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Robert Sidauruk
Financial-sector integration within the ASEAN region will prove key to strengthening economies and accelerating infrastructure development across member states. Despite the current positive progress and numerous initiatives however, financial-sector integration among the ASEAN countries still lags behind that of other sectors, such as trade and industry.
This view was asserted by Jayant Menon, Lead Economist for the Economic and Regional Cooperation Department at the Asian Development Bank (ADB), during the recent Thomson Reuters ASEAN Regulatory Summit, which was held in Singapore on 24 November 2015.
Mr. Menon emphasized in his address and that the diversity of financial development across the ASEAN countries was to a certain extent hampering the integration process. In order to address this issue, Mr. Menon urged financial-sector stakeholders within ASEAN member states to agree on a more flexible approach to financial integration. At the same time however, Mr. Menon asserted that member states must operate their financial markets according to a common set of rules and regulations.
Several initiatives have already been introduced in a bid to boost the financial-sector integration process. One of these initiatives, Mr. Menon explained, involves the ASEAN Bond Market Initiative (ABMI), which is a part of the ASEAN Plus Three program.
This initiative has proved fairly successful in developing bond-market integration across the region. Nevertheless, only a few key ASEAN players are involved in the ABMI project, namely Malaysia, Thailand, and Singapore.
“Foreign interest in ASEAN-region capital bonds is growing, however interest in corporate bonds remains low,” added Mr. Menon.
Another program currently being implemented is the ASEAN Capital Market Forum (ACMF), which has been established for 11 years now. Several key initiatives have been put forward under the ACMF. Just last year, the Monetary Authority of Singapore (MAS), the Securities Commission of Malaysia (SC Malaysia), and the Securities and Exchange Commission of Thailand (SEC Thailand) launched the ASEAN Collective Investment Scheme (CIS).
The CIS is aiming to facilitate cross-border interaction between retail investors. As a result, fund managers based within one of these three member states can now offer investments in their home jurisdiction directly to retail investors in the other two ASEAN countries, provided that these investments satisfy a common set of standards.
Also present at the ASEAN Regulatory Summit was Rapee Sucharitakul, Secretary General of Thailand’s Securities and Exchange Commission, who commented that financial-industry integration involved many different elements and that even the harmonization of the regulatory framework used by ASEAN member states was only a small step along the path to realizing such integration.
In regard to the capital-market sector, Mr. Sucharitakul added that currently no adequate system was in place which could achieve integration effectively and that there were a lack of substantial players in the market.
Therefore, while harmonization and attempts at mutual recognition have already been initiated, integration within the capital-market sector requires a more comprehensive system of regulation in place, including definitions of what types of products can be launched on the capital market, as well as what can be derived from the market, Mr. Sucharitakul believes.
“It [capital market integration] has a wider context than many people seem to think”, added Mr. Sucharitakul.
Single Currency
One of the most discussed ideas as regards the speeding up of ASEAN integration is the implementation of a single-currency policy, whether it involve the introduction of a new currency or the widespread adoption of an already existing currency.
Such a policy was of course implemented by a number of European nations, who abolished their national currencies in favour of adopting the Euro. However, if the ASEAN region is to copy such an idea, then several challenges must first be overcome.
Nicholas Ronalds, Managing Director of the Asia Securities Industry & Financial Markets Association (ASIFMA) stated at the recent summit that the ASEAN region must approach the single-currency idea cautiously and learn from the various issues which arose in the wake of the introduction of the European single currency.
Mr. Ronalds explained during his address that a majority of people believed that Europe was not economically well-suited to such a single-currency policy and that the decision to adopt the Euro as a single currency was ultimately driven more by political considerations than it was by an appreciation of economic factors.
Mr. Ronalds also offered up Australia and New Zealand as examples of countries which were similar in many ways, including culturally and in terms of their institutions, and so on. Despite these facts however, the volatility between both countries’ currencies remains quite high. Rather than focusing on a single-currency then, Mr. Ronalds believes that a flexible approach to fiscal and economic regulation is more important for the ASEAN region.
“ASEAN does not need it [a single currency policy],” concluded Mr. Ronalds.
Mr. Menon stated that he also shared this view, and sought to emphasize that the huge diversity that exists between ASEAN countries, as well as the differences between the region’s integration concept and that of Europe, were just two reasons why a single-currency policy was not suitable for the ASEAN region. Menon also asserted that unless there was a significant fiscal-policy union across the ASEAN region, then the monetary conditions necessary for the introduction of a single currency were bound to fail.
“If we want to encourage financial integration, then a single-currency policy would most likely prove destructive instead of helpful,” concluded Mr. Menon.
