| Market Development
Malaysia Central Bank Sukuk Pull-Back Opens Door Wider for Other Issuers Jakarta Globe 9th Jul 2015
A decision by Malaysia’s central bank to stop issuing Islamic bonds has slashed the global supply of sukuk but opens the door wider for other borrowers, and may begin to shift the focus of sukuk issuance westwards towards the Gulf. Malaysia has long accounted for the vast majority of the world’s new sukuk sales. But Gulf governments, multilateral institutions and even corporate issuers could now find more room in the market to issue. “There may be a recovery in sukuk volumes on an overall basis, though it could take some time for other issuers to fill the gap given the unfavorable market conditions,” said Fakrizzaki Ghazali, credit strategist at Malaysia’s RHB Bank. Low oil prices have slowed the oil-exporting economies of Malaysia and the Gulf. The Malaysian central bank issued about $45 billion worth of sukuk last year, most of it ringgit-denominated, accounting for more than a third of total global issuance of $116.4 billion, Standard & Poor’s estimated.
Asean Link: A stronger regional capital market Philippine Daily Inquirer 8th Jul 2015
This year is a turning point for the Association of Southeast Asian Nations (Asean) as member-countries form a unified economy, the Asean Economic Community (AEC). Under AEC 2015 or “One Asean,” the region commits to the free flow not just of merchandise goods but of services, capital and investments. In line with the AEC objectives, seven bourses in six Asean countries formed in 2011 the Asean Exchanges, a regional collaboration to promote Asean as one asset class. The members are the stock exchanges from Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam’s two bourses. By 2012, this regional collaboration has put in place the Asean Trading Link to connect the bourses, paving the way for what were envisioned to be streamlined, cost-effective post-trade procedures for cross-border transaction conducted through the Asean Trading Link.
Indonesia Hopes New Tools Will Boost Appeal to Foreign Islamic Banks The Jakarta Globe 7th Jul 2015
Indonesian regulators are promoting new sharia-compliant financial tools and considering easing foreign ownership limits for domestic Islamic banks, seeking to make the sector more appealing to foreign lenders. Indonesia is the world’s most populous Muslim nation but its Islamic finance sector is domestically focused and still has only niche status, behind neighboring Malaysia and several Gulf countries. The government wants to change that, and this year the financial regulator, Otoritas Jasa Keuangan (OJK), launched a five-year strategy that aims to triple the sector’s market share to 15 percent by 2023. Last month, President Joko Widodo threw his weight behind the drive by inaugurating a national campaign by the OJK to promote awareness of Islamic finance. Attracting foreign capital is part of those plans; the OJK is considering easing foreign ownership ceilings for Islamic banks, now at 40 percent.
Asset Management
Financial market volatility seen to continue Philippine Daily Inquirer 12 Jul 2015
Phippine monetary officials expect financial markets to stay volatile in the coming weeks, but assured that the real economy remained healthy. Governor Amando M. Tetangco Jr. of the Bangko Sentral ng Pilipinas (BSP) said both fiscal and monetary authorities had sufficient space to diffuse threats to the country’s economic stability. This comes amid separate crises overseas, namely Greece’s default earlier this month and the entry of China into “bear” market territory following the precipitous decline of equity benchmarks. “We may still see some further weakness in markets, but our macroeconomic fundamentals remain sound,” Tetangco said in a statement to reporters on Friday. “We have both monetary and fiscal space to help support the economy, should such be required.”
Singapore Banker Faces Uphill Battle in Boosting SGX Trading Bloomberg 12th Jul 2015
When Loh Boon Chye left the board of Singapore Exchange Ltd. in 2012, equity trading volume on the city’s bourse had been steadily dwindling for years. On Tuesday, the veteran Singaporean banker returns to the exchange’s recently-renovated downtown offices as its new chief executive. He will soon have to confront an issue that’s more acute than ever -- in the intervening period, the average daily value of equities traded kept dropping. Turnover on Singapore’s bourse in 2015 has been 95 percent lower than in Hong Kong. Loh will need to summon management skills honed over more than two decades in international banking to revive the market and appease Singapore’s brokers, who say SGX’s top executives neglected domestic equity trading to focus on developing new derivative contracts. “They’ve been pushing for the derivatives business because that’s where the growth is,” said Jimmy Ho, president of the Society of Remisiers, which represents Singapore’s commission-based stockbrokers. “They’ve forgotten about the stock market.”
