Financial Services Update: Indonesia Issues Fintech Regulations

Financial Services | January 5, 2018
Authors: Shay Wester and Ian Saccomanno
 
LOOKING AHEAD
 
 
  • April 2-6, 2018: ASEAN Finance Ministers and Central Bank Governors Meeting (Singapore): Please save the date for the Committee's annual Mission to the AFMGM. The Committee plans to consult with the assembled Finance Ministers and Central Bank Governors on ASEAN integration issues and hold bilateral meetings with leaders on the sidelines of the event. More information on the event, planning, and registration will be distributed soon. Please contact Ian Saccomanno at isaccomanno@usasean.org or Shay Wester at swester@usasean.org for more information.
  • January 30-31:  2018 Health & Life Sciences Industry Mission to the Philippines: The Council is now registering executives for our Health & Life Sciences Industry Mission to Manila, the Philippines on January 30-31. The mission aims to support the national health agenda and identify opportunities for collaboration with the Department of Health and its new Secretary, Dr. Francisco Duque III. Please contact Ying Hui Tng at yhtng@usasean.org or Hai Pham at hpham@usasean.org with any questions or to express interest.
  • January 26 or 27, 2018: Laos Digital Economy Forum: The Ministry of Posts and Telecommunications, Lao National Chamber of Commerce and Industry (LNCCI), and the Lao ICT Commerce Association are partnering with U.S. Embassy alumni to hold Laos’ first Digital Economy Forum. The purpose of the one-day forum is to expose government policy makers and business leaders to the opportunities the digital economy can create for Laos, explain how the digital economy can accelerate inclusive economic growth, and to facilitate discussions on how Laos can create the right policy environment to foster the growth of the digital economy. The forum will include minister-level participation- a Deputy Prime Minister or the Prime Minister himself is expected to make a keynote address- as well as panel discussions focused on issues such as electronic payment systems, e-governance, and e-commerce. The forum will be held on either January 26 or 27 and a large media presence is expected. The organizers are seeking participation and sponsorship from the U.S. private sector. Sponsorship of the forum would include participation in either Davos-style panel discussions or breakout sessions with policymakers, and an opportunity to engage with Laos’ top leadership on issues related to the digital economy. If you are interested in sponsoring the forum, please contact Ella Duangkaewat eduangkaew@usasean.org.
 
THE COUNCIL'S TAKE
 
 

Bank Indonesia Issues Fintech Regulations

Bank Indonesia (BI) has issued its first sweeping regulation overseeing fintech. BI Regulation 19/12/PBI/2017 (full regulation here in Bahasa Indonesia) was made public by BI on December 7. The stated aim of the legislation is to regulate the implementation of fintech to foster innovation, ensure consumer protection, and manage risk to maintain monetary and financial system stability and an efficient, safe, and reliable payment system. The long awaited regulations and accompanying sandbox were promised when BI began addressing digital payments innovation in late 2016. To support the implementation of this regulation, BI also issued Regulations 19/14/PDAG 2017 and 19/15/PDAG/2017 (found here and here in Bahasa Indonesia), which both came into effect on November 30.

Among its provisions, the regulation:

  • Defines fintech, fintech activities, and fintech providers;
  • Requires all fintech providers to register with BI, with certain exceptions;
  • Requires fintech providers to submit a letter of compliance within three months of registering;
  • Defines virtual currency, and prohibits fintech providers from using it as a means of payment (in line with previous regulations asserting that only the Indonesian Rupiah may be used in domestic transactions);
  • Introduces a regulatory sandbox that allows fintech providers to test their products, services or technologies; and
  • Details how BI will monitor the activities of registered fintech providers, primarily by publishing a list of all registered providers on its website and requiring providers to submit any requested information or data.

The regulation’s stated aim to foster innovation, as well as the introduction of the Regulatory Sandbox, indicates that BI intends to provide freedom and flexibility to fintech providers. However, there is concern around potentially restrictive provisions. The regulation requires any cooperation between registered fintech providers and Payment System Service Providers to obtain approval from BI first. The process to obtain approval may delay any cooperation or partnerships, possibly hindering innovation and growth of fintech and payment system providers. It will be important going forward to recognize BI’s efforts to foster innovation and provide flexibility through a Regulatory Sandbox; but also to advocate for the removal or adjustment of certain restrictive requirements in the regulation that would hinder the very innovation it is trying to encourage. For further details on these areas, see a report on the regulation from SSEK Indonesia Legal Consultants here.