(sp)
Thomson Reuters ASEAN Regulatory Summit. Photo by: RFS
Financial-sector integration within the ASEAN region will prove key to strengthening economies and accelerating infrastructure development across member states. Despite the current positive progress and numerous initiatives however, financial-sector integration among the ASEAN countries still lags behind that of other sectors, such as trade and industry.
This view was asserted by Jayant Menon, Lead Economist for the Economic and Regional Cooperation Department at the Asian Development Bank (ADB), during the recent Thomson Reuters ASEAN Regulatory Summit, which was held in Singapore on 24 November 2015.
Mr. Menon emphasized in his address and that the diversity of financial development across the ASEAN countries was to a certain extent hampering the integration process. In order to address this issue, Mr. Menon urged financial-sector stakeholders within ASEAN member states to agree on a more flexible approach to financial integration. At the same time however, Mr. Menon asserted that member states must operate their financial markets according to a common set of rules and regulations.
Several initiatives have already been introduced in a bid to boost the financial-sector integration process. One of these initiatives, Mr. Menon explained, involves the ASEAN Bond Market Initiative (ABMI), which is a part of the ASEAN Plus Three program.
This initiative has proved fairly successful in developing bond-market integration across the region. Nevertheless, only a few key ASEAN players are involved in the ABMI project, namely Malaysia, Thailand, and Singapore.
“Foreign interest in ASEAN-region capital bonds is growing, however interest in corporate bonds remains low,” added Mr. Menon.
Another program currently being implemented is the ASEAN Capital Market Forum (ACMF), which has been established for 11 years now. Several key initiatives have been put forward under the ACMF. Just last year, the Monetary Authority of Singapore (MAS), the Securities Commission of Malaysia (SC Malaysia), and the Securities and Exchange Commission of Thailand (SEC Thailand) launched the ASEAN Collective Investment Scheme (CIS).
The CIS is aiming to facilitate cross-border interaction between retail investors. As a result, fund managers based within one of these three member states can now offer investments in their home jurisdiction directly to retail investors in the other two ASEAN countries, provided that these investments satisfy a common set of standards.
Also present at the ASEAN Regulatory Summit was Rapee Sucharitakul, Secretary General of Thailand’s Securities and Exchange Commission, who commented that financial-industry integration involved many different elements and that even the harmonization of the regulatory framework used by ASEAN member states was only a small step along the path to realizing such integration.
In regard to the capital-market sector, Mr. Sucharitakul added that currently no adequate system was in place which could achieve integration effectively and that there were a lack of substantial players in the market.
Therefore, while harmonization and attempts at mutual recognition have already been initiated, integration within the capital-market sector requires a more comprehensive system of regulation in place, including definitions of what types of products can be launched on the capital market, as well as what can be derived from the market, Mr. Sucharitakul believes.
“It [capital market integration] has a wider context than many people seem to think”, added Mr. Sucharitakul.
Single Currency
One of the most discussed ideas as regards the speeding up of ASEAN integration is the implementation of a single-currency policy, whether it involve the introduction of a new currency or the widespread adoption of an already existing currency.
Such a policy was of course implemented by a number of European nations, who abolished their national currencies in favour of adopting the Euro. However, if the ASEAN region is to copy such an idea, then several challenges must first be overcome.
Nicholas Ronalds, Managing Director of the Asia Securities Industry & Financial Markets Association (ASIFMA) stated at the recent summit that the ASEAN region must approach the single-currency idea cautiously and learn from the various issues which arose in the wake of the introduction of the European single currency.
Mr. Ronalds explained during his address that a majority of people believed that Europe was not economically well-suited to such a single-currency policy and that the decision to adopt the Euro as a single currency was ultimately driven more by political considerations than it was by an appreciation of economic factors.
Mr. Ronalds also offered up Australia and New Zealand as examples of countries which were similar in many ways, including culturally and in terms of their institutions, and so on. Despite these facts however, the volatility between both countries’ currencies remains quite high. Rather than focusing on a single-currency then, Mr. Ronalds believes that a flexible approach to fiscal and economic regulation is more important for the ASEAN region.
“ASEAN does not need it [a single currency policy],” concluded Mr. Ronalds.
Mr. Menon stated that he also shared this view, and sought to emphasize that the huge diversity that exists between ASEAN countries, as well as the differences between the region’s integration concept and that of Europe, were just two reasons why a single-currency policy was not suitable for the ASEAN region. Menon also asserted that unless there was a significant fiscal-policy union across the ASEAN region, then the monetary conditions necessary for the introduction of a single currency were bound to fail.
“If we want to encourage financial integration, then a single-currency policy would most likely prove destructive instead of helpful,” concluded Mr. Menon.