Stormy Days for IPOs as Investors Remain Wary of Economic Uncertainty Jakarta Globe 10th Jul 2015
Indonesian companies looking to list on the local bourse this year face a tough time attracting investors as general malaise in the global and domestic stock markets sets in, paring back prospects for initial public offerings. Three of eight companies that went public this year – property developer Puradelta Lestari, automotive parts maker Garuda Metalindo and information technology firm Anabatic Technologies – slashed their offering size by 40 to 50 percent. Three other companies have priced their shares at the lower-end of their initial indicative range, including state-controlled developer PP Properti, miner Merdeka Copper Gold and storage operator Mega Manunggal Property. Syamsul Hidayat, the director for evaluation at the Indonesia Stock Exchange (IDX), in charge of vetting companies that want to go public, played down the trend, calling it “a calculated business decision” on the part of all the companies involved.
Decline of China’s stock influences yields of treasury notes: Ministry Jakarta Post 10th Jul 2015
The Finance Ministry’s financing and risk management office head, Robert Pakpahan, has said that the decline of stock prices in China influenced Indonesian treasury notes’ (SBN) yields. “On Wednesday, there was a correction of treasury notes’ yields, which increased by 20 to 35 basis points. It seems there was an external situation which had influenced the treasury notes’ yields,” he said as quoted by Antara in Jakarta on Thursday. Robert said despite global pressures which led to increases in yields, foreign investors were still attracted to invest in Indonesian government bonds.
PSE ready to tackle technical issues on new trading platform Business Mirror 9th Jul 2015
The Philippine Stock Exchange Inc. (PSE), which recently migrated its trading platform, on Thursday said it is ready to address technical issues, following the suspension of trading in the New York Stock Exchange (NYSE) on Wednesday. “The suspension of trading at the New York Stock Exchange, arising from technical issues, highlights the need for bourses to be prepared for any eventuality. At the PSE, we are very mindful of this, and we are always anticipating possible risks,” PSE President and CEO Hans Sicat said in a statement. A technical glitch at the NYSE, which accounts for about a fifth of the total trading stocks in the US, forced it to halt trading for four hours, the longest technology-related halt in its history. Since early this year, the PSE has been testing its new system, the PSEtrade XTS provided for by National Association of Securities Dealers Automated Quotations since early this year. It rolled out the system on June 22.
Positive Fitch Ratings likely for Malaysia :AmResearch New Straits Times 8th Jul 2015
The government’s commitment to containing public indebtedness on the back of sustainable growth with the resilience in the pace of deficit reduction could lead to a positive rating action by Fitch Ratings. With plans to cut more subsidies and move billions of ringgit in government employee housing loans off its balance sheets, the fiscal position can be bolstered. AmResearch said the move by the government to create a statutory body to take over the housing loans for civil servants will reduce the government’s debt-to-GP ratio.
Downbeat market sentiment in Malaysia seen to continue The Star 8th Jul 2015
The weakening ringgit, Greece crisis as well as the ongoing 1Malaysia Development Bhd (1MDB) saga, will continue to weigh on market sentiment in the current quarter. “Sentiment will continue to be weighed by predictable and unpredictable developments. “For one, the fasting and Hari Raya months have always been a quiet month for equity markets. “Aided by an uncertain outcome resulting from the brewing storms from the United States and Greece, investors may want to hold their horses while some may want to switch their bet on to the bond and sukuk market,” said M&A Securities in a report.
Thailand Baht Sinks to Six-Year Low on Outflows Amid China Rout Bloomberg 8th Jul 2015
Thailand’s baht fell to its weakest level since September 2009 after foreign funds pulled money from local assets amid a rout in Chinese equities. Global funds have withdrawn a net $199 million from Thailand’s shares and bonds this month, taking total outflows for 2015 to $1.2 billion, data compiled by Bloomberg show. The benchmark SET Index closed at the lowest level this year as investors grapple with potential risks stemming from Greece’s possible exit from the euro and whether China’s plunging stock market will worsen an economic slowdown.
