ASEAN ministers vows to widen capital market
ASEAN ministers vows to widen capital market
P. Parameswaran, Agence France-Presse, Manila
Southeast Asian finance ministers agreed here Thursday to open up their capital markets further and ease money flows as part of a road map toward a single market in the region.
Association of Southeast Asian Nations (ASEAN) ministers at their annual talks in Manila agreed on a "road map for integration in financial cooperation" that would serve as a cornerstone for the ASEAN common market by 2020, an official said.
It comprises broad steps to develop, liberalize and integrate the region's capital markets and financial services to bring about "a free flow of goods, services and investments and a freer flow of capital," according to a draft joint statement to be issued at the end of the two-day meeting later Thursday.
The road map is to be tabled for approval by ASEAN leaders at their annual summit in Bali in October, ASEAN Secretary-General Ong Keng Yong said.
ASEAN aims to achieve a single market -- dubbed the "ASEAN economic community" -- of 530 million people in 17 years. The group comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
The ministers agreed that member states be "more transparent and systematic" in relaxing restrictions on capital movements as part of regional financial integration efforts, the draft said.
At the same time, they would put in place "prudential measures in each step of their capital account liberalization process, where necessary, to minimize the possible adverse impacts of the reversal of capital, particularly short-term, flows."
Much of Southeast Asia's financial sector continues to recovers from a financial crisis in 1997/98 which plunged the region into its worst recession in decades.
The crisis was sparked by a currency meltdown, first in Thailand and then spreading across Asia, as excessive speculation and volatile short-term capital flows undid much of the economic progress made over many years.
As the level of development in the financial fronts of member states is not the same -- with Singapore, Malaysia, Thailand and the Philippines ahead of the others -- capital market integration will be undertaken in two phases, officials said.
Over the next five years, it will be mostly confined to "capacity building" -- beefing up the legal and regulatory framework, market infrastructure for trading, clearance and settlement procedures, investor education and adoption of international standards.
After that, members will move fully into "market integration," including setting up a common regulatory and legal framework, removal of restrictions on cross-border investment, adoption of common accounting methodologies and standards, and linkages in payment and settlement systems.
"With such a road map, we at least have an action program for ourselves and we know what to do according to a time frame," Ong said.
"If some countries are not ready to go ahead, we can hear each other out but continue working towards the goal."
The ministers also agreed Thursday to adopt a uniform set of tariff codes for more efficient implementation of the ASEAN Free Trade Area (AFTA), officials said.
The ASEAN Harmonized Tariff Nomenclature Agreement will help simplify and harmonize customs procedures with classification code systems for export products.
The region is already implementing a tariff reduction scheme for mostly-manufactured products under AFTA.
Ninety-nine percent of tariffs for manufactured products traded among Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand have been knocked down to between zero and five percent since the 1992 launch of AFTA.
Ultimately, tariffs will be completely abolished by 2010 for these six countries, and by 2015 for the newer members of Cambodia, Laos, Myanmar and Vietnam, with flexibility on some sensitive products retained until 2018.