On October 2, 2020, at the International Conference Center, the 6th ASEAN Finance Ministers’ and Central Bank Governors Meeting (AFMGM) was held virtually under the co-chairmanship of Governor Le Minh Hung of the State Bank of Vietnam (SBV) and Minister Dinh Tien Dzung of the Ministry of Finance (MOF). This was the most important meeting in a series of ASEAN financial-banking cooperation events hosted by Vietnam in ASEAN 2020.
Attending the meeting, in addition to the Central Bank Governors and Finance Ministers of ASEAN member countries, there was also the ASEAN Secretary-General, the President of the Asian Development Bank (ADB), the Regional Director of the International Monetary Fund (IMF), the Director of the ASEAN+3 Macroeconomic Research Office (AMRO)
At the Meeting, the ASEAN Central Bank Governors and Finance Ministers together with leaders of the international financial institutions talked about the global and regional macroeconomic situations and the Covid-19 pandemic responses, as well as measures to support the post-pandemic economic recovery. In addition, the Governors and Ministers also considered implementing the cooperation initiatives within the framework of the ASEAN Finance and Banking Cooperation Process.
The global and regional economic outlook
Discussing about the global and regional economic outlook, the ASEAN Central Bank Governors and Finance Ministers together with leaders of the international financial institutions exchanged views on the risks and challenges posed by the Covid-19 pandemic to the global and regional economy. The Delegates also shared about the policy solutions that the regional economies have implemented in the recent time to mitigate the impacts of the pandemic and to support the economic recovery, including fiscal, monetary and credit solutions of the Central Banks and Finance Ministries.
According to the Governors and the Finance Ministers, the Covid-19 pandemic has made numerous negative impacts on the economies and the financial stability within ASEAN. The economic activities have shrunk significantly and the ASEAN’s growth in 2020 has slowed down. The Delegates agreed that the disease situation could become more complicated, and would be the biggest risk for the recovery of the regional economy in 2021.
SBV Governor Le Minh Hung speaks at the Meeting
According to the ADB’s forecast, most of ASEAN countries are expected to have negative growths, from -1% to - 8%, in 2020; except for 3 countries with low positive growths, from 1.4% to 1.8%, including Vietnam. Nonetheless, there have appeared some optimistic signals when the international organizations all believed that positive growths would return to ASEAN in 2021, ranging from 3% to 6.5%, in which, Vietnam is forecast by the ADB to grow at 6.3% in 2021. The Governors and Ministers once again reaffirmed their commitments to continuing to ensure the stability of the regional financial and banking systems in order to support the economic recovery.
Sharing the same view with the ASEAN Central Bank Governors and Finance Ministers, the international organizations believed that the ASEAN finance - monetary and banking regulators should continue with the cautious approach when formulating and making fiscal and monetary policies in order to both support the business and economies to recover to a normal state, while still ensuring the safety of the domestic financial and banking systems.
In the context of many changes in the regional and world economy due to the impacts of Covid-19, the Delegates agreed on the necessity to accelerate the IT application, digital transformation, etc. in the banking and financial services. This is considered an important factor that will contribute towards the development of an ASEAN comprehensive and sustainable economy, which is resilient to future shocks similar to Covid-19. The Delegates further agreed that regional financial cooperation is one of the key factors helping countries enhance their capabilities to cope with the impacts of economic uncertainties in the coming time, while still be able to support economic recovery in an inclusive and sustainable manner.
Finance Cooperation Initiatives within ASEAN
The Central Bank Governors and Finance Ministers noted the progress of the Working Groups. With regard to the capital market development, the Delegates noted and adopted the "Report on Promoting Sustainable Finance in ASEAN" with a lot of valuable recommendations for the member countries. Regarding Financial Services Liberalisation (FSL), the Delegates acknowledged the negotiation results of the Working Committee on Financial Services Liberalization, especially the 9th Financial Services Commitment Package under the ASEAN Framework Agreement on Services (AFAS), and encouraged the member countries to make more significant and meaningful commitments on financial services, since this would be the last package of commitments before moving to the ASEAN Trade in Services Agreement (ATISA). Regarding the ASEAN Insurance Forum, the Delegates adopted a draft amendment to the Roadmap for the ASEAN Insurance Integration Framework (AIIF).
The Delegates attending the virtual Meeting at different broadcast points (screenshot)
Banking Cooperation Initiatives within ASEAN
The Delegates appreciated the cooperation results of the Working Groups in the banking sector when most of the work targets set forth from the beginning of 2020 have been achieved, in which, the most outstanding was the priority cooperation initiative of the economic pillar of ASEAN 2020 on promoting ASEAN payment connectivity. The Central Bank Governors adopted the results of several cooperation initiatives, i.e.: (i) Report on the Role of ASEAN Central Banks in Climate and Environmental Risk Management; (ii) Communiqué on the ASEAN Sustainable Banking Agenda; (iii) Initiative on an ASEAN Code of Conduct for Sustainable Banking; (iv) Cybersecurity Risk Information Sharing Programme (CRISP) Initiative. In particular, the initiative on an ASEAN Code of Conduct for Sustainable Banking was proposed by Vietnam, aiming to build sustainable common principles for the operations of ASEAN regional banks.
Overview of the Meeting
Also at this year’s Meeting, the Central Bank Governors and Finance Minister had a dialogue with the ASEAN Business Advisory Council, the EU-ASEAN Business Council, and the US-ASEAN Business Council on the topics of digital payments, financial inclusion and sustainable infrastructure. These topics are important conditions for the next period of cooperation after 2020 - the mid-term review year of the ASEAN Economic Community Blueprint 2025.
With high consensus, the 6th ASEAN Central Bank Governors and Finance Ministers adopted the Joint Statement of the 6th AFMGM. The Delegates all agreed that the 6th AFMGM under the chair of Vietnam had been successfully organized. The ASEAN Members expressed high appreciation for the organization and the leadership of Vietnam in ASEAN 2020, and hoped that the 7th AFMGM in 2021 would also be successfully organized under the chair of Brunei Darussalam.
VA