Temasek Assets Rise to Record as It Boosts Global Investments Bloomberg 7th Jul 2015
Temasek Holdings Pte’s assets jumped to an all-time high as the Singapore state-investment firm increased investments in developed markets and broadened those in China as global equity markets gained. The value of Temasek’s holdings increased 19 percent to a record S$266 billion ($197 billion) in the 12 months to March 31, from S$223 billion in the previous year and more than double a decade ago, the firm said in its annual report Tuesday. It made S$30 billion of new investments, the highest in seven years, and a record S$19 billion of divestments, taking advantage of liquidity-driven market rallies. “Temasek’s agile and aggressive investment style continues to pay off,” said David Evans, an analyst at the London-based Sovereign Wealth Center. “They kept diversifying their portfolio across geographies, especially in Europe and North America, and I expect them to continue to do so.”
Banking
Malaysia Central Bank Fights to Stay Above 1MDB Imbroglio Bloomberg 12 Jul 2015
Malaysia’s central bank sought to distance itself from the political imbroglio surrounding state investment company 1Malaysia Development Bhd. and allegations against Prime Minister Najib Razak. Bank Negara Malaysia, part of a task force looking into an alleged transfer to Najib’s bank accounts of funds connected to 1MDB, was the subject of a Malaysia Today blog on Saturday naming three central bank officials who it said leaked information on the money trail. In a statement on Sunday the central bank said such allegations were without basis and that it had made a police report, without elaborating on the accusations. The country’s police chief said on Monday the police are now probing all members of the task force, including central bank personnel, over the potential leaking of classified documents.
Bank Mandiri Lowers Growth Target Tempo 13th Jul 2015
Bank Mandiri has lowered its profit target for 2015 to Rp 20 trillion in relation to the economic slowdown, which has forced the company to be extra careful in handing out credits. Rohan Safas, Bank Mandiri Corporate Secretary, said that the company has set a 15 to 17 percent credit growth rate in its 2015 Bank Business Plan (RBB). However, after reviewing the country's economic performance in the first semester of 2015, the company was forced to lower its credit growth target to 13 to 15 percent. "Profit has also been revised to a maximum growth of 10 percent. So at the end of the year, the maximum profit for Bank Mandiri will be Rp 20 trillion," Rohan said on Sunday, July 12, 2015. Later on, the company will allocate 30 percent from its net profit for dividend payments, while the rest will be used to increase the bank's capital.
PH banks unfazed by foreign lenders Manila Standard Today 12th Jul 2015
A top executive of one of the country’s most aggressive banks remains unfazed by the entry of more foreign banks, after the government further liberalized the industry last year to attract more foreign direct investments. In an event held at the Bangko Sentral ng Pilipinas recently, where the banker was one of the guests, he said he welcomed the influx of foreign lenders into the Philippines. “There’s nothing to worry about… the more, the merrier,” the banker said confidently. He said he knew it from the start that foreign lenders would be no match to domestic banks as far as retail banking was concerned.
Thai lender to acquire Vinasiam Bank Vietnam Investment Review 11th Jul 2015
Thailand's Siam Commercial Bank (SCB) will set up a branch in Viet Nam by acquiring the joint venture Vinasiam Bank. Prime Minister Nguyen Tan Dung approved the move, which had been suggested by the State Bank of Viet Nam (SBV), the government office said in a notice released online on July 10. "Vinasiam is weak in organisation and operation, and it has failed to ensure adequate charter capital as required by law," the notice said. SCB is qualified for a licence to open the branch, and its takeover of Vinasiam will help manage a fragile institution in the domestic banking sector, the SBV said.
HSBC names Steven Cranwell as new head of commercial banking for Singapore The Straits Times 10th Jul 2015
HSBC on Friday announced the appointment of Steven Cranwell as head of commercial banking, Singapore. He takes over from Kelvin Tan, who has been appointed chief executive officer for HSBC in Thailand. Mr Cranwell will have responsibility for HSBC's large corporates, middle market, and small and medium-sized enterprise banking segments. He will also lead the global trade and receivables finance, and payments and cash management businesses in Singapore. He was previously responsible for the bank's large corporate clients in Singapore.
