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Market Development
BSP considers banks’ proposals for peso-yuan exchange facility Business World 8 Dec 2015
The Philippines will consider proposals from banks to establish a direct peso-yuan exchange facility in anticipation of increased use of the Chinese currency following its inclusion in the International Monetary Fund’s (IMF) reserve currency basket. “There are proposals to come up with a facility for having a direct peso-yuan exchange similar to peso-US dollar,” Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco, Jr. said in a late Monday interview in Manila, without elaborating on the time frame. The IMF last week decided to include the yuan in its Special Drawing Rights (SDR) basket starting October next year, a step deemed a milestone in the currency’s internationalization. China was the Philippines’ second-largest trading partner in 2014 with total trade worth $18.3 billion. The SDR stands as the global measure for a country’s potential claim to the “freely usable” currencies held by the IMF as a multilateral lender.
Cambodia, Laos central banks to enhance ties The Phnom Penh Post 8th Dec 2015
Central bank heads of Cambodia and Laos met yesterday in Phnom Penh to discuss ways of strengthening cooperation of their banking sectors. Chea Chanto, governor of the National Bank of Cambodia, and Somphao Phaysith, governor of the Bank of Lao PDR, talked about the potential for cooperation in training, human resources and information exchange.
Finance firms may expand to some new sectors Jakarta Post 5th Dec 2015
The Financial Services Authority (OJK) has officially given its permission for domestic multi-finance companies to start expanding their business into several new sectors in an effort to help spur the country’s lackluster economy. OJK chairman Muliaman D. Hadad said the financial regulator was fully supportive of non-bank finance companies expanding themselves by venturing into other sectors beyond their existing automotive and heavy equipment financing portfolios. Muliaman said that there were at least seven sectors that were traditionally financed by banks, namely agriculture, farming, horticulture, plantation, tourism, infrastructure and electricity. These sectors will now be open to new financial avenues.
CB Bank launches new trade finance products Myanmar Times 4th Dec 2015
Local lender Co-operative Bank, better known as CB Bank, has ramped up its trade financing services and will now provide financing directly to exporters, becoming the first bank in the country to do so. At the launch of the new products in Yangon yesterday, U Kyaw Lynn, the bank’s executive vice chair said exporters will now be able to take out loans, using their trade documents as collateral. This will make local exporters more competitive, allowing them more flexibility, as well as reducing their credit and exchange rate risks, he said. The bank’s newly formed trade unit team will handle international trade finance, based on four new products. The first is financing loans before shipment, to cover working capital costs. The second is invoice financing, which allows exporters to borrow money based on what they are owed. The third is export bills purchase under documents against payment, which means the bank can buy an exporter’s trade documents in return for the amount of money owed by the buyer, before the trade payment is made.
Financial illiteracy persists as banks blossom The Phnom Penh Post 4th Dec 2015
Most Cambodians continue to have low financial literacy even as an increasing number of them are beginning to embrace the formal banking sector, according to a recent Standard & Poor’s report. The international credit rating firm’s Global FinLit Survey showed that only 18 per cent of Cambodians were able to answer three of four questions related to basic financial literacy, placing the Kingdom at 135 out of 144 surveyed nations. While around 40 per cent of respondents in Cambodia were able to answer questions related to the calculation of simple and compound interest, which is used to understand the terms of a loan agreement, only 21 per cent were able to answer a question on diversification of investments.
Grant Knuckey, CEO of ANZ Royal Bank, said it was critical for people to make good decisions with their money, which would in turn improve the sustainability of the Cambodian economy.
Several Asia-Pacific countries agree on cross-border investment rules Nikkei 3rd Dec 2015
Financial regulators in Japan, Australia, South Korea and other countries in the Asia-Pacific have agreed to create a framework to promote cross-border mutual fund investments. The Asia Region Funds Passport will establish common rules governing matters such as information disclosure and what types of international investment are permitted. Under the framework, investment trusts and other types of mutual funds that meet certain criteria will tradable in any member country or territory.
