| Market Development
ValueCap To Invest In 6 Industries The Malaysia Reserve 27th Oct 2015
State-owned stock investment vehicle ValueCap Sdn Bhd has identified undervalued companies shares that it will buy using its RM20 billion fund as part of the government economic mitigation strategy. Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar said the public-listed companies are in banking, consumer industry, services, construction, plantations and property. It has been previously reported that ValueCap would start buying shares in November. Abdul Wahid named Malayan Banking Bhd (Maybank), United Plantation Bhd and real estate investment trusts (REITs) as examples of ValueCap’s preferred companies for its share-buying strategy. “The choice of stocks will not be based on sentiment or speculation,” he said in a written parliamentary reply. He said instead the companies would be picked on strong and consistent income records, steady cashflow and headed by excellent management. “Companies which provide returns in terms of good dividends and defensive are some examples of ValueCap’s choice. REITs are providing dividend returns more than 5% per year,” he added.
Malaysia Aims to Boost Islamic Finance With New Initiatives in Budget Jakarta Globe 26th Oct 2015
Malaysia is hoping new incentives for “ethical” Islamic bonds and home loans will strengthen the country’s shariah-compliant investment market and lure more private players to one of the world’s largest Islamic financial sectors. The government announced the new incentives in the 2016 budget which was delivered in parliament on Friday, as Prime Minister Najib Razak doled out populist incentives to shore up support. The government originally introduced the concept of “ethical” sukuk to finance “sustainable and responsible investment” (SRI) in projects such as wind and solar power generation or affordable housing, in 2013. Sovereign wealth fund Khazanah sold 100 million ringgit ($23.7 million) of SRI sukuk in May this year but so far there have been no other issues in the ethical sukuk market.
New platform for financial inclusion Philippine Daily Inquirer 26th Oct 2015
Around 500 representatives from government agencies, financial service industry, microfinance institutions, non-profit organizations, technology providers and other key stakeholders will gather in Metro Manila this week for the launch of a new platform to accelerate financial inclusion in the Asia-Pacific region. The inaugural Asia-Pacific Financial Inclusion Summit which will held at the Makati Shangril-La in Makati from October 27 to 29 is organized by the Citi Foundation, The Foundation for Development Cooperation (FDC) and the Financial Times, in partnership with the Banking With The Poor Network. It is supported by host partner Bangko Sentral ng Pilipinas (BSP). The summit is a consolidation of two leading fora in the Asia Pacific region – the Citi-FT Financial Education Summit and the Asia Microfinance Forum. The new platform seeks to serve as a catalyst for debate, knowledge and best practices sharing, and the formation of partnerships among practitioners, policy-makers and stakeholders to deliver impact and achieve scale in financial inclusion and drive economic progress in the region.
Next govt should carry on reform – Tetangco Manila Standard Today 26th Oct 2015
Develop the Philippines’ capital markets — this is central bank Governor Amando Tetangco Jr.’s main recommendation to whoever ends up leading the next administration. “We really need to develop the capital market – there’s no question about that. We have a long way to go as far as the domestic capital market is concerned. That is what the next administration should do,” Tetangco said in a roundtable interview with reporters and editors of The Manila Times last week. The Bangko Sentral ng Pilipinas (BSP) chief said implementation of a capital market development blueprint—put together by the Securities and Exchange Commission (SEC) with the assistance of different agencies—would help a lot in sustaining the country’s economic growth.
PHB to boost Amanah Hartanah Bumiputera fund size to RM3bil The Star Online 26th Oct 2015
Pelaburan Hartanah Bhd (PHB) will increase the Amanah Hartanah Bumiputera fund size to RM3bil with the issuance of additional units worth at least RM1bil next year. Its managing director and chief executive officer, Datuk Kamalul Arifin Othman said the new units would be launched by the first half of 2016. “With the additional units worth at least of RM1bil, the total fund size will reach RM3bil,” he told Bernama after the launch of the Nu Sentral and Menara 1 Sentrum in KL Sentral here by Prime Minister Datuk Seri Najib Razak, today. At a press conference earlier, Kamalul Arifin said AHB was a syariah-compliant with quality real-estate backed trust fund. “This investment enables bumiputra investors to participate as beneficial owners of Malaysia’s real estate assets. “AHB income distribution is tax-exempt and payable net of zakat, stand-by for launch next year,” he said.
Most Pinoys still rely on informal credit – World Bank The Philippine Star 22nd Oct 2015
A majority of Filipinos still prefer informal sources of credit for their basic needs rather than using formal or banking sources, a World Bank survey showed. Based on the survey, Filipinos are more likely to use informal credit and savings services, including “5-6” and paluwagan, than formal lending services. The survey showed 78 percent of respondents use informal financial series and 56 percent use informal credit only. Another 13 percent tap the microfinance sector and 12 percent use both formal and informal credit. The World Bank noted those residing in urban areas are significantly more likely to use informal credit while rural residents account for the majority of users of informal savings products.