BTN not getting state capital injection The Jakarta Post 10th Jul 2015
The government has scrapped its plan to inject additional capital into Bank Tabungan Negara (BTN), leaving the lender looking for other funding sources to help finance its business, including the “one million housing” program. Gatot Trihargo, the State-Owned Enterprises Ministry’s deputy for business services, confirmed recently that BTN, which specializes in mortgages, had been taken off the list of capital injection (PMN) recipients for 2016. “The total PMN amount has been lowered. We had to remove some SOEs because of budget constraints and BTN is one of them,” he said.
Fitch sees Philippine banks hurdling higher capital requirements The Philippine Star 9th Jul 2015
Fitch Ratings is convinced most Philippine banks could meet higher levels of capital for potential losses imposed by the Bangko Sentral ng Pilipinas (BSP) on banks deemed “too big to fail.” Fitch said most large and mid-sized banks in the Philippines have core equity Tier 1 (CET1) ratios comfortably above Basel 3 minimum. The banks identified by the BSP as domestic systematically important banks (D-SIBs) are required to maintain additional CET1 of between 150 and 250 basis points of the bank’s Risk-Weighted Assets beginning January 2017 until the same are fully in place by January 2019.
Vietnam banks' bad debt ratio dips to 3.15 pct in May Reuters 9th Jul 2015
Banks in Vietnam have reduced their bad debt ratio to 3.15 percent of loans in May 2015, from 3.59 percent in February, the central bank-run newspaper said on Thursday. The Banking Times gave no details on how banks could cut their bad debt ratios caused by real estate slump, unrestrained lending and costly investments by state-run firms in non-core areas. The central bank has allowed banks to increase credit growth and approved eight mergers and acquisitions so far this year, and is seeking to accelerate a reduction in banks' bade debts. It aims to cut the bad debt ratio to below 3 percent by September, a target previously set for the year end.
Citibank banks on affluent customers for growth Jakarta Post 9th Jul 2015
Lender Citibank Indonesia remains optimistic about its affluent customers as they continue to be the major growth drivers of its consumer banking business in the cooling economy. According to Citibank’s country business manager for global consumer banking, Lauren Sulistiawati, the lender reaped satisfactory results in its consumer banking lending segment during the first six months of the period. “We actually aimed for 20 percent year-on-year growth, but we already saw the business rise by 30 to 40 percent annually in the first half,” she said on Tuesday. Citibank has not officially released its first-half performance results. However, Lauren said that consumer business for the past several months had begun to account for 50 percent of the bank’s total loans, eventually balancing its lending portfolio between consumer and corporate banking.
Rural lenders seen consolidating under new BSP mechanism Business Mirror 9th Jul 2015
The Bangko Sentral ng Pilipinas (BSP) is crafting a mechanism that will encourage small, but healthy, lenders to fuse their resources with peers or rivals, and achieve a certain scale that will allow them to compete more effectively down the line. The mechanism, BSP Deputy Governor Nestor A. Espenilla Jr. said, builds on the success of an earlier program called the Strengthening Program for Rural Banks (SPRB) that sought to cure the operating inadequacies of rural lenders before these become full-blown financial problems. At the swearing in ceremonies of the latest officers of the Rural Bankers Association of the Philippines, Espenilla said the proposed mechanism has gained preliminary approval by the policy-making Monetary Board.
Citi seeks approval to set up a subsidiary in Vietnam Vietnam Investment Review 8th Jul 2015
Citi is expected to receive an in-principle official Letter of Acceptance from State Bank of Vietnam Governor Nguyen Van Binh for the bank’s plans to set up a local subsidiary in Vietnam at a signing ceremony at the US Chamber of Commerce, Washington D.C. on July 8. The bank’s acceptance of the letter comes at the time when Vietnam and the US are marking the 20th anniversary of the normalisation of diplomatic relations and on the occasion of the visit of Vietnam’s General Secretary Nguyen Phu Trong to the US. Commenting on the acceptance, Natasha Ansell, Citi Vietnam’s country officer, said that the US based global bank with operations in over 100 countries had expressed its intention to the State Bank to seek a license to operate as a wholly-owned subsidiary in the country in light of the country’s economic progress.
