Impacts of the 2015 ASEAN economic

integration on the accounting and finance

profession in Cambodia

By
Dr. Sam Ghanty
Royal University of Law & Economics
February 22 & 24, 2014
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Dr. Sam GHANTY was the head of the finance program and
professor of Finance, Investments and Banking at the
University of Wisconsin (USA) from 1977 to 1996.
He worked for ADB and the World Bank from 1996 to 2004
as advisor and training coordinator at the National Bank of
Cambodia and Ministry of Economy and Finance.
He served as an independent member of the Board of
Directors for the Foreign Trade Bank of Cambodia (20012005), Canadia Bank (2006-2007) and Arial Global Group of
Singapore (2004-2007).
He currently serves as advisor at the National Accounting
Council (NAC) of the Ministry of Economy and Finance, a
member of the Board of Directors at the Securities and
Exchange Commission of Cambodia (SECC), a member of
the Board of Directors at the Parliamentary Institute of
Cambodia (PIC) and a member of the Board of Directors at
the Cambodian Public Bank.
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Presentation Outline
1. The vision on economic and financial integration
under the ASEAN Economic Community (AEC)
2. The areas of economic and financial integration and
its accomplishments as of 2013
3. The benefits and challenge for Cambodia in
engaging in the ASEAN Economic Community (AEC)
4. An examination of a case of Finance and Accounting
education and training in Cambodia
5. Conclusion
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I. The vision on financial integration under

the ASEAN Economic Community (AEC)
Key characteristics are:
A single market and production based
A highly competitive economic production
A region of equitable economic development
A region fully integrated in the global
economy .

Core Vision
The AEC will transform ASEAN into a region with
free movement of goods, services, investment,
skilled labor, and freer flow of capital.
Each ASEAN member country shall abide by and
implement the AEC by 2015.
The declaration on the ASEAN Economic Blueprint
was signed by the heads of ASEAN members
countries.
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The Ten ASEAN Member Countries

(Competitive markets of over 600 million people)
GDP per capita (US$):

2011

1.Brunei Darussalam
50,790 50,000
2.Indonesia
6,728 4,700
3.Malaysia
13,385 15,800
4.Philippines
3,383 4,100
5.Singapore
49,754 60,500
6.Thailand
7,907 9,500
7.Cambodia
1,818 2,200
8.Lao PDR
2,054 2,700
9.Myanmar
1,040 1,300
10.Vietnam
2,589 3,400
Source: CIA World Fact Book (2013)

2012

II. AEC Core Areas of Integration

1. Human resource development and capacity building
2. Recognition of professional qualifications
3. Closer consultation on macroeconomic and financial
policies
4. Trade financing measures; enhanced infrastructure and
communications connectivity
5. Development of electronic transactions through eASEAN
6. Integrating industries across the region to promote
regional sourcing
7. Enhancing private sector involvement for the AEC
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Five Core Elements

of a Single Market and Production Base
1. Free flow of goods: removal of tariffs or through
removal of non-tariff barriers.
2. Free flow of services: No substantial restriction
to ASEAN service suppliers within the ASEAN
subject to domestic regulations.
By 2015 ASEAN is also working towards
recognition of professional qualifications with the view of
facilitating movement within the regions.
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3. Free flow of investment: To enhance ASEANs

competiveness in attracting foreign direct
investments as well as intra-ASEAN investments
to promote and ensure dynamic development of
ASEAN economies.
4. Freer flow of capital: To strengthen ASEAN

capital market development and integration, and

allow greater movement of capital.

5. Free flow of skilled labor: To allow managed

mobility and entry for the movement of people
engaged in goods, services and investment.

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Summary of Areas
of Economic and Financial Integration
Financial integration of ASEAN will be as follows:
1. Financial services liberation, including banking
integration
2. Capital account liberation: removing restrictions on
foreign exchange transactions on current account,
foreign direct investments, portfolio investments, etc.
3. Capital market development: harmonization of laws
and regulations, and linkage of market infrastructure,
etc.
4. Harmonized payments and settlement systems.
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III. Benefits and Challenges for Cambodia in

Engaging in the ASEAN Economic Community
Benefits:
1.Cambodia needs to speed up the economic reforms through
strengthening good governance, infrastructure development,
human resource development and research and
development.
2. Enhance the development of public-private partnership.
3.More government support to the private sector in developing
capacity, financing, technology, etc.
4.Focus on a knowledge-based economy through an
educational system focused on innovation, creativity, and
entrepreneurship development.
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Challenges:
1.Cambodian public administration is viewed as insufficient by the
private sector in meeting the ASEAN criteria in terms of
effectiveness and efficiency.
2.High production costs such as electricity compared to other
ASEAN countries

3. Lack of sufficient level of skilled labor and critical

professionals such as engineering, business
(CPA, CFA, Financial Analysts, Economists, etc.)
4.An insufficient overall education policy coordination body, of a
well-functioning accreditation institution, a good labor market
information system, etc.
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 Due to a large amount of important issues dealing with

the integration of Cambodia in the ASEAN Economic
Community (AEC) by the year of 2015,
I would
like to focus only on one area dealing with the
preparation of our human resource to be ready for
a full benefit in this integration process.
To do this, let me focus my presentation on the field
of finance and accounting in order to stress on the
need to urgently reform the program and training that
are urgently needed to meet the ASEAN educational
requirement in this field.
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IV. An Examination of an Area of Training need: The

Area of Finance and Accounting
The objectives of ASEAN Framework Agreement on
Services (AFAS) are to:
facilitate mobility of accountancy services professionals
across participating ASEAN Member States;

enhance the current regime for the provision of

accountancy services in the participating ASEAN Member
States; and
exchange information in order to promote adoption of
best practices on standards and qualifications.
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This means:
the cross-border movement of professional accountants
providing accountancy and public auditing services that
require domestic licensing in ASEAN Member States
may be facilitated through:
a. bilateral Mutual Recognition Agreements
(MRAs)
b. multilateral MRAs between or among the
Member States.

