ASEAN Strengthens Financial Cooperation amid Market Uncertainty
ASEAN finance ministers and central bank governors last week reviewed and exchanged views on risks and challenges in the region, including geopolitical tensions in Europe, as well as opportunities arising from digital transformation and green investments, among others. They committed to strengthen regional cooperation to overcome threats and promote financial stability and integration.
The 8th ASEAN Finance Ministers’ and Central Bank Governors’ Meeting was co-chaired by Dr Aun Pornmoniroth, Deputy Prime Minister and Minister of Economy and Finance of Cambodia, and Chea Chanto, Governor of the National Bank of Cambodia. It was held virtually for the third consecutive year because of the COVID-19 pandemic.
The meeting also included the Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), ASEAN+3 Macroeconomic Research Office
(AMRO), the World Bank (WB), and the International Monetary Fund (IMF).
Economic outlook and policy challenges
The finance and central bank officials noted the 3% rebound in ASEAN’s economy in 2021 and forecast growth of 4.9% this year as ASEAN countries gradually reopen and revive economic activities. However, rising oil and commodity prices due to geopolitical developments in Europe as well as the new wave of COVID-19 cases could affect this outlook.
In a statement, the ASEAN officials said they will monitor the “downside risks and will be ready to use all the available policy tools and a wide range of measures to ensure an inclusive, sustainable, and resilient recovery and maintain financial stability in the region.”
They will “cautiously and gradually normalize the expansionary policy measures,
while mitigating the risks to safeguard the recovery process.”
Financial integration and liberalization
In the meantime, the finance and central bank officials discussed efforts to advance financial integration and liberalization, sustainable finance and green investments, digitalization, and financial inclusion. These include the launching of cross-border QR code payment linkages between Indonesia and Thailand, Indonesia and Malaysia, Malaysia and Thailand, Singapore and Thailand, Thailand and Vietnam, and Cambodia and Thailand, as well as the upcoming linkages between Malaysia and Singapore, and the Philippines and Singapore. These bilateral linkages facilitate trade and e-commerce by allowing consumers and vendors in both countries to make and receive payments for goods and services via QR code.
They also noted the progress made in laying the groundwork for mobilizing more private capital to finance sustainabilitylinked investments and for more ASEAN companies to tap sustainable finance. They expressed support for the “development of ASEAN Sustainable and Responsible Fund Standards and the introduction of a ‘Green Lane’ to facilitate cross-border offerings.”
The ASEAN officials also acknowledged the important role of the ASEAN Catalytic Green Finance Facility in enabling the region’s green recovery from the COVID-19 crisis. The facility, which is managed by ADB, has mobilized $2 billion in public and private resources with support from nine partners, including co-financing from the European Union, Italy, United Kingdom, and the Green Climate Fund under the “Green Recovery Platform” launched at COP26.