Microfinance loans grow Business World 3rd Dec 2015
More Filipinos were able to secure small loans as of June from a year earlier, the central bank chief said, noting an increase in credit handed out by banks to poor borrowers. Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco, Jr. said total microfinance loans granted by banks grew to P10.4 billion as of end-June. The figure is 14.3% above the P9.1-billion loan portfolio recorded as of June 2014. “Based on latest available figures there were 173 banks engaged in microfinance as of June 2015, with a loan portfolio of P10.4 billion distributed to 1.27 million borrowers. In June 2014, there were 1.13 million borrowers with a loan portfolio of P9.1 billion,” Mr. Tetangco said in his speech at the 2015 Citi Microentrepreneurship Awards on Wednesday. “We see therefore an increase in both microfinance loans and borrowers.”
RMB funding options for Singapore firms expected to grow Channel NewsAsia 3rd Dec 2015
More Renminbi (RMB) funding options are expected to be available to Singapore companies over time, amid the growing internalisation of the Chinese yuan. This is expected to make it easier to do business with China, which will lead to greater trade between the two countries. The decision by the International Monetary Fund (IMF) to include the yuan in its basket of reserve currencies, also known as Special Drawing Rights (SDR), appears to be an endorsement of China’s efforts to internationalise its currency. As China moves towards freer capital flows, observers say they expect more RMB financing facilities to be established over time, both offshore and onshore. "Besides Chinese banks, I think other banks would start to provide more RMB facilities and we'll likely see more transactions between countries’ currency directly interchanging RMB as well,” said President of the Association of Small and Medium Enterprises Kurt Wee. “This would help SMEs (small- and medium-enterprises) in Singapore in their trade flows in having direct interchange between SGD and RMB.
S’pore adults most financially literate in Asia Brunei Times 3rd Dec 2015
Singapore has the highest percentage of financially literate adults in Asia, a continent where 73 per cent of adults do not adequately understand key monetary ideas, a new study has found. As many as two-thirds of adults in the world are financially illiterate, according to a survey by ratings agency Standard & Poor's. In one of the most extensive studies on the topic, S&P conducted interviews with more than 150,000 adults in more than 140 countries who were tested on their knowledge of four basic financial concepts: numeracy, risk diversification, inflation and compound interest (saving and debt). The agency's Global Financial Literacy Survey (S&P Global FinLit Survey) established regional difference in knowledge between East Asia, South Asia and Southeast Asia, but said that the percentage of financially literate adults across Asia was lower than the global average, the agency said yesterday.
Asset Management
Myanmar bourse launches long quest for regional stardom Financial Times 8th Dec 2015
Myanmar will finally ring the trading bell to launch its new stock exchange on Wednesday but bold talk that Asia’s newest frontier market could best more developed near-neighbours such as Vietnam will not be tested just yet. Investors and brokers say there is unlikely to be any dealing on debut, as authorities are still scrambling to list companies whose long international isolation has raised hopes of big profits now the country is opening up. In an echo of the national political skirmishing under way after landmark elections last month, the rhetoric around the new Japan-backed bourse in Yangon is of patience in pursuit of a bigger goal. Market regulators and prospective participants insist the potential rewards outweigh the drag of continuing US sanctions, the lack of financial architecture and a global bearishness about many emerging markets.
SGX reorganises to 'improve efficiency, serve customers better' The Straits Times 7th Dec 2015
The Singapore Exchange (SGX) on Monday announced changes to its organisational structure to "better serve customers and improve operational efficiency". In a statement, the SGX said the key changes include integrating the sales and product teams to provide comprehensive client solutions, deepening its international presence in growth markets, and streamlining technology and operations units to enhance operational resilience and responsiveness. SGX chief executive officer Loh Boon Chye said, "The changes we are taking will create a simpler and flatter structure, making us more efficient and better equipped to take on challenges and opportunities.
Ringgit undervalued New Straits Times 7th Dec 2015
The ringgit is undervalued, says Maybank Group president and chief executive officer Datuk Abdul Farid Alias. “It keeps changing over time depending on expectations, but clearly it is undervalued,” he said in an interview with the New Straits Times Press group. Farid said at one time he had commented that the ringgit should be at RM3.30 to the US dollar. “Clearly expectations have changed,” he said. “We know that fundamentally we are undervalued and based on interest rates parity we should be at 3.3. When we say it, we hope people will pick up on it, but it hasn’t happened.”
