Philippines opens up banking to Malaysia, Thailand
MACTAN ISLAND, Cebu, Philippines – The Philippines firmed up yesterday agreements with Malaysia and Thailand to open up the banking industry, aimed at greater financial integration and economic development among members of the Association of Southeast Asian Nations (ASEAN).
Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. led yesterday the signing of the Declaration of Conclusion of Negotiations (DCN) with Bank Negara Malaysia and the Letter of Intent with the Bank of Thailand in line with the ASEAN Banking Integration Framework (ABIF).
“We have to remember that despite the diversity, the collaboration has become stronger and is a key to achieving the success of ABIF. In the ASEAN integration, each jurisdiction will take the initiatives, including ABIF at its own pace and at its own extent as deemed feasible or desirable.
Under the ABIF timeline, each ASEAN-5 including Indonesia, Malaysia, Philippines, Singapore, and Thailand should conclude at least one bilateral agreement with another ASEAN-5 country by 2018.
By 2020, ABIF targets the conclusion or near conclusion of at least one bilateral agreement for each of the ten ASEAN members.
The DCN on the entry of qualified ASEAN banks between the Philippines and Malaysia was signed by Tetangco and Bank Negara Malaysia (BNM) Governor Muhammad bin Ibrahim on the sidelines of the 3rd ASEAN Finance Ministers’ and Central Bank Governors’ joint meeting and related meetings.
“Finalizing this agreement between the BSP and BNM is an important step towards achieving the goal of the ABIF to enhance intra-regional trade and inclusive growth through QABs operating in host ASEAN jurisdictions” Tetangco said.
The agreement signed by the BSP and BNM reflects the specific conditions for QABs from each jurisdiction to enter the other in a manner that is consistent with global banking standards and meets host jurisdiction regulations.
“We already have one of the largest banks waiting in the Philippines and we do expects other Malaysian banks to show interest in (the Philippines). We also want Philippine banks operating in Kuala Lumpur,” Ibrahim said.
The BSP chief also signed an agreement with the Bank of Thailand Governor Veerathai Santiprabhob yesterday.
“This document formalizes our intention to eventually craft the specific provisions that will govern the entry of QABs between our two countries. The bilateral discussion allows us to explore opportunities as well as common interests and the BSP looks forward to having vibrant discussions with our colleagues from the Bank of Thailand,” Tetangco said.
“Thailand is following the footsteps of the Philippines and Malaysia. The letter of intent is to mark the beginning of negotiations on QABs. We would very much like to see more Philippine banks operating in Thailand,” VeeraThai added.
Tetangco said the ASEAN region has a great potential as savings rate reached 33 percent of gross domestic product against the lower rate of 25 percent in other regions.
“As ASEAN integration advances, we expect to see greater collaboration across different member of ASEAN and the development of new channels. We think this is going to lead to greater banking activity, which then encourages greater cross border investment in the region,” the BSP chief said.