 
ADVOCACY UPDATE
 
 

Bank Negara Malaysia (BNM) has organized a public consultation for its Interoperable Credit Transfer Framework (ICTF), which aims to leverage high mobile penetration rate in Malaysia to drive migration from cash to e-payments. The Exposure Draft is available here and is open to input until January 8. The ICTF aims to allow customers of both banks and non-bank electronic money (e-money) issuers to transfer funds across the network, by providing access to a shared payments infrastructure where customers can make transfers using their mobile numbers or QR codes. Several concerns with the ICTF have been raised, including that the creation of an operator of a shared payment infrastructure with conditions imposed on banking and financial institutions for access to the shared infrastructure will distort competition, impede innovation and create bottlenecks. The Council has raised these concerns in our draft comments. Please review these comments and submit any feedback to Kim Yaeger at kyaeger@usasean.org by COB Friday, January 5 (DC time). Our comments will be submitted to Bank Negara on January 8.

 
IN THIS UPDATE
 
 
Market Development
The Quiet Singaporean Behind a Loud Global Finance Revolution
BSP connects with Bank of Thailand
FinTech Indonesia signs collaboration agreement with FinTech Australia
The good and bad of Vietnam’s banks
China, Vietnam vow to accelerate capital market cooperation
Moody's publishes FAQ on extent of Malaysia's resilience to high leverage and external vulnerability
Malaysia, Indonesia, Thailand aim to boost local currency settlement
Singapore banks can save over 10% from fintech

Asset Management
Most Asean markets up as China data lifts mood

Banking
Bank Negara signs MoU with Thai's OIC
Tax perks ahead for bank mergers
MAS tightens safeguard against excessive unsecured borrowing
Bank Negara to halt special deposit scheme for exporters
Moody’s sees ‘stable’ conditions for PHL banks

E-Payments
Nationwide e-payments to push cashless society goal
NBC disavows Cambodia-based digital currency
Finance Ministry vows to tighten management of cross-border services
Discover in deal with Vietnam’s domestic payments network
Myanmar to become member of APN, upgrade card-based services
Tech groups jostle for advantage in Indonesian digital payments
Go-Jek acquires three companies to dominate payment in Indonesia
Mobile money services gaining popularity across Myanmar
E-tax payment service to be expanded
Malaysia moving towards cashless society
PLDT targets 30 million users of e-payments platform
​Ho Chi Minh City taxman suggests requiring cashless payment at restaurants

Insurance
New Draft Regulations on Compulsory Fire and Explosion Insurance offered by Non-Life Insurers
Malaysia, Thailand sign insurance MoU
Subra: Migrant workers to get mandatory health insurance
Insurers post 22% income gain in Q3
AIA diversifies offerings in changing Thailand
MoH clarifies health insurance

Market Regulation
Rupiah range shrinks to 20-year low as authorities stifle trade
BSP readies bank stress test guidelines
Ministry set to reel in loan sharks
Bank Negara Malaysia Seeks Public Feedback On Digital Currency Exchange Business
Trilateral currency settlement pact agreed
New Rules for Equitising State-owned Enterprises in Vietnam
Plus500 Complements its Regulatory Portfolio with a Singapore License
Press Release: Basel III Implementation to be Adapted to National Interests
 
ARTICLE CLIPS
 
 
Market Development

The Quiet Singaporean Behind a Loud Global Finance Revolution Bloomberg 28th Dec 2017
Ravi Menon, managing director of the Monetary Authority of Singapore since 2011, is the architect of the most audacious makeover of Singapore's financial system in 50 years. But unlike in 1968, when a newly independent Singapore merely wanted to be trusted with dollar deposits in the hours when New York was off to dinner and London slept, the game is different. In fintech, Menon isn't just looking to fill a gap. He wants Singapore to shine a light from which even the West can draw regulatory comfort.

BSP connects with Bank of Thailand BusinessMirror 18th Dec 2017
The Bangko Sentral ng Pilipinas (BSP) on Monday announced the signing of another bilateral agreement with Thailand, aiming to boost exchange of technical support in the two countries’ banking systems.  BSP Governor Nestor A. Espenilla Jr. and Governor Veerathai Santiprabhob, his counterpart in the Bank of Thailand, signed in Bangkok, Thailand, a memorandum of understanding (MOU) on banking supervision.

