He singles out Jakarta’s mixed messages as key obstacle
ONE of the region’s largest banks has complained about the slow progress in South-east Asia’s planned economic integration and singled out mixed messages from Indonesia as a key obstacle to the Asean Economic Community (AEC) to be launched at the end of the year.
CIMB chief Nazir Razak – whose brother is Prime Minister Najib Razak of Malaysia, which chairs Asean – called on the bloc of 10 diverse nations to be realistic and accept that economic integration will result in “winners and losers” among its 625 million people.
“We are so far from there (the AEC). The idea that we are 90 per cent there feels so far from reality,” the chairman of South-east Asia’s fifth-largest bank said yesterday at an investment forum in Kuala Lumpur, just two days before an Asean summit will be held here.
He was responding to a presentation by Malaysian Trade Minister Mustapa Mohamad, who said members of the grouping – which has a collective economy worth US$2.5 trillion (S$3.4 trillion) – had completed 90.5 per cent of measures under the AEC, especially removal of trade barriers.
But pointing to problems with outsourcing and banking infrastructure, Datuk Seri Nazir said protectionism in finance went “against the logic of integration”.
“There will always be winners and losers. Be realistic that those who lose will make a lot of noise. I’m not sure if political leaders are prepared for that noise and potential pushback… what happens to AEC?” he said.
“Get Indonesia to state very clearly that it is pro-Asean. Asean is nothing without Indonesia,” he added, referring to Indonesia’s statements that its interests must prevail, as a wave of nationalism has hit the bloc’s largest member in recent years.
While many Asean states are looking to slowly liberalise their finance sectors, Indonesian lawmakers are set to pass a long-delayed Bill this year to cap foreign ownership of banks at 40 per cent, a move that would force several foreign banks to give up control of local lenders.
CIMB is the majority owner of Indonesia’s fifth-largest bank, CIMB Niaga.
Critics say Asean’s ability to shape regional policy has been hindered by the lack of clout given to its organs, such as its secretariat – a situation that has raised questions about the grouping’s willingness to put common interests ahead of domestic concerns.
Speaking on the same panel, Asean deputy secretary-general Lim Hong Hin lamented that his staff of 45 had to organise 700 meetings a year on a budget of US$70 million, leaving them with little resources to work on policy and outreach.
Datuk Seri Mustapa admitted that there were “issues of sovereignty”, but explained that the AEC was meant to offer a “freer” market rather than a completely open economy. He pointed out that many Malaysian companies, such as CIMB, have been able to grow their regional businesses.