ASEAN Regulatory Brief: Thai Interest Rates, Myanmar’s Anti-Money Laundering Measures, and New Links for the Philippines’ Stock Exchange
In this ASEAN Regulatory Brief, we look at some of the important regulatory changes taking place recently in Thailand, Myanmar, and the Philippines.
The Bank of Thailand believes rates are low enough
The Bank of Thailand has unanimously decided in the third quarter to keep its interest rates at 1.5%. On a statement from September 25, the central bank said the steady rates would preserve financial market stability and not pose additional risks or volatility to the economy.
By keeping a low rate the central bank is signalling that it wants government spending to take the lead in reviving the lagging economy. Thailand has been affected by China’s slowdown and lower-than-expected private consumption and investment.
Many economists believe the central bank is not likely to cut rates until at least the end of the year. According to Rahul Bajoria, an economist at Barclays, a global bank, weak growth and low inflation will keep rates low for an extended period. Furthermore, a weaker baht has provided some comfort for the economy by ensuring the currency remains competitive relative to regional markets.
Myanmar’s Central Bank issues anti-money laundering guidelines
On September 29 the Central Bank of Myanmar made public on its website new regulatory guidelines for financial institutions. The new guidelines regarding money laundering aim to make the country more attractive for foreign investment.
The changes brought by the new rules include the creation of new corporate governance standards and require banks to put in place comprehensive risk management processes.
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Enforcement and compliance mechanisms have not been set in place, something that has drawn criticism since the draft was first circulated earlier this year. However, the move has been seen as encouraging development in increasing financial transparency in the slowly opening economy.
The Philippines seeks to join ASEAN stock exchange platform
Philippines Stock Exchange CEO Hans Sicat announced last week the aim to join a cross-border in Southeast Asia. The move can take place as early as next year and is seen as a way to energize the region’s market.
The ASEAN Trading Link was launched in 2012 with the participation of Indonesia, Malaysia and Thailand. It was designed to allow investors to use the bourse in their home country to trade in stocks listed in other participating ASEAN member states.
Before joining the Philippines would need to clear some hurdles, such as putting trading infrastructure in place. Additionally, it would need to work with the Securities and Exchange Commission to allow investors to buy stocks abroad through brokerages in the Philippines, something is not currently allowed. Nevertheless, the move highlights the increasing regional financial links in the run-up to the establishment of the ASEAN Economic Community (AEC).
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