PPP proponents gain access to capital markets to finance projects The Philippine Star 21st Oct 2015
The country’s securities regulators are preparing the framework that will allow companies engaged in public-private partnership (PPP) projects to raise funds through equities and bond issuances. Philippine Stock Exchange (PSE) president Hans Sicat is hopeful the framework would be ready by next year. “We are pleased to take part in this continuing initiative with the PPP Center, SEC, and the ADB. Now that we have covered the opportunities and risks for capital raising through securities and bond issuances, we hope that the actual framework for both will be forthcoming,” Sicat said. During a forum entitled “Accessing the Philippine Capital Markets for PPPs,” the speakers and panelists from the government and private sector discussed the ideal structure for PPP project bonds as a source of financing.
Asset Management
BKPM: investment in Indonesia grows 17% in the q3 Jakarta Post 26th Oct 2015
Indonesia's investments grew 17 percent in the third quarter of this year compared to the same period last year, the Investment Coordinating Agency (BKPM) said on Thursday. Data from BKPM showed that the investment grew to Rp 140.3 trillion compared to Rp 119.9 trillion in the July to September period in the previous year. Foreign Direct Investment in the third quarter grew 18.1 percent to Rp 92.5 trillion while domestic direct investment rose to Rp 47.8 trillion or up 14.9 percent from the same period in the previous year. The total investment in the January to September period this year accelerated 16.7 percent to Rp 400 trillion. In the first nine months, foreign direct investment rose 16.9 trillion or Rp 266.8 trillion and direct domestic investment rose 16.4 percent to Rp 133.2 trillion, according to the agency's data. BKPM's chief Franky Sibarani said he was optimistic the agency would reach the 2015 investment target, as the current total accounted for 77 percent of the agency's Rp 519.5 trillion investment target this year. President Joko "Jokowi" Widodo's administration focused on investments to bolster the country's economy amid the global economic slowdown and rupiah depreciation. The government had issued pro-investment policies in the past year such as the one-stop integrated service for investment permits (PTSP) and also economic policy packages expected to lure investors to the country
Asean renews forex liquidity support program The Philippine Star 25th Oct 2015
The Association of Southeast Asian Nations (Asean) has renewed for the fifth time the short-term foreign exchange liquidity support for member countries experiencing balance of payments difficulties. The Bangko Sentral ng Pilipinas (BSP) and other Asean member central banks signed the fifth supplemental memorandum of understanding on the Asean Swap Arrangement last Oct. 8. BSP Governor Amando Tetangco Jr. signed the MOU extending the ASA for two years starting Nov. 7. The ASA involves the provision of $2 billion short-term foreign exchange liquidity support for Asean member countries that experience balance of payments difficulties. The Philippines’ contribution commitment of $300 million allows the country to draw up to $600 million as the need arises. The ASA provides the country an additional safety net similar to other regional financial arrangements including the Chiang Mai Initiative Multilateralization under the Asean+3.
Derivatives business drives up SGX profit by 28% Nikkei Asian Review 22nd Oct 2015
Singapore Exchange (SGX) has reported a net profit of 99 million Singapore dollars ($71.2 million) for the quarter ending in September, up 28% from the same period last year. Despite low liquidity and slow initial public offering activity in the securities market, the high-paced growth of the derivatives business led to the spike in revenue and profit. Overall operating revenue grew 30% on year to S$219.6 million. Revenue from derivatives business increased 69% year on year to S$90.9 million, thanks to a huge boost in traded volumes of equity-based futures products. Traded volume of SGX FTSE China A50 Index futures more than doubled year on year, while Japan's Nikkei Stock Average futures grew by 30%. Derivatives accounted for 41% of SGX's total revenue, up from 32% a year ago. Iron ore performed well among commodities futures.
If US hikes its rate, will there be another Asian currency crisis? Nikkei 21st Oct 2015
While the Federal Reserve Board did not hike its benchmark interest rate in September, the U.S. central bank is still likely to start raising the rate by the end of the year. Fears are rising among market players that emerging market currencies may weaken significantly against the dollar if the greenback, which has been flowing into emerging markets, flows back to the U.S. as a result of a U.S. policy rate hike due to investors seeking higher interest rates. The Japan Center for Economic Research has recently conducted analysis of the vulnerability of the currencies of 15 emerging market and Asian countries, using five economic indicators. As a result, the research institution found that the Malaysian currency suffers relatively high vulnerability in comparison to the currencies of other Southeast Asian countries.
Banking
Bank profits squeezed by growing competition Myanmar Times 27th Oct 2015
As rivalry in the banking sector heats up, several lenders are reporting falling profits. In an attempt to lure customers over the past year, banks have fiercely competed in several areas including remittance fees and deposit rates. Public companies including Global Treasure Bank (formerly under the Ministry of Livestock, Fisheries and Rural Development) and Asia Green Development Bank say that margins are being squeezed. While remittance volumes for Global Treasure Bank rose by 27 percent in 2014-15, remittance income fell by half, said the bank’s director U Kyaw Lwin.
1MDB says interest, principal payments done on time The Malaysian Insider 27th Oct 2015
Strategic development company, 1Malaysia Development Berhad (1MDB), has not defaulted on its loan repayments and is fully committed to repaying its debts of RM42 billion, said its president and group executive director Arul Kanda Kandasamy. He added that the move would give more breathing space for the company to effectively implement its rationalisation plan. "We have consistently met both our interest and principal debt repayments on time. "In the course of 2015, we have repaid the principal and serviced the interest," he told reporters after a recording a special programme entitled "Bernama TV with Arul Kanda" to be aired tomorrow at 10pm on Astro 502, HyppTV 410 and www.bernama.com.