FinTech Indonesia signs collaboration agreement with FinTech Australia Finextra Research 18th Dec 2017
The peak financial technology (fintech) industry bodies in Indonesia and Australia have signed a landmark agreement to help drive exchanges of talent and expertise between the two growing fintech markets.

The good and bad of Vietnam’s banks Asia Times 14th Dec 2017
But the industry could change quickly with many medium-sized, professionally run private banks on fast growth trajectories fueled by a retail banking boom and easy access to capital via two stock markets in Hanoi and Ho Chi Minh City. VP Bank, for one, started operations in 1993 when the SBV issued a slew of new licenses to joint-stock banks, which are essentially private banks. They now number more than 30, varying widely in asset size and management efficiency.

China, Vietnam vow to accelerate capital market cooperation China Daily 13th Dec 2017
The China-Vietnam Capital Cooperation Forum was held on Tuesday, helping accelerate cooperation between the two countries' capital markets and promoting two-way capital flow as well as supporting growth in their small and medium enterprise (SME) sectors. Participants at the forum, including representatives of Chinese and Vietnamese securities companies, agreed to support China-Vietnam SMEs Growth Roadmap, an action plan to support cooperation in the SME sectors between the two countries.

Moody's publishes FAQ on extent of Malaysia's resilience to high leverage and external vulnerability Moodys.com 13th Dec 2017
Moody's Investors Service ("Moody's") says that the Government of Malaysia (A3 stable) demonstrates a relatively high but stable government and household debt burden. Malaysia is also exposed to a potential sharp and lasting negative change in external financing conditions, given the country's reliance on foreign financing. Nevertheless, its resilient economic growth, deep domestic capital markets, large international asset position and large export proceeds mitigate the sovereign's vulnerability to sudden shocks. Moody's analysis is contained in its recently released report titled "Government of Malaysia: FAQ on credit resilience to high leverage and external vulnerability risks".

Malaysia, Indonesia, Thailand aim to boost local currency settlement The Edge Markets 12th Dec 2017
The central banks of Malaysia, Indonesia, and Thailand launched two trade settlement frameworks yesterday to enable direct settlement of transactions in their local currencies, to reduce dependence on foreign trading currencies like the US dollar.

Singapore banks can save over 10% from fintech Singapore Business Review 10th Dec 2017
Moreover, about 41% of banked balance has now abandoned traditional channels. Singapore banks can either be hurt or helped by fintech, as long as they can figure how to make use of them, the Monetary Authority of Singapore (MAS) revealed. In its financial stability review, banks can have over 10% of potential cost savings in their operating income. MAS also estimated the same for Asia, where cost savings can reach up to 20%. MAS estimates fintech payments already takes up 20-50% of household consumption if the probability of payments disintermediation is high in the next five years. A majority of 56% of the banked population is also willing to shift their savings into a pure play digital bank. An average of 41% of total balance has already been shifted.  

Asset Management

Most Asean markets up as China data lifts mood The Star Online 2nd Jan 2018
Most Southeast Asian stock markets firmed on Tuesday, tracking broader Asia, as strong China manufacturing data and ebbing tensions on the Korean Peninsula aided positive sentiment, with Indonesia setting a fresh record. Manufacturing growth in the world's second largest economy unexpectedly accelerated to a four-month high in December as factories cranked up production to meet a surge in new orders, a private business survey showed. Meanwhile, North Korean leader Kim Jong Un used his televised New Year's Day speech to call for lower military tensions and improved ties with the South.

Banking

Bank Negara signs MoU with Thai's OIC NST Online 18th Dec 2017
Bank Negara Malaysia and Thailand’s Office of Insurance Commussion (OIC) has signed a Memorandum of Understanding (MoU) to enhance cooperation for mutually beneficial development of the insurance sector of both countries. In a statement today, Bank Negara said the MoU was signed governor Tan Sri Muhammad Ibrahim and OIC secretary general Dr. Suthiphon Thaveechaiyagarn. Bank Negara said with growing financial linkages between Malaysia and Thailand, the MoU will support measures by the insurance regulatory authorities of both countries to promote effective and well-functioning insurance markets for the protection and risk management of individuals and businesses.

