ASEAN bankers gather to plan liberalization drive
The Jakarta Post, Nusa Dua, Bali
Senior bankers from the 10 member countries of the Association of Southeast Asian Nations (ASEAN) will gather here on Friday for a two-day meeting to discuss, among other things, preparations for the creation of an integrated financial system in the region.
The meeting, organized by the ASEAN Banking Council, is being held a day after the completion of the ninth ASEAN leaders summit here, in which heads of government and state endorsed a framework to set up the ASEAN Economic Community by 2020.
Under this plan, the economies of the region will be integrated through liberalization and facilitation measures to create a single market with a freer flow of trade in goods, services, investment, capital and skilled labor.
Chairman of the ASEAN Bankers Association (ABA) Rudjito said on Thursday that the bankers meeting would discuss issues related to the Economic Community plan.
"The banking industry will make preparations for the creation of the ASEAN Economic Community, which has just been endorsed by our leaders," he told The Jakarta Post.
"The final aim is to integrate the region's financial system," he said.
The annual bankers meeting is being participated in by more than 70 bankers from the region.
Many banks in the region are still struggling to recover from the devastating impact of the late 1990s financial crisis as the slow progress in the restructuring of a huge amount of bad loans is hampering them in resuming their normal lending activities.
A strong and healthy banking system is crucial for supporting the region's plans to create a single economy.
While banks in Singapore generally meet international standards in terms of capital adequacy ratio and technology, banks in other parts of the region are not so fortunate. The region's bankers will try to minimize this gap.
Rudjito said that measures designed to boost good corporate governance in the region's banking sector would also be discussed at the meeting as this would help avoid a recurrence of the late 1990s banking crisis.
During the first ASEAN Business and Investment Summit (ASEAN- BIS), held earlier this week also on the popular resort island of Bali, State Minister for State Enterprises Laksamana Sukardi stressed in his keynote speech the importance of implementing good corporate governance in the banking sector.
He told some 700 foreign and local business leaders that the Indonesian government's strategy was to invite credible investors to purchase state-owned banks via a privatization program. State banks in Indonesia have long-served as cash cows for politicians. and well-connected individuals and companies.
This resulting massive corruption was one of the reasons for the banking crisis, which forced the government to launch a costly bailout program.
The Indonesian Bank Restructuring Agency (IBRA), a government agency, has also sold majority stakes in a number of private banks that it took over in the wake of the crisis.
Rudjito said that bankers would also discuss the decision of the ASEAN-BIS to speed up liberalization in the agriculture and tourism sectors.