“We need to accelerate financial integration, for our banks and capital markets ... We need to establish an ASEAN class of investment instruments,” Philippine Finance Secretary Cesar V. Purisima said at the 10th ASEAN Finance Ministers’ Investor Summit (AFMIS) yesterday.
“We have to accentuate the strengths of ASEAN, especially so for investors looking at Asia ... We need to position ourselves as reasonable alternatives to bigger economies in the region like China or Japan for our investors,” Mr. Purisima added.
Myanmar Finance and Revenue Minister U Win Shein reiterated the benefits of integration, saying: “Realizing AEC (ASEAN economic community)... will facilitate the free flow of goods, services, investment, and skilled labor, among others, which will benefit countries individually.”
Mr. Purisima said financial integration would help develop markets in the region.
“What we’re looking at is really deepening the markets, common requirements, disclosure rules, standards ... So that when you look at ASEAN financial instruments, you know that they’re comparable. Also, connecting markets so that trading is deeper,” the Finance chief added.
“Because ... large funds, when they want to invest in a market, they want to do it large chunks. And for that you need liquidity. By integrating markets, you create a deeper market, more liquidity, and ... more attraction from funds throughout the world. This will just strengthen us.”
Integration will also help banks establish cross-border presence or partnerships, he added.
Nguon Sokha, secretary of state at Cambodia’s ministry of economics and finance, acknowledged that ASEAN member countries were at different levels of development, and thus will need to considering their domestic situations.
Myanmar’s Mr. Win Shein said, “[W]e understand that what happens in one country cannot necessarily be absorbed by another. So the homework for us is that we have to make sure financial integration will be beneficial for us”.
Josephine Teo, senior minister of state at Singapore’s ministries of finance and transport, said: “We have to build up the resilience of our financial systems, with our without integration. We should heighten financial surveillance, create buffers.”
Integration, the ASEAM ministers argued, will also help the region buoy itself against external shocks, such as those that could result from higher interest rates due to the normalization of monetary policy in advanced economies like the United States.
Enjoying sound macroeconomic fundamentals and favorable demographics, ASEAN countries expect to perform well vis-a-vis other emerging markets, they said.
“The ASEAN region has fared well in the aftermath of the 2008 global financial crisis. With strong fundamentals and improved regional cooperation, resiliency has further improved,” Myanmar’s Mr. Win Shein said.
Singapore’s Ms. Teo added that while ASEAN was not expected to be fully spared from the adverse effects of the US central bank’s tapering, any impact would be temporary as investors would look at fundamentals in shaping their decisions.
“If you look at FDIs (foreign direct investments) to the region, you will see that what is driving those is the prolonged period of macroeconomic stability. That has been boosting investor confidence,” Ms. Teo said.
The AFMIS also served as a venue for finance ministers to follow up on the results of the recent ASEAN Summit in Myanmar.
Among the programs being fine-tuned, according to the Philippines’ Mr. Purisima, are the ASEAN Financial Integration Framework, ASEAN Banking Integration Framework and the ASEAN Payments and Settlements Systems.
Implementation of the ASEAN Infrastructure Fund -- an integral component of ASEAN’s efforts to strengthen regional physical connectivity and narrow infrastructure development gaps -- was likewise discussed, along with customs cooperation as well as double taxation concerns and withholding tax issues in the proposed AEC.
“The AFMIS is expected to come up with an action plan to promote ASEAN as an attractive investment destination and to intensify policy cooperation and coordination in preparation for the ASEAN Economic Community 2015,” Mr. Purisima said.
ASEAN is composed of Brunei, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
Member countries are targeting to integrate their economies starting next year and to realize a fully integrated regional economy in the medium term.
The 10th AFMIS served as curtain raiser for the World Economic Forum on East Asia, which will also be held in Manila from May 21 to 23. -- Bettina Faye V. Roc
source: Businessworld
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