| Market Development
Businessmen back Cebu Action Plan The Philippine Star 8th Sep 2015
Businessmen in the region have thrown their support behind the Cebu Action Plan, a set of reforms that will be formally announced by Asia-Pacific finance ministers this week. Hiroyuki Suzuki, chair of the Asia-Pacific Economic Cooperation (APEC) Business Advisory Council’s (ABAC) finance and economics working group, stressed this multi-year roadmap would play a significant role in promoting inclusive growth for member economies. “These are the critical steps that APEC must take to catalyze the inclusive and broad-based growth that will transform our region into a strong and resilient engine of the global economy,” Suzuki said in a statement.
Real-time payments to begin this year Myanmar Times 7th Sep 2015
The Central Bank of Myanmar is planning to adopt a real-time gross settlement (RTGS) system for the first time by the end of 2015, according to officials. The system will allow transfers between banks to be settled immediately, making payments much more efficient. Rather than physically moving money or using cheques, both the creditor and debtor’s accounts can be immediately adjusted electronically when a transaction is made. Deputy governor U Set Aung wrote in a journal published by the Ministry of Commerce that RTGS will help to formalise large transactions, reducing the size of the cash economy. “[The Central Bank] will do many more things to facilitate electronic banking services and to strengthen the formal market,” he added.
Financial Industry Gears up to Face AEC Hukum 4th Sep 2015
The Association of Southeast Asian Nations (ASEAN) established the ASEAN Economic Community (AEC), with the ultimate goal of its member nations becoming a single market and production base. The AEC will allow for the free flow of goods, services, investment, capital, and skilled labor throughout the region with the intention of making ASEAN member nations more dynamic and competitive. However Executive Director Hendri Saparini of the Center for Economic Reform (CORE) is concerned about the nation’s preparedness for this new free-market zone, which is due to come into force at the end of the year. Compared with other ASEAN nations such as Malaysia, which is focusing its energies on strengthening its medical and tourism sectors, or the Philippines, which is working on its education and tourism sectors, Indonesia lacks a clear strategy regarding which sectors it should be focusing on with an eye towards being able to compete in the new-free trade area.
Cross-border capital raising in Asean made easier The Star 4th Sep 2015
The Monetary Authority of Singapore and Singapore Exchange (SGX), together with the Securities Commission Malaysia and the Securities and Exchange Commission, Thailand, have issued a handbook to implement the Streamlined Review Framework for the Asean Common Prospectus. In a joint statement, MAS and SGX said under the framework, Asean issuers planning a multi-jurisdictional offering of equity or plain debt securities can expect a shorter time-to-market, and faster access to capital across the region. This framework requires both home and host authorities to complete the prospectus review process at the same time, within three to four months from the date of submission.
‘Connectivity of Asean markets via ACMF’ Borneo Post 3rd Sep 2015
The Asean Capital Markets Forum (ACMF) continues to drive greater connectivity of the region’s US$3.5 trillion capital markets which aims to create more opportunities and avenues for Asean businesses and investors to benefit from, as well as to contribute, to regional growth and economic integration. The ten Asean capital market regulators gathered yesterday in Kuala Lumpur at its 23rd meeting, hosted by the Securities Commission Malaysia (SC). The SC is currently the Chair of the ACMF, a high-level grouping of Asean capital market regulators created under the auspices of the Asean Finance Ministers to better integrate the region’s capital markets.
PNoy signs law promoting financial literacy, entrepreneurship among students The Philippine Star 2nd Sep 2015
President Benigno Aquino III has signed the law promoting entrepreneurship and financial education among young Filipinos. Aquino signed Republic Act 10679 or the Youth Entrepreneur Act on August 27. The new law mandates the Department of Education (DepEd), the Commission on Higher Education (CHED) and the Technical Education and Skills Development Authority (TESDA) to establish the promotion of programs on entrepreneurship and financial literacy. DepEd shall also ensure that the K to 12 curriculum shall be supported by such programs. However, at the elementary level, the programs shall be focused on the ideal values necessary to become successful entrepreneurs.
Yangon Stock Exchange to Begin Accepting Listings Myanmar Business Today 31st Aug 2015
The Yangon Stock Exchange, which is slated to open in December, will begin accepting applications in September for listed companies which will sell shares said Dr Maung Maung Thein, Deputy Minister of the Ministry of Finance and chair of the Securities Exchange Supervisory Commission. “The work on Yangon Stock Exchange is 97 percent finished. The opening is being postponed from an earlier start date to avoid its launch taking place at the same time as the election. When the time of application is near, the official announcements will be issued,” he said. He said that if the companies which are interested in doing business and want to apply for the licences, they can do so, provided that they are acting in accordance with the 17 criteria for companies, issued on August 14.
Philippines backs Asian Funds Passport to finance big-ticket projects The Philippine Star 31st Aug 2015
The Philippines is pushing for the development of the Asia Regional Funds Passport to make it easier for financial services professionals to market investment products across the region. In a briefing late Friday, Securities and Exchange Commission commissioner Ephyro Amatong said this passport initiative could “create a bigger pool of funds that can be tapped for investment to drive growth within the region.” The Asia Regional Funds Passport is an Asia Pacific Economic Cooperation initiative, which is expected to be tackled during the Finance Ministerial meetings in Cebu scheduled on Sept. 9 to 11. Finance ministers of the 21 Asia-Pacific Economic Cooperation economies are set to launch the Cebu Action Plan, a roadmap to the Asia-Pacific region’s inclusiveness and resiliency.
Indonesia to encourage use of yuan Nikkei 27th Aug 2015
Indonesia's Finance Minister Bambang Brodjonegoro said the country will "encourage direct transactions with the yuan and rupiah," to facilitate trade between the two countries, a move that will be a major tailwind in China's effort to turn the yuan into a global reserve currency. China is Indonesia's biggest trading partner, although weak commodity prices have dampened Indonesian exports to China in recent years. In an interview with The Nikkei on Wednesday, Brodjonegoro said the cost of raising yuan needs to be reduced for more companies to conduct transactions using the Chinese currency instead of the dollar. China accounted for about 10% of Indonesia's exports and 24% of imports, both excluding oil and gas in the January-July period, according to data from Indonesia's Central Statistics Agency.
Philippines ranks 15th in global survey on financial inclusion The Philippine Star 26th Aug 2015
Washington-based think tank Center for Technology Innovation (CTI) has ranked the Philippines 15th out of 21 countries in terms of access and usage of affordable financial services. The Philippines earned 68 percent of the total possible points based on the 2015 Brookings Financial and Digital Inclusion Project (FIDP) Report prepared by John Villasenor, Darrell West, and Robin Lewis. The FIDP report is the first of a series of annual reports examining financial inclusion activities around the world. It ranked the 21 countries which have committed to improving financial access and usage using 33 indicators spanning four dimensions: country commitment, mobile capacity, regulatory environment and adoption.
Regulator urges micro lenders to merge The Jakarta Post 24th Aug 2015
The financial regulator has urged rural micro lenders (BPRs), which mostly run with small capital, to merge with each other as it seeks to strengthen their role as the source of capital for small and medium enterprises (SMEs) in rural areas. With increasing competition in the banking sector, BPRs face numerous challenges, including limited capital and poor management, according to the Financial Services Authority (OJK). “Half of the existing BPRs have small capital,” said Achmad Fauzie, the OJK’s financial institutions supervision coordinator for the eastern part of the country.
State banks help more Thais to join financial system Bangkok Post 21st Aug 2015
Thailand is among several countries in the East Asia and Pacific region to record an increase in financial inclusion thanks to greater financial services offered by state-owned banks, says a World Bank senior economist. Thailand registered a higher rate of financial inclusion among adults aged 15 and over at 78% in 2014, up from 73% in 2011, according to the World Bank's 2014 Global Findex Report. Credit borrowed from financial institutions for these adults was registered at 15% last year, down from 19% in 2011, while last year's formal savings edged down 2% to 41% from 43% registered in 2011.
