As appeared in Channel NewsAsia
SINGAPORE: Two top bankers in the region on Thursday (May 14) expressed their frustration and disappointment with the slow pace of economic integration in countries from the Association of South-east Asian Nations (ASEAN), which they attributed to a lack of political will.
“We are disappointed with the pace of progress of ASEAN integration and we have only ourselves to blame for it,” said DBS chief executive officer Piyush Gupta, speaking at a conference on regional integration organised by the ASEAN Business Club (ABC). “There has been a lot of ring-fencing around capital, data, people, technology … We have seen enough political lip service but not enough political support.”
CIMB Group chairman Nazir Razak, who was on a panel with Mr Gupta, added: “It is frustrating. We need a clear action plan. What was promised was not delivered. We had re-oriented our business plans accordingly.” He singled out Indonesia as giving unclear messages, and stressed that ASEAN is “nothing without Indonesia”.
For example, in December last year, executives from airlines operating in Indonesia said that the country’s aviation industry is not ready to implement the ASEAN Economic Community’s (AEC) plans for a single market unless the government helps reduce airlines’ costs by simplifying tax codes, curbing airport inefficiencies and reducing the cost of jet fuel.
Economic integration of the regional bloc was first laid out in a 2007 blueprint, and it aims to achieve this by December this year. But as the ambitious deadline approaches, various quarters have come out to say that the target would not be met. Last month, an ANZ Bank report said a borderless economic community among ASEAN will not emerge for at least another 15 years, while another report by ratings agency Moody’s said integration of important aspects, such as the elimination of non-tariff barriers, enhanced labour mobility and financial integration, would face delays.
Mr Gupta said there is a need to “create infrastructure capabilities and trading linkages, and then effectively market them”.
“There is tremendous opportunity and need for ASEAN to integrate the financial and capital markets,” he said. “If we collectively put our minds to it and given today’s technology, there are big opportunities waiting to be seized.”
There are 10 members in ASEAN. In 2012, stock exchanges and regulators in Malaysia, Thailand and Singapore launched the ASEAN trading link to offer easy access to each other’s stock markets.
“The next step would be to harmonise processes for seamless end-to-end trading,” said another panellist, Senior Minister of State (Finance and Transport) Josephine Teo. “Closing the gaps and creating a single gateway for stock exchanges to boost trading volumes and liquidity.”
Mr Cezar Consing, president and CEO of the Bank of the Philippine Islands, said funding for small and medium enterprises is another aspect that cannot be ignored, and banks in the region are not in a position to address these companies’ needs.
The 3rd Annual ABC Forum was attended by more than 300 regional corporate leaders and policymakers. ABC president Munir Majid said the region’s private sector has submitted recommendations to the ASEAN leaders, including the setting up of a Financial Services and Capital Markets Expert Group under the ASEAN Secretariat, and a Micro, Small and Medium Enterprises (MSME) Growth Bank. “Both (recommendations) will have crucial impact on trade in ASEAN,” he said.
Mr Nazir said the expert group could be funded by the private sector. “The ASEAN Secretariat needs to be better resourced in order to be fully effective, both financially and in the form of expertise. The private sector must help and its help must be welcomed. Otherwise the integration process will remain fragmented,” he added.