ASEAN a step closer to becoming single market

ASEAN a step closer to becoming single market

Agence France-Presse, Manila

Southeast Asian finance ministers are to meet this week to lay
the groundwork for a financial system that will fuel a single
ASEAN market, similar to the European Community, by 2020,
officials said.

The ministers from the 10-member Association of Southeast
Asian Nations (ASEAN) will map out strategies to develop,
liberalize and integrate the region's capital market and
financial services during their annual talks in the Philippine
capital on Wednesday .

"The ASEAN ministers will try to finalize three roadmaps that
will set the stage for a free flow of financial services, capital
account liberalization and capital market development," an
official told AFP, speaking on condition of anonymity.

They include a stage-by-stage approach towards a free flow of
capital in the region by 2020, including an individual country
liberalization program, and strategy to develop a regional bond
market.

"The financial system is a key and complex component of AFT
(ASEAN Free Trade Area) and we need to have roadmaps to achieve
the various components of this system," the official said.

Southeast Asian nations are already implementing a tariff
reduction scheme for largely manufactured products under AFT.

Ninety-nine percent of tariffs for manufactured products
traded among senior ASEAN members Brain, Indonesia, Malaysia, the
Philippines, Singapore and Thailand have been knocked down to
between zero and five percent since AFT was launched in 1992.

Ultimately, tariffs will be completely abolished by 2010 for
the six members, and by 2015 for the newer members Cambodia,
Laos, Monomer and Vietnam, with flexibility on some sensitive
products until 2018.

ASEAN aims to achieve a single market -- dubbed the "ASEAN
economic community" -- of 530 million people in 17 years.

The ASEAN finance ministers will also sign in Manila a pact
for the 10 member nations to adopt a uniform set of tariff codes
for more efficient implementation of AFT, officials.

The ASEAN Harmonized Tariff Nomenclature Agreement will help
simplify and harmonize customs procedures with classification
code systems for export products.

Tariff and customs officials of ASEAN member states had
settled "technical differences" in arriving at a common set of
tariff codes, paving the way for the agreement, Philippine
Finance Undersecretary Juanita Emitting said recently.

After their meeting, the ASEAN ministers will hold talks with
their counterparts from China, Japan and South Korea on Thursday
as part of the "ASEAN plus three" annual forum.

They are expected to discuss the deepening of local bond
markets in their countries as well as promoting cross-border
issuance of bonds and investment as part of an "Asian Bond Market
Initiative."

Six working groups had met under the initiative to, among
other things, set up new securitized debt instruments and credit
guarantee mechanisms, as well as look into the structures of
local and regional rating agencies.

"The ministers will be briefed on the progress of these study
groups," according to an ASEAN official.

Thai premier Thaksin Shinawatra announced last month the
launch of the Asian Bond Fund, to be backed by 11 countries in
the Asia Pacific.

The bond is the brainchild of Shinawatra.

Central banks in Japan, the Philippines and Singapore have
announced separately that they will each provide $100 million to
the fund, while Australia's reserve bank will contribute $50
million.