(sp)
Robert Sidauruk
Financial-sector integration within the ASEAN region will prove key to strengthening economies and accelerating infrastructure development across member states. Despite the current positive progress and numerous initiatives however, financial-sector integration among the ASEAN countries still lags behind that of other sectors, such as trade and industry.
This view was asserted by Jayant Menon, Lead Economist for the Economic and Regional Cooperation Department at the Asian Development Bank (ADB), during the recent Thomson Reuters ASEAN Regulatory Summit, which was held in Singapore on 24 November 2015.
Mr. Menon emphasized in his address and that the diversity of financial development across the ASEAN countries was to a certain extent hampering the integration process. In order to address this issue, Mr. Menon urged financial-sector stakeholders within ASEAN member states to agree on a more flexible approach to financial integration. At the same time however, Mr. Menon asserted that member states must operate their financial markets according to a common set of rules and regulations.
Several initiatives have already been introduced in a bid to boost the financial-sector integration process. One of these initiatives, Mr. Menon explained, involves the ASEAN Bond Market Initiative (ABMI), which is a part of the ASEAN Plus Three program.
This initiative has proved fairly successful in developing bond-market integration across the region. Nevertheless, only a few key ASEAN players are involved in the ABMI project, namely Malaysia, Thailand, and Singapore.
“Foreign interest in ASEAN-region capital bonds is growing, however interest in corporate bonds remains low,” added Mr. Menon.
Another program currently being implemented is the ASEAN Capital Market Forum (ACMF), which has been established for 11 years now. Several key initiatives have been put forward under the ACMF. Just last year, the Monetary Authority of Singapore (MAS), the Securities Commission of Malaysia (SC Malaysia), and the Securities and Exchange Commission of Thailand (SEC Thailand) launched the ASEAN Collective Investment Scheme (CIS).
The CIS is aiming to facilitate cross-border interaction between retail investors. As a result, fund managers based within one of these three member states can now offer investments in their home jurisdiction directly to retail investors in the other two ASEAN countries, provided that these investments satisfy a common set of standards.
Also present at the ASEAN Regulatory Summit was Rapee Sucharitakul, Secretary General of Thailand’s Securities and Exchange Commission, who commented that financial-industry integration involved many different elements and that even the harmonization of the regulatory framework used by ASEAN member states was only a small step along the path to realizing such integration.
In regard to the capital-market sector, Mr. Sucharitakul added that currently no adequate system was in place which could achieve integration effectively and that there were a lack of substantial players in the market.
Therefore, while harmonization and attempts at mutual recognition have already been initiated, integration within the capital-market sector requires a more comprehensive system of regulation in place, including definitions of what types of products can be launched on the capital market, as well as what can be derived from the market, Mr. Sucharitakul believes.
“It [capital market integration] has a wider context than many people seem to think”, added Mr. Sucharitakul.
Single Currency
One of the most discussed ideas as regards the speeding up of ASEAN integration is the implementation of a single-currency policy, whether it involve the introduction of a new currency or the widespread adoption of an already existing currency.
Such a policy was of course implemented by a number of European nations, who abolished their national currencies in favour of adopting the Euro. However, if the ASEAN region is to copy such an idea, then several challenges must first be overcome.
Nicholas Ronalds, Managing Director of the Asia Securities Industry & Financial Markets Association (ASIFMA) stated at the recent summit that the ASEAN region must approach the single-currency idea cautiously and learn from the various issues which arose in the wake of the introduction of the European single currency.
Mr. Ronalds explained during his address that a majority of people believed that Europe was not economically well-suited to such a single-currency policy and that the decision to adopt the Euro as a single currency was ultimately driven more by political considerations than it was by an appreciation of economic factors.
Mr. Ronalds also offered up Australia and New Zealand as examples of countries which were similar in many ways, including culturally and in terms of their institutions, and so on. Despite these facts however, the volatility between both countries’ currencies remains quite high. Rather than focusing on a single-currency then, Mr. Ronalds believes that a flexible approach to fiscal and economic regulation is more important for the ASEAN region.
“ASEAN does not need it [a single currency policy],” concluded Mr. Ronalds.
Mr. Menon stated that he also shared this view, and sought to emphasize that the huge diversity that exists between ASEAN countries, as well as the differences between the region’s integration concept and that of Europe, were just two reasons why a single-currency policy was not suitable for the ASEAN region. Menon also asserted that unless there was a significant fiscal-policy union across the ASEAN region, then the monetary conditions necessary for the introduction of a single currency were bound to fail.
“If we want to encourage financial integration, then a single-currency policy would most likely prove destructive instead of helpful,” concluded Mr. Menon.