Bursa ends lower on lack of interest The Malaysian Insider 27th Oct 2015
At 5 pm, the benchmark index was down 9.84 points at 1,696.95, after hovering between 1,964.88 and 1,703.75 throughout the day. Market breadth was negative as losers thumped gainers 608 to 253, while 271 counters were unchanged, 684 untraded and 41 others were suspended. Volume decreased to 1.57 billion shares, worth RM1.42 billion, from 1.91 billion shares, worth RM1.80 billion, recorded on Monday. Most Asian markets were mixed as investors stayed on the sidelines ahead of the US Federal Reserve's two-day meeting with the monetary policy expected to hog discusisons.
Maybank issues RM1.1bil notes The Star Online 27th Oct 2015
Malayan Banking Bhd (Maybank) has completed the issuance of RM1.1bil Basel III-compliant tier 2 subordinated notes under the RM7bil subordinated note programme. The bank told Bursa Malaysia that the notes, with a 10-year tenure, were callable on the fifth anniversary date from the issue date and on every coupon payment date thereafter with the first call date on Oct 27, 2020. The coupon rate is 4.9% per annum. “The proceeds from the subordinated notes will be utilised to fund Maybank’s working capital, general banking and other corporate purposes,” it said.
Moody's Confident in Indonesian Banking System, Despite External Concerns The Jakarta Globe 27th Oct 2015
Indonesian banks are resilient and capable enough to weather ongoing currency volatility and growth contractions in the global and national economy, according to a recent report from rating agency Moody's Investors Service. The rupiah has declined nearly 10 percent against the American greenback since the beginning of the year, largely due to pressure from the stronger US dollar against the backdrop of a sluggish economy moving at its weakest pace in six years in the first half of the year. The persistent downward pressure on the local currency has spurred some concerns over local lenders and their large exposure to overseas debts — which has doubled in the past five years to $170 billion by June 2015. "Recent volatility in emerging markets around the world has given rise to questions about the tail risks faced by Indonesian banks. However ..., the risks seem manageable," Srikanth Vadlamani, vice president and senior credit officer at Moody’s, said in a statement on Tuesday.
Bank Danamon profits slide on weak loan business Jakarta Post 27th Oct 2015
The nation’s sixth-largest bank by assets, Bank Danamon, has revealed that its net profits after tax reached Rp 1.9 trillion (US$138.5 million) in the first nine months of 2015, down 10 percent from Rp 2.106 trillion in the same period last year. The decline in profits was triggered by a weak loan business in the micro and auto financing segments, a Danamon official said in Jakarta on Monday. Danamon director and chief financial officer Vera Eve Lim said the bank had seen some improvement though over the past few months, as its after-tax net profit grew by 14 percent to Rp 643 billion in the third quarter from the second quarter. "We have implemented several changes at the beginning of this year to improve our business performance. These changes show promising results, although they are still at an early stage," said Vera.
Bank deposits up to P6.8 T in July The Philippine Star 27th Oct 2015
Bank deposits rose 7.3 percent in the first seven months, boosting the total resources of the country’s banking industry, the Bangko Sentral ng Pilipinas (BSP) reported yesterday. Based on the central bank’s Third Quarter 2015 Inflation Report, total bank deposits amounted to P6.8 trillion as of end-July, P500 billion higher compared to P6.3 trillion in end July last year. The BSP said the growth in deposits recorded in end-July was slower than the 8.2 percent growth posted in the previous month. The central bank said savings deposits increased nine percent in end-July while demand deposits jumped 12.3 percent.
Bank Mantap expects to be mid-sized lender by 2017 Jakarta Post 26th Oct 2015
New micro lender Bank Mandiri Taspen Pos (Mantap) expects significant capital growth in the long term as it aims to become a mid-sized bank with a vastly larger business portfolio. The bank, which is owned by three state-owned companies, currently has ample capital to help grow its business and expand its network, according to its president director, Nixon LP Napitupulu. “We are convinced that we will be a BUKU II bank by 2017 and we will have no issues with capital in the next two years at least,” Nixon said in a press briefing on Friday, adding that Mantap currently was still in the BUKU I category. BUKU II banks are those with core capital of between Rp 1 trillion (US$73 million) and Rp 5 trillion, while BUKU I banks hold less than Rp 1 trillion in capital.
Vietnam battling bad-debt woes The Star 26th Oct 2015
With a shabby facade, bars on its windows and flanked by a hair salon and a knock-off clothing store, the Vietnam Asset Management Co (VAMC) looks more like a backstreet pawnshop than a much-heralded bad-debt bank. This no-frills office with PVC sofas, chintzy 1980s decor and no elevator houses what’s been the central bank’s shoestring saviour for wayward banks and risky borrowers who ran up US$20bil in bad debt in 2012 and almost brought a promising economy to its knees. Even as more debts sour at in Thailand and Indonesia and also in China, Vietnam’s US$295bil banking sector has slashed non-performing loans (NPLs) to 2.9% of total loans by September from 17.2% in 2012.
