[Brief] ASEAN Banking Integration Framework sets the tone for ASEAN economic growth

Photo: Gunawan Kartapranata/CC BY-SA 3.0

The Philippine central bank and Indonesia’s Financial Services Authority will sign an agreement aimed at opening up the banking industry under the ASEAN Banking Integration Framework “ABIF”.


Philippine’s central bank had just penned a similar agreement with Bank Negara Malaysia and Bank of Thailand. These agreements are part of the plan to integrate banking economics of ASEAN nations under the ASEAN Economic Community “AEC”. Under the AEC, Indonesia, Malaysia, the Philippines, Singapore and Thailand will need to sign bilateral agreements by 2018.

Under the ABIF, banks can expect greater access and flexibility in each of the qualifying ASEAN markets. Bilateral and reciprocal arrangements are seen as the faster way to achieve integration relative to multilateral agreements.

The ABIF has been regarding as a crucial framework contributing to the region’s economic growth and financial inclusion, especially in developing markets in Indonesia, Philippines and certain regions in Malaysia, and Thailand.

An integrated banking market will promote stronger competition. ASEAN’s leading banks can compete directly in emerging markets, leading to improvements in quality of financial services in ASEAN.

A united ASEAN banking sector will promote growth within local markets. Under these conditions, a leading bank could potentially offer banking capabilities to even informal individuals by partnering local fintech firms.  Quicker improvements in the banking sector with ASEAN benefit the masses, leading to stronger economic performance.

In recent months, the Philippine central bank shared that at least eight Asian banks are already exploring setting up shop in the Philippines. The future of the banking sector in the Philippines is positive. This is not only because of the ABIF, but also because The Philippines has timed these agreements with her own tax amnesty programme. Unlike Indonesia, where tax evaders had offshore assets, Philippines face the issue of taxpayers not paying taxes as prescribed by the law. The government is planning to implement the scheme through an executive order from the President.

Banking sector insights

ASEAN 5 banking loan assets (2012-2016, US$ billion)









ASEAN 5 banking NPL (2012-2016, %)