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HSBC’s Guide to Cash, Supply Chain and
Treasury Management in Asia-Pacific 2014
ASEAN Edition
Foreword
Contents
HSBC’s Guide to Cash, Supply Chain and Treasury Management in Asia-Pacific 2014:
ASEAN and the AEC: Diversity Epitomised
1
Payments in ASEAN post AEC
9
ASEAN Edition
Welcome to the latest edition of HSBC’s Guide to Cash, Supply Chain and Treasury Management
in Asia-Pacific, which focuses on ASEAN and the introduction next year of the ASEAN Economic
Community (AEC).
Since its inception in 1967, ASEAN has grown enormously in terms of economic significance.
This favourable backdrop presents appreciable opportunities for businesses both within ASEAN and
outside. One important shift in recent years is that ASEAN is no longer so dependent upon exports
for growth, with internal consumption and investment now playing an increasingly important role.
Nevertheless, strong intra regional trade flows, the forthcoming launch of the AEC, the individual
specialist capabilities of member countries and of course ASEAN’s strong trading links with China
represent significant business opportunities. ASEAN’s relationship with China is particularly
intriguing and now goes beyond traditional trade flows and foreign direct investment to include easier
mobility of capital, as a result of China’s gradual liberalisation of its controls over FX and renminbi
internationalisation.
For businesses, one of the critical underpinnings of the region’s growth is a robust payment
infrastructure for settling transactions. While this is still some way from where it needs to be in the
region, progress is being made. Discussions about the adoption of common payment messaging
standards (e.g. ISO 20022 XML) are taking place and various countries are implementing or upgrading
their payment systems.
The timing of this progress makes it opportune for multinationals to assess/revisit the business
case for the centralisation of treasury processes into the region. ASEAN already contains the
skilled workforce and supportive regulatory environment needed to establish a number of different
business models, which help to further centralise treasury flows. For instance, to the extent that an
in-house bank, re-invoicing centre, treasury centre or global procurement hub are relevant or add to a
company’s growth plans, locating it in ASEAN may well help to maximise the benefit of the business
opportunities being pursued.
I am sure that you will find this guide both interesting and insightful, and I am confident that our
quarterly updates will remain an essential source of information and guidance to all our readers.
Yvonne Yiu
Acting Head of Global Payments and Cash Management, Asia-Pacific, HSBC
Tel: (852) 2822 2848
E-mail: [email protected]
Accessing ASEAN’s opportunities for treasury
15
Integration and collaboration
How businesses can capitalise on ASEAN’s growth story
17
New China, new openings
21
ASEAN and the AEC:
Diversity Epitomised
ASEAN1 has seen respectable growth over the last two to
three years. However, with the introduction of the ASEAN
Economic Community (AEC) due in 2015, hopes are
high in some ASEAN countries for appreciable additional
growth. Su Sian Lim, ASEAN Economist at HSBC,
casts an eye over some of ASEAN’s most interesting
economies, their future prospects, and those of the AEC.
ASEAN economies have seen a shift of emphasis in
recent years. The role of exports as a growth driver has
somewhat diminished, to be superseded by domestic
growth factors such as internal consumption and
investment. This shift has important implications for the
economic outlook over the next three to five years for
two main reasons:
• The move towards domestic demand has been
supported by generally low interest rates, which has
made borrowing inexpensive.
• This, in turn, has allowed many households in ASEAN
to take on a significant amount of debt, which has been
used to fund domestic consumption. For instance, in
Malaysia and Thailand, household debt-to-GDP ratios
are high, in the case of Malaysia approaching 90%.
Therefore, as global liquidity and interest rates gradually
normalise over the next few years, a key factor to watch
will be how the highly indebted ASEAN economies
adjust at the household level, as this can affect overall
consumption and GDP growth.
During this period of adjustment, it is also important
to consider the structural reforms that some ASEAN
countries have (or have not) implemented recently. Has
their growth been purely credit and debt driven,
or have they put in place measures to rebalance the way
their growth is formed? Have they undertaken fiscal
reforms, targeted better allocation of public finances,
or invested in infrastructure? Their activity in any or
all of these areas will help determine their economic
performance over the next few years.
The consequences of interest rate rises are particularly
pertinent in ASEAN, as such policy moves either are
already in progress or appear imminent. ASEAN central
banks in general appear likely to implement interest
rate hikes even before the US Federal Reserve. This
is because persistently above-trend growth has led
to inflationary pressure or generally low interest rates
have led to economic or financial imbalances, or both.
