INTEGRATION ‘MORE CRUCIAL’ AMID WOBBLING ABROAD
Finance ministers pledged to enable a freer flow of capital in Southeast Asia by removing restrictions and enhancing monitoring and policy dialogue
Finance and central bank officials reaffirmed their commitment to sustain cooperation toward a “highly-integrated and cohesive” Southeast Asian by 2025.
In a joint statement issued at the end of the 3rd ASEAN Finance Ministers and Central Bank Governors Meeting last Friday, top officials from the 10 member-economies vowed “to remain steadfast” in pursuing the goals of a “highly integrated, cohesive economy.” ASEAN stands for the Association of Southeast Asian Nations.
They also noted the sustained expansion of the ASEAN economy at 4.6 percent in 2016, amid global uncertainties. The region attracted $121 billion in foreign direct investments in 2015. Total trade was at $2.3 trillion.
“We recognize that domes- tic demand will remain a key driver of our regional growth while structural reforms, public spending, and fiscal stimulus will support investments in ASEAN,” read the joint statement.
The finance and central bank chiefs were in Shangri-La Mactan Resort and Spa for a five-day meeting to discuss ways of fleshing out ASEAN’s commitments to financial integration and cooperation. The separate meetings also centered on the regional bloc’s engagement with the global economy, regional connectivity and the progress of the ASEAN Economic Community (AEC), which is designed as a single market and production base.
Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco, Jr., in a joint press conference, said forecasts by institutions like the World Bank, Asian Development Bank and International Monetary Fund revealed greater optimism about the global economy.
Growth in Southeast Asia, in particular, is expected to pick up in 2017 and 2018. The BSP chief stressed the importance of regional integration and cooperation against the backdrop of rising interest rates in the US, Brexit and protectionist policies in some advanced economies.
Favorable conditions
“I think in this period of elevated uncertainty, the value of regional integration and greater regional cooperation becomes even more important. We can create what one can consider as an additional source of resilience, by being able to deal with the regional economies, particularly if regions outside ASEAN are not doing as well as they did before. This will help ASEAN countries weather the challenges brought about by the current global environment. Once this is done, we encourage more exchange in terms of trade and investment among the different members of ASEAN,” said Tetangco.
“We are trading with the economies in the region that continue to post favorable growth performance as well as favorable macroeconomic conditions,” he said.
The ASEAN is the sixth largest economy in the world, with its gross domestic product expected to reach $3.5 trillion by 2021.
Philippine Finance Secretary Carlos Dominguez III said the joint statement enumerates several initiatives to further harmonize Southeast Asia’s financial and monetary policies.
For one, the executives initiated a “financial inclusion initiative” to deliver more financial products and services to under-served communities and reaffirmed their vision of liberalizing progressive financial services. They also vowed to promote digital platforms and increase financial education and consumer protection.
The finance and central bank heads also discussed promoting the use of local currency to facilitate intra-ASEAN trade and investments, and the region’s payment and settlement systems.
“In this regard, we welcome the signing of agreements among Indonesia, Malaysia, and Thailand on the settlement of trade in domestic currencies,” the joint statement read.
Last Thursday, an agreement was signed between Indonesia and Malaysia and negotiations with the Philippines were completed under the ASEAN Banking Integration Framework.
The ministers also maintained their targets to achieve freer flow of capital among ASEAN countries by gradually removing restrictions, enhancing monitoring and policy dialogue, and developing a capital account liberalization learning roadmap.
Top officials also endorsed the Key Performance Indicators as evaluation tools to be employed by ASEAN working committees and other bodies to ensure that the region’s goals for the financial sector are achieved.
The Philippines chairs the ASEAN and is hosting the summit and related meetings this year, as the region celebrates its 50th anniversary.