The Philippines and Indonesia intend to sign an agreement to open up the banking sector, aimed toward greater financial integration and economic development of the Association of Southeast Asian Nations (ASEAN) member states.
Central Bank of the Philippines Governor Amando Tetangco Jr. said a letter of intent (LOI) on the ASEAN Banking Integration Framework (ABIF) might be signed with the Indonesian Financial Services Authority (OJK) in Jakarta.
“The LOI is in line with the ASEAN banking integration initiative,” he said.
“This reflects the mutual interest of the BSP and OJK to initiate discussions that will culminate in a formal bilateral agreement on the entry of QABs between the Philippines and Indonesia,” Tetangco Jr. said.
According to the ABIF roadmap, each ASEAN-5 country, including Indonesia, Malaysia, the Philippines, Singapore and Thailand, should conclude a minimum of one bilateral agreement with one other ASEAN-5 country by 2018.
By 2020, ABIF goals to have concluded or be near concluding a minimum of one bilateral agreement by each of the ten ASEAN members as a part of their integration throughout the ASEAN Economic Community (AEC).
This framework provides guidelines for banks to realize broader access to ASEAN markets. Banks that meet all the necessities regarding ownership, asset size, capital adequacy and repute are called qualified ASEAN banks, or QABs.
“The main principle of this agreement is reciprocity,” Sukarela Batunanggar, deputy commissioner for banking supervision on the Indonesian Financial Services Authority (OJK), told a news conference.
“The framework applies to all ASEAN countries, but we need adjustments in its implementation to ensure flexibility… We cannot start banking integration immediately because some countries may not be ready,” he added.
The talks between Indonesia and the Philippines might be attended by quite a lot of QAB representatives from each country.
Currently, there isn’t any Philippine bank in Indonesia and there isn’t any Indonesian bank within the Philippines.
If authorities reach an agreement, Bank Mandiri, Indonesia’s largest bank by assets, could turn out to be the primary Indonesian lender to open a branch within the Philippines.
Economic growth, financial inclusion
Batunanggar said ASEAN banking integration would contribute to the region’s economic growth and financial inclusion if the QAB verification process is carried out properly.
He said an integrated banking sector would promote competition and improve the standard of services, which in turn should profit trade and investment within the region.
Source : Globe Jakarta | FilStar
