Introduction
1. We, the ASEAN Finance Ministers, convened our 17th Annual Meeting under the chairmanship of H.E. Pehin Dato Abd Rahman Ibrahim, Second Minister of Finance at the Prime Minister’s Office, Brunei Darussalam.
2. We, the ASEAN Finance Ministers, together with the Central Bank Governors Troika and the ASEAN Secretary General, expressed our utmost gratitude to His Majesty the Sultan and Yang Di-Pertuan of Brunei Darussalam for graciously consenting to grant us an audience at the Istana Nurul Iman on 3 April 2013.
3. Together with the troika of ASEAN Central Bank Governors of Cambodia, Brunei Darussalam and Myanmar, we continue our commitment to maintain growth and improve economic stability in the region amidst the global economic challenges. We are also committed to maintain the stability of financial markets in the region. Our exchange of views with the Asian Development Bank, World Bank, International Monetary Fund and ASEAN+3 Macroeconomic Research Office (AMRO) on the risks and policy challenges confirmed our pledge to maintain stability.
4. We remain committed to realizing the goals of the ASEAN Economic Community (AEC). In this regard, we have taken several concrete steps in the various areas under the Roadmap for Monetary and Financial Integration of ASEAN. In addition to this, we reiterated our commitment to support the full operationalization of the USD 485.2 million ASEAN Infrastructure Fund (AIF) and the initial projects of the Credit Guarantee and Investment Facility (CGIF) this year.
5. We also welcomed the enhancement of the Chiang Mai Initiative Multilateralization (CMIM) as agreed by the ASEAN+3 Finance Ministers and Central Bank Governors last year. We strongly believe that this initiative is crucial in maintaining economic stability in the region given remaining uncertainties surrounding the global economy.
Regional Economic Update and Policy Challenges
6. We are pleased that the ASEAN economies grew by 5.6 percent last year despite the global uncertainties. This was underpinned by strong macroeconomic fundamentals, robust domestic demand, and sound balance sheets of banks and the corporate sector. We are confident our economies will grow this year at between 5.3 percent and 6 percent. Nonetheless, we remain vigilant in monitoring the external risks, particularly the weak external demand and volatile capital flows that may undermine the economic recovery going forward.
7. We are committed to implement appropriate monetary, fiscal, and other macro-prudential policies to sustain economic growth and maintain financial market stability. Our macroeconomic policies will be adjusted in line with country-specific development level and conditions facing our respective economies. Our main focus remains on price and financial sector stability which are imperative in supporting an on-going yet sustainable economic expansion. We agreed to further strengthen domestic demand, pursue structural reforms, encourage private sector investment, and aim for equitable economic development throughout the region. More importantly, we agreed to enhance our cooperation and integration efforts, and to improve regional resilience against external shocks.
Roadmap for Monetary and Financial Integration of ASEAN (RIA-Fin)
8. We agreed to intensify our efforts to build stronger integrated financial markets to achieve the goals of the AEC.
9. We welcomed the updates by the troika of ASEAN Central Bank Governors of Cambodia, Brunei Darussalam, and Myanmar on the implementation of the ASEAN Financial Integration Framework (AFIF) under the guidance of Senior Level Committee (SLC) on Financial Integration. We also welcomed the Governors’ endorsement in principle of the ASEAN Banking Integration Framework (ABIF) and the ongoing work on payments and settlements system.
10. We recognized the work of the ASEAN Central Banks in collaboration with the ASEAN Secretariat, Asian Development Bank and the SEACEN Research and Training Center within the Steering Committee on Capacity Building (SCCB). We strongly believe that capacity building is of utmost importance in narrowing the development gaps among ASEAN economies and in bringing all ASEAN members to fully participate in the ongoing integration efforts.
11. We are pleased with the launch of the Summary Report of the Combined Study on Assessing the Financial Landscape and Formulating Milestones for Monetary and Financial Integration in ASEAN, which reflects the ASEAN’s views on the current state of financial integration and highlights ASEAN’s financial integration frameworks in the areas of financial services, capital account, payments and settlement systems and capital markets.