List of 10 YSX underwriters revealed Myanmar Times 4th Dec 2015
Ten securities companies, named below, intend to operate as underwriters for the new Yangon Stock Exchange which is due to open on December 9, The Myanmar Times has learned. The exchange has not yet made an official announcement, but corporate sources and all but one of the companies involved have confirmed that provisional licences, dependent on registering a subsidiary with the Directorate of Investment and Company Administration and putting up K15 billion (US$11.5 million) in initial capital, will be granted to the following:
Banking
Next Malaysian Central Bank governor possible candidates The Star 8th Dec 2015
As Malaysian central bank Governor Zeti Akhtar Aziz prepares to leave in April after three decades at the central bank, here's a snapshot of people who have been the focus of speculation to succeed her. Whoever is chosen as her successor will have “very big shoes to fill,” said Wellian Wiranto, an economist at Oversea- Chinese Banking Corp. in Singapore. "This is especially so since the global environment remains uncertain and Malaysia is deemed relatively vulnerable to swings in global investor sentiment -- in part due to domestic political rumblings.” Zeti served as a deputy governor before she took the top job in 2000. The central bank declined to comment on whether any of the three current deputies are in the running this time.
Malaysian banks under pressure, profit decline to linger The Star 8th Dec 2015
Malaysian banks are at risk of capital pressures with decline in profits to linger until next year, according to rating agency Moody’s Investors Service. In its report yesterday, Moody’s said the challenging operating landscape would continue to take a toll on financial institutions here as profits slashed on rising credit costs and shrinking net interest margins (NIMs). Banks reported pressured NIMs over the past 12 months on elevated funding costs from the launch of liquidity coverage ratio in 2015 that prompted them to attract better quality, but costlier retail and small and medium enterprise (SME) deposits, said Moody’s.
OJK warns banks to keep cautious over rising bad loans next year Jakarta Post 7th Dec 2015
The domestic banking industry should keep cautious next year as the risk of rising bad loans still remains despite a slightly improved outlook in the country’s economy, regulators and analysts have said. Financial Services Authority (OJK) chairman Muliaman D. Hadad said the agency had requested lenders to set aside more funds to cover potential losses on loans in 2016. “We have asked them to increase their loan-loss provision for this year and for 2016 as well, so that they can absorb risks,” Muliaman said, acknowledging that their profitability might still be under pressure next year due to an increase in provisions. Despite the looming risk of rising bad loans, Muliaman said the OJK was convinced that the average gross of non-performing loan (NPL) ratio in the country’s banking industry could still be managed well at the current level of around 2.6 to 2.7 percent. Such a figure was one of the lowest compared to those in neighboring countries.
Bank loans up 14% to P4.8 T The Philippine Star 7th Dec 2015
Bank lending picked up in October on the back of a strong growth in real estate loans as well as the recovery in the manufacturing sector, the Bangko Sentral ng Pilipinas (BSP) reported over the weekend. Data showed that outstanding loans of commercial banks expanded 13.9 percent to P4.82 trillion in end-October from P4.24 trillion in end-October last year. The expansion in October was faster compared to the revised 12.6 percent growth in bank lending booked in September. Together with reverse repurchase placements with the BSP, lending rose 14.2 percent to P5.12 trillion in October from a year-ago level of P4.24 trillion.
The rise of regional banking Policy Forum 7th Dec 2015
Asia’s savings used to flow to New York and London before they came back to the region, but the Global Financial Crisis changed all of that, as Eli Remolona and Ilhyock Shim report. Much of Asia’s savings used to flow to New York and London before they were sent back to Asia. This is no longer the case. In the years before the Great Financial Crisis (GFC) of 2008-09, global banks recycled Asian savings to provide dollar funding to Asia. European banks played an especially large part. On the eve of the crisis, Euro area banks accounted for about a third of the international lending to emerging Asia. Banks from within the region accounted for a similar share. The Asia-Pacific region weathered the GFC well but it did not escape it entirely. The flow of dollars stopped but the halt was only temporary; the flow resumed with a vengeance in 2009. International claims on the region more than doubled in five years. China stood out, with its cross-border borrowing growing almost sixfold from 2008 to 2014.
