and distribution chains of the region. the increase in trade and related investments will naturally spill over to peripheral areas such as southern china, which has strong trade ties with the region as part of the gms. 6. second, on trade logistics facilitation. this is another crucial element to complement tariff reductions to reduce costs and time in order to facilitate cross - border trade. one of the key initiatives under this area is the “ asean single window ”, which will streamline customs procedures and expedite cargo clearance. owing to this, cross - border traders can save both costs and time for customs clearance region - wide. 7. third, on payment systems linkages. what asean central banks are aiming for is to enable businesses and individuals to make and receive electronic payments more conveniently yet less costly. a prominent example here is the “ asian payment network ” which translates to full regional atm interoperability. through this initiative, an asean world bank website ( 2014 ) ( http : / / data. worldbank. org / indicator / bx. klt. dinv. cd. wd ) asean - 6 includes brunei darussalam, indonesia, malaysia, philippines, singapore and thailand. bis central bankers ’ speeches resident, for instance, can use his or her local atm card to withdraw cash from a machine in another asean country without having to pay the fees charged by third - party payment providers. 8. we can see that the upcoming realization of the aec is a springboard for a more vibrant gms region. however, the benefits for the region go beyond the aec. i can see some points where tangible outcomes will take place in the near future. 9. the first one is the more integrated production networks of the main industries which dominate the gms. we all know that the region has a comparative advantage in primary industries which are demanded by other asean countries. this is why we have observed the large inflows of investment into agro - industry, garment and mining sectors. realizing the high potentials of these sectors, we have also seen contract farming practices in laos, where key commodities such as corn and sugarcane are produced using advanced technology and practices. 10. the other point concerns the development of infrastructure. this is particularly important given the lack of well - developed road and rail networks of the region. countries in the gms are addressing this through various projects, the main one being the road corridors. the north - south corridor which connects yunnan in china

as well as regionally. across the region, policymakers are sharing knowledge and expertise to ensure efficiency and pragmatism in the implementation of policy. most obviously, asian countries have also built up international reserves to a multiple of short - term external debt or other traditional measures of potential claims on reserves. they have also relied less on foreign debt financing and shifted more toward equity securities and direct investment. 4 this shift in the pattern of capital flows demonstrates to some extent advances in equity market development and corporate governance in the region. for a few countries, reserve accumulation partly constitutes a deterrent to the repeat of the last extreme episode of instability in 1997. as an added benefit, a relatively well - developed system of prudential banking regulation has also helped these countries avoid speculative pressures on their exchange rates. as far as financial integration is concerned, there have been selective and timely capital account restrictions and liberalization on both inflows and outflows over the years. much of this caution derives from the bitter lessons from the 1990s. but, even so, it is worth mentioning that, measured by total foreign assets and liabilities as a percentage of gdp, the trend from bangkok to seoul is that of more financial integration over the past 20 years. 5 ladies and gentlemen, these changes in policies and risk awareness make it less likely that financial market disturbances will trigger a sharp and broad - based dent to real economic outcomes. but, it may be a slight overstatement to declare that asia as a whole has become resilient to shocks and disturbances today. in a sense, the impressive heights of asian international reserves may be construed less as an indication of fundamental strength than as an indication for needed progress toward modern monetary policy framework. in addition to that, the size of accumulated global financial vulnerabilities that may unwind in the near future is by most measures unprecedented ; the extent and the whereabouts of the risk concentration are unclear. and as a result, circumstances of greater macroeconomic adversity may yet again put to test emerging markets ’ ability to adjust. the pressing and practical challenges emerging asia faces in the near term are three - fold. indeed, the three challenges are inter - related. they are “ hot money ” inflows and large inflows in general, pressure for rapid domestic currency appreciation, and finally, the potential loss of monetary autonomy in the sense of independent interest rate policy. having done the right thing over the past 10 years, asian emerging markets have become darling