■ ASEAN BANKING INTEGRATION NETWORK TO BE SIGNED THIS WEEK
Agreements on banking networks will be signed as an off-shoot of the Association of Southeast Asian Nations meeting today and tomorrow. The Asean Banking Integration Framework will be signed in the sideline meetings of the Asean Finance Ministers and Central Bank Governors’ meeting. The information came from the Department of Finance, the organizing committee of the said meeting.
Finance ministers and central bank governors are expected to sign the Asean Banking Integration Framework. The framework allows banks access to the wider Asean market and to be given the same treatment as local banks. Finance ministers of Laos, the Philippines and Singapore are expected to make an announcement on Friday.
Agreements on the Association of Southeast Asian Nations (Asean) Banking Integration Framework (ABIF) are expected to be signed on the sidelines of the Asean Finance Ministers and Central Bank Governors’ meetings to be held on Thursday and Friday in Cebu.
The information came from the Department of Finance (DOF), the organizing committee for the third finance ministers and central bank governors’ joint meetings in Lapu-Lapu City. However, it did not give details on what these agreements will be.
In December 2014, central bank governors of the Asean member-states created the ABIF, which permits banks that meet certain criteria to be classified as “qualified Asean banks” or those who enjoy widened access to other Asean markets, and afforded the same treatment as local counterparts.
To obtain a “qualified” status, banks need to come up with bilateral agreements between their home market and countries in which they wish to set up operations.
Expanding regionwide
“A smaller bank from an Asean country will have the opportunity to expand its activities in another Asean country. This system will provide significant benefits to small and medium businesses looking to establish themselves within the region,” ASEAN Briefing, an online source for technical and business information concerning investment and trade with ASEAN countries, under professional services firm Deza Shira and Associates, said.
For the Philippines, Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. was quoted in January as saying that the country has already signed its first bilateral deal with Bank Negara Malaysia’s former governor Zeti Akhtar Aziz. Under the agreement, three qualified Asean banks from either country can operate in the other country and vice versa.
A Business World report also quotes the BSP Governor being in talks with the Bank of Thailand and Otoritas Jasa Keuangan of Indonesia and hoping to sign the deal before Tetangco’s term ends on July 2 this year.
Deadline approaching
Debt watcher Fitch Ratings also named the Philippines this year as having “taken the biggest step” among its Asean peers in pursuing banking integration, citing the passage of Republic Act 10641 in 2014, which removed the cap on foreign bank ownership.
Region-wide, Fitch said the Asean financial integration goal is “slow to get off the ground.”
“Further moves are likely to remain gradual and full regional financial integration looks like a very distant goal,” said the debt watcher.
Final statement
The ABIF aims to implement a full integration in the banking sector by 2020.
After the joint meetings on Friday, a joint press conference by the finance ministers of the immediate past (Lao Republic), present (Philippines) and future (Singapore) Asean chairs will be held, added DOF.
On Thursday, the Asean finance ministers will be held at the Mactan’s Shangri-La Resort and Spa. Topics include infrastructure investments as a vehicle for sustainable growth in the region, e-commerce as a new business frontier for Asean, trade facilitation and cooperation in the regional bloc, and the rising consumer market in the region’s economies.
In the breakout session on infrastructure investments, Philippine Transportation Secretary Arthur Tugade and Dr. Supee Teravaninthorn, director general of the Investment Operations Department fo the Asian Infrastructure Investment Bank, will deliver keynote speeches.
The Philippines’ chairmanship of this year’s Asean Summit is the country’s third. Its first was under the leadership of President Corazon Aquino in 1987 and the second in 2006 under President Gloria Macapagal-Arroyo.
This year’s summit coincides with Asean’s 50th founding anniversary.