CIMB Thai to target less aggressive loan growth The Nation 26th Oct 2015
CIMB Thai Bank will not speed up its loan expansion from next year onward as it believes its asset size of Bt300 billion is a suitable scale for running its business in Thailand, president and chief executive officer Subhak Siwaraksa said last week. For the past five years, CIMB Thai Bank has accelerated its loan growth, especially in retail banking, to comply with Malaysia-based CIMB Group's policy. This has been achieved via housing loans in the retail - or individual - segment in order to build up the bank's customer base, he said. The strategy has resulted in a housing-loan portfolio of Bt50 billion to Bt60 billion, against less than Bt10 billion five years ago, giving CIMB Thai Bank a total retail-banking portfolio of nearly Bt100 billion.
Banks report tighter credit standards in Q3 Business Mirror 26th Oct 2015
Even tighter credit standards were noted across real-estate loans in the third quarter this year, as banks passed on to their borrowers the more stringent oversight exercised by regulators on real-estate loans during the period. In a recent report, the central bank said lenders across the country reported a net tightening of their overall credit standards for real-estate loans in the July-to-September period. This was the 13th consecutive quarter that the banks indicated a net tightening of standards in real-estate lending under the diffusion index approach, where the number of banks that indicated tighter credit standards proved more numberous than banks that indicated otherwise.
AGD Bank prepares IPO as profits drop Myanmar Times 26th Oct 2015
The bank’s net profit was K112.6 million for the 2014-15 fiscal year, far lower than K9.6 billion the previous year, officials said at the fifth annual meeting on October 24. Chair U Than Ye said that as competition in the industry had increased, banks had raised deposit rates and reduced remittance charges. “To be honest, we are not satisfied with our performance this year,” AGD said in its annual report. “Net earnings before tax are only marginal.” As a result, the bank could not allocate any dividends to shareholders. There are several reasons for the drop in profits. The first is increasing competition between banks to gain access to deposits, with lenders offering increasingly competitive interest rates, increasing the cost of funding. Rates have risen from 8 percent to 8.25pc or 8.5pc for savings accounts. The Central Bank of Myanmar has also tightened regulations on lending, and banks are not permitted to charge anything higher than the 13pc rate cap, or to levy extra fees or charges beyond this.
UnionBank net income drops in third quarter Business World 26th Oct 2015
Net income of Union Bank of the Philippines (UnionBank) continued to decline in the third quarter amid depressed trading gains and higher expenses, dragging its nine-month profit despite the expansion of its main businesses. The Aboitiz-led bank saw its net income for the first nine months of 2015 plunge to P3.669 billion, lower than the P5.997 billion it posted in the same period a year ago, its consolidated balance sheet and income statement filed with the Philippine Stock Exchange yesterday showed. The decline in the bank’s first nine months profit reflects its lower quarterly earnings realized for the year. The listed lender booked a net income of P663.504 million in the third quarter alone, down from P1.53 billion in the same period the year prior, its income statement showed. This follows the profit declines posted by the bank in the previous quarters of this year. UnionBank’s earnings were almost halved in the second quarter to P1.575 billion from the previous year’s P2.057 billion. Its net income also declined 39% in the January-March period.
BDO books higher net earnings Business World 26th Oct 2015
BDO Unibank, Inc. (BDO), the country’s largest bank, saw its net income rise by over 5% in the first nine months of the year as it reported continued expansion of its core businesses, boosted by a slight rise in its third-quarter profit. In a regulatory filing on Monday, the lender said its net income in the January to September period totaled P17.6 billion, up by over 5% compared to the year-ago level of P16.7 billion. The Sy-led bank attributed the profit rise to the “solid expansion of its core businesses despite the challenging operating environment.” The latest earnings result put the bank’s year-to-date net income just P7.5 billion short of its P25.1-billion earnings guidance for this year.
Banks further tighten rules on property loans The Philippine Star 26th Oct 2015
Banks continued to tighten the lending standards for commercial real estate loans in the third quarter or a year after the Bangko Sentral ng Pilipinas (BSP) introduced stricter rules on bank’s real estate exposure. Dennis Lapid, deputy director of the BSP’s Department of Economic Research, said results of the third quarter 2015 Senior Bank Loan Officers’ Survey showed a net tightening of overall credit standards for commercial real estate loans for the 13th consecutive quarter. Lapid explained respondent banks attributed the net tightening of overall credit standards for commercial real estate loans to perceived stricter oversight of real estate exposure of banks by the central bank.
Savings rates rising Voice of Vietnam 25th Oct 2015
A number of banks have slightly adjusted up savings rates and launched promotional programs to attract more depositors. Viet Capital Bank on October 21 announced to raise interest rates for Vietnam dong deposits by 20 basis points. The bank now applies an annual rate of 6.5% to deposits with a term of seven months, 6.6% to eight months, 6.7% to nine months, 6.7% to 10 months and 6.8% to 11 months. A day earlier, Eximbank launched a promotional program in which holders of savings accounts of 15 months or longer are entitled to an interest rate bonus of 10 to 50 basis points. The program runs till the end of this year. Under the program, deposits of 15 months or longer at Eximbank carry an interest rate of around 7% per annum. The lender also has gifts available for customers who deposit VND30 million (US$1,346) or more.
