MACTAN ISLAND-- Integration has proven its importance in ensuring that countries belonging to an economic block benefit from all opportunities present to the group and that risks are addressed through a common measure.
This idea remains the binding force of the Association of Southeast Asian Nations (ASEAN) amid realities such as the exit of Britain from the European Union (EU) after a 43-year membership.
Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said the need to advance ASEAN's regional ties is greater now given the impact of negative developments in advance economies, with protectionist policies rising further.
I think with all of these negative external developments now, it is even more important for the region to strengthen its integration efforts, he told PNA in an interview at the sidelines of the five-day 12th ASEAN finance and central bank governors meetings here, which ends Friday.
The central bank chief pointed out that issues being faced by the European Union (EU) now should not be a basis for concern in the ASEAN because there are differences between the way integration in Europe was pursued and how integration in ASEAN is being pursued.
He explained that ASEAN's approach is through inter-governmental cooperation, which is based on consultation and consensus, while EU's was based on legal provisions.
He said ASEAN regionalism has been characterized by a low-level of institutionalization unlike in EU, which has its own parliament.
ASEAN has its own Charter, which came into force in December 2008. It provides a legal status and institutional structure for the regional block and sets norms, rules and values.
Tetangco said through the Charter and the ASEAN economic community (AEC) the region is now trying to transform itself into a more rules-based organization with more effective institutions.
But still not at the same level of institutions as what was done in the European Union, he said.
Aside from low-level of institutionalization, ASEAN is also focused on diplomacy and informal mechanisms, he said.
Tetangco cited the ASEAN banking integration framework (ABIF), which allows Qualified ASEAN banks (QABs), or the bigger players in a country, to expand operations in other regional jurisdictions.
He said ABIF leans on the principle of readiness and reciprocity, wherein players are encouraged to join the integration when they are ready and to provide similar privileges given to them.
He said ASEAN members have different levels of development and regulatory frameworks and their readiness to adopt and implement policy reforms also varies.
So, the principle is you implement the reforms when you're readyWe've like to recognize the stage of development of each individual members, he said.
The diversity of the different members is recognized and the members are encouraged to adopt the standards as soon as they can, he said.
The BSP chief said regional integration benefits those with expanded markets as this eliminates trade barriers and allows greater mobility of workers.
The result of this is for the economic welfare to increaseallowing resources to be re-allocated to the country's comparative advantage, he said.
Risks of contagion, among others, remain but Tetangco said the benefits outweigh those risks since safety nets have been put in place.
These safeguards include the dialogues among member-countries that allow comprehensive discussions on latest developments, how these impact on the economies, and the possible solutions.
Because we live in an inter-connected world the challenges or pressures faced by one member are most likely the same as the challenges faced by the other members. So there is a great benefit to exchange information, to share experiences and to also exchange what potential policy measures can be undertaken, he said.
On the issue of protectionism, which Tetangco said is called by others as retreat from multilateralism, this remains mainly rhetoric.
So far, no specifics have been given. So far, what we have heard are desired directions so it is hard to say at this point in time (about its impact on ASEAN economies), he added.
Source: Philippines News Agency