Indonesia already raised rates in 2H 2013, while Malaysia
and the Philippines began tightening in recent months.
A tale of three economies
Given its large geographical spread, diverse political
systems, different working-population dynamics,
and varying infrastructure quality, it is perhaps hardly
surprising that ASEAN can produce three countries
with such differing economic prospects as Indonesia,
Malaysia, and Thailand.
The Association of Southeast Asian Nations. Current membership comprises Brunei Darussalam, Cambodia, Indonesia,
Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam
1
1
Indonesia
Indonesia has come a long way in the last 10 years
under the Yudhoyono administration, and trend growth
is now at about 6% per annum. But there is potential
for acceleration given that the raw ingredients for good
economic growth, such as favourable demographics
and significant natural resources, are already present.
The big question is whether future administrations can
combine these ingredients to best effect and move the
country up the next rung on the economic development
ladder so it advances beyond low-income developing
economy status.
In this regard, for the next five years at least, there
appears to be cause for optimism. Jakarta Governor Joko
Widodo (‘Jokowi’) is slated to take over as Indonesia’s
seventh President on 20 October 2014. As he did in
Solo, and more recently in Jakarta, Jokowi is likely
to make efforts to reduce red tape and corruption,
improve infrastructure and allocate public expenditure
more efficiently in the coming years. He is also likely
to bring in a smaller government and increase regional
autonomy under an economic model that will emphasise
decentralisation. Jokowi has estimated that under such
conditions economic growth can eventually exceed 7%.
Structural change cannot occur overnight, particularly
with reform on the scale that is planned. In the near
term, the incoming administration will have its work
cut out, with the country’s current account and budget
deficits needing urgent attention. Owing to significant
government subsidies on fuel and a large dependence
on imported oil, demand for oil imports has escalated
well beyond oil exports, resulting in a structural and
large oil deficit and, in turn, a widening current account
deficit. Likewise, the rising domestic consumption of
oil, together with weakness in the rupiah and higher
global oil prices, have brought the budget deficit close to
around 2.5% of GDP, not far from the legal cap of 3.0%.
The gradual fuel price hikes that Jokowi is advocating for
the next four to five years will help greatly. His running
mate, Jusuf Kalla, has indicated that fuel prices may be
hiked even within Jokowi’s first 100 days in office. There
are plans to reduce the country’s reliance on imports of
food and other goods and, importantly, to reform the oil
and gas sector to increase domestic energy supplies.
But it will take months or, more likely, years before
these changes can materially reduce the country’s
twin deficits. In the meantime, there are hints that
2
domestic activity may be accelerating again after having
moderated in early 2014. This is in spite of tightening
measures by the authorities last year, including a 44%
fuel price hike in June 2013, depreciation of the rupiah, and
increases in the reference and deposit facility rates since
May 2013, to 7.50% and 5.75%, respectively. In short, it
could still be challenging for authorities to rein in the current
account and budget deficits in the months ahead.
Against this backdrop, we continue to expect only a
gradual narrowing in the current account deficit, from
-3.4% of GDP in 2013, to -2.8% this year and -2.5%
in 2015. The budget deficit, too, may not narrow that
quickly, staying sticky at -2.5% of GDP this year before
going to -2.2% next year.
Nevertheless the government’s willingness to pursue
reforms is encouraging. In particular, subsidy reform will
unlock significant funds for more productive expenditure
in the coming years that will, in turn, boost Indonesia’s
economic development. Jokowi intends to spend these
funds on more roads, ports and other infrastructure,
which Indonesia badly needs. He also intends to spend
more on education.
This is important, as Indonesia’s large and youthful
labour pool is a huge resource that would benefit from
further development. Unlike countries such as Singapore
and Thailand, Indonesia’s working-age population
will continue to increase for some years. With better
education and training, the workforce and economy
can become wealthier over time because the jobs they
obtain will be more highly skilled and of better quality.
As an aside, it is perhaps worth noting in passing that
the Philippines is undergoing economic and political
transitions similar to those of Indonesia. The country is
due to go to the polls in 2016, with current President
Benigno Aquino not allowed to stand for re-election
after his six-year term ends. Like Indonesia, the
Philippines enjoys favourable demographics and, while
its government does not subsidise basic items to the
same extent as Indonesia, the budget faces significant
leakages in terms of revenue collection. Again, like
3
Indonesia, it is aware of the reforms needed, and has
already taken some steps to pursue them, such as
reducing corruption. The momentum of these efforts in
the coming years will hinge on the resolve of the next
government.
