The ASEAN Economic Community 2025 "Forging Ahead Together" (AEC Blueprint 2025) was signed and approved by the leaders of the 10 ASEAN member countries at the 2015 ASEAN Summit, aiming towards a peaceful, rules-based, people-oriented, people-centered ASEAN Community of shared values and norms. The ASEAN Economic Community (AEC) is one of three key pillars of the ASEAN Community to create a unified market and production base for the ASEAN member countries, promoting free flows of goods, services, investment, and skilled labor in ASEAN.
ASEAN Economic Community 2025 (AEC Blueprint 2025)
Vision of the ASEAN Economic Community 2025
After nearly 10 years implementing the AEC 2025, ASEAN has made impressive achievements. The total nominal GDP of the 10 ASEAN countries reached USD 3.6 trillion in 2022, more than doubled the total GDP of USD 1.6 trillion in 2009.
The regional economic growth, which is considered a bright spot in the global economic picture, was recorded at 5.5% in 2022, averaging 4.4% p.a. in the period of 2010-2022. ASEAN is expected to become one of the world's four largest economies by 2050.
Financial integration within the framework of AEC 2025
Finance and banking are always identified as one of the important elements in the AEC. The ASEAN member countries have committed to a partial liberalization of the restrictions in the banking, insurance, and capital markets by 2015, and continuing to further liberalize them by 2020. To achieve these goals, the AEC Blueprint 2025 focuses on 3 pillars: (i) Financial integration; (ii) Financial inclusion; and (iii) Financial stability.
Deputy Governor Pham Quang Dzung attends the 27th ASEAN Senior Level Committee on Financial Integration Meeting in the Lao P.D.R. in March, 2024
To realize the Plan of AEC 2025, a Strategic Action Plan (SAP) has been developed with specific goals and actions for each ASEAN Working Committee, including the following main elements: ( i) Policy actions; (ii) Quantitative goals; and (iii) Important timelines. In addition, the ASEAN Working Committees have also developed a set of Key Performance Indicators (KPIs) as a basis for measuring the level of accomplishment of the AEC 2025 Plan.
Achievements of the ASEAN banking integration
The results of cooperation within the framework of the ASEAN financial and banking integration have made important contributions to achieving the goals of financial and banking integration of the ASEAN region for the realization of the AEC Blueprint 2025. The most remarkable result is the finalization of the development of the KPIs on financial and banking integration in the ASEAN region, including further liberalization of the capital flows in support of the increasingly vibrant trade and investment activities.
Looking back on the journey since the AEC 2025 was approved, the banking sector has achieved important milestones in the regional financial integration through the activities of the ASEAN Working Committees. The Working Committees have proactively developed and implemented various initiatives related to the central banking operations, ensuring the most benefits and effectiveness from the cooperative initiatives, thereby making a significant contribution to the ASEAN regional integration process in the banking sector.
Governor Nguyen Thi Hong attends the 5th ASEAN Finance Ministers’ and Central Bank Governors’ Meeting in Chiang Rai, Thailand, in April, 2019
Deputy Governor Pham Tien Dzung attends the ASEAN Central Bank Governors' Meeting and the Joint Meeting of the ASEAN Finance Ministers and Central Bank Governors (AFMGM) in Bali, Indonesia, in March, 2023
Deputy Governor Pham Thanh Ha attends the ASEAN Central Bank Governors' Meeting and the Joint Meeting of the ASEAN Finance Ministers and Central Bank Governors in Jakarta, Indonesia in August, 2023
Working Committee on ASEAN Banking Integration Framework (ABIF): The goal of the ABIF is to promote and enhance the connectivity, and encourage the banking integration among the countries in the ASEAN region, thereby increasing trade and investment, supporting each other for mutual development, as well as coping with the increasingly complicated economic developments in the region and around the world. The Working Committee has actively promoted the cooperative initiatives to promptly achieve the goals set for 2025, such as the application of the international accounting standards (IFRS 9) and the system safety standards (Basel 3) among the countries; discussed on and formulated a cooperation mechanism to handle with crises among the ASEAN monetary authorities, ensuring the operational safety of the regional banking systems.
Working Committee on Capital Account Liberalization (CAL): With its active operations, the CAL Committee has achieved remarkable results in the capital account liberalization process: most of the ASEAN member countries have achieved capital account liberization levels of 80-100%; successfully built a regular reporting mechanism on the current status and the capital account liberalization plans; frequently organized the policy dialogues and information exchanges on capital flow data and capital flow management measures among the member countries; improved the frameworks to promote transactions in the local currencies in the region; recommended a lot of initiatives to promote sustainable finance in the capital account liberalization roadmap; developed and implemented programs to strengthen the capital flow management capacity of the ASEAN central banks.
Working Committee on Financial Inclusion (FINC): Many initiatives and activities have been implemented to promote financial inclusion in the ASEAN region by improving the financial inclusion infrastructure and building/implementing the national financial inclusion strategies aimed at reducing the proportion of people without access to finance, increasing the readiness of the financial inclusion infrastructure eco-systems, and enhancing the access and the quality of financial services to all social segments, enhancing the financial education and the consumer protection.
Working Committee on Financial Service Liberalization (FSL): With the goal of negotiating for market access for the ASEAN financial service sector, further liberalizing the financial service flows within the ASEAN Framework Agreement on Services (AFAS), since its establishment, the Committee has improved further the level of market access guarantees and the national treatment commitments to the trade in services with the enhanced commitment packages under AFAS. In addition, the Working Committee has upgraded the negotiations on the ASEAN-Australia-New Zealand Free Trade Agreement, and is currently in the process of negotiating to upgrade the ASEAN-Canada Free Trade Agreement, and the ASEAN-China Free Trade Agreement.
