BSP braces for Asean financial integration

CEBU, Philippines - The Philippines remains committed to the establishment of an integrated financial system in the Asean region, an official from the central bank said.

Bangko Sentral ng Pilipinas deputy governor Diwa Guinigundo said the central bank is ready to deal with the potential challenges of financial integration which is going to happen between next year and 2020.

One of the plans of Asean Economic Community is to achieve a unified and well functioning regional financial system which implies a more liberalized capital account system and inter-linked capital markets.

"BSP adopts policy reforms to simplify reporting and documentary requirements without compromising surveillance; and it remains an active party to regional financial arrangements," he said in a recent economic forum in Cebu.

The Asean Banking Integration Framework suggests the uniformity of rules and regulations of Asean nations on the banking system so that banks in the region can operate as local banks – and not as foreign banks.

While expansion efforts are being done to prepare for greater competition, Guinigundo pointed out Philippine banks are relatively smaller compared to other Asean banks in terms of assets and capital.

Countries in the region will further negotiate on allowing Qualified Asean Banks to operate in other jurisdictions with conditions.

"The criteria for allowing new entrants in the banking system are done in a multilateral basis," he said, adding the Philippines' rate of compliance in the financial integration is about 79 percent. This is close to the current highest rate which is 81 percent among other nine Asean countries.

Market integration

The official likewise pointed out the integration has been happening already in recent years with the increasing market presence of imported goods whose tariff duties have been brought down to as low as 2 percent or even zero percent.

"Despite the situation, many of our producers have been able to compete in the domestic market. Some of them are also able to move out and compete with Asean competitors," he noted.

In the same forum, Assistant Director Ruth Cruz of the National Economic and Development Authority said small and medium businesses may be eased out by stronger and more efficient competition; local enterprises may not be able to compete because of their lack of experience in the new playing field.

The risk of not receiving any funding from the national government could also be one factor, she said.

The official further added the integration could also mean the country's best talents may be lured by foreign companies who can offer better pay and benefits. — (FREEMAN)