Thailand Development Research Institute president Chalongphob Sussangkarn said central banks in Asean should have similar monetary policies, especially in terms of maintaining the range of inflation, which would help reduce the gap between countries and bring them closer.
“Non-standardised exchange rate will make cross-border business more expensive because when you export your products, the exchange rate changes (from one country to another). So you are not sure how much money in the local currency that you’re going to get,” he told Bernama.
Asked whether such an effort has been made by Asean central banks, the former Thai Finance Minister said there was no specific measure created to address the matter but based on the pattern of currency movement, the central banks were implicitly looking at each other.
“Except for when a country goes into an unusual situation, that particular currency will depart from other currency, but in normal times they tend to move together.
“However, more recently, when the United States revised its interest rate, the responses from (Asean) countries were not the same.
“And so, you have pressures from external changes that impact the coordination and movement of our exchange rates.
“However, some research have shown that countries having similar inflation target would implicitly minimise volatility in exchange rate, as the latter is among the factors affecting inflation, especially for an open economy,” he said.
On how integration among Asean central banks could cushion the external pressure, he said that Asean, which was set to be the world’s fourth largest economy by 2030 after the US, European Union and China, would be able to reduce the external pressure if the member states were to respond in a similar way.
“Not exactly the same but similar. External pressure will be there but we reduce the impact,” he said, cautioning the countries to be aware of pressures coming from outside like the US interest rate increase.
Chalongphob said another area that should be looked into to create an Asean economic bloc was common standards in areas such as finance and environment.
“For example, in the case of environmental standards, should they be different? Then (polluters can) just move to the country that allows them (to operate). This is not what we want - a dirty industry. In the long term, we need to standardise these,” he said.
Similarly, for banking standards, he said, more countries in Asean wanted an open banking system.
“But for countries, which are less developed, if you open too quickly, then domestic banks will be wiped out. So, it is about moving in a compromised way,” he said.
Chalongphob said Cambodia, Laos, Myanmar and Vietnam were moving ahead the rest of its Asean peers, particularly Thailand, as more investments poured into Vietnam and other countries offering low wages.
“That is the price you pay for integration. Integration means the bloc as a group will be more powerful; it promotes faster growth as a group but it means you have redistribution of growth within the group and that is essential.
“Otherwise, a poor country stands behind or you can see sort of negative impact such as illegal migrants and so on which we have already seen in many countries,” he said.
On a separate update, the Asean Single Window (ASW), established to facilitate trade for the Asean Economic Community, has already been capitalised by Indonesia, Malaysia, Singapore and Thailand.
According to the ASW website, Brunei and Vietnam are expected to join the ASW by mid-2017 whereas other Asean member states were at different stages of preparation and would join thereafter when ready.
The ASW is a regional initiative connecting and integrating the National Single Window of Asean member states, with the objective of expediting cargo clearance and promoting Asean economic integration by enabling the electronic exchange of border documents among them. - Bernama