Commentary 2016/6, 6 April 2016.
The 20th ASEAN Finance Ministers’ Meeting (AFMM) and the 12th ASEAN Central Bank Governors’ Meeting (ACGM) concluded on 4 April in Vientiane, Laos PDR. The two meetings covered various topics, including the ASEAN Infrastructure Fund, insurance cooperation, customs cooperation, efforts to combating the financing of terrorism, capital market development, capital account liberation and financial services. ASEAN countries have concluded the seventh package of their negotiations for the liberalisation of the regional financial sector, and are set to launch the eighth round later this year. The subsequent rounds will focus on liberalizing the insurance sector.
The central bank governors and finance ministers discussed the Strategy Action Plan on ASEAN Monetary and Financial Integration Framework 2016-2025, a key deliverable for the ASEAN Summit in September this year. The member states showed their willingness to develop ‘financial inclusion’ as a policy priority and realise this important aspect of the ASEAN Economic Community 2025 Blueprint.
The discussion of the ASEAN ministers in Vientiane was dominated by three region-wide trends.
First, the Finance Ministers and Central Bank Governors took into account the slowdown in Chinese economy, uncertainty over the US interest rates and political instability in certain countries. They know that ASEAN’s economic growth will have to be driven by expanding domestic demand and positive investors’ sentiments.
Second, economic restructuring in trade liberalisation, institution-building, and investments in infrastructure, education and healthcare remain key issues which will determine the success of integration efforts across ASEAN. The Ministers and Governors have committed to adopt cautious monetary and fiscal policies to sustain economic growth and stabilise the macro-economic conditions in their respective countries.
Third, acknowledging the recently established AEC, the Ministers and Governors are committed to providing the necessary support to buttress existing financial infrastructure in order to advance regional economic integration, and remove the existing bottlenecks to trade and foreign direct investment (FDI) across the region. They have promised to enhance regional capital market connectivity, while supporting financial cooperation initiatives for increased connectivity and internal trade development.
Taken in its entirety, these actions by ASEAN’s leading economic policymakers are a step in the right direction towards realising the ASEAN Economic Community 2025 Blueprint, but much more still needs to be done to ensure that ASEAN as a bloc can weather the choppy economic waters ahead and achieve sustained growth and prosperity.
Ms Sanchita Basu Das is Lead Researcher (Economic Affairs) at the ASEAN Studies Centre, ISEAS – Yusof Ishak Institute.
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