Malaysia
In terms of economic prospects, Malaysia represents
the middle ground in ASEAN. The country’s high level
of household debt suggests that consumer spending
– and, in turn, growth – may weaken in the medium
term, should the central bank continue to tighten
monetary policy further in response to growing financial
imbalances and rising inflation. But structural reforms
implemented by the government in the past few years
should help bring growth back to decent levels following
the household-sector adjustment.
A key plank of change in Malaysia has been the
Economic Transformation Programme (ETP). Launched
in late 2010, the ETP aims to elevate the country to
developed-nation status by 2020 by attracting USD444
billion in investments in 12 National Key Economic
Areas including oil, gas and energy, palm oil and rubber,
financial services, tourism and the Greater Kuala
Lumpur/Klang Valley region. The ETP also aims to create
3 million jobs by 2020. There has been strong progress
towards these aims so far: at end-2013, committed
investments since the implementation of the ETP
totalled nearly MYR220 billion, while new employment
stood at 1.3 million.
Reforms are also being made on the fiscal front. Sugar,
fuel and electricity subsidies have been cut recently, and
there are plans to broaden the revenue base through a
6% Goods and Services Tax in April 2015. These fiscal
reforms improve Malaysia’s longer-term economic
prospects, as they free up vital public resources for more
productive expenditure in areas such as infrastructure,
education and healthcare. They also help to reassure
ratings agencies – in 2013 the government reported a
lower-than-expected budget deficit of 3.9%, down from
4.5% in 2012, and with additional fiscal consolidation this
year the deficit should further narrow to 3.6% of GDP.
4
In the nearer term, GDP growth figures for 2014 and
2015 are expected to be 5.2% and 5.0%, respectively,
modestly above the 4.7% of 2013.
of consumer and investment spending in the second
half of 2014, and we forecast full-year growth of 5.0%
in 2015, assuming political stability can be maintained.
Much of the growth improvement annually is likely
to come from a positive export balance, with higher
shipments of both manufactured products and
commodities providing support. Even though export
growth is likely to be modest, in view of the similarly
modest economic prospects for markets such as the
US and Europe plus steady growth in China, it will still
probably outstrip import growth. This can be attributed
to weaker domestic demand, reflecting the effect that
government fiscal consolidation efforts are starting to
have on both public and consumer expenditure.
However, Thailand faces a number of challenges over
the long term. Surveys such as the World Economic
Forum’s Global Competitiveness Survey suggest that the
country’s competitiveness has been steadily declining
from as far back as 2006. By contrast, the Philippines
and Indonesia have been making progress on this front,
with the latter’s Global Competitiveness Index now on
the brink of overtaking Thailand’s.
While Malaysia’s central bank, Bank Negara Malaysia
(BNM), has seemed cautious in its response to what it
terms “domestic cost push factors”, headline inflation
is already above the central bank’s 2-3% comfort zone
and hit a 30-month high of 3.5% year on year in February
2014. Further subsidy rationalisation is likely – which,
given the government’s fiscal consolidation objectives,
would easily push this figure above 4.0%.
BNM’s recent move to tighten monetary policy is
therefore encouraging. In addition to upside inflationary
risks, financial imbalances are building. Malaysia now
has the highest household debt-to-GDP ratio in Asia at
86.8%. This has been driven by property and vehicle loans
and, although overall bank lending activity has declined,
residential property loan momentum unfortunately
remains high.
Thailand
Following the military coup on 22 May 2014, an
economic management team was established to
prioritise growth. Although we estimate the political
uncertainty of the first half of 2014 will pull full-year
growth down to 1.4% this year from 2.9% in 2013, the
immediate effect of the various economic measures has
been to boost private sector and consumer sentiment.
This should prepare the way for a gradual normalisation
5
The stimulus measures introduced in 2012 in response
to the major flooding of late 2011 masked the situation
for a while. However, once the measures ended, the
domestic economy started to struggle as underlying
growth was already in decline.
international competitiveness can be partly attributed to
a labour force lacking the skills to innovate and deal with
technological advancements. While Thailand has done
well in providing the basics that foreign investors have
traditionally sought, such as infrastructure and strength
of institutions, it has not progressed to the next stage of
providing ‘efficiency enhancers’, such as technological
readiness and labour market efficiency, and offers even
less in the way of business sophistication and innovation.
