Bank Negara Malaysia has signed a bilateral agreement with Indonesia's Otoritas Jasa Keuangan under the ASEAN Banking Integration Framework (ABIF). The agreement was signed by Muhammad bin Ibrahim, Governor, Bank Negara Malaysia and Dr Muliaman Hadad, Chairman of Board of Commissioners, Otoritas Jasa Keuangan, in conjunction with the 11th Meeting of the Annual Consultation between the President of the Republic of Indonesia and the Prime Minister of Malaysia.
The agreement, which seeks to operationalise the earlier Heads of Agreement in 2014, will provide greater access and operational flexibility for Malaysian and Indonesian qualified ASEAN Banks operating in the respective jurisdictions. The commitments in the agreement form part of the ASEAN Framework Agreement on Services.
Following the official launch of ABIF and establishment of the ASEAN Economic Community in 2015, the agreement represents a significant milestone towards achieving greater banking and financial integration within ASEAN.
With the implementation of the agreement, Bank Negara Malaysia looks forward to the establishment of Indonesian qualified ASEAN Banks in Malaysia. Under the agreement, it is envisaged that both Malaysian and Indonesian banks will have a greater role in facilitating cross-border trade and investment between both countries. The increased banking and financial integration will further deepen the potential for mutually reinforcing growth and greater shared prosperity between both countries and within the region.
To promote adequate safeguards in a more integrated environment, Bank Negara Malaysia and Otoritas Jasa Keuangan have also signed a memorandum of understanding (MoU) in April 2016 to further enhance supervisory cooperation. The MoU covers areas of supervisory cooperation and coordination, including exchange of information, facilitation of consolidated and cross-border on-site supervision, financial crime and crisis management in accordance with the principles set out in the Core Principles of Effective Banking Supervision and the Insurance Core Principles.