Vietnam seeks new tools to beat bad-debt woes, eyes China-style market Tuoi Tre News 25th Oct 2015
With a shabby facade, bars on its windows and flanked by a hair salon and a knockoff clothing store, the Vietnam Asset Management Company (VAMC) looks more like a backstreet pawnshop than a much-heralded bad-debt bank. This no-frills office with PVC sofas, chintzy 1980s decor and no elevator houses what's been the central bank's shoestring saviour for wayward banks and risky borrowers who ran up $20 billion in bad debt in 2012 and almost brought a promising economy to its knees. Even as more debts sour at lenders in Southeast Asian neighbours Thailand and Indonesia and also in China, Vietnam's $295 billion banking sector has slashed non-performing loans (NPLs) to 2.9 percent of total loans by September from 17.2 percent in 2012.
Malaysia's Islamic Finance Industry Poised For Greater Growth Bernama 24th Oct 2015
Malaysia's Islamic finance industry is poised for a greater future and will grow in line with the national aspiration of becoming a global hub, said Bank Negara Malaysia Governor Tan Sri Zeti Akhtar Aziz. "It (the industry) is set to grow. Its international dimension will continue to increase because we are becoming an international hub for Islamic finance," she told reporters after presenting scrolls to International Centre For Education In Islamic Finance (INCEIF) graduates here today. Zeti said the convocation, for 248 graduants from 40 countries, was an initiative to provide great talent that would help drive and spur the industry,going forward.
State banks eye capital rise from tax-incentive plan The Jakarta Post 23rd Oct 2015
State-owned banks expect increases in their capital adequacy ratio (CAR) if the government approves a tax-incentive plan for companies that conduct revaluation on fixed assets, say the lenders’ executives. The planned incentive, which is proposed by the Finance Ministry’s Tax Office, would offer tax cuts on fixed assets — comprising building and land properties — for companies, including banks, which could increase their capital based on recalculation of their book values. According to the plan, the current rate assets tax of 10 percent is proposed to be lowered to 3 percent.
MNC Bank aims for upgrade to upper-mid size by 2019 Jakarta Post 22nd Oct 2015
Publicly listed Bank MNC Internasional (MNC Bank) aims to be among the country’s upper-mid size lenders in terms of capital in the next five years as it consolidates its business following a recent rights issue, its executives said. MNC Bank president director Benny Purnomo said the major shareholder was committed to helping the lender reach the BUKU III category, for lenders with a core capital ranging from Rp 5 trillion (US$360 million) to Rp 30 trillion, either in 2019 or 2020. BUKU III lenders are allowed a broader banking services coverage than BUKU II lenders. According to its third quarter financial report, MNC had Rp 1 trillion in core capital by the end of September. MNC is currently a BUKU II lender, a category for lenders with core capital amounts ranging between Rp 1 trillion and Rp 5 trillion.
Initial outcomes of the restructuring of banking system Voice of Vietnam 22nd Oct 2015
The project to restructure credit organizations between 2011 and 2015 has achieved certain progress. Bad debts have been basically handled; the liquidity of commercial banks having been secured; and inter-bank interest rates having been stabilized. Over the past three years, the State Bank of Vietnam has taken various measures to restructure commercial banks, foreign banks, and credit organizations. The number of credit organizations and branches of foreign banks has fallen through mergers. A number of banks have been restructured or merged for better performances. Other banks have decided to undergo self-restructuring by increasing chartered-capital.
Bank of Tokyo Mitsubishi UFJ (BTMU) gears up for real time settlement in Yangon Myanmar Times 22nd Oct 2015
The Japanese lender, through the Japan International Cooperation Agency (JICA), is working with the Central Bank on its soon-to-be launched Real Time Gross Settlement (RTGS) system, said Go Watanabe, CEO of Asian and Oceania Region. The system will allow the immediate settlement of large domestic interbank payments. Rather than physically moving money or using cheques, both the creditor and debtor’s accounts can be adjusted electronically when a transaction is made, making the process much more efficient. The system is due to be introduced by early 2016. BTMU has seconded staff to the project development team, said Mr Watanabe in an email.
Big banks’ NPLs decline at end-August Business World 22nd Oct 2015
Bad debts held by universal and commercial banks relative to their total loan portfolio decreased as of end-August even as they handed out more loans, data from the Bangko Sentral ng Pilipinas (BSP) showed. Non-performing loans (NPL) -- or obligations left unpaid for at least 30 days past due date -- made up 1.86% of the banks’ total credit portfolio as of August, lower than the 2.21% recorded in the same period in 2014. The latest ratio is also a slight decrease from the 1.9% recorded at end-July. The NPL ratio is among the key indicators used to evaluate the quality of assets of the banking industry. Big banks recorded a lower NPL ratio even as they expanded their lending activities, according to the latest BSP data.
BI`s Banking Funds Likely to Decline Tempo 22nd Oct 2015
The amount of banking funds placed in Bank Indonesia (BI) is projected to decline at the end of this year, along with investors' optimism of credit demand increase. According to the Indonesian Banking Statistics launched by the Financial Services Authority, banking funds saved in the central bank went up 23.37 percent to Rp661.50 trillion as of August 2015 (year-on-year). This figure is the highest for the year. The reason for this increase, said Moch Doddy Ariefianto—acting director of economic and financial system risks group at the LPS, is the high amount of third-party fund growth, which exceeded credit disbursement's. As a result, banks opted to secure their money in the central bank. Despite August's high volume, Doddy projected BI's banking fund to decline by 10-20 percent at the end of the year.
