ASEAN Strengthens Collaboration Facing Global and Digital Economic Challenges
5th ASEAN Finance Ministers and Central Bank Governors (AFMGM) 2019 Meeting on April 2-5, in Chiang Rai, Thailand.

JAKARTA (TheInsiderStories)Southeast Asian countries (ASEAN) stated to strengthened the collaboration to face the regional and global economic challenges such as trade tension, protectionism, economic downturn in developed countries, changes in the direction of monetary policy in developed countries, and increasing economic opportunities and challenges digital and sustainable development, said an official statement on Sunday (04/07).

For this reason, ASEAN countries are targeting to strengthen economic integration and connectivity to improve regional competitiveness and encourage inclusive and human-oriented development through the ASEAN Economic Community  Vision 2025, said the report.

In a meeting entitled ASEAN Finance Ministers and Central Bank Governors  on April 2-5, in Chiang Rai, Thailand, ASEAN countries agreed on a number of key issues, including: connectivity through increased trade and investment facilitation, and system connectivity local trade financing and payment that is reliable, security and efficient so that it can act as a more competitive economic block.

In addition, in terms of financial system resilience, AFMGM is able to anticipate digital economic developments and cyber security risks; and optimizing the mechanism of capital market financing and banking for sustainable development and micro-insurance enhancement to encourage financial inclusion.

In order to encourage financial sector integration, AFMGM signed the 8th Protocol to the ASEAN Framework Agreement on Services, and agreed to accelerate further negotiations on Protocol 9 of 2019; finalization of negotiations on the ASEAN Trade in Services Agreement especially on financial services, which will be signed at the ASEAN Economic Ministers meeting at the end of April.

Meanwhile, on the issue of infrastructure financing, AFMGM has established the ASEAN Infrastructure Fund to develop two new financing mechanisms, namely: the first ASEAN Inclusive Finance Facility which aims to develop access to concessional financing for the countries of Cambodia, Laos and Myanmar, and the second ASEAN Catalytic Green Fund which will utilize the financing potential of regional and global development institutions, as well as funding from donor and private institutions to finance sustainable development projects in the region.

Significant infrastructure growth in several ASEAN member countries is believed to be able to increase investment, consumption and ultimately increase economic growth.

In the development of the capital market and financial sector, AFMGM included the establishment of a Working Group on Infrastructure Finance, which was chaired by Indonesia and Malaysia to increase infrastructure financing through the capital market.

AFMGM also formed WG on Sustainable Finance which will encourage the issuance of sustainable development bonds in the region through the use of ASEAN standards on green, sustainable and social debt securities; publication of Guidance Notes on Digital Financial Services and Guidance Notes on Financial Education and Consumer Protection to encourage regional financial inclusion; and cooperation in the development of the insurance sector, especially micro-insurance, which is expected to reach lower middle class people who have not been protected by insurance.

In the context of taxation, AFMGM continues to encourage the expansion of a network of double tax avoidance agreements between ASEAN countries, as well as global initiative cooperation in the exchange of information automatically related to taxation.

Regarding customs, AFMGM plans to develop the operation of the ASEAN Single Windows in order to encourage digitalization of the customs process, and will immediately pilot the ASEAN Custom Transit System scheme that can facilitate the movement of goods in transit.

“The meeting was very productive and very useful, where there was an exchange of ideas between the finance ministries and discussed the challenges of financial and taxation policies in the face of changes in digital 4.0 technology,” Finance Minister Sri Mulyani Indrawati said in a written statement.

As a disaster-prone area, AFMGM also highlighted the structure of disaster financing through an agreement on phase 2 of the ASEAN Disaster Risk Finance and Insurance which aims to improve regional capacity in data processing and mapping of disaster risk profiles.

AFMGM also aligned with the initiative at the ASEAN+3 level, which at the end of 2018 agreed to establish a Southeast Asia Disaster Risk Insurance Facility.

While, Bank Indonesia Governor Perry Warjiyo conveyed, Indonesia supports initiatives to use the digital economy to achieve financial system stability and inclusiveness in the region.

“Bank Indonesia supports the initiatives discussed in the second part which aim to support regional economic growth,” he said.

Written by Daniel Deha, Email: daniel@theinsiderstories.com

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