II. Regional Economic Developments

4. We are pleased to note the region’s stronger growth of 3.8 percent in 2002 compared to 2.4 percent in 2001. Despite a weak international environment due in part to the SARS outbreak and the war in Iraq, which affected the first half of the year, we expect the region to continue its recovery with a stronger growth rate in the second half of 2003, supported by continued accommodative macroeconomic policies, the pick-up in the global economy, and successful restructuring programs undertaken by the APEC economies. We recognized that the increasing level of intra-regional trade has been one of the driving forces of the recovery. We emphasized the importance of accelerating structural reform, adopting macroeconomic policies that promote sustainable growth, supported by appropriate exchange rate policies that facilitate orderly and balanced external adjustment. While recognizing that there is no single exchange rate regime that suits all economies at all time, we noted a view expressed at the meeting that more flexible exchange rate management, in some cases, would promote this objective.

5. We emphasized the importance of promoting more open and freer trade and investment through the multilateral system and through regional and bilateral trade arrangements, combined with stronger international trade rules and disciplines, to reinforce global and regional economic growth and development. We affirmed the need for continued progress towards the Bogor Goals of free and open trade and investment in the Asia-Pacific region. We urge faster progress in liberalizing trade in all sectors of our economies that significantly contribute to broad-based growth in our region. We reaffirmed the urgency of advancing the Doha Development Agenda during the Cancun WTO Ministerial Conference.

III. Tenth APEC Finance Ministers Process’s Policy Sub-Themes

(i) Grass-Roots and SME Development

6. We acknowledged the role of micro-enterprises and SMEs in supporting sustainable and equitable economic growth. We agreed to work closely with the SME Ministers in providing the support necessary for the development of micro-enterprises and SMEs in the APEC economies, especially in the areas of financing, corporate governance, and entrepreneurship.

7. We welcomed the signing of the Memorandum of Understanding on Cooperation Among the APEC Financial Institutions Dealing with SMEs by financial institutions from the participating economies on 5 September 2003, which covers financial and technical cooperation among the signatory institutions.

(ii) Regional Bond Market Development

8. We recognized the importance of regional efforts to promote sound and efficient financial systems. We agreed to work together to achieve well-developed bond markets that are effective sources of long-term funds, both domestically and within the region. We acknowledged that further cooperation is necessary to attain domestic and regional conditions which are essential to facilitate cross-border bond market activities. We welcomed the APEC initiative to promote the development of securitization and credit guarantee markets in enhancing the efficiency of bond markets. We also supported issuances of new products, including long-term, local currency-denominated debt instruments, derivatives, and asset-backed securities.

(iii) Fiscal and Financial Aspects of Regional Trade Arrangements

9. We welcomed the progress being made in promoting more open and freer trade and investment both through Regional Trade Arrangements (RTAs) among the APEC economies and through the multilateral trade system in recent years. We encourage greater coordination of RTAs in order to achieve the Bogor Goals and to reduce the potential costs arising from multiple trade agreements. We will work with our Ministerial colleagues to promote convergence of tariff regimes, rules of origin, and customs procedures to enhance efficiency and reduce distortionary effects. We emphasized that RTAs should be pursued as a complement to the multilateral process. We also support financial services liberalization, and noted that this should take place concurrently with the strengthening of financial regulation and supervision. APEC economies should approach liberalization with due regard to their stages of development and capacities of the domestic institutions.

IV. Other Matters and Venue of the Next Meeting

10. We welcomed dialogues with the APEC Financiers' Group (AFG), APEC Business Advisory Council (ABAC), and Pacific Economic Cooperation Council (PECC) Finance Forum on ways to strengthen the financial systems and promote regional cooperation. The dialogues provided valuable insights from the private sector, as well as support for the work under the three sub-themes of the 10^th APEC Finance Ministers’ Meeting.

11. We thanked the Royal Thai Government through the Ministry of Finance for the excellent arrangement for the 10th APEC Finance Ministers’ Meeting and the Thai people for their warm hospitality.

12. We agreed to meet again for the 11th APEC Finance Ministers’ Meeting in Santiago, Chile, on 2-3 September 2004.