(sp)
Thomson Reuters ASEAN Regulatory Summit. Photo by: RFS
Financial-sector integration within the ASEAN region will prove key to strengthening economies and accelerating infrastructure development across member states. Despite the current positive progress and numerous initiatives however, financial-sector integration among the ASEAN countries still lags behind that of other sectors, such as trade and industry.
This view was asserted by Jayant Menon, Lead Economist for the Economic and Regional Cooperation Department at the Asian Development Bank (ADB), during the recent Thomson Reuters ASEAN Regulatory Summit, which was held in Singapore on 24 November 2015.
Mr. Menon emphasized in his address and that the diversity of financial development across the ASEAN countries was to a certain extent hampering the integration process. In order to address this issue, Mr. Menon urged financial-sector stakeholders within ASEAN member states to agree on a more flexible approach to financial integration. At the same time however, Mr. Menon asserted that member states must operate their financial markets according to a common set of rules and regulations.
Several initiatives have already been introduced in a bid to boost the financial-sector integration process. One of these initiatives, Mr. Menon explained, involves the ASEAN Bond Market Initiative (ABMI), which is a part of the ASEAN Plus Three program.
This initiative has proved fairly successful in developing bond-market integration across the region. Nevertheless, only a few key ASEAN players are involved in the ABMI project, namely Malaysia, Thailand, and Singapore.
“Foreign interest in ASEAN-region capital bonds is growing, however interest in corporate bonds remains low,” added Mr. Menon.
Another program currently being implemented is the ASEAN Capital Market Forum (ACMF), which has been established for 11 years now. Several key initiatives have been put forward under the ACMF. Just last year, the Monetary Authority of Singapore (MAS), the Securities Commission of Malaysia (SC Malaysia), and the Securities and Exchange Commission of Thailand (SEC Thailand) launched the ASEAN Collective Investment Scheme (CIS).
The CIS is aiming to facilitate cross-border interaction between retail investors. As a result, fund managers based within one of these three member states can now offer investments in their home jurisdiction directly to retail investors in the other two ASEAN countries, provided that these investments satisfy a common set of standards.
Also present at the ASEAN Regulatory Summit was Rapee Sucharitakul, Secretary General of Thailand’s Securities and Exchange Commission, who commented that financial-industry integration involved many different elements and that even the harmonization of the regulatory framework used by ASEAN member states was only a small step along the path to realizing such integration.
In regard to the capital-market sector, Mr. Sucharitakul added that currently no adequate system was in place which could achieve integration effectively and that there were a lack of substantial players in the market.
Therefore, while harmonization and attempts at mutual recognition have already been initiated, integration within the capital-market sector requires a more comprehensive system of regulation in place, including definitions of what types of products can be launched on the capital market, as well as what can be derived from the market, Mr. Sucharitakul believes.
“It [capital market integration] has a wider context than many people seem to think”, added Mr. Sucharitakul.
Single Currency
One of the most discussed ideas as regards the speeding up of ASEAN integration is the implementation of a single-currency policy, whether it involve the introduction of a new currency or the widespread adoption of an already existing currency.
Such a policy was of course implemented by a number of European nations, who abolished their national currencies in favour of adopting the Euro. However, if the ASEAN region is to copy such an idea, then several challenges must first be overcome.
Nicholas Ronalds, Managing Director of the Asia Securities Industry & Financial Markets Association (ASIFMA) stated at the recent summit that the ASEAN region must approach the single-currency idea cautiously and learn from the various issues which arose in the wake of the introduction of the European single currency.
Mr. Ronalds explained during his address that a majority of people believed that Europe was not economically well-suited to such a single-currency policy and that the decision to adopt the Euro as a single currency was ultimately driven more by political considerations than it was by an appreciation of economic factors.
Mr. Ronalds also offered up Australia and New Zealand as examples of countries which were similar in many ways, including culturally and in terms of their institutions, and so on. Despite these facts however, the volatility between both countries’ currencies remains quite high. Rather than focusing on a single-currency then, Mr. Ronalds believes that a flexible approach to fiscal and economic regulation is more important for the ASEAN region.
“ASEAN does not need it [a single currency policy],” concluded Mr. Ronalds.
Mr. Menon stated that he also shared this view, and sought to emphasize that the huge diversity that exists between ASEAN countries, as well as the differences between the region’s integration concept and that of Europe, were just two reasons why a single-currency policy was not suitable for the ASEAN region. Menon also asserted that unless there was a significant fiscal-policy union across the ASEAN region, then the monetary conditions necessary for the introduction of a single currency were bound to fail.
“If we want to encourage financial integration, then a single-currency policy would most likely prove destructive instead of helpful,” concluded Mr. Menon.
(sp)