The Department of Finance (DOF) said Monday the Association of Southeast Asian Nations (Asean) is moving closer toward the creation of a common market, which is expected to further promote financial inclusion in the region.
In a Washington DC briefing, Finance Secretary Carlos G. Dominguez III reported to the International Monetary Fund (IMF) the accomplishments that the Philippines and other member-states of the Asean bloc have done so far in step with their financial inclusion agenda.
This includes the creation of a common market for the region, which is considered as one of the world’s major growth drivers.
During the meeting, the finance chief also reported the concerns of the Asean finance ministers over the prospect of more developed countries adopting inward-looking policies and the possibility of sharper-than-expected financial tightening in this export-oriented region amid the normalization of United States (US) policy rates.
Amid such concerns, the Asean continues to meet its timetable on economic integration as spelled out in the Asean Economic Blueprint 2025, Dominguez said.
“The Asean has moved dramatically in its effort to build a region-wide policy framework to enhance trade, economic cooperation and financial flows among the association’s member countries. We are now moving closer towards achieving the strategic goal of a common regional market,” Dominguez said.
With the Philippines chairing this year’s Asean, Dominguez reported that average growth this year among the Asean countries is expected at 5 percent, driven by strong domestic consumption in their respective economies.
According to Dominguez, in some Asean economies, faster growth is inhibited by higher inflation and weaker-than-expected trade flows, which are short-term limitations and could turn for the better once global growth picks up.
“The Asean region is currently one of the fastest and main drivers of global growth. As a group of export-oriented economies, however, we look with concern at the prospect of more developed countries adopting more inward-looking trade and investment policies,” he added.
He also reported the progress in the Asean +3, which includes Korea, Japan, and China, Finance Cooperation Framework jointly chaired by the Philippines and Japan.
While improvement on the Chiang Mai Initiative Multilateralization (CMIM) include:
- Completed the revision of the CMIM operational guidelines and the preparation of the CMIM Conditionality Framework that will clarify the activation process of the IMF De-linked Portion of the CMIM
- Been developing the qualification indicators for the CMIM Precautionary Line based on the Economic Review and Policy Dialogue (ERPD) Matrix; and
- Completed the 7th test run which examined the activation of the CMIM arrangement with the IMF program, underscoring the needs for strong coordination between the two agencies.
The CMIM is a currency swap agreement among the finance ministries and central banks of the Asean +3 economies that aims to provide financial support for short-term liquidity problems.
“We have achieved progress as well on the Asean +3 Macroeconomic Research Office (AMRO). We have finalized the AMRO’s Strategic Direction and Medium-term Implementation Plan. This Plan seeks to build up AMRO towards delivering high quality and original surveillance to member economies supportive of the CMIM,” he said.
According to Dominguez, a Memorandum of Understanding between the AMRO and the Asian Development Bank (ADB) has already been signed, with the Asean looking forward to the conclusion of a similar agreement with the IMF.