Tax perks ahead for bank mergers Bangkok Post 16th Dec 2017
The Finance Ministry is mulling tax incentives to persuade local commercial banks to merge, hoping to sharpen their competitive edge against foreign lenders and regional rivals in particular. Mergers have costs and the Finance Ministry may let commercial banks claim such expenses as a tax deduction under measures to be announced soon, said Finance Minister Apisak Tantivorawong. The policy is to offer incentives for banks to voluntarily merge rather than forcing them to, Mr Apisak said.

MAS tightens safeguard against excessive unsecured borrowing The Business Times 15th Dec 2017
Come Jan 1, there will be a new measure to help borrowers avoid accumulating excessive unsecured debts. The new Credit Limit Management Measure will cap the additional unsecured credit that a financial institution (FI) may extend to a borrower whose outstanding unsecured debts exceed six times his monthly income.

Bank Negara to halt special deposit scheme for exporters Malay Mail 15th Dec 2017
Malaysia’s central bank said it will discontinue a special deposit facility for exporters from next year, rolling back a measure that it had introduced last year to stem the currency’s slide against the US dollar. Last December, Bank Negara Malaysia clamped down on offshore ringgit trade and announced measures to boost liquidity and encourage more domestic trade of the ringgit as the currency fell to 13-month lows in the aftermath of Donald Trump’s US presidential election win.

Moody’s sees ‘stable’ conditions for PHL banks BusinessWorld 14th Dec 2017
The Philippine banking system will remain “stable” in 2018, Moody’s Investors Service said, noting that conditions will steady across all indicators on strong macroeconomic footing and improving asset quality. In a Dec. 12 report, the global debt watcher gave a “stable” outlook for the Philippine banking sector next year, in line with expectations across Asia Pacific. The industry will benefit from “synchronized global recovery and moderate credit growth,” according to Eugene Tarzimanov, vice-president and senior credit officer for Moody’s Financial Institutions Group. The Philippine economy expanded by 6.7% in the nine months to September, faster than Moody’s 6.5% forecast for the entire year and keeping within the government’s 6.5-7.5% growth goal. The Philippines holds a “Baa2” rating — placing the country a notch above minimum investment grade — with a “stable” outlook from Moody’s which was affirmed in June.

E-Payments

Nationwide e-payments to push cashless society goal The Nation 1st Jan 2018
As part of Thailand’s aspiration to become a cashless society, the country will soon adopt a new nationwide e-payment method using the so-called QR Code familiar to social media users. The Bank of Thailand has approved plans by five commercial banks to introduce the QR Code e-payment service – Kasikornbank, Siam Commercial Bank, Bangkok Bank, Krungthai Bank and Government Savings Bank.

NBC disavows Cambodia-based digital currency Phnom Penh Post 1st Jan 2018
The central bank has threatened legal action after a Japanese tech firm announced the development of a Cambodia-based cryptocurrency with the claim that the National Bank of Cambodia (NBC) was backing the new digital tender. The NBC, which has previously warned of fraud related to the peddling of cryptocurrencies, said in a statement that it had never allowed the purchase, sale or circulation of any form of cryptocurrency in the country.

Finance Ministry vows to tighten management of cross-border services VietNamNet 31st Dec 2017
Under a proposal by the Ministry of Finance (MOF), the payment for cross-border services will be made through the national payment portal NAPAS, a unit belonging to the State Bank (SBV).  The payment for cross-border services must be made through NAPAS This will allow taxation bodies to control revenue from services and to ask foreign institutions to pay tax.

Discover in deal with Vietnam’s domestic payments network PaymentsSource 21st Dec 2017
Discover Financial Services’ DFS Services has formed a strategic alliance with National Payments Corp. of Vietnam (NAPAS), the nation’s domestic payment network, for reciprocal card acceptance. The 46 Vietnamese banks participating in NAPAS, which is owned by the State Bank of Vietnam and major banks, may issue cards through NAPAS that will be accepted on the Discover Global Network, including Discover, Diners Club and PULSE, and Discover cards in turn will be accepted on the NAPAS network, according to a recent press release.

