HANOI, Jan. 23 — Leaders and policy-makers of the 10- nation Association of Southeast Asian Nations (ASEAN) are looking to integrate the member-countries’ trade, finance and related institutions into what is dubbed a “borderless ASEAN capital market”.
However, Nguyen Huy Hoang, deputy director general of the Institute for Southeast Asian Studies of the Vietnam Academy of Social Sciences, said that while there are concerted efforts of ASEAN member countries to realize the target of integrating capital markets, “it is not easy at all to put it into full operation.”
In a recent interview with Xinhua, Hoang said that establishing the ASEAN Exchanges is one of the measures that would lead into building the ASEAN Community in 2015.
Among the three development pillars of the ASEAN Community, namely politics, economy, and socio-culture, it is in the economic pillar that efforts are concentrated. The overarching goal of the regional grouping is to build ASEAN into a unified manufacturing market, where the commodity, capital and human resources can be mobilized freely among the member countries.
In January 2012, the CEOs of the ASEAN Exchanges announced the schedule to introduce the “Invest ASEAN 2013″ Index that comprises stock markets of seven out of ten ASEAN member countries ( excluding Laos, Myanmar and Cambodia) in order to facilitate the process of ASEAN capital markets integration.
“The ASEAN Exchanges are expected to benefit the member countries because it will be easier for businesses to interact with other markets through the status of a region, which is obviously higher than that of a single country,” Hoang said, adding that the exchanges will also create favorable conditions for investors to collect information, transfer orders between markets faster and avoid complicated procedures.
The ASEAN Exchanges will also provide investors with exclusive access to the public listed companies of ASEAN, a better market outlook, and an opportunity for market analysts to participate in panel discussions about the market and stock selection.
“In addition, the bourse will create chances for less developed ASEAN member countries to learn experience from working with foreign investors and increase competitive capacity,” Hoang said.
Seen as one of ASEAN’s measures to boost foreign investments with great potentials, however, the project still faces numerous difficulties ahead before becoming true, according to many analysts and experts, including Hoang, citing four major reasons.
First, current operations of stock bourses in the ASEAN member countries have not yet been efficient with low liquidity.
Secondly, impacts from global economic slowdown have recently affected the flows of foreign investments into the ASEAN market.
Thirdly, foreign investors are still not interested much in the ASEAN Exchanges and there are still no activities to promote the inflow of foreign investments into the market.
And finally, the differences in managing and listing standards, and legal and tariff systems also somehow obstructed the process of ASEAN capital markets integration.
Furthermore, the recent economic instability is also a challenge to the capital markets integration process.
According to Hoang, it will take a few more years for the ASEAN countries to put the ASEAN Exchanges into full operation and to realize the community’s target of capital markets integration.
First established in 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand, ASEAN’s membership has expanded to ten, with Brunei, Cambodia, Laos, Myanmar and Vietnam added to the list.
With a combined population of about 600 million, the ASEAN member countries have adopted suitable policies to cushion the impact of global economic downturn. It was able to maintain a relatively high growth of 5.2 percent in 2012 from 4.7 percent in 2011, and is expected to have 5.3-5.5 percent growth in 2013.
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