The ASEAN Economic Community (AEC) of 10 countries, including Indonesia, Thailand, and Vietnam, will launch late this year. Financial integration in the ASEAN region is expected to be accelerated by taking the opportunity.
The financial ministers and central bank governors of the 10 countries recently signed the ASEAN Framework Agreement on Services (AFAS) for the promotion of trade and investment based on the mutual opening of financial service sectors. The central bank governors signed the ASEAN Banking Integration Framework (ABIF) agreement last year as well. The ABIF is to modify the banking supervisory regulations in the region ahead of the inauguration of the AEC.
According to the AFAS, qualified ASEAN banks can do business without restriction in any of the ASEAN markets. The qualification process is predicted to be underway in 2018.
Korean banks are paying much attention to the region, too. For example, Shinhan Bank is currently running an overseas corporation in Vietnam and setting up branches in the Philippines. The Indonesian financial authorities allowed it to acquire Bank Metro Express shares on April 16 and Shinhan Khmer Bank recently started its business in Cambodia.
KB Kookmin Bank has also set up KB Cambodia Bank, and Woori Bank merged itself with Saudara bank in Indonesia last year. The Hana Financial Group is expanding its retail banking business in Indonesia by means of PT Bank KEB Hana, too.
At present, the ASEAN countries are aiming to form an integrated economic block, similar to the EU, where the free movement of goods, services, investment and workers is guaranteed. The AEC countries are home to 630 million population, the third-largest in the world, and a combined GDP of US$2.4 trillion won, the seventh-largest in the world as of 2013.