ASEAN Integration

Usama DeLorenzo

June 2013

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Agenda

• ASEAN Facts and Figures

• ASEAN Initiatives

• Challenges

• Recent Developments

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ASEAN Facts and Figures

4

The Ten ASEAN Member States

Facts and figures

Intra ASEAN

International

ASEAN Trade

Source: ASEAN Secretariat 5

• ASEAN Growth Steady at 6.6% (2001-2009)

• Commercial banks are the most important type

of FI in ASEAN

• Constitute > 82% of ASEAN financial

assets

• In BCLMV, 98%

• AEC 2015 slated for 31 Dec 2015

• Low preference margin

6

ASEAN Geographically

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Integration via Initiatives

OUR FOCUS

9

ASEAN’s Integration Focal Areas

POLITICAL

SECURITY

SOCIO-

CULTURAL ECONOMIC

ACMF

10

ASEAN Integration Focal Areas

ECONOMIC

AEC

ASP

ABMI

AFTA

CMIM

APG - AML

ASEAN

Link RIA-Fin

So many areas…

Well planned…

What’s happening now?

What’s next?

The big question:

Will ASEAN be able to

meet its deadline?

Some Examples of Initiatives

• Capital Market space

– ASEAN Capital Market Forum

– ASEAN Bond Market Initiative

– ASEAN+3 Bond Market Forum

• Framework for the issuance of cross border bond offerings

• Payments space

– Working Committee on Payment and Settlement Systems

– ASEAN Bankers Association

– Asian Payments Forum

• Trade space

– ASEAN Single Window for Trade

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Consumers

Securities

Regulators

Central

Banks

(policy)

CCPs

Exchanges

ACH

Ministers

12

Examples of the Players

Corporates

Custodians

Brokers

Funds CSD

Banks

Private Government Market

Infrastructures

Market

Participants

Central

Banks

(processing)

Subject matter expertise

Collaboration

Leadership Governance Reference

Drive

Consultation

ASEAN’s Working Level

Objectives

ASEAN’s Components of

High Level Objectives

ASEAN’s High Level Objective

Economic Community

Financial Integration

Financial Infrastructure

Regulatory Harmony

Economic Integration

Capital accounts, trade

barriers, etc

13

Where we fit in to the regional integration

agenda…

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ASEAN Integration Challenges

Assumptions we can make

• There is a structural renaissance underway – technology is

incredibly important

– 4G/LTE – SEPA – ISO 20022 – SADC

• Efficient Payment and Settlement Systems are a tool for

economic empowerment

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A Sample of Attributes of a Challenging Landscape

10

Languages

Market

Practices

Legal

Systems

Cultures

Multi

Currency

Many

integration

initiatives

ASEAN

Secretariat

monitors

integration

Economic Community

(2015)

Structure of Challenges for Cross Border

Payments

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Promoting Efficiency Safeguarding Stability POLICY REGULATION

Cash

Cashless payments

Financial Services Liberalization

Cross border/Multi Currency

Regionalization

Financial Market Infrastructure

Legal Frameworks

Foreign Exchange Risks

Cooperation in Oversight

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Recent Developments

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Southern African

Development Community

• 14 Countries

• Regional RTGS going live

with 4 countries in July

• Community defined cross

border market practices

• The Beige Book

Interesting Global

Development

Recent ASEAN Focused Report

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• Where the region stands

• Preconditions for ASEAN Integration

• Financial Services Liberalization (FSL)

• Capital Account Liberalization (CAL)

• Financial Infrastructure Building

• ASEAN Payment and Settlement

System

• Capital Market Development

Some of the key areas covered in

this report:

So… what do we see happening?

• International Standards are coming

• There is mention of standardizing accounts via IBAN

• Aspirations toward a single market based on 3 dimensions

– Equal environment

• Harmonization of regulation and capacity building

– Equal treatment

• Reduction of discrimination against foreign institutions

– Equal access

• Two tiered licensing regime to remove entry barriers

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What I believe…

• FIs must delineate the competitive and the collaborative spaces

to enhance the rate of progress

• The commercial banks, that are truly important to ASEAN,

should take a greater lead in the effort to internationalize (albeit

with a regional focus)

• Regionalization with the global markets in mind means

leapfrogging

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Thank you