Working Committee on Payment and Settlement Systems (WC-PSS): In order to realize the AEC 2025 goals, the WC-PSS has put efforts into connecting the policymakers in the field of ASEAN payments to build/improve many common documents on regional payments, thereby formulating or selecting common principles and standards on cross-border payments in the region, as well as promoting the ASEAN payments. There have been a lot of encouraging results of the Committee, including the development of the ASEAN Payment Policy Framework (APPF), the Implementation Policy Guidelines for the ASEAN Payments (IPG), Guidelines for establishing the cross-border real-time retail payment system (RT-RPS), etc.
Sustainable Finance Task Force: Established in 2021 with the goal of promoting the ASEAN sustainable banking agenda, over the past time, many sustainable finance initiatives have been implemented, such as: (i) Development of the ASEAN Sustainable Banking Principles, which include guiding principles for the central banks to refer to in the process of developing sustainable banking principles for each country; (ii) Development of an ASEAN Green Map as a comprehensive guiding document for all regulatory agencies in the ASEAN finance and banking sector on actions and steps that need to be taken in order to achieve the sustainable finance goals in the region; and (iii) Participation in building the ASEAN Taxonomy.
SBV’s contributions to the ASEAN banking integration process
The SBV has always played a proactive and leading role in the ASEAN banking cooperation process through assuming the important roles/positions in the cooperation processes, and actively coordinating with the members to build and implement the initiatives related to the central banking operations, with the highest sense of responsibility, contributing to realizing the AEC 2025 vision. The SBV’s outstanding milestones in the ASEAN region's financial and monetary cooperation process include:
Assumption of the role of the Chair of ASEAN 2020: within the framework of the ASEAN Chairmanship year 2020, the SBV, together with the Ministry of Finance, played a leading role in the ASEAN financial and monetary cooperation process. The SBV had launched two cooperation initiatives among the ASEAN central banks, i.e.: (i) Promoting the regional payment connectivity; and (ii) Sustainable Banking Principles Initiative. These two initiatives aimed to contribute to modernizing and improving the efficiency of the payment systems in the region and building the principles for the ASEAN commercial banks with the goal of sustainable development, not only for the regional banking sector in general, but also for the ASEAN economies in particular.
Assumption of the role of the Co-Chair of the ASEAN Working Committees: Since the approval of the AEC 2025, the SBV has assumed the role of a Co-Chair of most of the ASEAN Working Committees, thereby affirming the SBV’s responsibility for the regional cooperation, and also demonstrating the SBV’s leading role in promoting the priority cooperation processes within the ASEAN framework. As a Co-Chair, the SBV has actively coordinated with the members to propose and effectively implement multiple initiatives in the ASEAN financial and banking cooperation process on the basis of closely following the goals set in the AEC 2025, contributing to realizing the AEC 2025 vision. In addition, the SBV has promoted the regional policy exchanges in the banking sector.
Promotion of the signing/accession to regional cooperation instruments: In order to promote the cross-border payments, in 2023, the SBV proactively coordinated with the ASEAN5 central banks to improve the procedures and officially became the 6th member of the Multilateral Memorandum of Understanding on the regional payment connection cooperation. Within the framework of the 10th ASEAN Central Bank Governors’ and Finance Ministers’ Meeting (AFMGM) in Jakarta, Indonesia, on August 25, 2023, Deputy Governor Pham Thanh Ha signed a Memorandum of Understanding (MOU) with the ASEAN5 central banks. The MOU sets out the plans, roadmaps and specific activities to promote the cross-border payment connections in the region, in accordance with the directions of the ASEAN Central Bank Governors on promoting the cross-border payment connections.
Deputy Governor Pham Thanh Ha signs the Memorandum of Understanding on Cooperation in Regional Payment Connectivity with the ASEAN5 central banks on the sidelines of the ASEAN Central Bank Governors' Meeting in Indonesia in August, 2023
Promoting the upgradation of the ASEAN Swap Agreement (ASA): This is a form of backup lending to support one another among the ASEAN members when facing difficulties in the balance of payments through the method of using the local currencies by the swap requester to carry out transactions for the USD, EURO or JPY. Realizing the need to upgrade the ASA in the context that the sizes of the ASEAN member countries’ economies have changed significantly since the Agreement was signed, over the past time, the SBV has actively coordinated with the member countries to discuss about the amendments and an upgradation of the ASA to increase the scope and the readiness of the Agreement.
At the 27th ASEAN Senior Level Committee on Financial Integration Meeting (SLC) on March 7, 2024, Deputy Governor Pham Quang Dzung, on behalf of the SBV, assumed the role of Co-Chair of the SLC for the 2024-2026 period. This is the first time the SBV has assumed the role of a co-chair of the SLC, indicating the SBV’s responsibility toward the ASEAN members, while contributing to improving the position and reputation of Vietnam in general, and the SBV in particular in the process of the finance and banking integration in the region, in accordance with the Party’s and the Government's policy on multilateral foreign relations in the banking sector. This is also an opportunity for the SBV to strengthen the cooperation with the important partners. As the next Co-Chair of the SLC, the SBV would coordinate with the member countries to review/evaluate the implementation results of the AEC 2025 and formulate the visions and goals of the AEC in the 2025-2030 period, in the new context, with new requirements and new key tasks, in accordance with the ASEAN Community Vision 2045.
It is expected that the ASEAN Central Bank Governors and Deputy Governors would attend a series of regional summits on finance and banking in Luang Prabang, the Lao P.D.R., during April 2-5, 2024 to continue the discussions and provide orientations for the regional banking and financial integration process.
Le Hang