Asset Management
Philippine peso is least fragile currency among EMs – think tank The Philippine Star 14th Sep 2015
London-based Capital Economics Ltd. said the Philippine peso is the least vulnerable currency in emerging market economies amid the turbulent global financial markets. The think tank said in its latest global economic and market analysis entitled “Which emerging market currencies will suffer in the event of more capital flight?” the Philippine peso is the least vulnerable currency among emerging market economies. Based on its latest currency vulnerability index, the think tank said Brazil has the most vulnerable currency followed by Columbia, South Africa, Turkey, Russia, Chile, Mexico, Malaysia, Peru, Indonesia, Romania, Hungary, Poland, Korea, Thailand, India, Czech Republic, and the Philippines.
Foreign investors withdrew funds for sixth straight month Manila Standard Today 9th Sep 2015
Foreign funds fled the Philippines for the sixth straight month, amid investors’ concern over the health of the global economy and the impending interest rates hike by the US Federal Reserve. Data from Bangko Sentral ng Pilipinas showed that foreign portfolio investments or “hot money” posted a net outflow of $543 million in August, a reversal of the $483-million net inflow recorded a year ago. This marked the sixth consecutive month of net foreign fund outflow this year. The August figure brought the eight-month tally to a net outflow of $64 million, reversing the strong gains recorded early this year. Foreign portfolio investments yielded net inflows of $592 million in January and $1.19 billion in February. Investors began pulling out in March with a net outflow of $21.58 million, a trend that continued until August.
BPI Trade: Continuing volatility in stock market seen Business Mirror 9th Sep 2015
The Philippine Stock Exchange index (PSEi) is seen trading at the 6,600 level to 7,200 level this year and 7,600 to 8,200 next year, according to BPI Securities Corp. BPI Trade CEO and Managing Director Michaelangelo Oyson said the uncertainty in the market continues because of the highly anticipated US rate hike. “The PSEi is expected to trade at a range of 6,600 to 7,200 this year, if Federal Reserve Chairman Janet Yellen does not raise interest rates. Next year, PSEi is seen at 7,600 to 8,200 trading range, if Yellen decided to raise interest rates in December this year or January next year,” he said during a media discussion.
Philippines readies $300-M catastrophe bonds The Philippine Star 9th Sep 2015
The Philippines is in the final stages of discussions on an investment product that would allow the government to eliminate obligations when a natural disaster hits the country, Finance Secretary Cesar Purisima said. The so-called catastrophe bond may have its maiden issue this year, amounting to “between $100 million and $300 million,” Purisima told The STAR in a roundtable discussion yesterday. “The idea is that if a certain type of catastrophe hits, the bond will be extinguish of the debt, and thus, will open up the financial capability of the government,” he explained. In turn, this would allow the government to allocate more funds as response to the calamity. The government is now working with the World Bank on the mechanisms of the bond, one of which is the rate of return an investor may get from availing of the security.
Fund outflows persist in August Business World 9th Sep 2015
Foreign portfolio investments registered a net outflow for the sixth straight month in August as investors took profits, the Bangko Sentral ng Pilipinas (BSP) yesterday said, tipping the eight-month tally into negative territory. In a statement, the BSP said that “hot” money -- called so given the ease by which these funds enter and leave the country -- recorded a $542.54-million net outflow last month. The August total was a reversal of the $483.45-million net inflow of portfolio investments recorded in the same month a year ago. This was also more than thrice the net $160.1 million in funds that flowed out of the country in July.
Central bank expands scope of salary loans Business World 9th Sep 2015
The Bangko Sentral ng Pilipinas (BSP) has expanded the scope of salary loans in line with boosting credit standards and policies for borrowings based on an individual’s compensation. In a statement, the BSP said such loans are now called “salary-based-general-purpose consumption loans.” “The definition now includes credit accommodations for education, hospitalization, emergency, travel, household and other personal consumption needs, but excludes credit cards, motor vehicles and other personal loans, which are covered under other existing BSP regulations,” the central bank said.
Investors swamp T-bond exchange The Philippine Star 8th Sep 2015
While investors swamped the latest debt exchange by the government, most of them flocked to the longer termed securities on offer as they look at locking funds for the future still seen stable with high growth and low inflation. Around 65 percent—or P255 billion—in tenders to the current debt swap were for bonds maturing in 2040, or for a term of 25 years, the longest maturity being offered by the government, National Treasurer Roberto Tan said yesterday. The remaining balance, around P133 billion, wanted to swap for 10-year 2025 securities. The government is authorized to issue up to P300 billion. Results of the bond swap will be announced today.
Foreign investors attracted to invest money in mutual funds: IDX Jakarta Post 8th Sep 2015
The Indonesia Stock Exchange (IDX) said foreign investors’ funds had continued to enter the capital market’s investment products, such as mutual funds, because they were still considered attractive. IDX president director Tito Sulistio said based on the market’s data in the past month, the amount of mutual fund subscriptions had reached around Rp 16 trillion (US$1.12 billion) and Rp 12 trillion. “So there has been around Rp 4 trillion worth foreign funds entering mutual funds,” he said as quoted by Antara on Tuesday. He was speaking at an event in Jakarta on Monday evening.
Indonesian Bond Yields Rise to Highest Levels Since Early 2011 Bloomberg 7th Sep 2015
Indonesian bonds fell, pushing the 10-year yield to the highest level since 2011, as the weakening rupiah stoked concern the country’s economic outlook is deteriorating. A 13 percent drop in the currency this year is swelling the debt-servicing costs of the government and companies, which owe a record $304 billion of foreign debt, according to central bank data. The economy is growing at the slowest pace since 2009, damping domestic demand, while falling commodity prices are a drag on export revenue. Coordinating Minister for Economic Affairs Darmin Nasution told reporters in Jakarta on Tuesday that a package of stimulus measures would be announced on Wednesday.
Singapore Savings Bond rolled out Brunei Times 2nd Sep 2015
The Monetary Authority of Singapore (MAS) rolled out the first issue of Singapore Savings Bond (SSBs) yesterday, promising a 2.63 per cent average annual return if they are held for 10 years. The interest rate – or rate of return – of the first issue SSBs will start at 0.96 per cent for the first year, data released by the MAS showed. The rate will then go up to 1.09 per cent for those holding the bonds into the second year, which translates to an average annual return of 1.02 per cent. For the third year, the rate of return will be 1.93 per cent, which means an average annual return of 1.32 per cent. Thereafter, the rate will go up to 3.7 per cent for the 10th year, when the average annual return hits 2.63 per cent.
Applications to list on Yangon Stock Exchange to open next month Myanmar Times 26th Aug 2015
The Yangon Stock Exchange will begin accepting applications for listed companies by next month, according to Dr Maung Maung Thein, chair of the Securities Exchange Supervisory Commission. The long-awaited listing criteria was announced earlier this month through state media. “Companies acting in accordance with the criteria can apply for licences to sell their stocks on the Yangon Stock Exchange,” he said on the sidelines of a seminar on August 23. Dr Maung Maung Thein said the application process for licences will be announced at the end of the month, with applications beginning to be accepted in early September.
SEC to PSE: Explain shutdown of trading on the exchange Business World 26th Aug 2015
The Securities and Exchange Commission (SEC) has asked the Philippine Stock Exchange (PSE) to explain why all floor trading had been halted three times this month, with Tuesday’s outage being the biggest to hit the exchange in its entire history. “We have ordered the PSE to submit not later than Friday, Aug. 28, 2015, a full and thorough report on these glitches and trading halts,” SEC Chairperson Teresita J. Herbosa said in a statement released yesterday, a day after the exchange said a technical glitch forced it to stop trading for nearly five hours. Tuesday’s five-hour trading lull -- from 10:02 a.m. to 2:55 p.m. -- was “unprecedented”, PSE President Hans B. Sicat had said.
