FPO presents hearing on AFAS protocol
The Fiscal Policy Office (FPO) is launching a public hearing on protocol to implement the eighth package of commitments on financial services under the Asean Framework Agreement on Services (AFAS), which will allow the Bank of Thailand to push toward the long-awaited establishment of the Qualified Asean Bank (QAB) with Bank Negara Malaysia.
The commitment on QAB will pave the way for Asean commercial banks to operate in other countries in the region with more flexibility, said a source at the Finance Ministry who requested anonymity.
The Bank of Thailand signed its first heads of agreement on a reciprocal bilateral arrangement regarding QAB with Bank Negara Malaysia on March 14, 2016.
The bilateral arrangement is part of an umbrella agreement for the 10-member bloc called the Asean Banking Integration Framework (ABIF), which provides greater access for indigenous Asean banks to other members' banking sectors, offering them similar treatment as local banks in those countries.
The annex to the protocol also abolishes a requirement that at least 50% of asset management companies' paid-up capital must be held by financial institutions registered under Thai laws for five years, paving the way for foreign investors in Asean to invest up to 100% in local mutual fund companies, said the source.
Lifting the requirement on shareholding for mutual fund companies is allowed under current Thai law, meaning no amendments are needed, the source said.
Thailand has allowed foreign investors to invest in local mutual fund firms since 2012.
The Finance Ministry's think tank is taking soundings from state agencies and the public sector on their opinion of the protocol and its potential impacts to have measures in place to alleviate negative outcomes.
Interested parties can send their comments to the FPO by Sept 19.
The eighth package of commitments on financial services under AFAS is aimed at enhancing cooperation and eliminating restrictions in financial services among Asean nations, as well as offering most favoured nation treatment to countries in the region in compliance with ABIF.
The protocol and the eighth package of commitments are the major tool to encourage deeper and broader economic integration of the Asean Economic Community as members reduce restrictions to facilitate financial institutions.