Reply to Parliamentary Question on the Progress of Financial and Capital Market Integration in ASEAN under the ASEAN Economic Community
QUESTION NO 314
NOTICE PAPER NO 252 of 2015
FOR WRITTEN ANSWER
Date: For Parliament Sitting on 17 August 2015
Name and Constituency of Member of Parliament
Mr Yee Jenn Jong, NMP
To ask the Prime Minister what has been the progress on financial and capital market integration in ASEAN under the ASEAN Economic Community and specifically whether Singapore will support the proposal for a Micro, Small and Medium Enterprises (MSME) Growth Bank.
Answer by Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister in charge of MAS:
1 The ASEAN Economic Community (AEC) will be launched at the end of 2015.
2 Financial integration is an important part of the AEC. It will support economic growth in the region, strengthen our financial markets, and promote financial inclusion. Good progress has been made but the pace of financial integration has generally lagged behind trade integration. Financial integration is complex as it involves issues of harmonising national regulatory standards, market conduct practices, disclosure requirements, and conditions of licensing. Further development and convergence in financial system maturity among the ASEAN economies would also aid the pace of financial integration.
3 Notwithstanding the slower pace of financial integration, there has been progress in the areas of banking, insurance, and capital markets.
4 For example in banking, ASEAN countries have established the ASEAN Banking Integration Framework (ABIF), which provides a platform for two or more ASEAN countries to agree on specific areas for liberalisation based on ASEAN banks’ commercial interests. The banks that meet ASEAN members’ respective admission criteria and prudential requirements will be able to enjoy greater market access and operational flexibility in the region.
5 As there are presently limited details on the proposed Micro, Small and Medium Enterprises (MSME) Growth Bank, it is premature to decide on Singapore’s support for the proposal. However, our surveys indicate that the SME loan and equity financing programmes offered by private financial institutions have been broadly effective in meeting the financing needs of SMEs.