Market slump to postpone IPO plans Manila Standard Today 25th Aug 2015
The current slump in global equities will likely discourage companies from conducting initial public offerings in the short term, Philippine Stock Exchange president and chief executive Hans Sicat said Tuesday. Sicat said several companies planning to hold IPOs might defer their plans, until the volatility in the stock market improved. “The volatility in the market may be a negative factor and this could make companies hesitant to pull the trigger,” he said. Sicat said the country’s macroeconomic fundamentals remained unchanged despite the recent massive sell-off in the Philippine equities market. “The economic situation now is different from seven years ago. The successive growth in GDP has built solid foundation for growth moving forward. I don’t think growth will reverse easily,” Sicat said.
Government seeking ways to curb outflow of foreign funds The Jakarta Post 24th Aug 2015
Indonesia’s central bank (Bank Indonesia) and the Finance Ministry are seeking ways to curb the outflow of foreign funds that hit the local stock exchange in the past several days. Finance Minister Bambang Brodjonegoro said Wednesday that the government must be able to find solutions to maintain investors’ confidence and lessen the selling spree. “We won’t be able to directly intervene [in the stock market], but we can create confidence so that investors don’t get too jittery,” he told reporters following a coordinating meeting, which was attended by Coordinating Economic Minister Darmin Nasution, Coordinating Maritime Affairs Minister Rizal Ramli and Bank Indonesia governor Agus Martowardojo.
Vietnam Won’t Devalue Dong Further This Year The Wall Street Journal 24th Aug 2015
The State Bank of Vietnam won’t devalue the dong further for the rest of the year, central bank deputy governor Nguyen Thi Hong said Tuesday. The SBV last week devalued the dong by 1% against the U.S. dollar and widened its trading band to 3% from 2% in response to a weakening Chinese yuan and a possible rate increase by the U.S. Federal Reserve. Ms. Hong said in a statement that last week’s policy action is a pre-emptive move that would help make the dong more competitive and give room for flexible movement of the exchange rate.
SOEs to boost stock exchange, confidence Jakarta Post 24th Aug 2015
State-owned enterprises (SOEs) should be pushed to go public and float their shares on the Indonesi Stock Exchange (IDX) in order to help increase the quality of the bourse as well as the economy in general, Desmon Silitonga, a market analyst, has said. In the meantime, the IDX needs to prioritize the quality — instead of the quantity — of the companies listed on the bourse, said Desmon, an analyst with the Millenium Danatama Asset Management. The presence of more established companies would be able to draw in investors, he added. Given many SOEs already have well-known and established brands, the analyst argued, they would generate more confidence in investors about the certainty of their investments.
Indonesia Bear Market Sends Buy Signal to Nation’s Largest Fund Bloomberg 24th Aug 2015
Indonesia’s biggest fund manager is taking the slump that’s driven the nation’s stocks into a bear market as the cue to start buying again. BPJS Ketenagakerjaan, which manages about 193 trillion rupiah ($13.8 billion), will enter the equities market along with other state-owned institutional investors, Elvyn Masassya, its president director, said in a text message on Sunday. Shares are “relatively cheap,” he said, without naming any. The Jakarta Composite Index is trading at the cheapest levels in 20 months after plunging 5.4 percent last week.
Seven firms prepare for IPOs despite market slump Jakarta Post 22nd Aug 2015
Despite serious plunges in the stock market, coupled with a faltering Indonesian economy and a declining rupiah, the Indonesia Stock Exchange (IDX) says that seven companies still plan to hold initial public offerings (IPOs) before the end of the year. The companies that plan to hold IPOs are Gelombang Seismic Indonesia, Vallianz Offshore Maritim, Victoria Insurance, Media Komunikasi Nusantara Korporindo, Internux, Kino Sentra Industrindo and Ciputra Residences. Ciputra Residences, a subsidiary of property developer Ciputra Group, reportedly submitted its IPO proposal on Aug. 7, while another company, Bank Harda Internasional, recently made a listing on the stock exchange.
Malaysia Not Moving to Less Flexible Exchange-Rate Regime The Wall Street Journal 20th Aug 2015
Malaysia has no intention of moving to a less flexible exchange-rate regime, its central bank chief said Thursday, because the currency’s flexibility lets the economy weather external volatility. Bank Negara Malaysia Governor Zeti Akhtar Aziz said the ringgit—which has lost about 15% of its value against the U.S. dollar so far this year—will better reflect its fundamentals once stability returns and there is more certainty about policies in major economies. Ms. Zeti, speaking on the sidelines of a World Bank event, noted that Malaysia’s economic growth has averaged 5.0% for more than five years.
Assets managed in Singapore up 30% in 2014: MAS The Straits Times 20th Aug 2015
Wealthy investors put $2.4 trillion in the hands of Singapore's asset managers last year, 30 per cent more than the year before, said the Monetary Authority of Singapore (MAS) on Thursday. The regulator noted: "The robust growth was derived largely from positive asset inflows arising from Asia's growth dynamism and Singapore's position as a pan-Asian asset management hub." Although there are growth opportunities, MAS also noted structural trends that could change the asset management industry.
RI’s sovereign credit rating ‘stable’ despite weak economy The Jakarta Post 20th Aug 2015
Malaysia-based rating agency RAM Ratings has rated the country’s sovereign credit “stable”, reflecting the government’s ability to manage its debts and promising economic growth, despite the country’s slowing economy in the first half of this year. RAM Ratings graded Indonesia BBB2(pi)/stable globally and AA3(pi)/stable on an ASEAN scale, which was the fourth highest in the region after Singapore, Malaysia and Thailand. The rating showed a low government debt burden, profitable growth prospects and wise fiscal management, said Denise Thean, the deputy CEO of RAM Ratings, in South Jakarta on Wednesday.
Banking
Lower down payments fail to boost loans Jakarta Post 14th Sep 2015
Lenders have lamented a lack of positive effects following the relaxation of down-payment rules for property and automotive loans amid a lingering weak credit sector in the second half of the year. Credit rules were relaxed in June with Bank Indonesia’s (BI) revision of loan-to-value (LTV) ratios for both property and automotive loans. Under the new rules, which were expected to trigger higher sales of houses, apartments, shop houses, cars and motorcycles, customers are required to pay smaller deposits. “Weak purchasing power has prevented the LTV relaxation from having an impact,” Bank Danamon finance director Vera Eve Lim told The Jakarta Post recently.
Monetary Board OKs another foreign bank Manila Standard Today 14th Sep 2015
The Monetary Board, the policy-making body of the Bangko Sentral ng Pilipinas, approved the application of another foreign lender planning to enter the domestic banking industry. The latest approval brought to six the number of foreign banks whose applications were approved by the board this year. Bangko Sentral Deputy Governor Nestor Espenilla Jr. declined to reveal the identity of the bank. “There was an approval. But the bank did not make a disclosure yet, so I can’t say,” Espenilla said in a text message. The Bangko Sentral refrains from disclosing the names of approved foreign banks because they are listed firms in the country where they are based. The bank regulator only does so after these banks already made a disclosure.
Banks cut non-performing loans VietnamPlus 14th Sep 2015
The banking industry will meet the State Bank of Vietnam's target to reduce non-performing loans (NPLs) to 3 percent or less by the end of this month. This was confirmed by Chairman of the Vietnam Asset Management Company (VAMC) Nguyen Quoc Hung. In June this year, the central bank's Governor, Nguyen Van Binh, required credit institutions to reduce the NPL ratio from 3.72 percent of total outstanding loans reported by the end of June to 3 percent by September 30 this year. Hung estimated that the NPL rate of the entire banking system was currently slightly more than 3 percent, adding that VAMC purchased 77.273 trillion VND (3.43 billion USD) in NPLs from credit institutions in the first eight months of this year.