Furthermore, in terms of capital inputs, investment
flows into Thailand have been relatively weak, due
to a combination of political and policy uncertainty
since the 2006 coup. The THB2 trillion seven-year
infrastructure plan proposed by the previous Pheu
Thai government represented a significant opportunity
to boost capital and, in turn, economic growth, but
recent political uncertainty has resulted in those plans
being largely put on hold. Most of the spending would
have been allocated to a major high-speed rail link,
placing Thailand at the geographic heart of the ASEAN
Economic Community, between Southeast Asia to the
south and China to the north. Meanwhile, with the Thai
government having run persistent budget deficits, the
ability to ramp up public investment is constrained.
Given the above factors, if no meaningful structural
reforms are made in the next few years, long-term GDP
growth could sink below the 4.0-4.5% trend recorded
over the past decade.
This is in sharp contrast to the ‘miracle years’ of the
late 1980s and early 1990s, but our estimates show
that much of Thailand’s growth over that period was
driven by an accumulation of capital in the form of plant,
infrastructure and machinery. Labour has not contributed
much as a growth input, and technology even less so.
Looking ahead, contributions from labour and technology
look set to diminish further. United Nations’ projections
show Thailand’s working age population starting to shrink
as soon as from 2017. To compensate for this decline, the
country could either open the migration door or achieve
significant growth in productivity. But progress on the
former has been slow. Migration policies are hardly
ever discussed and, given historic border tensions, this
seems unlikely to be addressed soon. This is in stark
contrast to its ASEAN neighbour Singapore, which has
a similar ageing population issue, but has been making
preparations and implementing various population
management policies for the past few decades.
The alternative possibility of a major advance in
productivity also looks improbable. The Global
Competitiveness Survey suggests that Thailand’s weak
6
of manufacturing, the distinction between a worker
capable of making semiconductors and one capable of
making shoes is substantial in terms of the opportunity
and value of labour mobility.
This is not to denigrate the AEC’s potential benefits,
which at a high level should be significant. The ADBI
paper cited earlier suggests that ASEAN could see a
5% reduction in trade costs and that ASEAN economic
welfare under the AEC should rise by 5.3% relative to
the baseline. In monetary terms, this translates into
USD69.4 billion – nearly seven times the dollar benefit
of the ASEAN Free Trade Area. Projections mentioned
in the ADBI paper also suggest that competition policy
alone could raise per capita GDP by 26-38% in the
region encompassing ASEAN-5 4 and Brunei Darussalam.
The significance of the AEC
The inception of the AEC in 2015 is a major undertaking
for ASEAN in terms of lowering barriers. We expect
it, in time, to benefit the region as a whole in terms of
reducing production costs and facilitating the free flow
of labour and capital, as well as assisting trade and
investment flows.
Nevertheless, different member countries are moving at
different speeds and have highly divergent perspectives.
Countries such as Thailand are focused on what the AEC
can bring and the concept is constantly in the public space,
but in Malaysia or Indonesia it has a much lower profile.
A cynic might argue that this difference in attitude could
be explained by Thailand’s relative economic weakness
and its hope that the AEC will provide stimulus.
However, a paper released by the Asian Development
Bank Institute2 (ADBI) last year estimated that the
country expected to achieve the greatest welfare gains 3
from the AEC was Singapore, with Thailand ranking
only fifth.
At a more granular level, which countries in ASEAN will
derive which benefits from the AEC is actually quite a
complex question. For instance, a manufacturing hub
such as Malaysia wholeheartedly adopting the AEC
concept could tap a cheaper pool of labour.
A further complication is that some poorer ASEAN
economies with paper-driven bureaucracies administering
their existing barriers and regulations derive significant
employment from the status quo. Many of these jobs
will effectively cease to exist post-AEC. This prompts the
question of how they will be replaced if the local labour
market can offer only a relatively limited set of alternative
skills. At a high level, a country might eventually enjoy
more foreign direct investment flows and trade volumes,
but in the shorter term those who were earning a low
wage in stable employment may see greater labour
mobility as small recompense. The individual benefits
of labour mobility are closely linked with labour skill and
opportunities, which are by no means universal across
ASEAN, and the achievable benefits apply only in a
specific fashion. For example, under the general umbrella
“The ASEAN Economic Community: Progress, Challenges, and Prospects”, Author: Siow Yue Chia, ADBI Institute, October 2013
As a percentage of baseline GDP
Furthermore, the net benefits of the AEC may be larger
than the estimated 5.3% economic welfare increase
mentioned earlier. Other possible gains include lower
cost of capital due to its freer movement, improved
financial systems, and greater macroeconomic stability
resulting from the more conservative policies required to
support the AEC.
