are different in their levels of development, they have different domestic priorities, but that sense of urgency to come together and the leadership Malaysia provided to lift that sense of urgency is just remarkable,” said Georgieva.

She said that the 47th ASEAN Summit and Related Summits have been incredible, citing the 27 heads of state and global organisation leaders who gathered in Kuala Lumpur.

“(Literally), the whole world came to Malaysia.  So, it is the ASEAN Summit, with multiple pluses,” she quipped.

The event saw the attendance of leaders such as Brazil’s President, Luiz Inácio Lula da Silva, who helms the BRICS grouping, and South African President Matamela Cyril Ramaphosa, who will host the Group of 20 (G20) Summit in Johannesburg in November this year.

ASEAN should expand intra-bloc trade, increase final goods

Going forward, Georgieva said that while ASEAN has strong macroeconomic fundamentals, sound policies, strong institutions, and private-sector dynamism, it should focus on boosting intra-regional trade.

“More of those in the future would be good for countries, and then we have the tremendous opportunity for ASEAN to integrate further and become a strong force for its own people.”

The IMF has forecast the ASEAN economy to expand by 4.3 per cent in 2025.

“ASEAN countries trade only 22 per cent among themselves, and most of this trade is in intermediate goods, not in final goods.  And if you compare this to the European Union, where 60 per cent of trade is within the union and mostly final goods.

“Clearly, there is a long way to go for ASEAN,” she said, adding that open economies cannot benefit from protectionism.

The IMF, she said, also foresees greater potential for the region to deepen its financial integration.

She said that while trade integration matters, going forward, there should be greater utilisation of people’s savings in the capital markets rather than leaving them in the banking system. 

“We are talking about trade integration into matters, but going towards making the best use of the savings of people here through capital markets, rather than just through the banking system.”

Georgieva also noted that cross-border payments between ASEAN countries have been excellent and should be further expanded.

She added that the region should take full advantage of artificial intelligence (AI).

“There is a good global leader on artificial intelligence, Singapore, and other ASEAN countries, like Malaysia, Thailand, and Indonesia, are doing quite well, and that can be a driver of growth,” she said.

Tapping on the uncertainties

The IMF chief, however, cautioned that the world is now navigating through an era of deep uncertainty, driven by a convergence of powerful global forces reshaping economies and societies.

“We are now in a world of uncertainty.  That is unquestionable with four major forces affecting us all at the same time, namely geopolitics, technology, demography, and climate change,” she elaborated.

Georgieva said global power dynamics have shifted toward a multipolar world, technological advances are accelerating at unprecedented speed, demographic divides are widening between ageing and youthful nations, and climate change continues to exert mounting pressure across borders.

The way to tackle these challenges, she said, is to “get your own house in good order by strengthening domestic policies and institutions and focus on unlocking innovation and creativity.

“At a time of uncertainty, you cannot cling rigidly to a long-term plan.  You must be able to adjust and adapt as conditions change,” Georgieva said, while emphasising that flexibility must not come at the expense of core national principles.

“It doesn’t mean, however, that you abandon your guiding principles.”

Citing the 13th Malaysia Plan as an example, Georgieva credited its goals of raising incomes, accelerating the green transition, and ensuring equitable opportunities for all citizens.

“It’s about maintaining good governance while staying agile.  When circumstances shift, policies must evolve, but the vision for inclusive growth and sustainability should remain constant,” she said.

Above all, the IMF managing director said public trust and social cohesion are vital.

“We have seen young people on the streets in many countries because they feel excluded from opportunity and uncertain about their future.”

So, inclusiveness matters, she said: “In a world of greater uncertainty and frequent shocks, societies that stay united and inclusive will always emerge stronger.”

-- BERNAMA