Philippine banks can compete under ASEAN

integrated market in 2015

by Bernie Magkilat
January 23, 2014
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Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said Philippine banks can compete under a fully
integrated ASEAN economy by 2015, but stressed the need for local banks to scale up.

Tetangco expressed his confidence on the local banks competitiveness in the region when the seamless ASEAN
Economic Community (AEC) kicks off starting 2015 during the dinner Wednesday with business editors from the print
media.

ASEAN, which groups the Philippines, Indonesia, Thailand, Malaysia, Singapore, Cambodia, Myanmar, Laos, Brunei
Darussalam and Vietnam, are gearing toward a single market by 2015 to facilitate trade and investments.

We can compete, said Tetangco when asked to comment on some apprehensions by the local banking community
of their competitiveness come 2015.

He, however, said that local banks must scale up their size and expand their reach as they are relatively small
compared with other banks in the region, but in terms of competitiveness in their financial services the local banks are
competitive enough.

Tetangco further said that ASEAN countries have reciprocity clause on a bilateral basis allaying fears that the local
banking industry may be gobbled up by bigger ASEAN banks.

The countrys financial services sector is just among the Philippine industries that are faced with competitiveness
issues when AEC kicks off two years from now.

Nestor Tan, President of the countrys largest bank BDO Unibank, Inc., admitted that Philippine banks are not yet
ready for full ASEAN economic integration by 2015.

We saw the advantages of economic integration that is the way. ASEAN integration is irreversible, but for banks we
are not yet there, Tan said. According to Tan, BDO, the countrys largest commercial bank, is just number 19 among
ASEAN banks. In fact, the top three Philippine banks have just the size of Bangkok bank.

For BDO, we may be big here, but if you open it up we are nobody, he added.

Thus, while the banking sector is looking at its place in the AEC by 2015, it is also looking at initiatives analyzing the
macro and micro factors that would be affected with the liberalization of the banking industry.

The strategy, he said, has to address the issues of volatility, financial impact and jobs creation.

I dont think our industries are prepared if we open up our markets for the Asean single market by 2015, said Tan in
last years forum on AEC in Makati.
He said even the countrys commercial banks face constitutional constraints of implementing the mutual-recognition
clause of the AEC goal to hire Asean nationals in the Philippine industries. Under the Philippine Constitution, banks
are not allowed to hire foreign nationals.

He said the government should establish protective-policy mechanisms on key areas for the Philippines that include
food; financial services, including commercial banks and rural banks that fuel the economy; and the labor market with
focus on the business-process outsourcing industry.

Read more at http://www.mb.com.ph/philippine-banks-can-compete-under-asean-integrated-market-in-

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