Impressive as these figures are, a glance at the
implementation rates for the AEC to date suggests that
the transformation will not happen overnight. The AEC
scorecard for implementation covers four principal areas:
•
•
•
•
Conclusion
Despite (or perhaps because of) its
diversity, ASEAN’s economic potential is
exceptional. Its population exceeds that
of both the EU and Latin America. While
it remains relatively small economically,
it has demonstrated an ability to grow
rapidly. This will continue to be the
case in 2014 and 2015. Although like
most emerging market regions HSBC
expects GDP growth in ASEAN-5 and
Vietnam to moderate cyclically this year
before accelerating in 2015, the speed
of its expansion should remain above
that of Latin America or Europe, Middle
East and Africa (EMEA). We expect
growth in ASEAN-5 and Vietnam to
average 4.6% this year and 5.5% in
2015, from 5.2% in 2013. By contrast,
stable growth is projected for EMEA this
year at 2.4% before a pick-up to 2.7%
in 2015. Meanwhile Latin America is
expected to slow from 2.0% to 1.6%
this year, before accelerating to 2.4%
in 2015. In the longer term, the effects
of the introduction of the AEC may see
ASEAN’s acceleration extend even
further into the future.
Integration into the global economy
Equitable economic development
The formation of a competitive economic region
The formation of a single market and production base
With some six months to the launch date, the first
point scores the highest, with nearly 86% of the
necessary measures already implemented. But the
other three are all still between 66% and 68% in
terms of implementation rate.
2
3
7
Indonesia, Malaysia, the Philippines, Singapore, and Thailand
4
8
Payments in
ASEAN post AEC
The introduction of the AEC1 in 2015 will usher in an important
new economic era and area. With a range of ambitious
objectives, the new economic community has the potential
to be a significant player in the global economy. But what of
the essential plumbing that underpins an economic venture
like the AEC – i.e. the payment infrastructure? Vengadasalam
Venkatachalam, Head of Product Management South East
Asia at HSBC, examines the current payment environment in
ASEAN2 and the changes envisaged, if the infrastructure is to
facilitate growth within the AEC and beyond.
Challenges
Despite the introduction of the AEC, ASEAN
is currently by no means homogenous in
terms of payments. The challenges that
ASEAN and the AEC face essentially fall into
two broad categories: issues directly related
to payments and more general ones that
nevertheless still affect them indirectly.
ASEAN contains approximately 604 million people3, around 9%
of the world’s population and an economic zone that covers
around 4.46 million square kilometres4. In 2013, its members
had a combined GDP of USD2.4 trillion and if it were a single
entity, it would be the world’s seventh largest economy5.
Lack of integration and costs
At present there is no cross-border
payment system integration in ASEAN, so
a corporate that wishes to make payments
between countries has a problem. In some
ASEAN countries, the payment challenges a
corporate faces are even more fundamental,
because there is no Automated Clearing
House (ACH) payment system domestically.
These combine to make the forthcoming launch of the AEC
a highly significant economic event. Financial stability is a
prerequisite for stronger economic activity and a robust payment
infrastructure plays a critical role in providing that stability.
While there are areas needing improvement, the good news
is that if ASEAN can develop a homogenous inter-country
payment network, the economic benefits for the region
will be profound. Removing the current cost and logistical
barriers to international payments would be a major step
towards unlocking the full internal growth potential of ASEAN.
Furthermore, if standards such as ISO 20022 are adopted to
support this network, the AEC will be globally connected as
well, thereby facilitating the flow of trade and foreign direct
investment with the rest of the world.
ASEAN Economic Community
Association of Southeast Asian Nations. Membership consists of Brunei
Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines,
Singapore, Thailand, Vietnam
3
http://investasean.asean.org/index.php/page/view/about-the-asean-region/
view/707/newsid/932/integrated-asean.html
4
http://en.wikipedia.org/wiki/Association_of_Southeast_Asian_Nations
5
“What a globalising China means for ASEAN: Two-way benefits on the rise”,
HSBC Global Research, August 2014
1
2
9
Payment issues
In ASEAN, cross-border payments are
high-value, because lower value payments,
such as payroll and vendor payments
are effectively precluded from going
cross-border due to the associated costs.
These costs consist of two elements – bank
charges and foreign exchange (FX). In the
case of bank charges, payments between
ASEAN countries typically have to be sent as
telegraphic transfers (TT), and although now
effected over the SWIFT network, these
attract further charges.
FX adds cost in various ways. One
element is that an FX conversion between
ASEAN currencies usually involves two
conversions. For instance, a conversion
from Singapore dollars to Malaysian ringgit
will be executed by the bank first making a
conversion from the Singapore dollar to US
dollar and then another from the US dollar
to Malaysian ringgit, thereby incurring two
bid/offers.
