Regional banks need better deal from Asean

This, in turn, will help the region achieve its aims of further economic integration as banks are important catalysts in the process.

"We have always talked about our determination to evolve into a regional universal bank. Obviously, part of the reason for doing so is to position ourselves for Asean economic integration, and we want be a catalyst for greater economic integration in the region," CIMB group chief executive officer Datuk Seri Nazir Razak said in an interview with Business Times in Kuala Lumpur.

The 10 member countries has an ambitious aim to set up the Asean Economic Community (AEC) by 2015. This should create a single-market economy by removing tariffs and non-tariff barriers, enlarging intra-regional trade and investments, and freeing the movement of skilled workers and professionals.

However, the concept has not been fully embraced even though governments have signed off on it. This is particularly obvious in banking, Nazir said.
"There is no preferential treatment of Asean banks, for instance. In all markets that we operate in, there are either local or foreign banks. There's nothing in between," he said.

Licensing is restricted in every member country with no clear framework of advantage for Asean banks, he added.

Nazir pointed out the restriction that CIMB faced in Singapore where it was only allowed two branches. In Indonesia, it encountered restriction in moving around middle management and more junior employees.

"When you are trying to create a regional operation, this creates complication because your staff can't actually move freely within the organisation," he said.

In addition, existing rules do not allow CIMB to centralise or outsource certain back-office operations, such as cheque processing, to a single location, which is a logical move to reap synergy from a regional operation.

Nazir expressed hopes that Asean governments could overcome the human instinct to compete against each other for the greater good of the region.

"If you asked in a poll today in Jakarta or Bangkok that in 2020, should the champion bank in Asean be HSBC, DBS or CIMB, I suspect the answer would be HSBC.

"This is a normal human competitive instinct between contemporaries. You don't mind someone always regarded as more advanced or superior being champion. This is something that the governments must collectively campaign against towards the advancement of Asean."

The benefits of greater Asean integration are obvious. In a new global landscape made up of giant economies like the US, China, India and Brazil, an economically unified Asean is not only critical but also necessary, Nazir said.

"Yes, if I were China, I would not care to integrate with anyone because I'm already big. But if you are Asean, even if you are Indonesia with 200 million people, shouldn't you think carefully that, by force, Asean is not a nice-to-have, but even a must-have in the context of a world in, say, 20 years' time? But if we strive towards that goal in 20 years, it's too late."

While he acknowledged that political challenges, nationalism and obstacles related to economic disparity between member countries could hinder the Asean dream, Nazir said his concern was the lack of resources committed to achieving the 2015 goal.

"The question asked today is, who is really working towards this? The Asean secretariat actually has no real teeth and no budget to really drive Asean integration.

"(The year) 2015 is around the corner and there is a lot of work to do. It worries me that it is still just talk in many critical aspects."

Realising the Asean dream should not solely fall on governments, Nazir stressed. What government leaders should do is set a consequential framework and policy, and then allow industries to respond.

The people must also step up to the challenge.

"Malaysians today still find it a great difficulty to uproot themselves and work in another country. I tell all my people that this is a regional organisation. In future, you cannot rise up aspiring to be a leader of CIMB without the regional experience. The future CEO of CIMB may not be Malaysian, but this definitely will not be a person who works only in one market," Nazir said.