Myanmar to become member of APN, upgrade card-based services The Myanmar Times 19th Dec 2017
Myanmar will become a member of the Asian Payment Network (APN), which was established to create a common payment settlement platform within the Asia-Pacific region, said U Zaw Lin Htut, CEO of Myanmar Payment Union (MPU). MPU has already met with officials from APN, and is waiting for the membership announcement to be made, U Zaw Lin Htut said at the second MPU annual meeting held in Yangon on Sunday.

Tech groups jostle for advantage in Indonesian digital payments Financial Times 15th Dec 2017
Indonesian ride-hailing unicorn Go-Jek has acquired three local digital payments companies as it competes with Grab and other rivals to build market share in the nascent electronic payments sector in Southeast Asia’s biggest economy. The company, which is valued at $3bn after investments from Chinese technology giant Tencent and private equity houses KKR and Warburg Pincus, said on Friday that the acquisitions represented a “significant leap” in its journey from ride-hailing to becoming a digital payments powerhouse.

Go-Jek acquires three companies to dominate payment in Indonesia The Jakarta Post 15th Dec 2017
Go-Jek, Indonesia’s biggest ride-hailing service, agreed to acquire three local financial-technology companies, underscoring its ambition to become the dominant player in the country’s nascent digital-payments industry. The deals bring together Kartuku, Indonesia’s largest offline payments-processing company; Midtrans, the nation’s top online-payment gateway; and Mapan, a local community-based saving and lending network, Go-Jek said in a statement Friday.

Mobile money services gaining popularity across Myanmar The Myanmar Times 14th Dec 2017
Telenor Myanmar launched mobile money service through Wave Money in 2016, while Ooredoo Myanmar launched its mobile money services through M-Pitesan in September. These digital money transfer services do not require bank accounts to move cash from senders to receivers. “Over 1000 mobile subscribers use Oreedoo’s M-Pitesan service to transfer and pay the phone bill daily,” said Jacques Voogt, M-Commerce officer from Ooredoo Myanmar.

E-tax payment service to be expanded VOV 11th Dec 2017
The General Department of Taxation has announced it has finished refining the pilot online-based tax payment service (E-Tax) for enterprises. The service will be made available in the northern provinces of Bac Ninh and Phu Tho from December 11, 2017 – March 10, 2018, enabling firms to access all taxation services in a single system. Large-scale businesses will be able to open accounts for other positions such as directors and chief accountants apart from main accounts to flexibly monitor their responsibilities.

Malaysia moving towards cashless society The Star Online 9th Dec 2017
To embrace the digital economy, Bank Negara has taken various step to enhance the e-payment platform, hence moving the country towards a cashless society. Governor Tan Sri Muhammad Ibrahim said effective July 1, 2018 the instant transfer fee of 50 sen will be waived for up to RM5,000 per transaction by individuals and small medium enterprises (SMEs). However, the cheque fee would be increased from 50 sen to RM1.00, beginning Jan 2, 2021 to reflect the higher processing cost.

PLDT targets 30 million users of e-payments platform philstar.com 9th Dec 2017
Voyager Innovations Inc., the digital innovations arm of PLDT Inc., is aiming to have 30 million users for its products which include digital payments app PayMaya and mobile wallet Smart Money by 2020. “Since we launched PayMaya, our target across Voyager is always for 2020 to be a banner year. When we started in 2015, five years later, we’re expected to have about 30 million users across all of Voyager,” Paolo Azzola, PayMaya chief operating officer and managing director told reporters yesterday. At present, he said there are eight million users of PayMaya and Smart Money. To get to the 30 million target by 2020, Azzola said the plan is to encourage more people to use their platforms.

​Ho Chi Minh City taxman suggests requiring cashless payment at restaurants Tuoi Tre News 8th Dec 2017
The Ho Chi Minh City tax department has proposed the mandatory use of point-of-sale (POS) machines in place of cash payment at restaurants and other high-end services in order to improve the city’s tax administration. The proposal, submitted to the municipal administration, also seeks to require the use of electronic receipts at certain establishments in order to ensure a more precise calculation of taxable revenue. According to Tran Ngoc Tam, head of the city’s tax department, the proposal, if approved, will first be imposed on large-scale restaurants and restaurant franchises in the city before expanding to include small catering services. Tam further clarified that the proposed regulation would not require all payments to be cashless, only those that exceed a certain value.

