T

he Financial Services Authority (OJK) is turning to domestic lenders for their input on the all-important banking integration framework, which is set to be implemented in Southeast Asia in 2020.

The OJK held a discussion on Friday, during which lenders put forward their recommendations.

Among the lenders attending the discussion were Bank Rakyat Indonesia (BRI), Bank Central Asia (BCA), Bank Tabungan Negara (BTN), Bank Mandiri and Bank Mega.

The framework '€” dubbed the ASEAN Banking Integration Framework (ABIF) '€” is expected to provide a level playing field to lenders in all 10 ASEAN member countries, namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand, the Philippines and Vietnam.

BCA president director Jahja Setiaatmadja said some of the recommendations highlighted the need to tighten domestic banking regulations to limit expansions by foreign lenders.

'€œThe principle of reciprocity was also discussed during the deliberation,'€ he said.

Indonesia'€™s banking system has for a long time been regarded as one of the most liberal in the world, attracting numerous foreign lenders into the country.

This has caused some jitters among domestic banks over the years, due primarily to obstacles they claim they face when trying to expand overseas, such as in Singapore and Malaysia.

According to OJK chairman Muliaman D. Hadad, the financial super body will discuss all the input at the next meeting with its counterparts, in the hope of finalizing talks on the framework and polishing the categories of the so-called Qualified ASEAN Bank (QAB) very soon.

By having QAB status, it is expected a lender will be able to expand overseas more easily and be treated on equal terms as a domestic bank in the destination country.

'€œWe hope that four or five domestic banks will acquire QAB status, not only state-owned lenders, but also private ones,'€ Muliaman said.

However, bankers have questioned the effectiveness of QAB, as the '€œfate'€ of their planned expansions would still be decided by bilateral talks among regulators.

'€œWe have to be clear about it. Why should we have bilateral talks if banks have already acquired QAB status?'€ Mandiri'€™s finance and strategy director, Pahala N. Mansury, said.

At the moment, the OJK is on its way to wrapping up bilateral agreements with Malaysia, the Philippines and Singapore.

BTN president director Maryono, who goes by one name only, said the OJK would send a list of questions to banks to gain an insight into the expansionary interests in certain countries.

It would then carry out negotiations with its counterparts based on the data, he said.

Meanwhile, according to the Asian Development Bank (ADB), the ASEAN 5 '€” Indonesia, Malaysia, Singapore, Thailand and the Philippines as the original members of the association '€” have taken steps to open up their banking industries.

However, cross-border banking and cross-border penetration of ASEAN-based banks within the region has been slow.

'€œIn 2010, not a single ASEAN-based commercial bank had either a branch or a subsidiary in any ASEAN member state,'€ the ADB wrote in its 2013 report, The Road to ASEAN Financial Integration.

At present, Malaysia'€™s CIMB Group is listed as the ASEAN-based bank with the widest coverage in the region, with an established presence in nine out of the 10 ASEAN countries.