Readiness of ASEAN Banking Sector Integration : Recent Development and Statistical Evidence

ASEAN has a vision to form a single community by 2020. Thus, ASEAN integration has been a topic of great interest but unfortunately, attentions has been over-focused on economics aspect. This paper aims to study the specific aspect of ASEAN banking sector integration within three objectives. Firstly, this paper aims to compare the ASEAN countries' respective commitments to its own members through ASEAN Framework Agreement on Services (AFAS) against their commitments to the world under General Agreement on Trade in Services (GATS). Secondly, this paper aims to evaluate the readiness of ASEAN for banking sector integration using statistical approach. Thirdly, the statistical results from the second objective will be utilized to construct an indicator of readiness for ASEAN banking sector integration. The results reveal that ASEAN countries' commitments to AFAS did not differ much from their respective commitments to GATS. Statistical evidence shown that there are vast different of monetary conditions between ASEAN countries, hence causing difficulties for one-step-total-integration. Therefore, “paired-integration” is proposed based on the results of “readiness indicator”. Optimal pairing for Malaysia is Thailand, follows by Philippines and Singapore