KUALA LUMPUR: Banks in Malaysia and other countries in the Asean region will now have greater access to tap the regional financial market, thanks to the regional banking framework.
However, they would first need to be “Qualified Asean Banks” (QAB) before they are allowed to be financial service suppliers to other countries in the region.
Bank Negara Malaysia Governor Tan Sri Zeti Akhtar Aziz, who chaired a recent meeting of regional central bank governors, said with this new framework, there is operational “flexibility and reciprocity” between two countries.
“This means that whatever they give to their local banks will be accorded to our banks just like whatever we give to our local banks we will accord to theirs.”
The Asean Banking Integration framework, which took five years to prepare was finally signed off by the respective finance ministers from the 10 countries, and this move will enable banks to be regionally operational.
“In fact, the central banks of Indonesia and Malaysia actually signed an MoU that allows us to take the opportunity to operationalise this framework,” she said, after co-chairing the Asean Finance Ministers and Central Bank Governors Joint Meeting yesterday.
Asked if this means the entry of Indonesian banks into Malaysia, the central bank chief said Malaysia would look forward if they have the potential but it is still early to say as the framework has just been approved.
On the definition and criteria of an “Asean bank”, she said, “It's very lengthy and it has credentials and other criteria for a bank to be qualified and each central bank will determine which banks have the status of qualified Asean banks.”
On whether any Malaysian bank fitted the QAB hat, she said an announcement would be made in some point in time.
Zeti described the latest development as an exciting progress, based on consensus and marked a major step towards the Asean Economic Community single market which takes shape at the end of the year.
“These banks will have a specific purpose to facilitate greater trade and investments within our region. They will be intermediate funds, otherwise, we will be investing surplus funds in developed financial markets, and will come back (to the region) as volatile capital flows.”
Intra-trade between the Asean countries has risen to 25 per cent on the average, while cross border investments have now reached significant levels, she added.
On an earlier proposal by economic ministers for the setting up of a micro credit bank to facilitate the small entrepreneurs, she said it has been taken up for further study by one of the working groups.
She also dismissed the single currency suggestion for the region.
“We are too diverse and we don’t have the preconditions for a single currency. We are going to approach it differently via financial integration to achieve the same objectives of greater growth, collectively. “