A further cost is caused by volatility in the exchange
rates of certain ASEAN currencies, which have wide
intraday swings. Therefore, to cover the inherent
risks of this situation and any settlement risks, banks/
counterparties may have to charge an additional
premium for dealing in these currencies.
The scale of FX charges on cross-border payments also
tend to vary considerably depending on the type of bank
used. A local bank may be less likely to have liquidity in
the foreign currency and may therefore have to involve
an intermediary bank, thus adding a further layer of
charges. By contrast, a global/regional bank is likely to
have liquidity in both currencies and can often therefore
handle the FX conversion and the payment internally.
Transparency and consistency
Given the challenges noted above, banks may not always
detail the charges associated with ASEAN cross-border
payments, so corporate treasuries at either end of
the payment chain also have to contend with a lack of
transparency that makes accurate reconciliation of charges
difficult. The sender and receiver of a cross-border
payment will each see a number in their native currency,
but not necessarily how that number was calculated.
This becomes even more difficult to resolve when using
a local bank, as they will almost certainly have to use an
intermediary bank to handle the foreign leg of the payment.
A further complication is the inconsistency across
ASEAN when it comes to the information required to
make a payment. For instance, in some countries the
payee’s bank branch code is required, in others the
bank’s SWIFT code. From a treasury perspective, this
presents a significant barrier to the centralisation and
automation of ASEAN payments.
Documentation and customs
Most countries in ASEAN have extensive customs
documentation requirements for payments involving
foreign exchange. Even for payments related to
documentary trade transactions, documents such as
purchase orders, invoices and other logistics paperwork
are required in order to comply with local regulations.
This makes the payment process inefficient, especially
since ASEAN customs documentation is predominantly
paper-based. Even where it is electronic, there is no
10
common standard. In the long term, the ideal model
would be for ASEAN countries to agree to abolish
these paper-based documentary requirements relating
to cross-border payments. Failing that, a common
ASEAN standard for electronic documentation would
considerably streamline the payment process.
General issues
Local currency payment opportunities, capital
controls and cash
The more general factors affecting ASEAN payments
include the fact that most trade settlement is conducted
in US dollars and not in local currency. This depresses
cross-border payment volumes because of the persistent
foreign exchange risk. A related point is the existence
of capital controls in some ASEAN countries, which
preclude free capital movement. Formal permission
needs to be in place before a payment can be made,
which necessitates an application that includes
justification and supporting documentation. Finally,
in many ASEAN countries, physical cash remains
the primary payment medium, because much of the
ASEAN Countries
RTGS
ACH
population is un-banked. From a corporate treasury
perspective, this introduces risk, while also materially
increasing costs.
Infrastructure and standards
Physical infrastructure varies considerably across
ASEAN: average internet speeds in Singapore may be
over 100 Mbps, but in the Philippines the average speed
is only 3.6 Mbps6 and in parts of some ASEAN countries
slow dial-up connections are still the norm. This has
major implications for consistent ATM connectivity
(important for corporates with retail customers) as well
as electronic banking capabilities.
An associated issue is lack of payment infrastructure
linkage. As a first step towards consistency, ASEAN
countries need to implement Real Time Gross
Settlement (RTGS) systems and ACH systems
domestically before they inter-connect them. (See
Table 1 for the current state of domestic RTGS and
ACH development in ASEAN.)
Remarks
Brunei Darussalam
RTGS expected to go live in Q3 2014
ACH expected to go live in Q4 2014
Cambodia
Clearing System launched in December 2012
ACH went live in July 2014
Indonesia
Lao PDR
RTGS is live, but not commonly used
Malaysia
Myanmar
Central Bank of Myanmar is planning to implement ACH and RTGS. Currently this
is work in progress
The lack of common message standards in ASEAN
also presents a major structural obstacle to low-value
cross-border payments. At present, the only common
standard is SWIFT, which as explained earlier is
predominantly used in conjunction with telegraphic
transfers for high-value payments.
Needs and Benefits
FX risk and local currencies
There are various ways in which the settlement risk
associated with FX payments could be mitigated, such
as by continuous linked settlement or some form of
RTGS delivery versus payment. The mitigation of this
risk would benefit corporates, as they would no longer
have to bear the costs of banks adding margin to cover
their settlement risks.
The introduction of an ASEAN-wide cross-border
payment and settlement system with multicurrency
capabilities would take the benefits to the next level.