Malaysian banks enjoy lowest bad loans in years The Star 8th Jul 2015
Malaysian banks have the lowest bad loans in at least 17 years. They shouldn’t get used to it. While the lenders’ non-performing ratios are at the lowest levels in data going back to 1998, they’ve begun ticking up and Standard & Poor’s reckons they will keep doing so. “Loan quality is possibly at a cyclical peak,” said Ivan Tan, an S&P credit analyst in Singapore. “The non performing loan ratio is probably as good as it can get.” Borrowers have binged on a record RM1.37 trillion (US$360bil) of loans, encouraged by a jobless rate which was close to a 1990s low last year. But that’s since risen as Asia’s only major oil exporter grapples with a crude price rout, the prospect of higher US interest rates and troubles at a debt-laden state investment fund.
Vietnam central bank taking over another troubled lender The Star 8th Jul 2015
Vietnam’s central bank said it would take over all shares in troubled lender Global Petro Bank because of its failure to restructure, making the third such move this year to consolidate the country’s fragmented banking sector. The State Bank of Vietnam (SBV) would nationalise Global Petro Bank (GP.Bank) because it had exhibited serious risks and management weakness and had failed to find a partner, or devise a feasible reform plan in the past three years, the SBV a statement. “The direct buy-out of all GP.Bank shares is to help SBV become fully proactive in further reforming GP.Bank, ensure the safety and stability in banks and help maintain political security and social order and safety,” the SBV said.
BSP welcomes more foreign banks The Philippine Star 7th Jul 2015
The Bangko Sentral ng Pilipinas (BSP) said there is more room to accommodate the entry of foreign banks in the country despite the green light given to five foreign banks to set up shop in the Philippines. BSP Deputy Governor Nestor Espenila Jr. told reporters on the sidelines of the Regional Social Dialogue organized by the UNI Apro Asean Bank Unions Council (ABUC) and the Asean Services Employees’ Trade Unions Council, the regulator sees more foreign banks filing their application to operate in the country. “To begin with, the foreign bank penetration in the country is actually very small,” he said. Espenilla said foreign banks operating in the Philippines currently account for only 11 percent of the total assets of the country’s banking industry compared to the 40 percent ceiling.
E-Payments
Maybank mobile banking pioneers fingerprint identification The Star 13th Jul 2015
Malayan Banking Bhd (Maybank) has raised the benchmark in mobile banking as its customers can access their accounts and check their balances using fingerprints on their mobile devices. Maybank said on Monday the Quick Touch service on the Maybank2u app incorporated the use of biometric authentication. The new service is part of the group’s strategy to strengthen its offering in the digital space and meet the demands from customers for increasing convenience and transaction speed. Essentially, the new biometric authentication speeds up access to accounts by some 70% faster than the traditional mode of keying in the conventional six-digit personal identification number (PIN).
Young population, Internet accessibility give e-commerce chance to thrive in Vietnam Tuoi Tre News 13 Jul 2015
E-commerce has great potential to prosper in Vietnam given a rising young population and easy Internet accessibility, a trend which is also taking place in many areas of Asia, according to a recent report and the ideas shared by experts at a conference on e-commerce last week. Online shopping has overtaken bricks-and-mortar retail as the most popular method of purchase in certain Asian markets, according to the “Asia Pacific Consumer Survey – How We Like to Shop Online” report, conducted for the second year in a row by U.S.-based realty service firm CBRE. Consumers aged 18-24 are also set to play an influential role in the regional retail market in the coming years, said the report, released on July 8. Whilst 50 percent of Asia Pacific consumers still physically visit a shop to make a purchase, findings show that in emerging markets such as China and India, the majority of respondents – 76 percent and 68 percent, respectively – utilize online shopping as their most commonly used method of making purchases, according to the report .
Debit card usage still low in Philippines The Philippine Star 10th Jul 2015
Debit card usage in the Philippines remains relatively low as most cardholders still prefer conventional cash withdrawals from automated teller machines (ATM), a Bank of the Philippine Islands executive said. BPI assistant vice president for debit and prepaid business product department head Ranj Basi said only four out of every 10 ATM cardholders actually use their cards for purchases. “There are still a lot of people who line up in ATM machines to get cash to make purchases when they can already use the card to make payments for the same purchases,” Basi said. ATM cards are debit cards whose value is based on cardholders’ existing accounts while prepaid debit cards are based on the amount “loaded” on the card. On the other hand, credit cards “borrowed” money, thus slapped with interest fees.