November loan rate slides to 9.3 percent VietnamPlus 4th Dec 2015
Average lending interest rate in November reduced 0.28 percent to 9.3 percent per year, the highest slide for the past nine months. According to a survey of HCM City Securities Corporation (HSC), under the November survey on deposit and lending interest rates, the average lending rate this year cut by 0.74 percent against January. According to the survey, ACB offered a rate of 9.26 percent per year for long-term loans, the lowest level in the whole banking system. Meanwhile, the lowest rate for short-term loans listed at banks was 7.5 percent. In November, Vietinbank cut its lending rate between 0.5 percent and 1.5 percent per year in many terms while the rate at Vietcombank and Techcombank was also reduced 0.5 percent.
Vietnam banking system outlook stable: Moody's VietNamNet Bridge 3rd Dec 2015
The outlook for the Vietnamese banking system is stable, driven by the country's good economic growth and stabilising asset quality and good liquidity, according to a Moody's report released early this week. However, the rating agency said Vietnam's banks had relatively low ratings when compared with their global peers, reflecting their weak capital levels and insufficient provisioning for problem legacy assets. "The operating environment for Vietnamese banks has been benign in the past two years, after a sharp deterioration in 2012 that followed several years of very rapid credit growth," Moody's Vice President – Senior Credit Officer Eugene Tarzimanov said. Moody's conclusions have been compiled in its report entitled "Banking System Outlook – Vietnam: Benign Macro Conditions Support Stable Outlook".
Singapore’s banks pummeled with weak lending activity and rising NPLs Singapore Business Review 3rd Dec 2015
Singapore’s banks are facing double haymakers in the gut as a tepid loan growth is further aggravated by non-performing loans (NPLs). According to BMI Research, as of the close of September NPL ratio was 0.9% for OCBC and 1.3% for UOB, both higher y-o-y, while at DBS is remained unchanged from Q314 at 0.9%. Uncertainty clouds Singapore’s banks in 2016, due to the usual suspects--the regional economic environment and financial market volatility. “Total loan growth is likely to remain tepid through the end of 2016, and we have downgraded our forecast for loan market growth to a single-digit of 5.0% for the year, down from 10.0% previously,” BMI Research said. Meanwhile, banks are also likely to experience a rise in net interest margins over the coming quarters, as lending rates rise due to sluggish lending growth.
Ringgit drops as oil slide to 6-year low dims revenue outlook The Malaysian Insider 3rd Dec 2015
The commodity has dropped 26% this year, helping make the ringgit the region’s worst-performing currency and threatening to derail government efforts to cut the budget deficit. Malaysia is also the world’s second-biggest producer of palm oil, leaving the country extra vulnerable to the slowdown in China. “It’s the same old story with commodities, in particular oil, under pressure,” said Sue Trinh, Hong Kong-based senior currency strategist at Royal Bank of Canada. “That’s clearly a negative for the Malaysian ringgit.” Brent crude sank 4.4% overnight to $42.49 a barrel before Friday’s meeting of the Organization of Petroleum Exporting Countries, with the Iranian oil ministry’s Shana news agency saying some members disagree on the need for an output cut that may help prices recover. Federal Reserve chair Janet Yellen reaffirmed yesterday that the US economy is ready for the first increase in interest rates since 2006, with futures showing 72% odds for a move this month. She also provided greater clarity on the direction of policy once the central bank starts tightening.
Short-term interbank rates to remain stable on BNM intervention Malaymail 3rd Dec 2015
Short-term interbank rates are expected to remain steady today on Bank Negara Malaysia's (BNM) intervention to absorb surplus liquidity from the financial system. BNM estimated today's liquidity at RM43.11 billion in the conventional system and RM13.87 billion in Islamic funds. The central bank will conduct a conventional money market tender of RM5.0 billion for seven days, a Qard of RM3.7 billion for seven days and two repo tenders of each RM200 million for 32 days and 46 days respectively.
1MDB To Cut Debts By RM17 Billion With CGN Agreement Bernama 3rd Dec 2015
1Malaysia Development Bhd (1MDB) is expected to reduce its debts by RM17 billion when the takeover of debts of Edra Global Energy Bhd's (Edra) operating assets by China General Nuclear Power Corporation (CGN) is completed. The Finance Ministry said this was achieved following the share sale and purchase agreement signed with CGN for the sale of 1MDB's 100 per cent ownership in Edra's energy assets on Nov 23 this year. "Based on Edra's financial statement for the year ended Mac 31, 2015, 1MDB will receive for its equity, cash of RM9.83 billion, besides the takeover of debts of Edra's operating assets by CGN Group of RM7.43 billion. "With the cash and transfer of debts, 1MDB will achieve a debt reduction of up to RM17 billion. The transaction is expected to complete in February 2016," according to the Finance Ministry in a written reply to a question from Datuk Mahfuz Omar (PAS-Pokok Sena) which was distributed at the Dewan Rakyat here, today.