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Challenge to Our Existing Finance

and Accounting Program
We need to review the process for integrating a
proposed standardized accounting syllabus
recommended by the World bank and ADB in the
present accounting and finance programs of Cambodian
universities, and to proceed to the transformation of
those programs as smoothly and practically as possible.
Our universities may need the assistance of the
Kampuchea Institute of Charted Accountants and
Auditors (KICPAA) to speed up the process of this
integration.

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By the year 2015 and beyond, the ASEAN Framework

Agreement on Services (AFAS) which enhances the
cooperation in services among ASEAN Member States
are designed:
to improve the efficiency and competitiveness,
to eliminate substantially restrictions to trade in services
amongst ASEAN Member States and
to liberalize trade beyond those undertaken by ASEAN
Member States.

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ASEAN countries, including Cambodia, agreed on the

objectives of:
facilitating mobility of accountancy services
professionals across participating ASEAN Member
States,
enhancing the current regime for the provision of
accountancy services in the participating ASEAN
Member States; and
exchanging information to promote adoption of best
practices on standards and qualifications.
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We need to standardize the accounting and finance

syllabus throughout Cambodian universities by:
developing and producing a number of needed
accounting and finance textbooks that facilitate the
implementation of the standardized accounting and
finance syllabus,
standardizing the delivery of quality teaching and
method of assessment of the accounting knowledge that
can help produce qualified accounting graduates in
Cambodia to met the ASEAN challenges.
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The Challenges are:

To rebuild the accountancy reputation in Cambodia
To bring back the confidence in audited financial
statements

To adopt and implement international standards and get

the commitment of an internationally accepted curriculum
To establish a strong accountancy profession at the
international regional, and domestic level.

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The role of the International

Federation of Accountant (IFAC)
The International Federation of Accountants (IFAC),
composed of 173 member-bodies in 130 countries, in
different stages and adoption of international
accounting standards.

KICPAA, representing the Cambodian accounting

profession, is a member of IFAC.
Member- bodies are required to demonstrate
compliance with international accountancy standards
through the Statements of Membership Obligations
(SMOs)
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Key Requirements by IFAC

International Accounting Education Standards

International Auditing and Assurance Standards

International Public Sector Accounting
Standards
International Ethics Standards for Accountants

International Financial Reporting Standards

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 An ASEAN Mutual Recognition Agreement

(MRA) enables professional service providers
registered in signatory countries to be equally
recognized in another signatory country.
It allows professionals in one country to move
to another country, with their existing
credentials being recognized by passing an
exam on corporate and taxation laws and
regulations in order to obtain a license to
practice the profession in that country.
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Basis for Recognition among ASEAN countries

Education
License
Competencies
Experience
IFAC Standards and Guidelines
Note:
All ASEAN accounting and finance professionals
adopt the IFAC educational and professional
guideline.
The next slide lists other ASEAN professional
membership agreements.
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Other ASEAN Mutual Recognition Agreements (MRA)

MRA for Professionals

Year

Venue

Date Signed

Engineering Services

2005

Kuala Lumpur 9 Dec 2005

Nursing Services

2006

Cebu

Architectural Services

2007

Singapore

19 Nov 2007

Framework on surveyors

2007

Singapore

19 Nov 2007

Framework on accountancy
Medical Practitioners
Dental Practitioners

2009
2009
2009

Chan-am
Chan-am
Chan-am

26 Feb 2009
26 Feb 2009
26 Feb 2009

8 Dec 2006

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ASEAN Federation of Accountants (AFA)

Established in 1977, led by a council consisting of
the representatives of the national accounting
bodies of Asian Nations (ASEAN)

Composed of ten (10) ASEAN member bodies and

four (4) Associate member bodies
Objective is for regional cooperation and exchange
of best practices among ASEAN Accountants for
professional development
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AFA Ten Regular Members

Brunei
Lao

- BICPA
- LICPA

Cambodia - KICPAA

Indonesia
Malaysia
Myanmar
Philippines
Singapore
Thailand
Vietnam

- IAI
- MIA
- MAC
- PICPA
- ISCA
- FAP
- VAA
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AFAs Role in MRA

ASEAN Federation of Accountants (AFA)
1.Analyse the country requirements for the
Accountants and Practicing Public Accountants.
2. Coordinate with each countries focal points to
confirm and update the information contained in
The AFAs Easy Guide to Setting up Accountancy
Practices in ASEAN Countries
3. Issue on equivalency among ASEAN Nations in
terms
of compensation, benefits and qualifications of
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practitioners.

V. Conclusion
By the year 2015 and beyond, the ASEAN Framework
Agreement on Services (AFAS) are:
1.to enhance cooperation in services among ASEAN
member states to improve the efficiency and
competitiveness,
2.to eliminate substantially restrictions to trade in services
amongst ASEAN Member States and
3.to liberalize trade beyond those undertaken by ASEAN
Member States.
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 Keeping this development in mind, the reform of the

present capacity building programs to improve the
Cambodian accounting education is perceived to be a
necessary policy option in the Financial Sector
Development Strategy 2011-2020 of the Royal
Government of Cambodia.
We must provide future Cambodian finance and
accounting professions the necessary academic and
professional skills that enable them to be competitive
and ready to face the influx of internationally qualified
accountants in the ASEAN region as well as globally.
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Thank you
for your attention
and

Q&A

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