Capital Market Development
12. We firmly believe that robust capital markets are important in ensuring financial stability and facilitating the efficient allocation of capital. We have therefore agreed to continue the efforts to deepen and integrate our capital markets, to harness foreign capital inflows, and to develop new investment vehicles in the region. We wish to ensure that the flow of capital is geared towards productive sectors, and we are encouraged that the work undertaken by the Working Committee on Capital Market Development (WC-CMD) and the ASEAN Capital Market Forum (ACMF) has shown great progress in achieving that objective.
13. We took note of the WC-CMD’s Bond Market Development Scorecard which has continued to be a useful benchmark for ASEAN finance and central bank officials to monitor the progress of ASEAN’s bond market development, openness and liquidity. We also welcomed the WC-CMD’s progress in work relating to OTC derivatives market reforms, helping to enhance ASEAN members’ understanding in this developing area. We encouraged the WC-CMD to continue capacity building programmes and the exchange of views on best practices, in the effort to reduce market gaps as identified in the Scorecard.
14. We welcomed the significant progress made by the ACMF and the ASEAN Exchanges in the integration of capital markets, particularly on the launch of the ASEAN Trading Link, the development of a regulatory framework for cross-border offers of mutual funds, the implementation of the fully-harmonized ASEAN Disclosure Standards and the completion of the common regulatory model to facilitate the cross-border provision of supporting marketing services. We noted the ongoing efforts on corporate governance ranking of ASEAN publicly listed companies as well as the development of a common prospectus framework for cross-border offers of securities. We encouraged the ACMF and the ASEAN Exchanges to continue working on the initiatives for the development of an integrated ASEAN capital market. In particular, to support the ASEAN Trading Link, we agreed to establish a cross-committee comprising ACMF, WC-CAL, WC-CMD and WC-PSS to develop a blueprint for the establishment of clearing, settlement and depository linkages.
Financial Services Liberalization
15. We remain positive that the on-going Sixth Round of negotiations of Financial Services Liberalization under the ASEAN Framework Agreement on Services (AFAS) will bring our economies closer in ensuring that ASEAN’s financial sectors support the region’s trade and investment activities. We look forward to signing the Protocol to implement the Sixth Package next year as an important deliverable before the AEC’s crucial 2015 deadline.
16. We are supportive of the work done by the Working Committee on Financial Services Liberalization (WC-FSL) in deepening insurance sector integration to complement the banking sector efforts in support of the AEC. We note and encourage the established channel of collaboration between the WC-FSL and the ASEAN Insurance Regulators’ Meeting in undertaking developmental initiatives to further support insurance sector integration. We also welcome the WC-FSL’s continued efforts in ensuring that ASEAN’s integration with the global economy is achieved via ASEAN’s free trade agreements with dialogue partners.
Capital Account Liberalization
17. We recognized that freer capital mobility is essential in supporting greater investment, trade and business activities in the region, and in promoting greater integration of our markets with the global economies and in line with the goals of the AEC. In this regard, the Working Committee on Capital Account Liberalization (WC-CAL) has shown substantial progress in its efforts to achieve greater capital mobility.
18. We welcomed the WC-CAL’s work on the capital account liberalization framework. This includes the completed heat maps which assess member countries’ current level of openness of the capital account regime. This also serves as a basis for members’ Individual Milestones Blueprints, which show member countries’ plan to progressively liberalize their capital account sequencing in accordance with the ASEAN Financial Integration Framework.
19. We also noted the WC-CAL’s successful completion of the mutual assessment process of identifying rules to progressively liberalize our current account transactions, direct and portfolio investments, and for other types of flows. We furthermore welcomed the discussions on safeguards of capital account liberalization held by this Working Committee.
