The bulk of ASEAN’s surplus funds, however, are currently intermediated mainly through the international financial markets before being reinvested back into the region. In particular, more than 90% of cross-border portfolio investment flows are channelled to the advanced economies. Given the USD 1 trillion infrastructure funding required by ASEAN in the next decade 2, greater financial integration will facilitate the re-channelling of at least a part of the region’s surplus funds towards productive investment opportunities in the region. Regional financial integration will also allow for more efficient risk diversification of assets to include foreign assets from within the region. This will not only reduce vulnerability to external developments but will contribute to achieving more stable conditions in the regional financial markets. Following the development of the domestic financial systems in ASEAN, the next phase of development is to foster greater financial integration in the banking, insurance and capital markets and in the linking of the payment and settlement systems. The growing presence of regional financial institutions will be an important contributor to the development of SMEs in ASEAN. The availability of cross-border financing will enable SMEs to innovate, invest and further expand within the region. Beyond financing, SMEs can also leverage on the extensive networks and advisory services of regional banks to facilitate matching with regional clients and entry into new markets. This can be an important source of information on countryspecific dynamics and requirements for the SMEs before venturing into new markets in the region. The digital age also augurs well for SME businesses.

Despite the initial reluctance of a part of the public administration employees, the withdrawal of payrolls through the bank accounts has now turned into as common as any other services provided by the private market. The channelling of pensions through the bank accounts has met with certain complications, since the small amounts and the high circulation do not make them very attractive for the commercial banks. The licensing of the post for carrying out certain banking services has resulted to be a good solution for this issue. The larger involvement of the private business in this process remains a challenge. In this context, the encouragement of channelling the payments through the banking system is a crucial step to be taken. The requirement of a rigorous application of the obligation that (small, medium and large) businesses have to open and operate with the bank accounts would not only serve to reduce cash but also to reduce the informality. 2. Monthly utility payment (electricity, water, telephone) through the bank accounts  The monthly utility payment is now made through banks. However, this is limited only to the clients of the bank the utilities have their account in. The holding of these utilities’ accounts with all the banks in the system, or the finding of a kind of interbank cooperation would not only serve to increasing the amount of payments channelled through banks, but also to enhancing the competition. Another difficulty encountered in this context is the implementation of bank accounts direct crediting by the utilities.