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Advances and Challenges in Regional Integration

Jointly organized by Hitotsubashi University and the IMF Regional Office for Asia and the Pacific

March 3-4, 2016

A decade ago, there was much discussion about when Asia might achieve full economic integration, including the establishment of a monetary union. This reflected rapid expansion of intra-regional trade in Asia, and the optimism in the success of European integration, as the 50th anniversary of the Treaty of Rome was approaching. Now, while there remains a broad consensus on the desirability of economic integration, the landscape has become more nuanced.

Asia saw rapid advances in the integration of its economies over the last quarter century. This integration occurred spontaneously mainly through trade, driven by the integration of Asian economies into the Global Value Chain (GVC). This integration has expanded the export growth model of individual Asian economies into a regional wide driver of growth, supporting the traditional view that economic integration confers substantial benefits to the economy.

This successful episode of trade integration was accompanied by a growing policy push towards further integration. The AEC Blueprint, launched in 2007, will see completion in 2015, while the number of regional trade arrangements has increased rapidly. However, the complex web of competing arrangements has raised questions as to whether the ‘noodle bowl’ of trade arrangements are helping or not, and whether countries must look to deeper integration beyond trade liberalization, including liberalization in the movement of capital and labor, in order to achieve further gains. Importantly, despite the importance of migrant labor for a number of countries within the region, there has been little focus on freer movement of labor.

The established optimistic view that further integration, supported by policy measures, will lead to higher growth has recently suffered from some setbacks. On the one hand, there has recently been deceleration of trade growth within Asia, possibly reflecting in part the broadening of the range of production processes undertaken by China in GVC. This process has to some extent been offset by the large increase of demand in China for final goods, supplied by its Asian neighbors, but the recent slowdown in Chinese growth is casting a shadow on trade prospects of the region. The problems in Europe is casting the European experience in a less favorable light, highlighting the importance of political and fiscal integration to support economic integration. The recent quest for a ‘high-quality’ trade arrangement has sharpened the perennial question of how existing producers that would suffer from trade liberalization might be protected or compensated. Moreover, the slowing global growth has resulted in some retrogression of trade liberalization.

Turning to financial integration, there was always less unanimity in its perceived benefits, with Asian economies generally preferring to take a gradual approach towards capital account liberalization and opening up of its financial markets. Nonetheless, advances in globalization of financial markets inevitably encompassed Asia, leading to integration of Asian economies into the global capital markets.

The Asian Financial Crisis of 1997-98 and the recent Global Financial Crisis impressed policy makers in the region the potential dangers of relying on extra-regional players to provide financial services to facilitate trade and investment within the region. However, this led to a policy push towards regional financial integration rather than an outright rejection of financial opening. In that vein, much official effort has gone into developing an ‘Asian Bond Market’ to intermediate regional savings into regional investment opportunities, as well as the effort to create a stronger regional safety net for balance of payments crisis. Nonetheless, the progress of financial integration in the region lags well behind those achieved in the real sectors. While there are efforts to further integrate regional financial markets, including through the ambitious ASEAN Banking Integration Framework to create a single banking market in ASEAN, other factors such as the volatility of global capital flows and the concerns for domestic financial stability consequences restrain integration efforts.

This seminar will discuss the current state of economic and financial integration within Asia, and the policies that will be required to promote effective and welfare-increasing integration for all the Asian economies.


March 3, 2016

8:30 am -


9:00 am -

Welcome Remarks

Prof. Akira Ariyoshi, Professor, Asian Public Policy Program (APPP), Hitotsubashi University

Mr. Odd Per Brekk, Director, Regional Office for Asia and the Pacific (OAP), International Monetary Fund (IMF)

9:10 am -

Opening Address

Mr. Mitsuhiro Furusawa, Deputy Managing Director, IMF

  Opening Address

9:30 am -

Keynote Address

Prof. Anne O. Krueger, Senior Research Professor of International Economics, the School for Advanced International Studies, Johns Hopkins University, and Senior Fellow, the Stanford Center for International Development

10:00 am -

Coffee break

10:20 am -

Session 1: Evolving nature of economic integration and policy challenges

Chair: Prof. Shinji Asanuma, Visiting Professor, APPP, Hitotsubashi University

Presentation 1-1: Changing pattern of integration
Presenter: Dr. Cyn-Young Park, Director, Regional Cooperation and Integration Division, Economic Research and Regional Cooperation Department, Asian Development Bank (ADB)


Discussant: Mr. Vanndy Hem, Under Secretary of State, Ministry of Economy and Finance, Cambodia

Presentation 1-2: The future of Regional Arrangements
Presenter: Prof. Fukunari Kimura, Dean, Graduate School of Economics, Keio University, and Chief Economist, Research Department, Economic Research Institute for ASEAN and East Asia (ERIA)


Discussant: Mr. Nik Azman Nik Abdul Majid, Deputy Director General (Policy), Economic Planning Unit, Prime Minister’s Department, Malaysia

Presentation 1-3: Regional labor mobility
Presenter: Dr. Siow Yue Chia, Senior Research Fellow, Singapore Institute of International Affairs


Discussant: Mr. Giovanni Ganelli, Deputy Head of Office, OAP, IMF

General Discussions

12:50 pm -

Photo Session

1:00 pm -


2:30 pm -

Session 2: Financial integration

Chair: Mr. Odd Per Brekk, IMF

The current state of financial integration

Presentation 2-1: Overview
Presenter: Mr. Alexandros T. Mourmouras, Division Chief, Asia and Pacific Department, IMF


Presentation 2-2: ASEAN Banking Integration Framework
Presenter: Dr. Yati Kurniati, Director of Macroprudential Policy Department, Bank Indonesia


Presentation 2-3: View from private financial institutions
Presenter: Mr. Go Watanabe, Chief Executive Officer, Asia & Oceania Region, the Bank of Tokyo-Mitsubishi UFJ, Ltd.

(Brief Q&A could follow each presentation)

3:45 pm -

Coffee Break

4:00 pm -

Session 2 (continued):

Discussions and Comments:
1. Ms. Amy Auster, Executive Director, Australian Centre for Financial Studies

2. Mr. Tomoyuki Shimoda, Deputy Director-General, Monetary Affairs Department, Bank of Japan

Country experiences and views:
3. Philippines: Ms. Maria Teresa Sanz Dueñas, Director, International Relations Department, Bangko Sentral Ng Pilipinas


4. Thailand: Ms. Alisara Mahasandana, Senior Director, International Department, Bank of Thailand

General Discussions

5:15 pm

End of first day seminars

6:30 pm -


7:00 pm -

Keynote Address
Mr. Masatsugu Asakawa
, Vice Minister of Finance for International Affairs, Ministry of Finance, Japan

Dinner following the Keynote Address

March 4, 2016

10:00 am -

Panel Discussion
Moderator: Prof. Akira Ariyoshi, Hitotsubashi University


Prof. Fukunari Kimura, Keio University and ERIA

Prof. Anne O. Krueger, Johns Hopkins University SAIS, and the Stanford Center for International Development

Dr. Yati Kurniati, Bank Indonesia

Mr. Daikichi Momma, Director-General, International Bureau, Ministry of Finance, Japan

Mr. Alexandros T. Mourmouras, IMF

Dr. Cyn-Young Park, ADB

12:00 pm -

Concluding Remarks

Mr. Giovanni Ganelli, IMF

Prof. Akira Ariyoshi, Hitotsubashi University

12:15 pm -


2:00 pm

End of Seminar

This seminar is funded by the Government of Japan through its JSA trust fund at the IMF.