Strengthening ASEAN Finance Cooperation and Economic Integration
Enhancing Regional Surveillance
20. We recognized the need for stronger economic surveillance efforts to achieve regional economic integration. We are encouraged by the improved work of the ASEAN Integration Monitoring Office (AIMO), particularly with the development of surveillance reports, monitoring tools, and capacity building programs. We are fully committed to expand the capacity and resources of AIMO, and encourage Member States and external partners to better assist AIMO in delivering its mandate. We support AMRO and AIMO to work closely to develop productive and value-added economic surveillance report.
21. We also reaffirmed our support to AMRO in providing macroeconomic and financial surveillance of the region, particularly in its mandate to support the CMIM. We welcomed AMRO’s participation in briefing us on the macroeconomic and financial situation in the region. We also look forward to the institutionalization of AMRO as an international organization.
Infrastructure Financing
22. We welcomed the full establishment of the ASEAN Infrastructure Fund Limited in Labuan, Malaysia last year and the commencement of AIF lending operations this year. We believe that the AIF is an integral component of ASEAN’s efforts to strengthen regional physical connectivity, and narrow the infrastructure development gap in ASEAN. We welcomed Myanmar’s commitment to join the AIF as a shareholder, at the earliest opportunity available. We also welcomed the idea of the AIF as an innovative infrastructure financing mechanism in ASEAN region to be shared with other international fora like APEC and G20 Forum. We appreciated the continued support from the ASEAN-World Bank Infrastructure Finance Network (IFN) and endorsed the programs for 2013.
Cooperation on Customs Matters
23. We are pleased with the progress of activities under customs cooperation, particularly the pilot project to implement the two-month ASEAN Single Window pilot testing among seven participating countries as well as the implementation of the ASEAN Harmonized Tariff Nomenclature (AHTN) 2012. We urged our customs officials to fully implement the outstanding initiatives, including the finalization of agreements and protocols, to support the establishment of a single market and production base under the AEC.
ASEAN Cooperation on Taxation
24. We agreed to strengthen cooperation in addressing tax-related impediments to integration including withholding tax and double taxation issues. We encouraged the ASEAN Forum on Taxation (AFT) to further enhance regional dialogue on taxation, strengthen cooperation in tax matters, as well as establish and update bilateral tax treaties in the region.
ASEAN Cooperation in Insurance
25. We are encouraged by the progress made by the ASEAN insurance regulators in improving insurance penetration in the region, developing regulatory frameworks to promote insurance products, and promoting consumer education to increase awareness. We agreed on capacity building initiatives to assist member regulators in aligning their regulations with international best practices.
26. We noted with satisfaction the progress made in the implementation of the ASEAN Strategy on Disaster Risk Financing and Insurance (DRFI). We recognized the importance of the initiative and welcomed the collaborative efforts of the AFDM, AIRM and ACDM in this regard. We endorsed the establishment of the ASEAN Cross-Sectoral Coordination Committee on DRFI initiatives and we tasked the AFDM and AIRM to work closely with their ACDM counterparts in further implementing the ASEAN DRFI Roadmap.
Financial Inclusion
27. We welcomed the efforts made by ASEAN members in promoting financial inclusion as mandated by our Leaders in 2011. We firmly believe that inclusion of the small and medium enterprises will further promote them to become the backbone of our future economic growth.
28. We welcomed the new initiative on Financial Literacy by Brunei Darussalam to provide a platform for dialogue and exchange of experiences and best practices on effectively promoting financial literacy between ASEAN member countries. We recognized the far reaching benefits of Financial Literacy and education in contributing to the well-being of the people and stability of the economy.
Engaging and Building a Stronger ASEAN
29. We reaffirmed our commitment to promote a stable and integrated ASEAN, and our support for strong, sustainable, inclusive and balanced growth in the region. We are determined to continue our efforts to work towards economic and financial integration. We are committed to narrowing the development gap and raising the living standards of our people by reducing barriers to trade, investment and financial flows.
Acknowledgement
30. We thanked Brunei Darussalam for hosting the 17th AFMM this year and welcome Myanmar as Chair in 2014.