Lower reserve ratio to stimulate growth The Jakarta Post 2nd Dec 2015
Bank Indonesia (BI) expects its decision to lower the primary reserve requirement ratio to help spur the country’s economic growth, although its benchmark interest rate remains unchanged, according to its official. On its Nov. 17 board of governors meeting, the central bank lowered the reserve requirement ratio (GWM) to 7.5 percent from 8 percent, effective Dec. 1, while maintaining its key rate at 7.5 percent, the same level since February. With a lower reserve requirement, or minimum funds that banks need to hold in reserve, the central bank has decided to support the economy while also maintaining stability amid risks of capital outflow, according to BI director for monetary policy Solikin M. Juhro.
Smaller banks maintain ample buffers Business World 2nd Dec 2015
Smaller banks remained well-capitalized as of the first quarter of 2015, the Bangko Sentral ng Pilipinas (BSP) said, well above the minimum ratio set by the monetary authority. Stand-alone thrift banks posted capital adequacy ratios (CAR) of 21.66% as of end-March, well above the minimum 10% requirement though slightly lower than the 22.31% ratio seen in December 2014, the central bank said in a statement on Wednesday. The BSP said the decrease was due to an “increase in exposure to debt securities held-for-trading” in the first three months of 2015. Rural and cooperative banks, meanwhile, posted a CAR of 18.24% for the January-March period from the 18.17% seen in December, brought about by a higher quarter-on-quarter increase in qualifying capital that offset an slight uptick in the banks’ risk-weighted assets, BSP data showed.
Scramble behind the scenes as Yangon Stock Exchange nears launch Myanmar Times 2nd Dec 2015
Ten companies have been offered conditional underwriting licences for the Yangon Stock Exchange, but several say they are not yet ready to operate. According to sources within a number of the companies, those offered provisional licences include AYA Bank, CB Bank, Daiwa Securities, Asia World affiliate Global World Securities, Innwa Bank-linked Aung Myint Moe Min Insurance, Loi Hein Company, KBZ Bank, United Amara Bank and Young Investment Group. U Maung Maung Thein, chair of the Myanmar Securities and Exchange Commission (MSEC), said he could not confirm these names, as a number of companies have not yet completed the formalities necessary for a final licence – such as registering a subsidiary with the Directorate of Investment and Company Administration and putting up K15 billion in initial capital. The announcement was originally planned for June. At a meeting on November 30, he “urged the companies to pay their licencing fees by December in preparation for the launch date”, state media reported yesterday.
Oct bank lending sags on slowing growth The Straits Times 2nd Dec 2015
Bank loans fell in October as the slowing economy weighed on lending to businesses. Total bank loans to consumers and firms came in at $601.7 billion, down 1 per cent from September. Total deposits at domestic banking units fell as well, down 0.3 per cent to $550.6 billion from September's $552.8 billion. This kept the ratio of loans to deposits at about 107 per cent in October, below a record high in October 1997 of 115.6 per cent. If the ratio is too high, banks may not have enough liquidity to cover unforeseen fund needs while a low ratio could mean banks are not earning as much as they could.
Heavy demand for more SME soft loans Bangkok Post 2nd Dec 2015
The business sector is asking for more financial assistance from the government to offset the weak global economy. It is requesting another tranche of 100 billion baht in soft loans to help support struggling small and medium-sized enterprises (SMEs) and those wanting to expand. The state-owned Thai Credit Guarantee Corporation (TCG) is also seeking Finance Ministry approval to widen its credit guarantee service to leasing and factoring for SMEs to help increase their liquidity. The first tranche of 100 billion baht extended by the Government Savings Bank since September ran out quickly, Federation of Thai Industries chairman Supant Mongkolsuthree said after the monthly meeting of the Joint Standing Committee on Commerce Industry and Banking.
