ASEAN bankers gather to plan liberalization drive

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.