Insurance

New Draft Regulations on Compulsory Fire and Explosion Insurance offered by Non-Life Insurers Lexology 21st Dec 2017
The Ministry of Finance of Vietnam (the “MOF”) has recently released the draft of a new Decree to regulate compulsory fire and explosion insurance products provided by local general/non-life insurers (the “Draft Decree”). The Draft Decree aims at improving the consistency between relevant regulations of the Law on Insurance Business and those of the Law on Fire Prevention and Fighting, as well as addressing implementation issues of current regulations under Decree No. 130.1 Specifically, the Draft Decree proposes clarifications and amendments to current regulations on, among other things, minimum sums insured, insurance premiums, compulsory contribution of the insurers to the budget maintained by the relevant public security authority for fire prevention and fighting purposes, and exclusions of insurance policies.

Malaysia, Thailand sign insurance MoU The Edge Markets 18th Dec 2017
Bank Negara Malaysia and the Office of Insurance Commission, Thailand had today signed a memorandum of understanding (MoU) to enhance both countries' insurance sector cooperation. Bank Negara Governor Tan Sri Muhammad Ibrahim and Office of Insurance Commission, Thailand Secretary General Dr Suthiphon Thaveechaiyagarn signed the MoU on behalf of Malaysia and Thailand respectively, according to Bank Negara and Office of Insurance Commission, Thailand's joint statement today.

Subra: Migrant workers to get mandatory health insurance Malay Mail 15th Dec 2017
The government will introduce compulsory health coverage for foreign workers as part of the country's larger voluntary health insurance scheme (VHIS), Datuk Seri Dr S. Subramaniam said today. The health minister said the coverage for the foreigners will be launched in phases beginning in the middle of 2018.

Insurers post 22% income gain in Q3 philstar.com 13th Dec 2017
The local insurance industry continued to expand as players recorded a total net income of P27.86 billion in the third quarter, 21.88 percent up from P22.85 billion in the same period last year, the Insurance Commission (IC) reported yesterday. Insurance commissioner Dennis Funa attributed the increase mainly to the rise in the underwriting and investment income of the life insurance sector, which more than offset the decline in the performance of the non-life insurance sector. “While the non-life insurance sector experienced a 20.87 percent decline in total net income for the third quarter from P3.49 billion to P2.76 billion, the life insurance sector showed a strong performance in the penultimate quarter of this year, with a total net income of P21.96 billion up by 31.93 percent compared to the same period last year,” Funa said. The microinsurance sector, which is accounted mainly by the mutual benefit associations, also posted a 15.19-percent increase in net income to P3.13 billion from P2.72 billion, Funa said.

AIA diversifies offerings in changing Thailand Bangkok Post 11th Dec 2017
AIA Group, the world's second-biggest life insurer by market value, continues to see Thailand as a "very important market" where it aims to increase the number of health and life protection products it offers, says CEO and president Ng Keng Hooi. "The Thai market has huge potential and it is a market that we are very pleased about where we are," he told Asia Focus in an exclusive interview last month. A leading life insurer in Asia Pacific excluding Japan, AIA now has 5.5 million policyholders in Thailand with more than 8 million policies, for a market-leading share of 20%.

MoH clarifies health insurance Vietnam News 11th Dec 2017
Private hospitals that have signed health-insurance contracts with Việt Nam Social Insurance (VSI) will continue the contracts next year. However, private healthcare facilities must now have their classifications authorised by the Ministry of Health. Lê Văn Phúc, deputy director of VSI’s Department for Health Insurance Policy said that VSI did not order provincial social insurance agencies to end their existing healthcare contracts with private healthcare facilities.

Market Regulation

Rupiah range shrinks to 20-year low as authorities stifle trade The Jakarta Post 2nd Jan 2018
While volatility in many financial markets has been rising over recent weeks, one notoriously unpredictable currency has been dead in the water. The trading range for Indonesia’s rupiah shrank to the least in two decades last year and volatility all but vanished as the central bank made maintaining the currency’s stability its chief mission. All this in a year when there were plenty of reasons to be bullish: a narrowing current-account deficit, rising bond inflows and two rating upgrades have helped to cement the turnaround of an economy that was part of Morgan Stanley’s “Fragile Five.”