This would facilitate local currency trade settlement, as
well as further reducing the costs currently associated
with cross-border payments in ASEAN.
Common messaging standards
While the reduced costs that would result from an
initiative such as this would be welcome, the introduction
of common standards would enhance its capabilities and
benefits. An ASEAN-wide common XML messaging
standard is under preliminary discussion (see sidebar
“XML progress”), but its early and universal adoption is
essential as a first step. The second step will be its local
implementation, while the third step will be cross-border
implementation.
Philippines
Singapore
ACH is moving from a proprietary format to the ISO 20022 XML format in 2015
Thailand
Discussions are in progress between Bank of Thailand and commercial banks to
change the current ACH file format to the ISO 20022 XML format
Vietnam
Table 1
Once in place, it will be possible to automate (and if
desired also centralise) cross-border and local payment
activity within ASEAN. The transparency of a common
standard of this sort will also assist in improving the
quality of invoice reconciliation within ASEAN, as well as
corporate cash forecasting and liquidity management.
The scope and format of any XML standard will be
particularly important in a region as diverse as ASEAN.
If it includes fields that can carry any required regulatory
documentation, this will significantly improve a corporate’s
ability to connect cross-border with trading counterparties
more efficiently. The messages could also carry details
of any applicable FX rates, bank charges etc. This would
thereby address some of the transparency, regulatory and
reconciliation issues outlined above, as well as the basic
mechanics of payment.
Common infrastructure standards
A common messaging standard is clearly important,
but so are common infrastructure standards. These are an
essential foundation to the development of interoperable
ACH and RTGS systems in ASEAN. Both types of
payment systems would ideally use the same basic
technological infrastructure, which necessitates common
infrastructure standards as regards speed and resilience.
As mentioned earlier, the quality and speed of internet
connectivity varies considerably. All countries would need
to subscribe to a minimum common standard sufficient
to interconnect both ACH and RTGS systems.
At its core, ASEAN countries all need to have an ACH,
which is currently not the case (see Table 1). These
ACHs could adopt the common message format.
The next step would be to have network connectivity
among the various domestic ACHs, which would allow
the exchange of messages and the cost-effective
transmission of low value cross-border payments.
The same common infrastructure standards and
message format should ideally apply to RTGS systems
as well. If these points are addressed, then ASEAN will
have two efficient sets of payment infrastructure that
meet the requirements for both domestic and crossborder ACH and RTGS systems:
• One for RTGS systems where payments are executed
on the same day
• One for ACH (or giro) systems where payments are
executed on the next day
http://www.gmanetwork.com/news/story/357617/scitech/technology/phl-internet-slowest-in-asean-report
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A logical way to kick start this standardisation process
would be a pilot scheme whereby all ASEAN countries
first implement a standard XML format for domestic
payments. With that consistent foundation in place
across the region, it will then be possible to add
successive layers of integration on top of this, until
complete cross-border interoperability is achieved.
Collateral
At present, RTGS payments in ASEAN require the paying
bank to deposit collateral with the appropriate central
banks as security. Extrapolated across ASEAN this
becomes inefficient and adds further cost to the process.
This could be appreciably streamlined by the introduction
of cross-border collateral agreements. This would allow
a country’s central bank to access unused collateral held
by other ASEAN countries’ central banks in the event
of a default. It would also be more capital-efficient and
therefore reduce costs to bank clients. An alternative
approach might be a series of currency swap agreements
(or similar) among ASEAN countries.
Other critical success factors
As part of the process of standardisation, a framework of
legislation and regulation to cover cross-border payments
and payments settlement finality is required. At present,
not all ASEAN countries have the requirement to honour
cross-border payments enshrined in law, so there is no
consistent legal framework that payees can use in order to
achieve restitution for dishonoured cross-border payments.
Implementation of settlement finality legislation across
ASEAN would therefore benefit corporates by providing
greater certainty and consistency of process when pursuing
dishonoured cross-border payments.
Another area that could add considerable value is in
the development of a unified infrastructure. As things
stand, the variety and complexity of customs and capital
controls in ASEAN is definitely an obstacle to both
payments and trade growth, particularly since most
of the associated documentation is paper-based. In a
perfect world, such controls would be minimised within
a unified pan-ASEAN infrastructure, so as to facilitate the
movement of funds.
However, if a suitable common electronic message
format can be agreed and implemented, a satisfactory
half way house becomes possible. Messages could
contain fields that would carry the data necessary to
comply with customs and capital controls requirements
alongside the payment, thereby expediting and
streamlining the whole process into a single electronic
channel and dispensing with the need for paper.