Banking system outlook stable: Moody's VietnamPlus 2nd Dec 2015
The outlook for the Vietnamese banking system is stable, driven by the country's good economic growth and stabilising asset quality and good liquidity, according to a Moody's report released early this week. However, the rating agency said Vietnam's banks had relatively low ratings when compared with their global peers, reflecting their weak capital levels and insufficient provisioning for problem legacy assets. "The operating environment for Vietnamese banks has been benign in the past two years, after a sharp deterioration in 2012 that followed several years of very rapid credit growth," Moody's Vice President – Senior Credit Officer Eugene Tarzimanov said. Moody's conclusions have been compiled in its report entitled "Banking System Outlook – Vietnam: Benign Macro Conditions Support Stable Outlook".
E-Payments
Annual e-commerce event outstrips 2014 Nikkei Asian Review 7th Dec 2015
Online Friday 2015, Vietnam's annual e-commerce event, has reported 300,000 orders -- almost double last year's -- 80% of which were for technology and fashion items or home appliances. Staged for the second time, the event promotes e-commerce in a country where 40% of the population already uses the Internet. These consumers spend an average of $145 shopping online each year, with total business to consumer (B2C) sales worth $2.97 billion in 2014. This is expected to rise to $4 billion this year, according to the Vietnam E-commerce and Information Technology Agency (VECITA), one of the event's organizers. The latest Online Friday involved 2,000 companies, 26 e-marketplaces and e-retailers, and offered consumers 63,000 products on the website. More than one million hits were recorded with eight million product views on the day. Total sales have not yet been disclosed, but may have been as high 500 billion dong ($25 million) -- three times higher than last year.
Banks still some way from leading mobile revolution Channel NewsAsia 3rd Dec 2015
As part of efforts to be at the frontline of the mobile revolution, banks are launching new apps to promote the use of mobile banking among customers. However, they still have some way to go, with consumers looking for more and better features. Despite the convenience it offers, Singapore consumers are taking time to warm up to mobile banking. A report by RFi Group earlier this year showed that only about one in four bank account holders in Singapore carries out transactions using mobile phones, compared to 42 per cent in Indonesia. "Many of the banks don't have a very user-friendly app till now," said Mr Ajay Sunder, vice president for ICT Practice (Asia Pacific) at Frost & Sullivan. "Only in the last one year have we been seeing revamped apps from the banks." He added: "I think people are becoming increasingly more comfortable with banks, so I wouldn't say that it's a demand-side constraint, it's more a supply-side constraint. We can see that the banks are trying to change that and we will increasingly see more revamped apps, more increased features being offered through mobile apps."
E-commerce sector and its challenges The Straits Times 3rd Dec 2015
Singapore's competition law and assessment frameworks are "well suited" to meet issues related to e-commerce, according to a study out yesterday. It also found that the growing industry will more or less police itself, given its dynamic nature. "In rapidly changing markets, any market power gained may be temporary and interventions by competition authorities may risk stifling long-term innovation and investment," said the study. "Interventions should be targeted and made on a case-by-case basis, balancing potential competition concerns with efficiency benefits and the risk of creating market distortions."
Visa to increase card acceptance points upcountry The Nation 2nd Dec 2015
To support Thailand's National E-Payment Project and drive payment growth next year, Visa Thailand will add more than 1,000 acceptance points for plastic cards upcountry, especially in Tier 2 provinces in the Northeast. Country manager Suripong Tantiyanon said yesterday that the company was responding to the policy from the Bank of Thailand on expanding acceptance points at key merchants and promoting mobile points of sale at smaller merchants to boost electronic payments. Visa has about 400,000 acceptance points nationwide. Bangkok still dominates the country's plastic-card spending at 64 per cent. The company hopes payments between Greater Bangkok and the provinces will be more balanced soon. In its 2015 fiscal year, which ended on September 30, payment volume expanded by 11.5 per cent against 9.6 per cent in 2014. Transactions turned to growth of 7.7 per cent from a drop of 3 per cent.
Insurance
Microinsurance for farmers to help stabilize food prices Business Mirror 7th Dec 2015
The Philippines should immediately start marketing products under the micro-agriculture framework of the Insurance Commission (IC) to help the country become more resilient to inflation, brought about by the destruction of crops during natural calamities. Department of Finance (DOF) Undersecretary and chief economist Gil S. Beltran said in an economic bulletin that the consumer price index (CPI) inflation rate in November, which rose to 1.1 percent from the previous month’s 0.4 percent, was brought about by the increased costs of vegetable products as a result of Typhoon Lando’s devastation in October. Prices of vegetables increased 12 percent in November, representing a big increase in the prices of these commodities during the previous month. “The adverse price impact of Typhoon Lando will wane as farmers replant. This emphasizes the need to immediately launch the micro-agri framework and start marketing of new microinsurance products for farmers.