Central Bank Bullish Over Efforts to Boost Local Currency The Irrawaddy 21st Oct 2015
Burma’s central bank has defended its decision to revoke foreign exchange licenses last week, reiterating its determination to control “dollarization” and strengthen the country’s struggling currency. Win Thaw, deputy director general of the Central Bank of Myanmar (CBM), told media this week that the bank stuck by its decision, despite concern from local businesses. The CBM issued a directive to businesses dated Oct. 13 announcing the revocation of foreign exchange licenses that had permitted holders to accept transactions in US dollars. License holders include a broad sweep of businesses, including hotels, travel agencies, airlines, hospitals, restaurants and supermarkets. Sett Aung, CBM’s deputy governor, said the bank had begun accepting returned licenses as of Oct. 19. The policy shift is expected to impact hundreds of businesses, with some concerned over their capacity to promptly comply.
Central Bank will not return to old ways: senior official Myanmar Times 21st Oct 2015
For many years – until 2011, when six commercial banks opened money changers – no ordinary citizen of Myanmar was permitted to hold foreign currency. Since then, as the country has opened up, licences have been awarded not just to banks and money changers, but to companies in many sectors including hotels, airlines and supermarkets. However, after thousands of these licences were abruptly rescinded last week, rumours have been flying in tea shops, on social media and in local language news that non-bank money changers will also be forced to close and that people found holding US dollars will be prosecuted. U Win Thaw, deputy director general and head of the Foreign Exchange Management Department at the Central Bank, has sought to allay these fears. The Central Bank has no plan to return to the government’s old policies, he told The Myanmar Times, adding that the purpose of the notice was to increase confidence in the kyat and to widen its use in the domestic economy.
E-Payments
E-payment system moves a step closer Bangkok Post 26th Oct 2015
The Any ID first module of a national e-payment system set to be implemented next month will allow people to use their identification cards to pay for goods and services with a 20-baht minimum. Finance permanent secretary Somchai Sujjapongse said the Any ID e-payment module of the system, a collaboration between his ministry and the Bank of Thailand, would enable anyone to transfer money using their ID card, mobile number or email address. The second module, to follow at a later date, will be an expansion of the electronic data capture (EDC) software that collects and stores customer data. EDC uses the point-of-sale terminal, or specialised software for online transactions, to submit and validate transactions to a merchant account provider or some other transaction processor.
VN e-commerce market growth to be led by online retail market VietNamNet Bridge 25th Oct 2015
Vietnam is one of Asia’s unexplored markets in terms of the compelling potential in e-commerce. The country’s e-commerce market growth is expected to be led by online retail market followed by demand for travel and entertainment services online, according to a report by Indian-based Ken Research. According to Ken Research’s recently issued report “Vietnam E-Commerce Market Outlook to 2019 – Driven by Internet Penetration and Smartphone Usage”, e-commerce managed to gain some attention in Vietnam only after 2011. The retail market in Vietnam is considered one of the most dynamic markets in the South East Asia with such a high growth rate. Hanoi and Ho Chi Minh City are ranked in the top 10 cities in the entire Asia for retail expansion. Hanoi ranked third after Beijing and Shanghai as the city with liveliest retail market. Vietnam is one of the top three countries with the highest rate of growth of internet and mobile phone subscribers in Vietnam, with more than four million people using the internet a day, offering great potential for online shopping development.
PHL mobile financial services seen growing by leaps and bounds Business Mirror 21st Oct 2015
Amdocs projects a strong growth in mobile banking in the Philippines as mobile financial services (MFS) are more universally offered or practiced across the country. Amdocs Vice President for Mobile Financial Services Justin Ho said the use of mobile money is a more effective way of reaching the country’s unbanked and underbanked sector. Amdocs, he said, is a market leader in software solutions and services for the world’s largest communications, entertainment and media service providers. He said, “Using MFS is three times cheaper than using a bank branch. The mobile financial service is the way to go. Banks and telecommunication companies can both participate in its success,” he recently said at a news conference on the subject.
Insurance
Asean: Insurers need to be prepared for changing realities of a single market Asia Insurance Review 27th Oct 2015
The challenges of regional integration among Southeast Asian economies can be overcome as Asean member states prepare for the unveiling of the Asean Economic Community (AEC) at the end of the year, declared Cambodia's Ministry of Economy and Finance whose country played host to the Asean Insurance Congress held yesterday. “For a region as diverse as Asean where political systems, cultural backgrounds, stages of economic development and domestic priorities vary widely, the challenges are substantially greater but not insurmountable…there are enormous opportunities that can be realised for the good of member countries,” said Mr Mey Vann, Director General in the General Department of Financial Industry, Ministry of Economy & Finance, Cambodia. He added the process towards regional integration will be long and ongoing, and AEC 2015 will represent a “key milestone achievement” in that journey.
Indonesia: President Widodo approves establishment of national reinsurer Asia Insurance Review 26th Oct 2015
President Joko Widodo has approved the establishment of jumbo-capacity reinsurer PT Reasuransi Indonesia Utama, also known as Indonesia Re, according to the Financial Services Authority (OJK). A presidential regulation on Indonesia Re's formation was signed by Mr Widodo on October 7, 2015, reported the local media organisation, Tempo. The OJK had also given its approval. The establishment of Indonesia Re is aimed at creating a large-scale national reinsurance company that can help promote domestic retention. The company is formed through the merger of state-owned PT Asei Reasuransi Indonesia (Persero) and PT Reasuransi Umum Indonesia (Persero) Indonesia Re will have two subsidiaries: PT Asuransi Asei Indonesia and PT Reasuransi Internasional Indonesia.
