MACTAN, CEBU—The monetary authorities in Manila and Kuala Lumpur have completed arrangements allowing lenders in the Philippines and Malaysia freely to establish presence in each other’s jurisdiction.
This developed after the Bangko Sentral ng Pilipinas (BSP) and Bank Negara Malaysia (BNM) on Thursday signed the Declaration of Conclusion of Negotiations (DCN) on the entry of qualified Asean banks (QABs) between the two countries.
“Aside from acting upon our collective vision for Abif [Asean Banking Integration Framework], [the] signing represents another triumph for the long-standing close collaboration between Bank Negara Malaysia and the BSP. In signing, they will move from the negotiating table to the arena of implementation,” BSP Governor Amando M.
Tetangco Jr. said.
This pertains to the Abif and the ongoing effort to untangle and harmonize all the practical limitations preventing lenders of one jurisdiction to operate unhampered in the other.
The Abif contains the general principles for the entry of so-called QABs from one Asean member-state to another.
The agreement between the BSP and the BNM reflects the specific conditions for QABs from each jurisdiction to enter the other.
“The benefits of a harmonized Asean financial market are often cited, and having QABs allows us to reap these benefits in concrete terms.
The significance of this DCN then is that we are essentially opening to the two jurisdictions the envisioned upside of stronger cross-border finance,” Tetangco said.
The BSP also signed a letter of intent on Thursday to begin the bilateral discussions with Bank of Thailand (BoT) in line with the Abif.
Tetangco and BoT Governor Veerathai Santiprabhob signed the document on Thursday.
“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 BoT,” Tetangco said.
Abif enjoins each Asean-5 country to hammer out at least one bilateral agreement with another Asean-5 country by 2018. Asean-5 refers to Indonesia, Malaysia, the Philippines, Singapore and Thailand.
The framework also targets the conclusion or near conclusion of at least one bilateral agreement for each of the 10 Asean members by 2020.