ASEAN bankers discuss strategies in globalization era

By Hendarsyah Tarmizi

NUSA DUA, Bali (JP): Bankers from the countries of the Association of Southeast Asian Nations (ASEAN) began a three-day conference yesterday which will focus on strategies for facing the trend towards the globalization of banking services.

ASEAN Bankers Association Secretary-General Tay Kah Chye said that the strategies discussion was among the main items on the agenda of the meeting, which will last until Saturday.

He said that 140 bank executives from ASEAN's six member- countries were participating in the meeting, which is expected to come up with concrete proposals for responses to the globalization of banking.

"It is one of the most crucial issues which should be addressed by ASEAN bankers," he said of the liberalization of the world's banking industry.

The association's concern over the negative impact of the liberalization does not necessarily it opposes the globalization of banking services, he said in reference to the demand for the removal of operational restrictions on foreign banks in developing countries.

"We are absolutely not against the globalization idea, but we still need much time to prepare ourselves," he told journalists before the opening of the meeting of the council's permanent committees.

"If we liberalize our banking industry now, we will certainly be killed," said Tay, the president of the Singapore-based ASEAN Finance Corporation Ltd, a finance firm owned by the association.

Minister of Finance Mar'ie Muhammad is expected to deliver his keynote address to the conference today.

In addition to setting out strategies in facing the globalization era, the council's permanent committees will also hummer out the details of the organization's cooperation programs which were approved during its 24th congress in Cebu, the Philippines, last November.

Rafael B. Buenaventura, the chairman of the association, said the improvement of mutual cooperation in networks and technology should not be ignored because these would play a decisive role in enabling "indigenous" banks in the region to compete with more developed financial institutions from industrialized nations.

Another essential question in facing the free market era is how to expand the cooperation arrangements among ASEAN banks into "a more business-like framework," said Buenaventura, who is also an executive of the Association of Philippine Bankers.

He said that cooperation among ASEAN banks, which is now mostly focused on exchanges of information, should also cover other fields, such as sharing customers or a syndication in financing activities.

"Banks, which still mostly focus their operations on their respective countries, should also study the possibility of taking advantage of the growing business activities in the other ASEAN countries," he said.

Iwan R. Prawiranata, the chairman of the Federation of Associations of Indonesian Banks, agreed that there was a need to improve technology and software cooperation among ASEAN banks.

"In addition to an increase in the capital, improvements in banking technology and software are a must in enabling ASEAN banks to compete with those from developed nations," he said.

He said that such a cooperation arrangement need not necessarily be carried out through the establishment of a permanent body.

"It can be carried out bilaterally or under a non-formal framework, because under this approach the cooperation could be more effective," he said, adding that Indonesian banks, which at present mostly use out-dated banking software and technology, could cooperate with their more developed partners in Singapore to gain wider access to the global banking network.

Iwan, who is the president of state-owned Bank Bumi Daya, said Indonesian banks had no alternatives but to improve their technology, software and human resources to enable them to survive in what are expected to be more competitive conditions in the coming years.

"Those three factors should come first, before they decide to strengthen their capital," he said. "It is also essential to raise the capital but it will be nothing if you have poor management and lack reliable technology."