BSP starts bilateral talks with Thailand for ABIF
MACTAN, Cebu — The Bangko Sentral ng Pilipinas (BSP) yesterday started talks for cross-border deals with Thailand as it completed discussions with Malaysia, which will allow the entry of banks from one country to the other, expected to spur increased trade within Southeast Asia.
BSP Governor Amando M. Tetangco, Jr. yesterday signed a letter of intent with his Thai counterpart, Governor Veerathai Santiprabhob of the Bank of Thailand, signalling the start of formal talks for a bilateral agreement for the two banking systems part of the Association of Southeast Asian Nations (ASEAN).
Mr. Tetangco said that the new deal opens more “synergies” of cross-border finance and regulatory cooperation, as it also unlocks broader investment opportunities between the neighboring economies, with ASEAN posting a high savings rate compared to other regional blocs which can be mobilized for investments.
The ASEAN Banking Integration Framework (ABIF) was first endorsed in December 2014, and seeks to allow duly identified qualified ASEAN banks (QABs) to operate freely across membereconomies in the region.
“Having QABs established between our two countries will not only complement trade linkages, but also promote more efficient and secure transfer of money at reasonable prices,” Mr. Santiprabhob said in a speech during the signing ceremony held at the Shangri-La’s Mactan Resort & Spa on Thursday.
This bilateral deal is the second for the Philippines under the ABIF. Talks with Thailand will now proceed to crafting the technical details of the crossborder agreement, where the two central banks will set the standards and the number of slots to be opened for QABs, to name a few.
Mr. Tetangco also concluded negotiations with the Bank Negara Malaysia (BNM) yesterday, which now opens the doors for a Malaysian QAB to enter the Philippines and vice-versa.
This comes a year after the two central banks entered into a heads of agreement for cross-border banking, where three duly-identified QABs of one country may apply to set up its business in the other, subject to the regulations set by the host economy.
The ASEAN is the sixth largest economy in the world, with its gross domestic product expected to reach $3.5 trillion by 2021, according to regional data. Total trade logged $2.3 trillion in 2015, and attracted $121 billion in foreign direct investments.
“Once we have our banks in other markets, business will follow in terms of investments,” BNM Governor Muhammad bin Ibrahim said in pursuing the bilateral agreement, its second after Indonesia.
So far, Maybank is the sole Malaysian bank operating in the Philippines, having secured a license to operate years ahead of the ABIF deal.
BSP Deputy Governor Nestor A. Espenilla, Jr. has said that the regulator has not received any formal requests for a Philippine bank to secure QAB status so far, noting that availing of the cross-border deal depends largely on business decisions.
Mr. Espenilla added that discussions between the BSP and the Otoritas Jasa Keuangan of Indonesia remains on the pipeline, ahead of the full integration eyed by 2020. The Philippines has already hurdled the requirement of inking at least one agreement by 2018.