BSP readies bank stress test guidelines BusinessWorld 22nd Dec 2017
The Bangko Sentral ng Pilipinas (BSP) will soon prescribe standards on the conduct of stress tests by banks, as part of efforts to improve risk management protocols and recovery plans, especially for “too-big-to-fail” lenders. As a rule, banks must conduct stress tests regularly to check how their balance sheets would hold up amid a funding crunch, in the process exposing potential weaknesses. “Stress testing allows banks to prepare for events with severe financial impact,” the BSP’s policy-setting Monetary Board said in a statement yesterday, noting that the new guidelines are aimed at further strengthening risk governance and boosting the safety and soundness of the banking system. A bank’s board of directors is also expected to consider the results of regular stress tests in capital and liquidity planning, setting of risk appetite levels and planning business continuity measures in order to mitigate potential risks. Banks have two years from the date the circular takes effect to streamline internal mechanisms and comply with the new standards.

Ministry set to reel in loan sharks Bangkok Post 18th Dec 2017
Prime Minister Prayut Chan-o-cha has instructed the Finance Ministry to expedite efforts to tackle the problem of loan sharks and ensure the debtors understand and comply with the terms they sign up to. Government spokesman Sansern Kaewkamnerd said the prime minister is satisfied with the government's schemes to keep low-income earners away from loan sharks and provide access to formal financial sources. In its latest move, the government has sent a list of those who borrowed money from loan sharks to the Government Savings Bank (GSB) and the Bank for Agriculture and Agricultural Cooperatives (BAAC) so they can step in.

Bank Negara Malaysia Seeks Public Feedback On Digital Currency Exchange Business Nikkei Asian Review 14th Dec 2017
Malaysia's central bank said Thursday it has issued an exposure draft seeking public feedback on the reporting obligations of digital currency exchange business. Bank Negara Malaysia said the invocation of reporting obligations on digital currency exchangers is the first step towards making digital currency activities more transparent in Malaysia. Written responses must be submitted by Jan. 14, it said.

Trilateral currency settlement pact agreed Bangkok Post 12th Dec 2017
The Bank of Thailand together with Bank Indonesia (BI) and Bank Negara Malaysia (BNM) on Monday announced the launch of a local currency settlement framework between them to promote trade and investment trilaterally. All three frameworks, namely the rupiah-ringgit framework, rupiah-baht framework, and expanded baht-ringgit framework, will be effective from Jan 2, 2018. The move is in accordance with two bilateral memorandums of understanding on the local currency settlement framework that were signed between the three central banks on Dec 23, 2016.

New Rules for Equitising State-owned Enterprises in Vietnam Mayer Brown 11th Dec 2017
On 16 November, 2017, the Government issued Decree No. 126/2017/ND-CP ("Decree 126") on privatisation of state-owned enterprises ("SOE") (referred to as “equitisation” in Vietnam) with effect from 1 January, 2018. Decree 126 replaces Decree 59/2011/ND-CP ("Decree 59"). The promulgation of Decree 126 appears well-timed and strategic, as Vietnam looks to introduce a more transparent and developed framework to maximise valuations on the sale of state assets against the backdrop of the current wave of investment interests in the Vietnam market and the large number of planned state divestments. The introduction of book-building as an initial public offering (IPO) pricing method should facilitate more market sensitive pricing, which appeals both to the investors and the state. In addition, selling stakes to strategic investors only after the IPO ensures that Vietnam’s equity capital markets will play a critical role in the equitisation process.

Plus500 Complements its Regulatory Portfolio with a Singapore License Finance Magnates 11th Dec 2017
The list of regulatory jurisdictions where Plus500 is operating continues to grow. The latest achievement for the company on the compliance front is the addition of a regulatory license in Singapore. The jurisdiction has been notorious in the industry for being very rigorous when granting regulatory permits. At the same time, the stamp of approval of the Monetary Authority of Singapore is very well respected in Southeast Asia.

Press Release: Basel III Implementation to be Adapted to National Interests OJK 8th Dec 2017
Chairman of Financial Services Authority's (OJK) Board of Commissioners Wimboh Santoso said that the Basel III framework would be implemented with emphasis on national interests in mind, and banks were expected to play optimal roles in promoting economic growth. Wimboh gave the statement following a meeting of the Group of Governors and Heads of Supervision (GHOS) of 27 member countries of the Basel Committee on Banking Supervision. The meeting was held at the European Central Bank, Frankfurt, Germany, on Friday (Dec. 7), local time.