ARITICLE

ASEAN Financial Integration

11 May 2015 (Readers 469)

After the AEC implement at the end of 2015, the financial flow within ASEAN region will be naturally more in volumes due to the expanded economic. This financial flow consists
of trade-flow and investment- flow. Both flows are cross-boarder transactions. To control the flows smoothly and transparently, it required the strict disciplines of all concerned
financial institutions. To create the proper frameworks to control the flows, is rather complicated and it takes time to complete.

Moreover, the frameworks should support the requirements of another 3 countries in East Asia region: China, Japan and Sothe Korea. These 3 countries are included jn ASEAN
Plus Three (APT).

ASEAN central banks have started working out, since 2011, for the "ASEAN Financial Integration Framework (AFIF)”. The objective of this AFIF is to create only "semi-
integrated financial market” by the year of 2020. It takes about 5 yeaers, from the opening of AEC in 2015 until ASEAN can operate this "semi-integrated financial market” in
2020.

Two bank experts comment regarding the situation, the AFIF and why it takes 5 years, as follows :

1. Comment of Dr. Prasarn Trairatvorakul, Bank of Thailand Governor. Setting up the "Qualified ASEAN Bank (QAB)”
The flows of trade and investment within ASEAN need a system with more transparent and more open.

Now, there are ASEAN-banks operating in other ASEAN countries as a result of unilateral liberalization. There should have the agreements between home-countries and host-
countries to designate clearly that which banks should become QAB.

The AFIF’s frameworks should be more boarder for the best future-flows and most acceptable criteria of QAB.

After the QAB framwork is finalized , not before, all ASEAN central banks may start the further bilateral dicussions

immediately.

ASEAN capital markets connection.

Since 2012, the stock markets of Thailand, Singapore and Malaysia have been connected and more exchanges are added. Currently, Bangkok investor can buy shares in listed-
companies in another two markets and vice versa. Their front-office platforms have been set-up, but their back-offices still need to be linked to create seamless trading,
clearing, custody and settlement of shares.

All ASEAN Finance Ministers have approved for another framework called "ASEAN Capital Market Infrastructure Blueprint" which is now being developed. All ASEAN countries’s
central banks should study the pros and cons of this framework.

2. Comment of Mr Banthoon Lamsam, Chairman of Kasikorn Bank (KBank) of Thailand. ASEAN Plus Three (APT) and Bangkok Declaration.

KBank together with 35 banks from 9 countries, launch the ASEAN Plus Three’s Banking Initiative and announce to the public as Bangkok Declaration.
The objective of this Banking Initiative is : try to create better services for customers conducting cross-border transactions, after the opening of AEC.

"Taksila ASEAN Banking Forum” Platform.

In order to fulfill the Banking Initiative’s objective, a platform called "Taksila ASEAN Banking Forum” was set up.

This platform was designed to create new banking products, new international- standard services and to develope future financial human resources, prior to AEC opening.

To develop human resources, the platform used banking experts to prepare training courses and to share their experiences to others.

In this platform, there are also two programs : the leadership program for top executives, future leaders and the banking expertise program for banking product/service
specialists.

Adjust to customers' ever-changing needs, after AEC opening

After the opening of AEC ; capital, products and services movement will be more free. It will stimulate businesses within the APT (ASEAN Plus Three) region which will lead to
trades and investment increasing.

All banks in the region should adjust to customers' ever-changing needs as soon as possible, in order to provide cross-border trade advice and details of new banking products
through efficient channels.
In conclusion, the ASEAN Financial Integration is still not accomplished at the moment due to : the AFIF framework, the QAB framework and the "ASEAN Capital Market
Infrastructure Blueprint" framework are all under the process of developing. The negotiation within APT (ASEAN Plus Three) is still moving on. It is a matter of wait and see.