BPI ATM cards double as debit cards Business Mirror 8th Jul 2015
More and more Filipinos have migrated from cash transactions when making purchases and embraced the electronic payments system such as those represented by debit cards in recent years, the Bank of the Philippine Islands (BPI) said on Wednesday. That migration has been substantial enough to encourage local lenders to project increased used of BPI-issued debit cards this year averaging 10 percent at the very least. BPI Assistant Vice President for Debit and Prepaid Business Ranj Basi said the lender has issued some 7 million automated teller machine (ATM) cards that double as debit cards, as well.
Insurance
Insurance option for small hold farmers The Phnom Penh Post 10th Jul 2015
The Cambodian Agriculture Cooperative Insurance Company (CACIC), an initiative established by the Cambodia Center for Study and Development in Agriculture (CEDAC), yesterday announced the start of an agriculture micro insurance service to help rice farmers better respond to climate change. Farmers who become a member of CACIC will have to pay an insurance fee of around $10 per hectare each season, although this cost will vary slightly depending on the type of rice variety gown. In return, they receive consultation on farming techniques, climate change resilience methods and will get an insurance payout when their crop is damaged either by flood or drought, according to Yang Saing Koma, president of CEDAC.
Vietnam: Insurance mart buoyant in Q1 Asia Insurance Review 9th Jul 2015
Total premiums in the Vietnamese insurance market in the first three months of this year are estimated at VND14.38 trillion (US$659 million), up by 18.76% over the corresponding period in 2014, according to a preliminary report by the Insurance Supervisory Authority (ISA) under the Ministry of Finance. Life insurance grew rapidly to VND6.84 trillion in Q1, a surge of 29.15% over the same period in 2014. Specifically, new premiums raced ahead by 41.5% to VND2.08 trillion from January to March this year, according to local media reports. Mixed insurance accounted for 43% of total life insurance premiums, followed by investment-linked insurance (40.1%); term life Insurance (5%); pension insurance (2.2%) and other services including wholelife insurance, pure endowment insurance and annuity insurance (0.17%). Supplementary products accounted for the remaining 9.46% of life premiums.
Private Insurers to Provide Shipping Insurance Myanmar Business Today 9th Jul 2015
Local private insurance firms will soon be allowed to sell maritime shipping insurance, a senior government official said. Dr Maung Maung Thein, deputy minister for finance, said, “More freedom to sell different types of insurance will be provided to local companies. There are seven types of insurance that are already permitted. Soon, maritime shipping insurance will also be permitted.” He added that local insurance companies possess “good experience” as the companies had provided insurance service for almost three years, which makes them capable of providing maritime commodities insurance. State-run insurer Myanmar Insurance Enterprise (MIE) had a monopoly in the insurance sector until 2012, when the government issued licences to 11 private companies to provide insurance services. The government only last month allowed those firms to provide health insurance services for the first time in the country’s history.
Indonesia: Insurers to gain as govt upgrades transportation Asia Insurance Review 9th Jul 2015
Insurance opportunities in Indonesia are huge, especially with the government's efforts to further infrastructure development, according to Transportation Minister, Mr Ignatius Jonan. Speaking at an insurance function last week, Mr Ignatius said that the government aims to improve land, sea, air, and rail transportation, according to local media reports. For instance, in sea transportation, the government will try to increase the capacity of about 200 harbours over the next five years. "The potential in the marine sector is huge, especially with our new regulations requiring ships to be insured,” he said. "Commercial flights could rise to three times in five years. In the field of insurance, this is a great opportunity," he said.
Market Regulation
Names of DSIB banks will not be published, says OJK The Jakarta Post 13th Jul 2015
The Financial Services Authority (OJK) says that it will not publish the names of banks categorized as “domestic systemically important banks” (DSIB). According to the OJK commissioner for banking supervision, Nelson Tampubolon, the financial regulator will only announce the DSIB criteria, without revealing the names of the banks. “It will be in line with the standards set by the BIS [Bank for International Settlements, an international organization of central banks], but we will not publish the names for the sake of some depositors,” he said on Thursday.