ThaiSri Insurance to cash in on demand in border provinces The Nation 4th Dec 2015
ThaiSri Insurance will expand its customer base in border provinces, where business is brisk, via partners including the Thai Chamber of Commerce. The company will also set up more offices for agents in border provinces, including those with special economic development zones. This month it will open an agency in Tak's Mae Sot district to ride the logistics route from Thailand to Myanmar, Natee Panichewa, chief executive officer, said yesterday. It already has offices in Chiang Rai, Udon Thani and Nong Khai. The company will offer an insurance policy called AEC Easy Carrier's Plus to tap transport and logistics companies. The coverage will expand to those companies operating transport services in Laos, Myanmar, Vietnam and China.
Philippines: Insurance regulator to oversee HMOs Asia Insurance Review 4th Dec 2015
The Insurance Commission (IC) is taking over the regulation and supervision of health maintenance organisations (HMOs) from the Department of Health (DOH), in a move to to ensure better financial supervision over such entities. President Benigno Aquino signed an executive order on 12 November, that was released on 26 November, transferring the regulatory and supervisory function to the IC. The insurance regulator is set to assume the role within 90 days of the order taking effect. The executive order, explaining the transfer, said: "Ïnsurance companies, pre-need companies, and HMOs function under a common concept of receiving compensation, either through premiums or contributions, and in turn, promise certain contractual benefits in the future.
Insurance, Takaful sector will remain stable in 2016: Fitch New Straits Times 3rd Dec 2015
The insurance and takaful sector in Malaysia will remain stable in 2016, underpinned by the industry's solid capitalisation, says Fitch Ratings. M&A (mergers and acquisition) activities are likely to pick up following a quiet 2015. The rating agency said solid capitalisation in Malaysia will also support the sector's premium growth and potential underwriting volatility as economic growth decelerates. Malaysia's robust regulatory framework and capital practices comes from a series of regulatory reforms implemented in recent years ahead of full liberalisation and economic integration with other south-east Asian economies. The industry's consolidated risk-based capital ratio was strong at 239 per cent in the first half of the year, well beyond the regulatory minimum of 130 per cent.
Malaysia’s insurers strongly capitalised, says Fitch The Star 3rd Dec 2015
Malaysia’s insurance and takaful sector is set to remain stable in 2016 as their strong capitalisation will support premium growth and cope with potential underwriting volatility as economic growth decelerates, says Fitch Ratings. In a new outlook report for the sector next year issued on Thursday, it said the strong capital position for Malaysia’s insurers was built on a robust regulatory framework ahead of the full liberalisation and economic integration with other Southeast Asian economies. This was evidenced by the industry’s robust consolidated risk based capital ratio of 239% in the first half of this year (1H15), which was well beyond the regulatory minimum of 130%, according to Fitch. The ratings house believed that stable domestic demand and low insurance penetration would continue to support the general insurance and takaful industries despite a slower premium growth in 1H15 associated with lower automobile sales and lower consumption spending.
Pacific Cross Health Insurance eyes Myanmar Asia Insurance Review 3rd Dec 2015
Thai health insurer, Pacific Cross Health Insurance, will expand into Myanmar next year, with plans to cooperate with state-owned Myanmar Insurance through reinsurance. The insurer is in the process of planning this business. It believes that Myanmar is the most attractive for investment now as purchasing power is rising, reported The Nation newspaper. Mr Tom Thomson, CEO of Pacific Cross Health Insurance, said in an interview with the newspaper that the company had drawn up a business plan for the next five years to 2020, targeting growth in gross premium income of 40% per year to reach THB1 billion (US$28 million).