Loans grow to SMEs, but still not enough to ease concerns Myanmar Times 11th Sep 2015
International institutions are providing more money for on-lending to local small businesses, though experts say demand is large and still mostly unmet. Small entrepreneurs face a tough slog to receive bank loans. The World Bank’s 2014 Enterprise Survey listed access to finance as the largest single concern of local business, ahead of troubles accessing land, electricity and skilled workers. Domestic loans usually come with short terms and have a high bar for collateral. U Zin Phyo Paing, CEO of Future Myanmar and a consultant to small business, said there is lots more room to provide the funds that are needed among entrepreneurs.
Easing of Regulations for Foreigners Opening Indonesian Bank Accounts Imminent Hukum 11th Sep 2015
In order to better support Indonesia’s foreign citizens, the financial services authority (“OJK”) plans to issue a new policy which aims to simplify matters as regards foreigners (“WNA”) opening local bank accounts. However, the accounts in question may only be in foreign currencies. Muliaman D. Hadad, Chairman of the Board of Commissioners at the OJK, recently stated that the new regulation – which will take the form of a Circular Letter (“SE”) –will be finalized this week. Under the new regulation, WNA will be allowed to open foreign currency accounts simply by using their passports. "We will try to be more modest in accommodating their business interests and family needs. When opening an account of USD 50,000, for example, a passport will now suffice. The SE will also state the necessary required documents in the case of foreign citizens wishing to open an account above a certain amount of initial deposit, and this may include temporary residence documentation.
S&P: Company Debts Under Pressure if Rupiah Hits 15,000 per Dollar The Jakarta Globe 10th Sep 2015
With weak domestic demand undermining revenue, Indonesian companies would struggle to pay their overseas debts if the rupiah hits 15,000 against the US dollar, rating agency Standard & Poor's said in a report on Thursday. "Indonesian companies are battling slow revenue and profit growth, oversupply and growing debt levels," Standard & Poor's credit analyst Xavier Jean said in a statement on Thursday. "But they are also fighting the indirect effects of the rupiah depreciation on their margins, balance sheet and liquidity -- and that's a fight over which they have no control," Jean added. The rupiah has declined 15 percent so far this year to trade at 14,322 against the greenback on Thursday, according to data from Bank Indonesia.
Debt-riddled Thailand struggling to revive economic growth Nikkei 9th Sep 2015
Thailand's economy, which was Southeast Asia's growth dynamo for years, is now seeing its biggest dip in two decades. Faced with decreased consumer spending, retailers are making desperate efforts to lure back shoppers. The Thai economy is showing clear signs of having fallen into the so-called "middle-income trap," a situation where an emerging country loses growth momentum as it moves into the middle of the global economic table. Thailand appears to have veered off the growth track before it joins the ranks of industrial nations. Thai consumers have put away their wallets because they have saddled themselves with a huge amount of debt.
Banks face tough balancing act VietnamPlus 7th Sep 2015
Credit this year has grown robustly and might surpass the 15-17 percent annual target, however, commercial banks will find it difficult to balance lending and deposit sources, according to experts. Statistics from the State Bank of Vietnam showed that credit as of August 20 rose 9.31 percent against December last year, doubling the 4.07 percent rising rate in the same period last year. In the period, credit to priority sectors rose sharply, of which lending to high-tech application sectors was up 29.12 percent, agriculture and rural development up 9 percent, the export sector up 4.99 percent, supporting industry sectors up 3.2 percent, and small- and medium-sized enterprises rose 4.07 percent.
Bank Mandiri Scales Back 2016 Profit Growth Target on Fears of Bad Loans Jakarta Globe 7th Sep 2015
State-owned lender Bank Mandiri has set a growth target of 3 to 5 percent for its net income next year, lower than the 9.3 percent it recorded in 2014. "We've made our net income [target] conservative because we need to increase our reserves to prepare for bad loans," Budi G. Sadikin, Bank Mandiri's president director, said in Jakarta on Tuesday. Budi said Mandiri's non-performing loans increased to 2.2 percent at the end of June this year, from 1.9 percent at the end of last year. Despite a higher proportion of bad loans, Mandiri still expects net interest income to grow 12 to 14 percent on an annual basis.
Bank liquidity manageable, but potential risks remain Jakarta Post 4th Sep 2015
The liquidity of the country’s banking industry is manageable despite the weakening of the rupiah against the US dollar and the weak economic growth, according to a study by the Deposit Insurance Corporation (LPS). The result of the study, called the “Banking Stability Index”, was published in the agency’s Report on the Economy and Banking for the period of August, which shows that the country’s banking risks decreased in July from the previous month. Based on the calculation of domestic banks’ financial report as of May, the index declined by six basis points (bps) to 100.25 in July from 100.31 in June.
Citibank names new head of retail banking for Singapore The Straits Times 3rd Sep 2015
Citibank Singapore has named Charles Wong its new retail banking head for the Republic, effective immediately. Mr Wong, who was previously the regional head of Citibanking, Citi@ Work and global banking, will now be responsible for Citibank's retail banking business in Singapore and will have oversight of wealth management, bancassurance, sales and network distribution. Mr Wong, a Singaporean, has close to two decades of banking experience and a thorough understanding of the business, having held a range of roles in retail banking, bancassurance, credit payment products and marketing across Asia Pacific, Citi said in a statement yesterday.
Banking sector to see subdued earnings growth The Star 3rd Sep 2015
The banking sector in Malaysia will continue to face subdued earnings growth prospects amid slower lending, higher credit costs and ongoing net interest margin (NIM) compression. These challenges give Maybank Investment Bank Research the conviction to maintain its “neutral” outlook on the country’s banking sector as a whole. The research house’s “buy” recommendations were only limited to three financial institutions, namely, BIMB Holdings Bhd, Hong Leong Bank Bhd and Hong Leong Financial Group Bhd. “We have trimmed our aggregate loan growth forecast (including foreign loans) to 8.6% and 7.6% for 2015 and 2016 from 9.6% and 8.9%, respectively,” Maybank Research said on Thursday.
Fitch: Major Indonesian Banks Still Resilient to Rupiah, Commodities Weakness The Jakarta Globe 2nd Sep 2015
Indonesian banks are resilient enough to face rising pressures from the nation’s battered rupiah and persistently weak global commodity prices, thanks to their strong profitability and healthy capital, according to Fitch Ratings. In a statement released on Wednesday, the ratings agency said major banks in Indonesia had set aside enough funds from profits in anticipation of bad loans amid the current economic slowdown. The capital adequacy of most tier-1 banks is also still strong enough, Fitch said. “Fitch expects the loss-absorption cushions of the nine major Indonesian banks to remain sufficient even if the environment were to weaken significantly,” analysts from Fitch Ratings said in the statement. “Many major foreign-owned banks tend to have lower core capital buffers … but Fitch believes they are likely to benefit from extraordinary support from their highly rated parent banks.”
Banks bulk up on consumer loans in Q1 The Philippine Star 2nd Sep 2015
The Bangko Sentral ng Pilipinas (BSP) reported yesterday a 27 percent jump in the consumer loans portfolio of universal, commercial and thrift banks in the first quarter of the year on the back of the country’s stable economy. Data released by the central bank showed consumer loans amounted to P932.78 billion from January to March this year or P197.68 billion higher compared to the P735.1 billion recorded in the same period last year. The amount was also P30.3 billion or 3.4 percent higher compared to the P902.47 billion booked in the fourth quarter of 2014. “This sustains the quarter-on-quarter growth in commercial loans that began in 2008,” the BSP said.
