ISLAMIC BANKING INDUSTRY IN ASEAN ECONOMIC COMMUNITY (AEC): CONSEQUENCES IN LEGAL FRAMEWORK AND PRACTICES

Abstract

Having suffered an inevitable slowdown during the global financial crisis, Islamic finance is once again on the rise, with growth now being seen outside the traditional heartlands of the Middle East and South East Asia and taking on an ever more innovative and global flavour. ASEAN Economic Integration has provided the platform for ASEAN countries to restructure their finance sectors and move forward to better cooperation among economies.  There are 2 factors for consideration. The internal restructuring of the finance sector has direct impact on employees through the merger and acquisition process.  The external factor in the form of the region helps facilitate the movement of investment. ASEAN leaders have embarked the Southeast Asian association to the next step of economic development, which will also ultimately bring the Southeast Asian peoples closer. They have engaged since 2007 towards the integration of ASEAN into an ASEAN Economic community. The ASEAN Economic Community (AEC) project’s integrated ASEAN economic region has been built on four pillars of integration: (i) a single market and production base, (ii) a competitive economic region, (iii) equitable economic development, and (iv) integration with the global economy. In banking, the ASEAN market’s increasingly free flow of products and services will open up growth opportunities in both retail and wholesale. What are the consequences of this fact of AEC establishment on Islamic banking industry from the perspective of legal framework and practices will the aim of this paper discussion.

Keywords: Islamic banking – aec – legal framework – practices