Bill protects policymakers Jakarta Post 13th Jul 2015
The proposed new financial system stability net (JPSK) bill will emphasize meticulous and transparent decision-making processes during economic crises that could provide stronger legal protection for policymakers, but excluding fully fledged legal immunity, which has been the bill’s sticking point for years. The JPSK bill, expected to be passed into law this year, will act as a crisis management protocol for officials amid increasing volatility in the global economy from China to Greece and at a time when potential shocks from US interest rate increases are also imminent. During crises, policymakers will be legally allowed to take approaches that may contravene existing laws and regulations that govern them, according to the JPSK bill, a copy of which was obtained by The Jakarta Post.
Central Bank’s autonomy questioned with recent currency actions Myanmar Times 10th Jul 2015
The Central Bank of Myanmar’s intervention in the exchange rate bears the stamp of senior government officials, raising questions about its independence, according to experts. The Central Bank was separated from the Ministry of Finance and declared an autonomous body in mid-2013, in theory allowing it to independently dictate monetary policy, such as determining how much currency to print and rules around currency use. Yet government officials have stepped in. The President’s Office has been coordinating the policy toward kyat-dollar exchange, which has been heavily criticised by businesspeople, economists and even some government officials.
Banks face need to raise capital with law Myanmar Times 10th Jul 2015
Local banks may have trouble meeting stricter controls to be brought in with the new financial institutions law, sources say. The law is to raise paid-up capital requirements as well as introduce a statutory reserve which cannot be lent out, in addition to a tightened reserve requirement. Experts say it will make the whole industry safer, though the requirements will onerous to meet. U Mya Than, chair of Myanmar Oriental Bank, said the Central Bank has been giving instructions to the banks of what the law will contain, though the law is not yet passed.
House to start bill deliberation over imminent shocks The Jakarta Post 8th Jul 2015
The House of Representatives agreed on Tuesday to annul a government regulation in lieu of law (Perppu) on the financial system safety net (JPSK), paving way for deliberations over a more extensive law that could safeguard the Indonesian economy against external risks. After the annulment, the House confirmed that it would soon begin discussion with the government over the JPSK bill, which was forwarded to lawmakers by President Joko “Jokowi” Widodo on July 3. The draft law is among the National Legislation Program (Prolegnas) to be passed into law between this year and the next. Once the JPSK bill was passed into law, it would encourage policymakers to act decisively when the economy faced pressures, Maruarar Sirait, a lawmaker from the ruling Democratic Party of Struggle (PDI-P), said after the House plenary session.
Measures against financial wrongdoers another NA concern Vientiane Times 8th Jul 2015
The punishment of people who commit financial discipline violations and break other related laws was raised to the government by National Assembly (NA) members, even by the NA itself, as they had observed there were no concrete measures used against the wrongdoers. The NA members raised the query yesterday at the NA debate on the report of the State Audit Organisation (SAO) on its work in the current fiscal year 2014/15. The SAO reported that, as of June 2015, 60 of the 90 targeted budget units were audited. The audited units include 31 government bodies, 20 loan and grant assistance development projects and nine banks and enterprises. Despite having agreed with the SAO report, many NA members were interested to know what measures were taken after financial indiscipline had been found. Member for Champassak province Mr Meksavanh Phomphithak said the SAO work could limit the violation. He reminded the audience about public concern and the concern of NA members about how many cases of violation had gone to court and what decisions the court had reached about them
Three-year credit history rule insufficient to vet borrowers Business Mirror 7th Jul 2015
The Chamber of Thrift Banks (CTB) considers the three-year rule insufficient to establish the creditworthiness of bank borrowers and has asked this be lengthened to five years at the very least. According to CTB President Rommel Latinazo, who is also president at RCBC Savings Bank, allowing the various lenders to look into the credit history of borrowers and limiting the same to only three years is too short for purposes of establishing a reasonably credible credit history of potential borrowers. He told the BusinessMirror the CTB is seeking a longer period beyond the three years allowed under current guidelines of the Credit Information Corp. (CIC) to help them evaluate the creditworthiness of borrowers.
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