Singapore bank lending rises on housing loans in July Customs Today 31st Aug 2015
Singapore’s total bank lending in July rose on stronger demand for property loans and from the general commerce sector, central bank data showed on Monday. Loans and advances by domestic banks in the city-state amounted to S$610.4 billion ($433.1 billion) last month, according to data from the Monetary Authority of Singapore. That compared with S$606.8 billion in June. July bank lending grew 2.2 percent from S$597.4 billion a year earlier. Housing and bridging loans in July increased to S$181.6 billion from S$180.3 billion in June. These loans totalled S$172.6 billion in July 2014.
Rethinking Myanmar’s state-owned banks Myanmar Times 31st Aug 2015
The country’s four state-owned banks account for more than 60 percent of total banking assets, but have not kept up with the reforms and growth at their private counterparts since the sector was liberalised in 2011. Members of parliament have urged the Ministry of Finance to reduce the size of state banks, particularly Myanma Economic Bank (MEB), saying that they should become smaller as private banks become stronger and financial inclusion levels grow. MEB is the largest bank in the country in terms of reach, with 307 branches. It offers rural banking services, but also acts on behalf of the finance ministry to issue highly subsidised loans to other banks including state-owned Myanma Agricultural Development Bank (MADB).
Bank branching shifts to areas outside urban centers Business Mirror 30th Aug 2015
The country’s lenders look more and more toward the provinces for new markets and increasingly less in the urban centers as competition from foreign banks heat up, analysts at Maybank ATR said “Branch expansion is happening in provincial areas where the potential for new markets is greatest. It’s also a logical response to more foreign entrants in the country who will likely be focused in Metro Manila,” analysts Katherine Tan and Arabelle Maghirang said. The Bangko Sentral ng Pilipinas has since encouraged the establishment of branches in the unbanked areas, to which some banks have responded by starting microfinancing ventures, led by Rizal Commercial Banking Corp. and Bank of the Philippine Islands.
Bank loans grow 13.5% to P4.6 T The Philippine Star 29th Aug 2015
The growth in bank lending slowed down in July on the back of lower borrowings from both corporate and individual clients, the Bangko Sentral ng Pilipinas (BSP) reported yesterday. Outstanding loans of commercial banks expanded 13.5 percent to P4.597 trillion in July this year from P4.05 trillion in July last year. The expansion is lower compared to the 14.5 percent growth in bank lending in June. Together with reverse repurchase placements with the BSP, lending rose 13.4 percent to P4.886 trillion in July from a year-ago level of P4.31 trillion.
Maybank expects lower loan growth Brunei Times 28th Aug 2015
Malayan Banking Bhd (Maybank), Southeast Asia’s fourth-largest lender by assets, expects Malaysia’s economy to slow, raising prospects of lower loan growth and spending, its group president and chief executive Abdul Farid Alias said. He added that consumption will be weaker following the implementation of a new goods and services tax in April. “The bank also expects slower loan growth and expenditure in view of the slowing Malaysian economy,” Farid said. He also said the outlook for the equity capital market remained soft in view of the weak market sentiment.
KTB's retail bad loans inching up Bangkok Post 27th Aug 2015
Retail non-performing loans (NPLs) of state-owned Krungthai Bank (KTB) are expected to creep up to 2.8% by year-end, with self-employed workers the main contributor. The forecast reflects KTB's belief that the country's economy will remain fragile for the rest of this year. As of June 30, the country's largest lender by assets had an NPL rate of 2.67% for its retail loan portfolio of 800 billion baht. Self-employed workers who took out mortgages and SME loans from the bank with a maximum credit line of 20 million baht have been hurt by the lacklustre economy and contributed largely to the higher bad loan rate, first executive vice-president Tanyapong Thamavaranukupt said.
RI banks show resiliency amid rupiah fall, OJK says Jakarta Post 27th Aug 2015
The Financial Services Authority (OJK) is confident that domestic banks are resilient enough to face the impact of ongoing rupiah depreciation because they have adequate capital and foreign exchange liquidity, its officials have said. “They [banks] are still strong because in general, they have a long position in foreign exchange [forex],” OJK commissioner for banking supervision Nelson Tampubolon told The Jakarta Post on Wednesday. The “long” position in US dollars means the bank has an adequate level of forex liquidity, based on the calculation between its forex assets and liabilities.
Failing rupiah threatens banks and insurance company The Jakarta Post 25th Aug 2015
Further depreciation of rupiah may force banks and insurance companies go bankrupt, a private banking watch organization warns. The Center of Banking Crisis (CBC) said on Tuesday that the country’s financial sector would be hit hard should the rupiah exceed the Rp 16,000-mark against the US dollar. Such a conclusion was made by CBC after conducting a series of simulation tests. Based on the tests, CBC expects that if the rupiah weakened to Rp 15,000 per dollar, then one insurance company would go bankrupt as the Jakarta Composite Index was expected to lose 20 percent of its value.
OJK warns banks of hard times, falling capital The Jakarta Post 25th Aug 2015
The Financial Services Authority (OJK) has told shareholders in the banking industry to brace for hard times ahead as the national economy is facing growing pressure on global uncertainty. The regulator issued the warning as it was monitoring dwindling capital in several banks due to ongoing economic pressure, said Nelson Tampubolon, OJK commissioner for banking supervision. “We have communicated with shareholders of banks to cautiously overcome this situation and asked them to be prepared for risks,” Nelson told reporters after a meeting with House of Representatives Commission XI on Monday.
BSP adds more perks for rural bank mergers The Philippine Star 22nd Aug 2015
The Bangko Sentral ng Pilipinas (BSP) has issued the guidelines of a new program further sweetening the incentives as well as financial package to encourage mergers and consolidations among rural banks. BSP Deputy Governor Nestor Espenilla Jr. has issued Circular Letter 2015 – 050 laying down the incentives and implementing guidelines for the Consolidated Program for Rural Banks (CPRB). The CPRB was conceptualized by the BSP, Philippine Deposit Insurance Corp. (PDIC), and Land Bank of the Philippines and is intended to strengthen rural banks that play a major role in financial inclusion.
E-Payments
E-commerce helps courier business thrive Jakarta Post 14th Sep 2015
The courier and delivery services industry in the country has recorded relatively stable growth thanks to the growing number of online shopping portals. “While shipment demand among several industries has declined by between 5 percent and 30 percent amid the current economic downturn, e-commerce has been the savior,” said Andy Pesik, the director of PT Birotika Semesta, which operates DHL Express Indonesia. Andy, who is also an active member of the Indonesian Chamber of Commerce and Industry (Kadin), confirmed his company had seen an increase in shipment volume from most e-commerce players, with the biggest surging by around 20 percent.
Telcos agree on unified platform for e-payments The Philippine Star 12th Sep 2015
Consumers may soon easily send and receive money using their mobile phones despite being enrolled in different providers, a Bangko Sentral ng Pilipinas official said. BSP Deputy Governor Nestor A. Espenilla Jr. said in a briefing consultations are currently ongoing for local telcos to create a unified platform for e-payments eyed as early as next year. “There are also conversations going on with respect to how the telcos’ subsidiaries involved in providing electronic money are able to inter-operate their own platforms so the idea there is to move one e-money product to another e-money product,” Espenilla said.
Govt to complete e-commerce roadmap by end of month Jakarta Post 12th Sep 2015
In order to support the country’s burgeoning e-commerce industry, the government is expected to complete its e-commerce roadmap by the end of this month, a top official has said. Communications and Information Minister Rudiantara said that the roadmap, which had been developed since February, was so far 95 percent complete. “About 20 initiatives will be included in the roadmap. It’s more of a guiding set of ideas rather than a list of details, but factors such as investment, tax and accreditation will be included,” he told reporters at his office on Friday.
