MANILA, Philippines–It may take as long as five more years, or until 2020, before Southeast Asia’s banking industry becomes fully integrated, regulators said this week, as they unveiled the staggered time frame for cross-border operations of the region’s lenders.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said the region’s regulators agreed on stringent rules for the implementation of the Association of Southeast Asian Nations (Asean) Banking Integration Framework (ABIF).
Finalized last March 21, ABIF rules pave the way for countries to start bilateral talks with neighbors regarding the operations of their banks.
“ABIF is integral to the achievement of a financially and economically integrated Asean region,” the BSP said in a statement.
Despite the approval of the region-wide deal, bilateral talks are still needed because not all Asean countries are ready for the integration, BSP Governor Amando M. Tetangco Jr. said in a previous interview.
With ABIF, the region will adapt to the new regime step-by-step. The Asean’s most immediate goal is for at least two of 10 members to sign a bilateral deal that will open up their respective banking sectors.
By 2018, each member of the so-called Asean 5—namely Indonesia, Malaysia, the Philippines, Singapore and Thailand—should all have at least one bilateral deal with other countries in the region. By 2020, all 10 member states must each have at least one bilateral deal with their neighbors.
Ensuring reciprocity is one of the goals of bilateral talks. Tetangco earlier said countries should agree to open their industries to each other’s respective banks.
Last year, the Philippines’ legislature approved the liberalization of the banking sector and allow the entry of more foreign lenders.