Philippines, Singapore push open banking system

MANILA, Philippines - The Philippines is set to pursue an agreement with Singapore as part of efforts to open up the banking industry aimed at greater financial integration and economic development among members of the Association of Southeast Asian Nations (ASEAN). 

Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said the Philippines has already entered into various agreements with Malaysia, Thailand, and Indonesia on the ASEAN Banking Integration Framework (ABIF). 

Tetangco said the BSP has to reach out with the Monetary Authority of Singapore (MAS) for a possible agreement. 

“We have not started yet with Singapore. But it might happen soon, maybe over the next few months. We have to touch base with the MAS,” the outgoing BSP chief said. 

Last June 4, Tetangco and incoming BSP Governor Nestor Espenilla Jr. concluded the signing of the letter of intent with Indonesia’s Financial Services Authority (OJK) in Jakata to hammer out a bilateral agreement on the establishment of qualified ASEAN banks (QABs) between the two countries under the ABIF. 

Under the ABIF timeline, each ASEAN-5 member (Indonesia, Malaysia, Philippines, Singapore and Thailand) should conclude at least one bilateral agreement with another ASEAN-5 country by 2018.

 By 2020, ABIF targets the conclusion or near conclusion of at least one bilateral agreement for each of the 10 ASEAN members as part of the integration under the ASEAN Economic Community (AEC).  

The integrated system is defined under the ASEAN Financial Integration Framework (AIFF) that also covers the integration of the banking markets wherein QABs.  

To achieve the consolidation of the 10 ASEAN markets into a single economic base with the launch of the AEC in 2015, there is a need to have an integrated and well-functioning regional financial system. 

The BSP signed the Declaration of Conclusion of Negotiations (DCN) with Bank Negara Malaysia and the LOI with the Bank of Thailand on the sidelines of the 3rd ASEAN Finance Ministers’ and Central Bank Governors’ joint meeting and related meetings in Mactan, Cebu last April 6. 

The ASEAN region has a great potential as savings rate reached 33 percent of gross domestic product against the lower rate of 25 percent in other regions. 

Espenilla, who is currently the deputy governor for the BSP’s Supervision and Examination Sector, earlier said several foreign banks have expressed interest in establishing its presence in the Philippines through several modes of entry. 

Aside from entering as a QAB or as a strategic partner, he said foreign banks could enter the country through Republic Act 10641 signed by former president Benigno Aquino III in July 2014.