ASEAN to set up new policy over overseas funds
ASEAN to set up new policy over overseas funds
KUALA LUMPUR (AFP): Capital market regulators of Southeast
Asia's free-wheeling economies agreed yesterday to set up a forum
to evolve common procedures for tapping overseas funds and beef
up enforcement of laws governing their fledgling markets.
The forum's proposed functions include laying the groundwork
for improving stock clearing and settlement systems and
harmonizing capital requirements, and cross-border enforcement of
laws in the Association of Southeast Asian Nations (ASEAN).
Except for Brunei, which does not have a stock exchange, the
other members -- Indonesia, Malaysia the Philippines, Singapore
and Thailand -- agreed to the setting up of the so-called ASEAN
capital market regulators consultative group.
Malaysia floated the proposal at the first ASEAN capital
market regulators symposium, which opened here yesterday, and it
received immediate endorsement by the other members.
"Singapore certainly welcomes this proposal, which will help
develop the region's capital market in tandem with economic
growth," said Koh Beng Seng, deputy managing director of the
Monetary Authority of Singapore's banking and financial
institutions group.
Malaysian Security Commission chairman Munir Majid said the
consultative group would meet at least once a year.
Munir said the group would try to devise a regional stock
clearing and settlement system and improve existing systems in
ASEAN countries through harmonization of guarantee fund
arrangements and wider coverage of fidelity funds.
Requirements
It would also harmonize capital requirements through a
proposed three-tier approach to capital adequacy involving paid-
up capital, borrowing limits and minimum liquid funds, Munir
said.
"At the primary level, with the funding through the capital
markets, particularly equity financing, assuming increasing
importance, enormous opportunities are thrown up for ASEAN's
financial sector, of which I don't think they are getting a fair
share," Munir said.
Cross-border sharing of information to fight market fraud
would also be among the tasks of the group, whose first meeting
would be held soon to establish working groups comprising also of
industry specialists, officials said.
"Without close cooperation and exchange of information,
regulators will be overwhelmed by the nature, amount, and speed
in which huge amounts of funds can be transferred from one market
to another," Ekamol Kiriwat, secretary-general of the Thailand's
Securities and Exchange Commission said.
Market capitalization of the stock exchanges in ASEAN have
increased from US$174 billion at the end of 1991 to $583.8
billion at the end of last year, representing more than a three-
fold increase in two years, officials said.
"With such quantum growth, capital market regulators in the
region have to continuously be on guard to ensure that the market
is not disrupted and investor-interest is protected," Azman
Hashim, vice-president of the ASEAN Business Forum said.
Bacelius Ruru, chairman of Bapepam, Indonesia's capital market
supervisory agency, said a forum for ASEAN capital market
regulators to exchange ideas would help ensure market integrity,
"a vital ingredient for attracting foreign investment funds."