Cooperation in the area of finance has made notable progress. Given the increasing level of cooperation in the field of finance the ASEAN Finance Ministers have met three times. During the year under review, two informal meetings were held in Kyoto and Manila in March and April 1996, respectively. The ASEAN Finance Ministers (AFM) met to discuss areas for enhancing cooperation in the financial sector and to carry out the Fifth Summit decision that "ASEAN Sectoral Ministers as well as Senior Officials shall meet regularly to embark on new initiatives to strengthen economic cooperation".

Recognising the importance of fostering closer cooperation among the ASEAN Member Countries in the area of finance, the Ministers also agreed that the ASEAN Senior Finance Officials Meeting (ASFOM) be formalised and convened regularly.

Four technical meetings of the ASEAN Finance Officials were convened from August 1996 to February 1997 to assist and prepare for the ASFOM and AFM Meetings. The terms of reference which cover the objectives, scope of activities and structure of ASFOM were adopted.

The ASEAN Finance Ministers met formally for the first time in Phuket in March 1997. At the Meeting, the Ministers reiterated their recognition of the importance of concrete and pragmatic cooperation in the area of finance as a building block towards ASEAN's goal of greater economic integration.

Two documents were signed by the ASEAN Finance Ministers. The first, a Ministerial Understanding (MU), laid the foundation for strengthening cooperation in finance. The MU provides a framework for enhancing cooperation within the existing institutional arrangement in several areas of finance including banking and finance, financial and capital markets, customs matters, insurance matters and taxation and human resources development in the area of finance.

The second document signed by the AFM was the ASEAN Agreement on Customs. The Agreement further enhances ASEAN cooperation in customs activities. The Customs Agreement is an important achievement and will help expedite the early realisation of AFTA as it contains provisions that would facilitate greater intra-regional trade and investment flow. The Agreement further enhances joint efforts in anti-smuggling and customs control activities, mutual technical assistance, customs modernisation, and upgrading customs skills to meet present and future challenges.