Slow progress in ASEAN in­te­gra­tion, says CIMB chief

The China Post - - COMMENTARY - BY SHAN­NON TEOH

One of the re­gion’s largest banks has com­plained about the slow progress in Southeast Asia’s planned eco­nomic in­te­gra­tion and sin­gled out mixed mes­sages from In­done­sia as a key ob­sta­cle to the ASEAN Eco­nomic Com­mu­nity (AEC) to be launched at the end of the year.

CIMB chief Nazir Razak — whose brother is Prime Min­is­ter Na­jib Razak of Malaysia, which chairs ASEAN — called on the bloc of 10 di­verse na­tions to be re­al­is­tic and ac­cept that eco­nomic in­te­gra­tion will re­sult in “win­ners and losers” among its 625 mil­lion peo­ple.

“We are so far from there (the AEC). The idea that we are 90 per­cent there feels so far from re­al­ity,” the chair­man of Southeast Asia’s fifth-largest bank said yes­ter­day at an in­vest­ment fo­rum in Kuala Lumpur, just two days be­fore an ASEAN sum­mit will be held here.

He was re­spond­ing to a pre­sen­ta­tion by Malaysian Trade Min­is­ter Mustapa Mo­hamad, who said mem­bers of the group­ing — which has a col­lec­tive econ­omy worth US$2.5 tril­lion — had com­pleted 90.5 per­cent of mea­sures un­der the AEC, es­pe­cially re­moval of trade bar­ri­ers.

But point­ing to prob­lems with out­sourc­ing and bank­ing in­fra­struc­ture, Nazir said pro­tec­tion­ism in fi­nance went “against the logic of in­te­gra­tion.”

“There will al­ways be win­ners and losers. Be re­al­is­tic that those who lose will make a lot of noise. I’m not sure if po­lit­i­cal lead­ers are pre­pared for that noise and po­ten­tial push­back ... what hap­pens to AEC?” he said.

“Get In­done­sia to state very clearly that it is pro- ASEAN. ASEAN is noth­ing with­out In­done­sia,” he added, re­fer­ring to In­done­sia’s state­ments that its in­ter­ests must pre­vail, as a wave of na­tion­al­ism has hit the bloc’s largest mem­ber in re­cent years.

While many ASEAN states are look­ing to slowly lib­er­al­ize their fi­nance sec­tors, In­done­sian law­mak­ers are set to pass a long-de­layed Bill this year to cap for­eign own­er­ship of banks at 40 per­cent, a move that would force sev­eral for­eign banks to give up con­trol of lo­cal lenders.

CIMB is the ma­jor­ity owner of In­done­sia’s fifth-largest bank, CIMB Ni­aga.

Crit­ics say ASEAN’s abil­ity to shape re­gional pol­icy has been hin­dered by the lack of clout given to its or­gans, such as its sec­re­tariat — a sit­u­a­tion that has raised ques­tions about the group­ing’s will­ing­ness to put com­mon in­ter­ests ahead of do­mes­tic con­cerns.

Speak­ing on the same panel, ASEAN Deputy Sec­re­tary-Gen­eral Lim Hong Hin lamented that his staff of 45 had to or­ga­nize 700 meet­ings a year on a bud­get of US$70 mil­lion, leav­ing them with lit­tle re­sources to work on pol­icy and out­reach.

Mustapa ad­mit­ted that there were “is­sues of sovereignty”, but ex­plained that the AEC was meant to of­fer a “freer” mar­ket rather than a com­pletely open econ­omy. He pointed out that many Malaysian com­pa­nies, such as CIMB, have been able to grow their re­gional busi­nesses.

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