Thailand’s insurance sector becomes a major force World Finance 24th Oct 2015
There may have been setbacks, but Thailand’s economy is getting back on track, with the insurance industry playing a crucial role in the country’s continued development The general insurance market is a major force in Thailand’s growing economy – helping to drive it forward, while also providing invaluable social and business assurance. The industry is an integral aspect of economic development for the country by providing a platform for financial stability, as well as facilitating opportunities for business expansion. Recent political and economic conditions in Thailand however, have restricted the country’s GDP growth, as well as the level of contribution achievable by major industries. Following various setbacks in recent years, it seems that the country is returning to its former promising route of development and stability. Once again, playing a pivotal role in the country’s growing financial strength is the insurance industry.
Bid to have insurance for SMEs The Nation 23rd Oct 2015
The Office of the Insurance Commission plans to hold discussions with state agencies and the National Village and Urban Community Fund to design attractive insurance plans for small and medium-sized enterprises and low-income earners who benefit from the government's stimulus packages. Secretary-general Pravej Ongartsittigul said yesterday that the Office would set up a subcommittee to work with the Village Fund office to get more details about the borrowing habits of low-income villagers so as to design insurance plans appropriate for them. There are 1.3 million members of 79,000 Village Funds across the country.
Indonesia: Cession rules aimed at pushing local industry to optimise capacity Asia Insurance Review 23rd Oct 2015
More than just reducing the Indonesian insurance industry's balance of payments deficit, compulsory cession rules introduced by the Otoritas Jasa Keuangan (OJK) earlier are aimed at capacity optimisation and essentially intended to encourage the local insurance industry in Indonesia to step up on its risk management efforts and ensure better and more prudent underwriting by local players, said OJK Chief Executive of Non-bank Financial Institutions (NBFI) Firdaus Djaelani at the 21st Indonesia Rendezvous in Bali yesterday. Capacity optimisation, he said, is a key part of prudential supervisory and regulatory framework, and such policy stance is considered one of the best practices in other countries that have sought to boost the advancement and development of their respective insurance markets.
Market Regulation
Only Local Investors to Get a Slice of Freeport Indonesia IPO, Bourse Chief Says The Jakarta Globe 27th Oct 2015
The Indonesian stock exchange authority says it will restrict the market for a highly anticipated initial public offering of shares in mining giant Freeport Indonesia to local investors only. US-based Freeport-McMoRan plans to divest an initial 10.6 percent stake in its Indonesian unit as part of a deal to allow it to extend its contract to operate the Grasberg copper and gold mine in Papua province beyond 2021. The company, which controls a 90.64 percent stake in Freeport Indonesia, is expected to submit details about the planned divestment to the Indonesian government this month. Indonesia Stock Exchange (IDX) director Tito Sulistio said on Tuesday that his office, along with the Financial Services Authority, was drafting a regulation prohibiting foreign investors from snapping up the Freeport Indonesia shares, in a bid to accommodate domestic investors.
BSP talks with banks on interest rate corridor The Philippine Star 26th Oct 2015
The Bangko Sentral ng Pilipinas (BSP) is set to start talks with bank presidents and trust officers to discuss the proposed changes in the framework for monetary operations designed to enhance the effectiveness of monetary policy next year. BSP Governor Amando Tetangco Jr. said the central bank is scheduled to meet with president of banks operating in the Philippines on Oct. 30 to discuss the proposed interest rate corridor (IRC) in the second quarter of next year. Tetangco said the BSP would also hold talks with trust officers of financial institutions early next month on the proposed changes. The consultation with banks and other counterparties on the details of IRC-related reforms would ensure smooth implementation and give market participants sufficient time to prepare for the transition.
New rules for financial holding companies in Malaysia The Straits Times 26th Oct 2015
Malaysia's new Basel III capital adequacy rules will extend to the financial holding companies (FHCs) of most major banking groups such as Maybank, CIMB Group, RHB Capital, Hong Leong Financial Group and AmBank Group, among others, starting from Jan 1, 2019. The minimum capital adequacy ratio (CAR) for FHCs will be the same as those for banks, Fitch Ratings said. These will include an 8 per cent total capital ratio; a 2.5 per cent capital conservation buffer; and when required, a counter-cyclical capital buffer, or a capital buffer to curb excessive risk taking. The rules, finalised by Bank Negara Malaysia earlier this month, aim to strengthen the capital framework for FHCs with bank operating subsidiaries.
Return of Dollar Black Market Shows Limits of Reforms The Irrawaddy 26th Oct 2015
Banks in Burma bought hundreds of millions of dollars in the black market this year, banking sources said, in a resurgence of an unregulated trade that flourished under military rule and has raised fears among foreign investors of backsliding on reforms. Lenders say they were forced to turn to unlicensed brokers for scarce dollars to keep the wheels of trade turning, as the central bank’s efforts to prop up the kyat currency threatened to freeze up the nascent financial system. “We deliberately made our currency appreciate, while there was an actual depreciation happening,” said a senior central bank official. “The whole informal market re-emerged, no transactions were happening through the banks any more. That’s when we came to the brink of collapse.”
