United Kingdom in South East Asia should be Chairman, and that the Australian and New Zealand Governments should be invited to nominate observers at its meetings. The Terms of Reference of the Working Party are set out at Appendix D.
IV. FINANCIAL AND ECONOMIC MATTERS
28. On the subject of the machinery of government relating to the administration of financial and economic affairs, we agree that the responsibility for all financial matters, including foreign exchange, at present discharged by the Financial Secretary, should be transferred at once to a Malayan Minister of Finance. We recognise that, during the interim period, the United Kingdom will possess a continuing interest in the mechanism of financial control in the Federation in order to be satisfied that the expenditure of money made available from the United Kingdom funds is properly controlled, but we are satisfied that there are no objections on financial grounds to this proposal. We are also agreed that a Ministry of Commerce and Industry should be set up to take over some of the functions at present exercised by the Minister for Economic Affairs, which title would lapse.
29. We recognise that ultimate responsiblity for policy will rest with the Executive Council, and we welcome the proposal to establish, under the chaimanship of the Chief Minister, an Economic Committee of the Executive Council, charged with the responsibility of coordinating economic poilcy and determining priorities, in the belief that such a Comittee will greatly assist and strengthen the work of government.
30. We had a full and frank discussion of the Federation's position in the Sterling Area. The Malayan delegation indicated that it was the view of their Government that membership of the Sterling Area was to the common advantage of the Federation and the other members and that it was their intention to remain in it after attaining full self-government. There was general recognition by the United Kingdom representative of the importance of the Federation's contribution to the strength of the Sterling Area through the direct earnings of dollars from rubber and tin.
31. We discussed the question of responsibility for the Federation's foreign exchange policy with particular reference to dollar imports. We recognise that the existing arrangments for consultation between the Government of the Federation and Her Majesty's Government have on the whole worked well in practice. There was a general discussion on the common problems of the Sterling Area and it was agreed that, so long as the problem of the balance of payments of the area as a whole remained, it would be necessary for the Government of the Federation to continue to exercise restraint in its dollar expenditure in conformity with the policy generally followed by the Sterling Area. We agree that the responsibility for applying this policy in the Federation rests with the Federation Government and that the Federation Government will continue to consult with Her Majesty's Goverment so that it can act in full knowledge of Sterling Area problems and the United Kingdom can be fully informed of the special problems of the Federation.
32. In view of the Federation's participation in the Sterling Area and the importance of its trade to the Area's strength, it was agreed that the Federation Government must be able to assure the people of the Federation that the voice of their elected representatives would be heard in matters of Sterling Area Policy. We agreed that, in order to achieve this, it was desirable that arrangements should be made for the Government of the Federation to send a delegate to all future meetings of the Commonwealth Finance Ministers on a basis which would enable him to have full freedom of expression and full discretion at such conferences in all matters which fall within the responsibility of the Federation Government. The status of the Federation's delegate at such Conference further at the present time, but it was agreed that the Federation Government would be entitled to raise it again should occasion arise later.
33. We recognise the important part which overseas capital must continue to play in the economic and social development of Malaya. In this connection we think it desirable to draw attention to the statement in the Alliance Manifesto that it is their policy to attract overseas capital to Malaya. This was given more detailed expression in the High Commissioner's statement in the
