ASEAN Banking to Integrate in 2020

TEMPO.CO, Jakarta-Financial Services Authority (OJK) chairman Muliaman D. Hadah said ASEAN banking integration will begin in 2020. “We have made an agreement. There are still five years to prepare,” he said on Monday, October 12.

Discussions regarding integration of ASEAN financial services sector have begun showing pattern and shape through the launching of ASEAN Financial Integration Framework. Priority agenda will be for banking sector as 70 percent of ASEAN financial system is dominated by this sector.

According to Muliaman, many Indonesian economic players are still oriented to domestic sectors, including financial services sector, even though the need for integration and cooperation with other ASEAN countries is increasingly urgent. This is related to development of financial services sector capacity in preparation for ASEAN Economic Community.

Muliaman said the ASEAN Banking Integration Framework (ABIF) had been agreed and there are four steps that must be taken for banking integration. First, capacity anf competency development for individual and institution. Second, harmonization of banking regulation between countries so that they have the same definition and standard. Third, build financial infrastructure. Fourth, preparing Indonesian banking to fulfill ASEAN Qualified Bank category.

“While waiting for agreement in 2020, we can firstly conduct bilateral work which of course still refers to ABIF,” he said.

Muliama explained that Indonesia had reached an integration bilateral agreement with Malaysia. Agreement with Singapore is currently in negotiation phase and will be followed with Myanmar.

If agreements have been reached, Indonesia’s banking will receive ease of access to expand and open branch in other ASEAN countries. Muliaman said Indonesia’s banking is already able to develop overseas.

GHOIDA RAHMAH