Jakarta Regional Government to Issue a Regulation on Trade Hukumonline 26th Oct 2015
The Jakarta provincial government is currently deliberating a draft regional regulation (rancangan peraturan daerah – “Raperda”) with the intention to regulate Jakarta’s trade sector. Amongst the things that is included in the Raperda regards to trade of goods and services, infrastructures, regional logistics, development of foreign trade activities, standardization, consumer protection, as well as oversight and control. This plan is an implementation of the Trade Law, which grants regional governments some regulatory powers to manage the trade sector within their respective region. Domestic product utilization is one of the things covered in the Raperda. This provision mandates the Jakarta government and relevant stakeholders to act independently or collectively to promote the utilization of domestic products by supporting its promotion, marketing, information dissemination, as well as obliging the use. On e-commerce, the Raperda orders businesses utilizing electronic system for their operation to provide complete and correct data and information. Such information includes the identity and legitimacy of the respective business, technical requirements pertaining to their goods or services, price and means of payment, as well as methods to transfer goods or services. Failure to comply with this provision results in administrative sanctions such as license revocation. Commenting on the e-commerce issue, Nathaniel Mangunsong, a Senior Associate at Ginting & Reksodiputro law office, affirmed that there are no government regulation pertaining to e-commerce as of yet. He also applauded Jakarta government intention, and thinks that incorporating such provision is an innovative step.
OJK relaxes rule to help Islamic banks develop The Jakarta Post 26th Oct 2015
The Financial Services Authority (OJK) expects that its new relaxation on Islamic banking included in the government’s fifth economic policy package will help the industry grow better, its officials say. OJK head of sharia banking department Ahmad Buchori said the agency was still expecting that the country’s sharia banking industry could get away from its “5 percent trap” through more lenient policy in various aspects. Buchori said Islamic banks, which still has market share below 5 percent of the total assets in the country’s banking industry, grew constantly each year, even though some of them were consolidating their businesses due to negative effects of weak economy.
OJK to release private pawn business regulation in January The Jakarta Post 26th Oct 2015
The Financial Services Authority (OJK) is planning to regulate private pawn businesses to create pawn business practices that are safer for the public. OJK's executive head for non-banking financial institutions (INKB) Firdaus Djaelani said the OJK would release an official OJK Regulation (POJK) on private pawn shops in January 2016. "We hope that [the regulation] will be [implemented] in January. Currently, there are so many unofficial pawn shops," said Firdaus on the sidelines of a book launch at this office in Jakarta on Monday.
Forex Licences Revoked, but Gov’t Offers Grace Period Myanmar Business Today 25th Oct 2015
The kyat has lately been struggling with a crisis of legitimacy. As businesses began to move away en masse from the kyat for the more stable dollar, the Central Bank of Myanmar (CBM) in mid-October made good on earlier threats and revoked the foreign exchange acceptor and holder licences for a variety of businesses, which allowed them to do business in dollars inside Myanmar. However, the lasting implications of this move have so far remained unclear, as a later statement seemed to give a grace period not present in previous documents. U Win Thaw, deputy director general of Central Bank, said in an emailed statement last Thursday, “Because of the nature of the business for airlines, tourism businesses, and FDI hotels, they need to deal with pre-orders and bookings. So these businesses will need time to change their long-acting business habits. That’s why they still can operate their business as usual, with the exception the abolishment of licences. This abolishment warns and informs that they all have to use kyat alone for local business in the future.”
New rules on treasury activities to fortify banks Business World 25th Oct 2015
The banking industry sees the tightened rules for treasury activities of financial institutions as a step aimed to further fortify Philippine lenders against risks and make them more competitive in an increasingly integrated Southeast Asian economy. The Bangko Sentral ng Pilipinas (BSP) last week said its Monetary Board approved this month new regulations on the treasury activities of BSP-supervised financial institutions (BSFIs), as well as changes to the fit-and-proper rules covering these activities in a bid to minimize the likelihood of losses and curb other risks such operations entail. Bankers Association of the Philippines (BAP) President Lorenzo V. Tan, also Rizal Commercial Banking Corp. (RCBC) president and CEO, said in a text message: “Philippine banks continue to align with global best practices/standards as they prepare for the ASEAN (Association of Southeast Asian Nations) Banking Integration Framework by 2020.”
Bank-secrecy law not for criminal purpose Business Mirror 25th Oct 2015
BDO Unibank Inc. said the bank-secrecy law remains relevant, as it encourages more deposits and ensures that legitimate money is kept. “The bank-secrecy law is not for criminal purpose. It [gives] freedom to keep funds the way people want these to be kept. I wish they [government regulators] can understand what [the banks’] clients need, and so it [law] [should be crafted so that it] will attract more deposits,” BDO Chairman Teresita Sy-Coson told the BusinessMirror. When sought for comment about the government’s move to eliminate bank secrecy for tax purpose, she said, “in the international area, that [bank secrecy] has been there. There’s bank secrecy everywhere.” “There’s already a compliance structure in it—there’s also the antimoney-laundering [law], know your customer [KYC]; there’s a lot of documents required. I don’t know what’s the other purpose for this,” she said.
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