other emerging regions. several countries have entered into bilateral agreements, including trade agreements with asean to enhance economic cooperation. these multilateral and bilateral engagements have the potential to create many new business opportunities for asean smes. greater financial integration as a catalyst of growth for smes let me now turn to the prospects for greater regional financial integration and its potential to support growth for the asean smes. given the region ’ s high savings rate of approximately 30 % of gdp, there is immense scope for greater financial integration in the region. an intensification of financial integration in asean will serve to enhance the more effective intermediation of funds and thus the efficient allocation of resources in the region, thereby acting as a catalyst to achieve a growth that is mutually reinforcing for the economies in the region. this will allow for excess savings in one country to be channelled into productive investments in another country within the region. 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. the use of technology such as mobile and internet banking have enabled financial institutions to provide

. the rapid progress of economic integration in asean has enabled the region to harness the benefits arising from the diversity and complementarities that exist across the asean economies. amid the strengthening of cross - border supply chains in the region, intra - asean trade and investment activity have increased significantly over these recent 15 years. intraregional trade now accounts for almost a quarter of the region ’ s total trade while intraregional investment activity has quadrupled to 17 % of total investment since 2000. the vibrant sme sectors in the respective asean economies have been an important part of this commendable economic progress. indeed, going forward, the development and growth of asean smes will have significant potential to contribute to the region ’ s prospects and become a key source for the future growth of the region. it is estimated that smes would account for between 20 to 50 % of gdp across the asean economies, constituting more than 96 % of enterprises in the region, and contributing 50 to 80 % of total employment. international monetary fund world economic outlook ( april 2015 ). bis central bankers ’ speeches while smes continue to contribute significantly to domestic economic growth, intra - regional trade in asean remains driven by large multi - national companies with the sme sector mainly having a supporting role in the regional production network. the next phase of the asean economic integration process should therefore be focused on enhancing the role of smes in contributing towards greater cross - border economic activity. to realise this, policy initiatives are being geared to ensure that smes in our region will be plugged into the regional and global value chains. leveraging on asean ’ s growth prospects the recent drive for the greater economic and financial integration of asean has paved the way for smes to expand and thrive. firstly, asean has enabled smes in the region to gain access to a larger and more extensive marketplace. the realisation of asean into an integrated economic community means that the potential benefits for smes in the region are no longer constrained by national borders. with easier cross - border flow of goods, services, capital and people, asean offers significant market opportunities for smes. given the large consumer base in asean, smes can also utilise asean as a platform to strengthen competitiveness before entering into the global market. secondly, the lowering of regulatory barriers to trade within asean has further increased the potential for smes. the standardisation of trade procedures, the removal of tariff and non - tariff barriers and the improvement of regulatory frameworks across the region