Why Southeast Asia Is Leading The World’s Most Disruptive Mobile Business Models Tech Crunch 8th Sep 2015
Earlier this summer, more than 35,000 industry leaders gathered at Mobile World Congress Shanghai 2015 to discuss the future of mobile, making it the largest-ever mobile-focused event in Asia. Whereas the majority of the conference focused on new technologies such as 5G and Internet of Things, I was joined by peers from Netflix, Line, Ola Cabs, Flipkart and Twitter to discuss future business models for the mobile Internet. Most of this discussion steered toward China and India, but I was there to focus on Southeast Asia. This perspective (or some would say, bias) isn’t just because my company operates in Southeast Asia, but rather is because of our $16 million dollar bet that innovation and disruption in mobile will be coming out of Southeast Asia far faster than other regions, such as the U.S., China and Japan, as expected.
The future and challenges of ecommerce in the Philippines Tech in Asia 3rd Sep 2015
The internet has a significant place in the lives of many Filipinos. According to statistics on the number of internet users of countries worldwide, the Philippines with over 39 million internet users, ranked 16th worldwide and 3rd in Southeast Asia next to Indonesia and Vietnam. The country would pale in comparison to China and US internet users, but it can’t be denied that Filipinos are among the world’s most active and most participative online users. Thus, it would be no surprise to see the booming e-commerce industry in the future.
Shift to e-payment urged to cut costs The Nation 1st Sep 2015
The cost of making payments at the banks should go down once electronic transactions become more widely used, said Boontuck Wungcharoen, chairman of the Thai Bankers' Association (TBA). Speaking at a Bank of Thailand conference on the trends and developments of digital payments, Boontuck said that in his personal view, e-payments would become more attractive if the fees were seen as reasonable by customers. As it is now, the cost of digital banking is lower than for physical banking, but its fees are higher. Under the TBA's five-year strategy ending in 2019, the association is focusing on transactional efficiency in order to reduce the use of cash.
Insurance
OJK Warns Insurance Industry of Upcoming Risks Jakarta Globe 12th Sep 2015
Indonesia's Financial Services Authority, or OJK, has warned the country's insurance industry about the risks caused by the continuing uncertainty in the global economy, even though the industry performed well in the first half 2015. "There are two [major risks] in the insurance industry. [...] It's the way the companies invest their funds and the quality of their own products," said Firdaus Djaelani, a commissioner at the OJK who oversees non-banking financial institutions. Firdaus made the comment on the sidelines of a seminar on "Managing Risk in the New World" organized by Prudential Life Assurance in Jakarta on Thursday. According to Firdaus, the OJK has found several insurance companies that need to be watched closely in the face of the economic slowdown, but he refused to name any names.
Insurers push for mandatory earthquake insurance The Philippine Star 9th Sep 2015
The Philippine Insurers and Reinsurers Association (PIRA), the umbrella group of non-life insurers, reiterated the need for a mandatory earthquake insurance for residential buildings and small to medium businesses. The PIRA noted that less than one percent of the 14 million people in the metropolis are insured against earthquakes. The group said millions of Filipinos would be devastated with no one but the government and foreign aid to depend on when a powerful typhoon hits the country.
Malaysia: General insurance mart to be stagnant in 2015-16 Asia Insurance Review 8th Sep 2015
The outlook for the Malaysian general insurance industry for the second half of this year and 2016 is expected to be stagnant due to the fall in new car sales and in the market value of used cars. The Chief Executive Officer of the Malaysian Insurance Institute (MII), Mr Syed Moheeb Syed Kamarulzaman, said that the insurance industry's growth depended on the two factors as 50% of its portfolio was motor business, reported the Bernama News Agency. He said when the market value for used cars declined, it would affect insurance premiums and when new car sales slowed down, the lower sales would affect them as well.
Indonesia: Life insurers shift to deposits from stocks Asia Insurance Review 7th Sep 2015
Indonesia's life insurance industry is increasing the proportion of time deposits in its investment portfolio and decreasing that of stocks after suffering a significant slump in investment returns amid the ongoing global stock market rout. The Indonesian Life Insurance Association (AAJI) revealed last week that its members had decreased investment placements in stocks to 25.5% of overall portfolio in the second quarter this year from 29% in the same period last year, reported The Jakarta Post. Life insurers saw investment returns plunge in the April-to-June period this year.
Malaysia: 2nd biggest bank inviting bids from insurers Asia Insurance Review 7th Sep 2015
Malaysia's second biggest bank, CIMB Group Holdings, has invited bids from insurers for an agreement to distribute their general insurance products in four Southeast Asian markets, a deal that could fetch it US$400 million, reported Reuters citing people with direct knowledge of the matter. The deal is expected to draw interest from companies, including Australia's QBE Insurance Group, Tokyo Marine Holdings, France's AXA and Italy's Generali among others, the people said. German insurer Allianz's 10-year bancassurance agreement to distribute general insurance products through CIMB's branches in Malaysia ends in 2017. Allianz is looking to renew the partnership, people familiar with the process said.
Asean: Lloyd's study shows Asian cities' exposure to potential economic loss Asia Insurance Review 3rd Sep 2015
Southeast Asia's top 15 largest cities have US$300 billion at risk from a series of threats over the next decade, according to new research launched by Lloyd's. The Lloyd’s City Risk Index 2015-2025 presents the first-ever analysis of economic output at risk (GDP@Risk) in 301 major cities across the world from 18 manmade and natural threats over a 10-year period. Based on original research by the Cambridge Centre for Risk Studies at the University of Cambridge Judge Business School, the Index finds that a total of $4.6 trillion of projected GDP is at risk in these cities around the world.
OJK to throw sinking insurance firms a life buoy The Jakarta Post 1st Sep 2015
The Financial Services Authority (OJK) is planning a series of measures to help the country’s insurance industry weather the volatility of the rupiah and the current global economic slowdown. The measures, which come into effect today, are seen as highly urgent, with a number of insurance companies having been hit hard by the weakening currency. OJK executive head for non-banking financial institutions Firdaus Djaelani said the regulator had decided to act after recent slumps in the rupiah and in stock prices affected the solvency of some insurance companies.
Vietnam: Insurance market showing robust growth Asia Insurance Review 31st Aug 2015
The total premium revenue in the Vietnamese market for the first five months of this year stood at VND24,869 billion (US$1.11 billion), an increase of 22.7% over the corresponding period of 2014, according to data from the Insurance Supervisory Authority (ISA) of the Ministry of Finance. Non-life insurance premiums are estimated at VND12,287 billion, rising by 14.4% from the corresponding period in 2014 while life insurance premiums stood at VND12,582 billion, up by 32% over the same period of 2014. In the non-life market, the market leader in terms of premiums for the first five months of this year was PVI with VND2,565 billion, up 7.88% over the same period in 2014, representing a market share of 20.88%.
Krungthai-AXA banks on health growth Bangkok Post 28th Aug 2015
Despite anticipating an industry slowdown in the second half caused by the struggling economy, Krungthai-AXA Life Insurance expects health insurance products to be the primary factor boosting its premiums later this year. "The main sources of growth [in the second half] will be the continuation of our push of protection and health products because I feel that health insurance is something that has a lot of potential in Thailand," said chief executive officer David Korunic. An expansion of the middle-class population and the country's demographic shift to an ageing society are factors contributing to the long-term growth outlook of the company's insurance business, he said.
Indonesia: General insurance sector post 10% premium growth in 1H Asia Insurance Review 26th Aug 2015
The Indonesian general insurance industry has posted gross premium income of IDR28.05 trillion (US$2 billion) for the first six months of this year, 10.1% higher than the IDR25.48 trillion reported for 1H2014, according to the General Insurance Association of Indonesia (AAUI). Mr Julian Noor, AAUI Executive Director of the General Insurance Association of Indonesia Julian Noor said that despite Indonesia's flagging economy, the insurance industry was still able to grow compared to other industries, reported the Bisnis news website.
