Top Story: International cooperation vital to tackle financial risks, argues Zeti
An international platform is vital to facilitate effective policy coordination and governance while addressing financial risks in the wake of increasing financial liberalization. In making the call, Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz, said the cross border dimension of policy-making has not been as extensive, despite wide ranging financial reforms at the international level to strengthen the resilience of the financial sector. This is also despite the swift spread of financial and economic shocks in the global economy and international financial system, following the 2008 crisis which affected the stability of both emerging economies and more developed financial systems.
HIGHLIGHTS:
- Asian nations urged to rethink policies - Asian policymakers may have to accelerate efforts to reorient growth strategies to mitigate the problems of international spillovers in the global markets, according to Glenn Stevens, the governor of the Reserve Bank of Australia. "The traditional Asian strategy of export-driven growth assisted by a low exchange rate worked well when Asia was small," he said. "Asia isn't small any more, and so the rest of the world will not be able to absorb the growth in Asian production in the same way as it once did. More of that production will have to be used at home." Mr Stevens, in an address on challenges for central banking at the Bank of Thailand's Policy Forum yesterday, said Asian policymakers understand that past export-led growth strategies must change, and that progress has been made.
- The Liberalization and Management of Capital Flows - An IMF Institutional View - A November 14, 2012 paper put forth by the IMF rethinks its doctrine on capital controls. The IMF, which previously favored unfettered flows of money across borders, now accepts that controls are sometimes necessary.
Market Development
BoT outlines resolutions for second of five-year plan | The Nation, Dec 18
The Bank of Thailand will in 2013, the second year of its five-year plan, focus on connectivity with foreign economies to boost growth, acceleration of competitiveness through a high-value-added economy, reduction of inequality through financial inclusion, and management of overall economic stability. "In 2012, our key word has been common vision," BOT Governor Prasarn Trairatvorakul said yesterday. "Several agencies have their own strategy for the nation's development. The central bank also has a five-year strategy through nine platforms. Thus, in 2013, we will concentrate on constructive engagement with other agencies for good living and sustainability."
Asian bond market to stay strong in 2013 | Business Times, Dec 15
Hwang Investment Management Bhd (HwangIM) expects Asian bonds to be strong next year as investors look for defensive products with low votality, amid concerns over the US fiscal cliff and the ongoing Europe debt crisis. HwangIM investment head of fixed income Esther Teo is expecting strong inflows from private banks in Asia, and higher allocation from investors in the region as well as emerging markets such as Eastern Europe and Latin America. "We believe the growth story for Asia will pick up. Investors are looking for higher returns and product diversification. Instead of Malaysian bonds, they are looking outside in the Asian region to spread their risk," she said yesterday at a media briefing.
Use local currency to settle trades, Asia told | Business Line, Dec 15
Asian economies would do well to build their own trade settlement infrastructure on their local currencies rather than complaining to the West about their excessive dollar dependence. This was suggested by Chang-Yong Rhee, Chief Economist, Asian Development Bank, at the Delhi Economics Conclave 2012 here on Saturday." You build your own infrastructure and allow the market to decide which currency they would like to adopt," he said. At the same time, Rhee also felt that dollar dependence will only increase in the coming days .
Market Regulation
SBV too hasty to stop capital mobilization and lending in foreign currencies | Vietnamnet, Dec 15
Under the Circular No. 03 of the State Bank of Vietnam, a lot of enterprises would have to stop borrowing in foreign currencies from January 1, 2013. This is one of the steps towards the goal set up by the central bank to stop the capital mobilization and lending in foreign currencies. However, the bank has been warned that if it is too impatient about the plan, this would weaken the competitiveness of Vietnam's export products.
Banking
New Vietnam ATM fee scheme to burden cardholders | TuoiTreNews, Dec 17
As of next March, banks will be allowed to charge ATM users for on-us transactions, or those made on machines of the same bank that issued the ATM card, according to a draft decree on which the State Bank of Vietnam said last week it has completed collecting feedback. Customers are currently charged a VND3,000 fee only when conducting the transaction at an ATM booth of another bank. ATM cardholders, mostly workers who do not usually withdraw all of the salaries they are paid via the cards at once, are unhappy with this on-us withdrawal fee.
Basel III enforced in Thailand in 2013 | The Nation, Dec 14
The Bank of Thailand has issued 7 directives, to immediately apply the Basel III rules on the capital ratio of local and foreign banks operating in the Kingdom. In the statement, the central bank said that Thai banks' capital ratio is strong enough to comply with the Basel III immediately. Starting from January 1, 2013, local and foreign banks in Thailand must maintain the capital adequacy ratio at at least 8.5 per cent of risk assets, which is unchanged from the current requirement. For Thai banks, tier-1 capital must be at least 6 per cent, including minimum 4.5 per cent of common equity.
NBC (Cambodia) launches national clearing system | Xinhua, Dec 12
The National Bank of Cambodia ( NBC) on Wednesday officially launched the country's national clearing system in order to increase efficiency and expand clearing and settlement services for inter-bank transactions. A central bank statement said that the central system can clear and settle payment instruments such as checks and legitimate electronic transactions within one day. "Clearing and settling these instruments can be completed within one day and are operational at the NBC's National Clearing House," it said. "With the system, one bank can transfer its clients' deposits to another bank's clients on the same day everywhere in Cambodia."