Singapore: Insurers resilient against interest rate conditions Asia Insurance Review 2nd Dec 2015
Singapore insurers, which have been resilient against low interest rates as guaranteed benefits provided by Singapore insurers are low, will remain resilient against upcoming increases in interest rates, according to the Monetary Authority of Singapore (MAS). The upcoming normalisation of US monetary policy could pose near-term risks to the investment performance and balance sheets of insurers in general, and life insurers in particular which tend to hold longer-duration fixed-income securities to match longer-term liabilities. Rapidly rising interest rates will reduce the mark-to-market value of insurers’ fixed-income instruments and could prompt a potential increase in policy surrenders from policyholders searching for higher yield from capital markets.
Market Regulation
MAS issues Response to Feedback Received on proposed notice on Liquidity Coverage Ratio ("LCR") and minimum liquid assets ("MLA") requirements for merchant banks ("Merchant Bank Notice") Lexology 8th Dec 2015
On 26 November 2015, the Monetary Authority of Singapore ("MAS") issued its Response to Feedback Received on its proposed Merchant Bank Notice, which MAS had previously consulted on in July 2015. In August 2013, MAS issued the Consultation Paper on Local Implementation of Basel III Liquidity Rules - Liquidity Coverage Ratio ("Basel III Liquidity Rules") with its proposal to implement a new MLA and LCR framework for all banks in Singapore licensed under the Banking Act (Cap. 19), finance companies under the Finance Companies Act (Cap. 108), and merchant banks approved under the Monetary Authority of Singapore Act (Cap. 186) ("the August 2013 Consultation Paper"). In August 2014, MAS published its Response to Feedback Received in relation to the August 2013 Consultation Paper along with the draft wording of the MAS Notice on MLA and LCR which is applicable to all licensed banks in Singapore ("MAS Notice 649"). MAS Notice 649 was published in November 2014 and came into effect on 1 January 2015 for a licensed bank incorporated and headquartered in Singapore, and will come into effect on 1 January 2016 for all other licensed banks in Singapore.
Draft data privacy bill heads for NLA debate Bangkok Post 7th Dec 2015
Thailand's draft data protection bill is expected to go through the National Legislative Assembly (NLA) debate within the next four months. This follows its complete revision by the Information and Communication Technology Ministry. "After the NLA passes the draft bill, it should become effective by the end of 2016," said Surangkana Wayuparb, executive director of the Electronic Transactions Development Agency (ETDA). Thailand spent almost two decades working to implement a data privacy law because of setbacks from political instability. Mrs Surangkana said with the number of threats and the sophistication of cyberattacks increasing, there was a high risk for personal data breaches.
Banking dispute resolution body to operate next year Jakarta Post 4th Dec 2015
The Financial Services Authority (OJK) is completing the establishment of an agency that will take over resolution activities from the financial regulator in disputes between banks and their customers. The agency, the Indonesian Alternative Agency for Banking Dispute Resolution (LAPSPI), will be part of a larger institution called the Indonesian Alternative Agency for Dispute Resolution (LAPS) that will start handling disputes in the insurance and capital market sectors on Thursday. LAPSPI was established under an agreement signed in April this year by six banking associations, including the National Banks Association (Perbanas) and Foreign Banks Association (Perbina).
OJK, BI to build comprehensive debtor database Jakarta Post 3rd Dec 2015
The Financial Services Authority (OJK) and Bank Indonesia (BI) are working together to develop a comprehensive database aimed at providing accurate information about the creditworthiness of individuals and companies. The two entities would coordinate their work to build the debtor information system (SID), which is scheduled to be implemented next year, OJK chairman Muliaman D. Hadad said in Jakarta on Thursday. The OJK would have access to applications and raw data of the SID, which would become part of an “integrated services system” serving numerous purposes, Muliaman said at the signing of an agreement between BI and the OJK on the joint project. SID is an information system designed to provide information regarding debtors, both individuals and businesses. The information is processed based on data from reporting institutions (members) on available funds, received by BI.
BSP tightens regulations on big, family-run banks The Philippine Star 2nd Dec 2015
The Bangko Sentral ng Pilipinas (BSP) has tightened the rules on related party transactions by ensuring arm’s length principle is being followed in conglomerate and family-owned banks. The central bank approved the new guidelines strengthening the oversight and control standards for managing related party transactions in recognition of the unique landscape of the Philippine financial industry largely composed of conglomerate or family-owned banks. Under the new rules, higher degree of standards should be applied on transactions between and among the entities within the same group to protect the interest of all stakeholders. The central bank said related party transactions are generally allowed for as long as these are done on an arm’s length basis.
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