Vietnam: Top 2 life insurers in neck-to-neck competition Asia Insurance Review 25th Aug 2015
Vietnam's life insurance market is seeing its top two players in stiff competition, with the industry leader Prudential holding a 29.88% share for the first four months of this year, followed by its closest rival Bao Viet Life with 29.87%, according to the latest figures from the Insurance Supervisory Authority (ISA) of the Ministry of Finance. Also among the top five life insurers are Manulife Vietnam with a 11.58% market share; AIA Vietnam with 9.55%, and Dai-ichi Life Vietnam with 8.54%, according to ISA data. The life insurance industry reported premium revenue of over VND9 trillion (US$399 million) for the first four months of this year.
Philippines: Sun Life posts highest premiums in 1H Asia Insurance Review 21st Aug 2015
Sun Life of Canada (Philippines) leads life insurers in the country in the first half of this year, chalking up the highest premium income, data from the Insurance Commission (IC) show. Sun Life ranked first among life insurers, with total premiums of PHP16.313 billion (US$351.3 million) for the first six months of this year, that were 46% higher than the PHP11.14 billion posted for the corresponding period last year, according to quarterly statistics submitted to the IC. The preliminary data also show that the other nine insurers among the top 10 life insurance companies for the first half of this year in terms of premiums were: Philippine AXA Life, BPI Philam, Philam Life, Pru Life Insurance Corp of UK, Insular Life Insurance, Sunlife Grepa Financial, Manufacturers Life Insurance (Philippines), PNB Life Insurance and Generali Pilipinas Life Assurance.
Malaysia: Life insurers report flat new business premiums for 1H Asia Insurance Review 19th Aug 2015
The life insurance industry saw new business weighted premiums decline by 0.7% to MYR2.024 billion (US$493 million) for the first half of the year, from MYR2.040 billion during the corresponding period last year, according to the Life Insurance Association of Malaysia (LIAM). The association attributed the flat growth to a challenging business environment tempered by rising consumer awareness. LIAM said that the gross sum assured for all new individual policies rose by 8.1% to MYR45.2 billion from MYR41.8 billion in the previous corresponding period. This increase in protection was contributed by investment-linked plans, which saw a 9.6% growth, and traditional plans, with 3.5% growth.
PHL life insurance market among most liberalized in Southeast Asia Business World 19th Aug 2015
The Philippine life insurance industry is the second most liberalized market among countries in the Association of Southeast Asian Nations (ASEAN), a study made by Milliman, Inc., a global actuarial and consulting firm showed, but penetration is still one of the lowest in the region. The Milliman ASEAN Liberalization Index (MALI), published in a report entitled “Potential Implications of the ASEAN Economic Community for the Life Insurance Industry,” showed that the Philippines scored 58 points out of a total 100 in the overall index, putting it at second place among the 10 ASEAN member economies behind Singapore, which scored 70 points. Countries were rated across eight features “that capture some key characteristics of a life insurance market, and assessed the relative stage of development or openness of each feature for each ASEAN country in the form of an index.”
Market Regulation
SEC to tighten disclosure rules Bangkok Post 14th Sep 2015
The Securities and Exchange Commission (SEC) will soon tighten information disclosure requirements for SET-listed state-owned enterprises (SOEs) to comply with a bill to establish a super holding company, expected to come into force by year-end. The information disclosure will focus on corporate governance, board appointments and business operations to make sure that these state enterprises work in an efficient and transparent manner and free from political intervention, Chalee Chantanayingyong, SEC deputy secretary-general, said.
DOF backs easing of Bank Secrecy Law The Philippine Star 10th Sep 2015
The Department of Finance (DOF) said yesterday the easing of restrictions in the Bank Secrecy Law could boost the national coffers by at least P300 billion. Finance Secretary Cesar Purisima said the lifting of the existing Bank Secrecy Law for suspected tax evaders and the use of tax evasion as a predicate crime in the Anti-Money Laundering Act (AMLA) would boost government coffers as more self-employed individuals are expected to pay the correct taxes. Purisima said the proposed legislation amending the existing Bank Secrecy Law would not be passed within the remaining term of President Aquino as elections is just around the corner.
RI to adopt financial data exchange globally Jakarta Post 8th Sep 2015
The government is looking to adopt a global standard on exchange of financial information in 2017 in the hope of addressing the country’s tax revenue issues, according to a Cabinet minister. Finance Minister Bambang Brodjonegoro said the move would enable the government to collect financial data on accounts belonging to Indonesian citizens or corporations that are recorded overseas, as well as allowing other countries to source similar information on their own citizens or corporations in Indonesia’s jurisdiction. “We are one of the early adopters [of the exchange system]. We will adopt it in September 2017. The US, Japan and other countries will adopt it in 2017 as well, while global implementation will occur in 2018,” Bambang said over the weekend after attending the G20 Finance Ministers and Central Bank Governors Meeting in Ankara.
Henares wants Congress to amend bank secrecy law to hike tax haul Business Mirror 7th Sep 2015
Internal Revenue Commissioner Kim Jacinto-Henares wants Congress to pass a law lifting particular provisions to the bank-secrecy law to enable the agency to go after tax evaders and compensate for revenue losses presented by the proposed reduction in income tax to 25 percent. “If the [legislature] will pass a law to lift bank secrecy for tax purposes and make tax evasion a predicate crime, there might be some room to adjust,” Henares said in a note to Communications Secretary Herminio B. Coloma Jr. “Without it or any revenue measure, we will still be looking at an amount that the government cannot collect,” she said. The note highlights the need to craft legislation compensating for revenue losses presented by the proposed reduction in income tax to only 25 percent from the current 32 percent, the highest in the region.
Indonesia's OJK to Loosen Regulation on Foreign Currency Accounts for Non-Nationals The Jakarta Globe 7th Sep 2015
The Financial Services Authority, or OJK, says it will issue a new regulation which will make it easier for foreigners to bank in foreign currencies in Indonesia — as part of attempts to curb the plunge of rupiah against the US dollar. The chairman of the OJK's board of commissioners, Muliaman D. Hadad, on Monday said the planned regulation was expected to increase Indonesia's foreign exchange reserves. He said the OJK was particularly targeting frequent visitors to the country, who make up 20 percent of the average 12 million foreigners visiting Indonesia every year. “Some of those foreign visitors don't come to Indonesia only once, but they may come back here six or seven times a year because they have some business or family purposes to tend to,” Muliaman said on the sidelines of a meeting in Nusa Dua, Bali. “[The frequent visitors] make up 20 percent of total annual visits,” he added.
Indonesia Eases Debt Mark-To-Market Rules for Long-Term Investors The Jakarta Globe 4th Sep 2015
Indonesia relaxed on Friday mark-to-market rules for debt securities held by insurance companies and pension funds, a move some analysts said could help boost investor demand for local debt. The Indonesia Financial Services Authority, the country's financial regulator, said insurance firms can now amortise the purchase value of their debt securities until the debt matures. Previously the firms had to record the market value, which may have fallen significantly amid a global rout, in their books. They can also adjust the minimum amount of their risk-based capital to keep a certain level of solvency, the regulator said in a press statement. "Some insurance firms and pension funds might be more willing to buy Indonesian debt after previously being worried about having to mark to market," said Ariawan, a fixed income analyst at Sucorinvest Central Gani.
Approval still eyed for bill easing taxes on premiums Business World 3rd Sep 2015
A measure seeking to lower taxes on non-life insurance premiums may still be approved before President Benigno S.C. Aquino III ends his term next year, putting the sector at par with its neighbors in the region. Insurance Commissioner Emmanuel F. Dooc made the pronouncement as he cited the commitment made by top Congress officials to pass the proposal. “We’re trying to secure the approval within the 16th Congress, that’s the timeline, and I think it will be approved by then,” Mr. Dooc told reporters in a press chat last Tuesday.