Private Equity
KKR raises $6b Asia fund, region's largest ever | The Edge, Dec 17
KKR & Co L.P. has finished raising its second pan-Asia fund, reaching $6 billion, according to sources, the largest private equity pool ever raised for the region, with strong demand from pension funds and endowments seeking emerging market returns. KKR's latest Asia fund, which follows a $4 billion regional fund it raised in 2008, is over-subscribed, the sources told Reuters, meaning demand exceeded the current total, despite challenges facing investors putting money into the region's slowing economy.
The shape of PE in emerging markets | Financier Worldwide, Jan 2013
According to Jennifer Choi, vice president of the Emerging Markets Private Equity Association (EMPEA), investment and fundraising for emerging markets fell in the first three quarters of 2012. This decline, argues the EMPEA, is a result of the continuing global slowdown. While it is true that funding has fallen across the emerging markets and confidence in these regions has been shaken, the outlook for future investment and prosperity is far from negative. The cyclical nature of the PE industry would suggest that the dropping off of these numbers is no great cause for alarm.
Myanmar: Gold mine or sink hole for investors? | WSJ, Nov 27
Private-equity firms are divided over whether Myanmar will be a source of huge profits, or just another place to endure losses.Some private-equity funds already are scrambling to raise cash to pour into the Southeast Asian nation, which has only just cracked open to Western investors after a secretive military junta stepped down in 2011. They see big opportunities in health care, real estate and other businesses that were starved of capital during five decades of military rule, while other Asian nations zoomed ahead. Yet many other firms, including big-name players such as KKR and Blackstone Group LP are holding back.
Asset Management
Foreign funds seek redemption, cash out on ASEAN | GMA News, Dec 18
A record month of redemption from equity mutual funds invested in Southeast Asia suggests a boom in these markets could be over as money managers look elsewhere for value with their sights set on China and India. Pricy share valuations in Southeast Asia are steering the funds to cheaper markets after a bull run in which the Philippines and Thailand were some of the best performers in the world. Investors cashed out a record net $505 million from equity mutual funds investing across Southeast Asia in October, a Reuters analysis of Lipper data shows.
Insurance
Marine insurer, Skuld, sets up regional hub in SG | Asia Insurance Review, Dec 11
Skuld, an international marine insurer, has opened a branch office in Singapore to spearhead further business expansion in South Asia, according to a company statement. Skuld provides P&I, hull & machinery, cargo, energy and marine liability cover to ship owners. It also offers specialist liability covers for vessel charterers, defence insurance as well as offshore cover.
RI regulation criticized for centralization | Asia Insurance Review, Dec 11
The Law on Social Security Providers (BPJS), which will take effect from January 2014, has come under fire on claims it may create problems in the national health insurance system, reports the Jakarta Post. It quotes a Yogyakarta Development Planning Board (Bappeda) staff as saying one of the problems of the law is centralisation, which could create a long wait for people to get health insurance since everything is centred in the national capital, Jakarta.
UN adopts healthcare for all, but funding still an issue | Asia Insurance Review, Dec 17
The United Nations has passed a resolution urging member states to develop universal health systems that avoid significant direct payments at the point of delivery and to pool risks to avoid catastrophic healthcare spending and impoverishment. Supporting universal healthcare is one thing, but funding it is another as the UN delegate from Singapore, Mr Lee Boon Beng, says. "The path to achieving universal health coverage is complex and there is no universal formula."
M'sia insurance, takaful sector to see steady growth | Business TImes, Dec 14
Malaysia's insurance and takaful sector may see its earnings stability challenged by regulatory initiatives and ongoing capital market volatility, says Fitch Ratings. "The sector will, otherwise, continue to be underpinned by steady market growth and sound capital management, as underlined in its stable outlook," it said in a statement. The research house said the regulator's intention to eliminate both life insurers' cap on acquisition costs and the fire tariff pricing structure could undermine the stability of insurers' operating margin.
BNM's removal of cap on acquisition costs will affect margins, warns Fitch | Asia Insurance Review, Dec 14
Bank Negara Malaysia's (BNM) intention to eliminate life insurers' cap on acquisition costs and fire tariff pricing structure could undermine the stability of insurers' operating margin, says Fitch in a recent report. The impending implementation of Personal Data Protection Act (PDPA) - gazetted in June 2010 - could also modify insurers' business practice, potentially leading to higher compliance costs. Mr Terrence Wong, Director of Fitch's Insurance team, says: "Generally, insurers have been able to maintain satisfactory operating margin due to favourable claim experience from non-motor lines, sound investment return and steady surrender rates, as well as a stable expense ratio."
ASEAN plans joint insurance services to support AEC | BERNAMA, Dec 13
Thailand and members of the Association of Southeast Asian Nations (Asean) are planning to introduce joint insurance services in the lead-up to the formation of the Asean Economic Community (AEC) by 2015, Thai News Agency (TNA) reported. As part of the plan, Thailand hosted the 15th Asean Insurance Regulators Meeting (AIRM) here from Dec 12 to 14. Deputy Prime Minister and Finance Minister Kittirat Na-Ranong, who inaugurated the forum, said insurance firms have so far offered only local coverage but insurance regulators and providers should start offering joint insurance services in the region in view of anticipated increased visits among people in Asean once the AEC is formed.