South-east Asia may need another decade before it can become a fully integrated financial market, owing to gaps in both development levels and monetary policy among the 10 ASEAN countries.
OCBC chief executive Samuel Tsien said yesterday: “Because of the different maturity of our financial markets, I think it’s too premature for us to talk about one ASEAN.
“It is likely that we will take half a generation – maybe 10 to 15 years – before the one-ASEAN concept can be adopted as it was originally proposed,” he said.
Mr Tsien was speaking at ASEAN Day, part of the closing day programme at Sibos, a major four-day banking industry event.
The nations making up ASEAN are in the midst of creating an integrated trade and financial marketplace via the ASEAN Economic Community, which is expected to be in place by the end of this year.
But while cross-border trade has certainly benefited, the banking systems are not as well-connected.
“I think we must acknowledge that in terms of one ASEAN, trade integration is perhaps more advanced than banking integration, which is still at a stage where we can see only two countries coming together for a bilateral agreement, but not yet where the 10 countries can freely access (one another’s) market,” he said.
The process must start with regional countries developing monetary policy independent of governments to limit political bias.
“Only then can we start thinking of ways to integrate. One of the more important things is to create a payment structure that allows money to go cross-border easier than it is now,” Mr Tsien told reporters.
United Overseas Bank chief executive Wee Ee Cheong, who also spoke at the event, agreed that the ground for ASEAN’s full integration is uneven.
“Progress can be faster. The reality is this: ASEAN is a diverse region, with countries at different stages of development, different political systems and national priorities.”
Nonetheless, UOB, which has the largest network in ASEAN, is confident of the region’s potential.
“As a bloc, ASEAN is the seventh-largest country in the world. Demographic-wise, ASEAN’s population of 630 million is young, driven and enterprising. Its urbanisation will not only drive domestic economic demand, but also spur intra-regional investment flows” which will hit US$1 trillion (S$1.4 trillion) by 2020, Mr Wee said.
And while countries such as Malaysia and Indonesia are facing economic volatility amid the commodity woes, there is no reason to think that another ASEAN financial crisis is in the making, both Mr Tsien and Mr Wee stressed.
Mr Tsien said: “It is more challenging than a few years ago for Malaysia and Indonesia, but their fundamentals remain and they have the ability to ride out this storm.”
Wong Wei Han, Oct 17, 2015, firstname.lastname@example.org
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