Crisis Protocol to Protect Banking Sector Ready by End of Oct. The Jakarta Post 3rd Sep 2015
A crisis protocol bill, set to provide decision makers in the country with a strong legal grounding to take necessary action during times of crisis, is expected to be ready by the end of October, legislators said on Wednesday. Lawmakers representing all 10 factions at Commission XI of the House of Representatives, which supervises finance, banking, non-bank financial institutions and national development planning, has agreed to start discussions on the bill dubbed the Financial System Safety Net, or JPSK, in the near future. "We agreed to continue the discussion on such a bill in a first-degree discussion at Commission XI," said Commission XI chairman Fadel Muhammad on Wednesday, adding the commission will establish a special team to detail the bill. Fadel said legislators at the commission expect the bill to be ready by Oct. 30, so that policymakers can take necessary measures if the country faces a crisis — including a possible massive capital outflow after the US Federal Reserve increases interest rates.
OJK Confirms Sweeping Liquidity, Bonus Reform by Year's End The Jakarta Globe 2nd Sep 2015
The Financial Services Authority, or OJK, will this year release a regulation about bank liquidity coverage ratios and remuneration, an official has confirmed. The forthcoming regulation is part of the OJK's efforts to reform the national banking sector to comply with Basel III, the latest update of regulatory baselines for financial institutions introduced by international regulators. “This year, we will probably release [regulations] about LCR and remuneration. A regulation on leverage ratio may only be released next year,” said Mulya Siregar, a deputy commissioner for banking supervision at the OJK. LCR is a standard used to measure bank liquidity risk. The bank remuneration policy will establish standards for remuneration based on the performance and risk's of banks. Mulya explained this regulations, which are closely related to banks' liquidity ratio, will not be imposed on small banks with a domestic market orientation, instead it is targeting large banks or branch offices or subsidiaries of foreign lenders. He said small banks with domestic market orientation have only a small exposure to external risks.
Indonesia central bank tightens rules for domestic dollar purchase The Straits Times 31st Aug 2015
Indonesia's central bank has tightened its rules for domestic purchases of U.S. dollars as it tries to bolster the fragile rupiah. Effective immediately, Bank Indonesia said dollar purchases at banks or money changers above US$25,000 require a document showing the underlying transaction, such as payments for imports, school tuition and health treatment abroad, or offshore loans. The previous threshold for buying dollars without documents was $100,000. "With this improvement in our regulation, we hope the domestic foreign exchange market will become more stable and will reflect the real demand of foreign exchange for people's economic activity," Bank Indonesia said in a statement issued late on Friday.
House passes depositor protection bill on second reading Business Mirror 31st Aug 2015
The Philippine House of Representatives, in its plenary session on August 25, passed on second reading a bill strengthening the deposit- insurance system in the country. Rep. Nelson P. Collantes of the Third District of Batangas, chairman of the House Committee on Banks and Financial Intermediaries, authored House Bill (HB) 6020 to amend Republic Act 3591, as amended, otherwise known as the Charter of the Philippine Deposit Insurance Corp. (PDIC). HB 6020 aims to institutionalize much-needed reforms in the field of deposit insurance, and resolution and receivership of banks. The proposed legislation is intended to ensure the protection of depositors and promote financial inclusion. He expressed optimism that HB 6020 will soon be passed on third and final reading.
BI Allows 1-Month Transition Period for Tighter Forex Rules Jakarta Globe 28th Aug 2015
In a bid to ease pressure on the rupiah, Bank Indonesia has tightened its rules regarding the purchase of foreign currency, but the central bank is allowing a transition period of a month, it said in a statement on Friday. Starting Aug. 25, any person or company seeking to purchase $25,000 or more in any foreign currency must submit supporting documents for the underlying transaction, such as for offshore debt repayments, international trade settlements or the payment of dividend. Previously the central bank only required such documents for transactions of $100,000 or above.
No foreign-local joint ventures to list on YSX at first Myanmar Times 27th Aug 2015
Joint ventures between local and foreign companies will not be permitted to list on the Yangon Stock Exchange at first, according to Dr Maung Maung Thein, chair of the Securities Exchange Commission of Myanmar. While the rules will eventually be changed to allow for foreign-local joint ventures to sell shares, that may be some time off. At first, listing will be limited to local public companies. The main hurdle is the existing Companies Act, which defines any foreign ownership in an otherwise local company – even as little as one share – as making the company foreign.
House approves amendments to PDIC charter Business World 26th Aug 2015
The House of Representatives has approved a measure amending the Philippine Deposit Insurance Corp. (PDIC) charter to provide more protection to depositors. The chamber approved House Bill 6020 on second reading late Tuesday. The substitute bill consolidates four proposals filed by lawmakers before the House committee on banks and financial intermediaries. “It is hereby declared the policy of the state to strengthen the mandatory deposit insurance coverage system to generate, preserve, maintain faith and confidence in the country’s banking system, and protect it from illegal schemes and machinations,” the bill read. Republic Act 3591 or the PDIC charter was last amended in 2009.
The House to Continue Talks on JPSK Bill After Govt Drops Immunity Clause The Jakarta Globe 25th Aug 2015
The House of Representatives agreed on Tuesday to continue a discussion with the government on the long-awaited Financial System Safety Net draft bill that would give authorities clear instructions on how to respond during a financial crisis. The move come amid a steep depreciation of the rupiah and global stock market crash ̶ both alarming reminders of the country's past economic downturns. The government issued a regulation in lieu of law in 2008 on financial safety nets, providing authorities with a legal base to take actions that could counter the impact of a global financial crisis. The House rejected the regulation due partly to controversies surrounding the Rp 6.7 trillion ($477.6 million) bailout of Bank Century and an article in the regulation that would shield policymakers from subsequent legal scrutiny.
Indonesia C.Bank Changes Auction Mechanism to Support Fragile Rupiah The Jakarta Globe 24th Aug 2015
Indonesia's central bank has changed the auction mechanism of several monetary instruments and offered longer tenures as part of measures to support the shaky rupiah. Effective Wednesday, Bank Indonesia changed its auction mechanism for reverse repurchase (reverse repo) of government bonds and issuance of BI certificates to offer a fixed rate instead of a variable rate, Doddy Zulverdi, executive director of monetary management, said on Thursday. BI also offered several longer tenure instruments like 3-month reverse repo for banks, Zulverdi said, and will issue more of its 9-month and 12-month certificates, which are available for investors as well as banks. The change is aimed at absorbing banks' excess short-term liquidity to prevent its use to speculate against the rupiah .
Indonesia Exchange Imposes 10 Percent Drop Limit on Shares Bloomberg 24th Aug 2015
The Indonesia Stock Exchange narrowed the daily limit on share-price losses to 10 percent in a bid to stem volatility after the benchmark index fell to a 20-month low. The bourse cut the cap from between 20 percent to 35 percent starting Tuesday, the same day that state-owned companies collectively plan to spend at least 10 trillion ($710 million) on share buybacks. The benchmark Jakarta Composite Index rallied the most since March 2014. Indonesia becomes the third Asian nation to follow China’s lead in imposing extraordinary measures to sandbag share markets amid a global rout triggered by the surprise devaluation of the yuan. Taiwan on Sunday issued a limited ban on short-selling after its benchmark index entered a bear market last week, while South Korean financial authorities were ordered to implement measures when necessary to shore up share prices.
Banks’ offshore accounts under scrutiny amid weakening rupiah The Jakarta Post 19th Aug 2015
Regulators are scrutinizing local banks’ accounts placed overseas — called nostro accounts — in an attempt to the guard stability of the banking industry. Bank Indonesia (BI) and the Financial Services Authority (OJK) have held joint focus group discussions with banks to assess the impact of the exchange rate volatility to their operations. “One part that we are monitoring is the movement of their nostro accounts, whether they undergo a significant rise. If they do, we can take supervisory action to discover the cause,” he said during a press conference held by BI on Tuesday.
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