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."