This guest blog is the first in a series of four by Peter Mumford, SE Asia Regional Director, Economic & Trade Policy, based at the British High Commission in Singapore. In this series, Peter shares his experience working on economic and trade policy projects in South East Asia, and also his views on where further areas of cooperation between the UK and partners in ASEAN might be.
The Importance of ASEAN
ASEAN is one of the most dynamic regions in the world and is becoming an increasingly important driver of global growth. The ten members of ASEAN are also working towards the launch of the ASEAN Economic Community (AEC, single market) at the end of 2015, with further integration planned beyond then. Collectively, the economies of ASEAN are predicted to become the 4th largest single market in the world by 2030. In order for this potential to be realised, SE Asian countries are taking further steps to reform their financial systems and enhance regulation, as well as deepen integration between the region’s financial systems and with the global economy. Capital and insurance markets in particular are relatively underdeveloped and/or closed in some SE Asian countries and foreign participation in the banking sector is restricted in several countries. Addressing these issues is essential to ensuring strong, sustainable economic growth in ASEAN.
How the UK is helping
The UK is keen to support SE Asian countries, and ASEAN as a bloc, take forward these ambitious reform plans at the national and regional level. As home to the world largest international financial centre and many of the leading players in global financial markets, the UK has a wealth of experience and expertise – from policymakers, market participants and industry associations – which we are keen to share with our SE Asian partners. The Prosperity Fund is our main vehicle for doing this in SE Asia. Some of the areas we have worked on before and are interested in cooperating more on are:
Capital markets: A Prosperity Fund project with the Ministry of Finance (MoF) in Vietnam has already supported the development of new policies on credit rating agencies and bond markets. The project forms part of our Memorandum of Understanding with MoF and has involved in-country workshops as well as study trips to the UK. We are also working with a consultant, Nicholas de Boursac, who is running a Prosperity Fund project to develop a roadmap for the Indonesian authorities on government bonds, aimed at enhancing the liquidity and efficiency of the market. Early recommendations from this project have already been implemented and further consultations are planned. We are keen to support capital market development in other countries as well.
Insurance and private pensions: Our Prosperity Fund project with MoF in Vietnam has supported reforms to the private pensions market. We are eager to work more on issues related to the development of the insurance sector and private pensions, which are of increasing importance in SE Asia given rising development levels and changing demographics.
Regional Integration: Prosperity Fund project facilitated a visit to the UK in July 2014 by the chairs of 6 key ASEAN working groups, who met the Lord Mayor, UK officials, regulators, industry associations and market practitioners. Follow-up is being discussed with the ASEAN Secretariat and the working groups, in particular on capital market issues. We are also keen to explore how the UK could support capacity building for the less developed economies in ASEAN as a group on integration-related issues, potentially through sub-regional frameworks such as the Greater Mekong Sub-region.
Islamic Finance (IF): As the Western hub for IF, the UK is keen to cooperate with countries such as Malaysia, Indonesia, Thailand and the Philippines, as well as international IF organisations based in the region, on this exciting segment of the financial sector. This includes cooperating on the development of international IF standards, promoting IF education/awareness and exploring the potential link between IF and investment in the UK.
We look forward to further strengthening our cooperation on these range of financial sector issues in this exciting region and hope ASEAN countries will view the UK as their partner of choice on financial sector development and reform.
Peter Mumford
SE Asia Regional Director, Economic & Trade Policy
British High Commission Singapore