Finally, the availability of local currency liquidity within
ASEAN needs to be maximised. This would further
reduce frictional costs by dispensing with the need
for duplicate currency conversions to be made via the
US dollar.
Benefits to corporates
To give an estimate of just how positive payment
integration can be, one need only look at SEPA as
an example of the benefits of a consistent regional
payment infrastructure. While SEPA has the advantages
of a single currency and the involvement of larger
economies, the projected benefits7 for corporates alone
are substantial:
• Savings of EUR13.2 billion arising from reduced
banking fees, price convergence and simplification of
bank account structures
• EUR179.5 billion of idle cash unlocked
• Reduction of 9 million bank accounts
• Up to EUR115 billion in efficiency gains deriving
from process efficiencies and from removing the
opportunity-losses relating to cash balances currently
trapped in payment processing
The projected benefits above only relate to corporate cost/
efficiency savings, not the additional trade flows made
possible through the removal of payment obstacles. When
one considers that these obstacles were already far lower in
Europe before the implementation of SEPA than they currently
are in ASEAN, one begins to appreciate the sheer scale of the
opportunity of a “Single AEC Payment Area”.
Conclusion
The arrival of the AEC represents an important economic
opportunity. However, the extent to which that
economic opportunity is realised will depend heavily
upon the development of high quality pan-ASEAN payment
systems and messaging standards.
Where they are not already available, some ASEAN countries
are implementing local RTGS and ACH systems (see Table 1)
and some are also implementing XML messaging standards
for ACH payments. This is a positive sign, suggesting that AEC
integration will be able to drive further improvement in the
right direction.
By building on the experience of previous similar initiatives
(such as SEPA) AEC payments integration is perfectly
achievable at a technical level. Once key standards are
agreed, the next step is local implementation at an individual
country level, with the disposal/reduction of capital controls
enhancing activity and improving local currency liquidity,
which will ultimately result in a standardised pan-ASEAN
international payment infrastructure. Once this is in place,
the consequences for the AEC and the corporates that trade
within it will be extremely positive.
XML progress
While much remains to be done, various
initiatives are underway that will eventually
facilitate payments across ASEAN. Some
countries in the region are implementing
XML standards for messages that are
transmitted to the central bank. This
in time may mean it will be possible to
transmit XML payment messages between
two countries rather than having to use
telegraphic transfers.
It will therefore be a significant step forward
if this initiative can be extended so that
all ASEAN countries agree to a common
standard message format (e.g. ISO 20022)
for transmission between central banks.
An important opportunity here is that
such messages (unlike the current SWIFT
formats used in messaging) could also carry
large amounts of additional information, not
just payment data. This would allow existing
customs documentation requirements to
be fulfilled in a standardised and electronic
fashion.
Although some progress is being made
on a common standard, it is important to
have realistic expectations. For instance,
the introduction of SEPA in Europe was a
lengthy process and that only involved a
single currency. In ASEAN, the challenge
is considerably greater because payment
mechanisms need to be standardised
across multiple currencies.
Progress is also likely to vary considerably
from country to country. Some could reach
the minimum infrastructure level to support
an ASEAN XML standard very quickly,
while for others it may take longer.
“Economic analysis of SEPA”, PWC, January 2014 http://ec.europa.eu/
internal_market/payments/docs/sepa/140116_study_en.pdf
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Accessing ASEAN’s
opportunities for treasury
With its strategic location and burgeoning economy,
Southeast Asia offers many benefits to businesses
looking to set up treasury centres within the region.
Kelvin Tan, Head of Commercial Banking, HSBC
Singapore, explains the benefits and how companies can
capitalise on the opportunities the region presents.
For more than half a century, Asia has been integral to the
growth agenda of the West. Attracted by the region’s highgrowth economies and booming population, multinational
corporations (MNCs) have prioritised Asia as a key region
within which to conduct trade and investment.
Southeast Asia’s part in this growth story is particularly
noteworthy. The economies of the 10-member
Association of Southeast Asian Nations (ASEAN) today
boast a combined annual GDP growth rate of around
6%1. Comparable figures for Europe and the US stand at
around 0.8% and 2.5%, respectively2.
A further reason for MNCs to take ASEAN seriously
is the region’s rapidly growing trade with China,
which stood at USD443.6 billion in 2013, up 10.9%
on the previous year 3. These trade activities are spread
across the region: Malaysia’s 2013 share was the largest
at USD106.07 billion, but other ASEAN
members also enjoy significant trade flows with
China, including Singapore (USD75.91 billion), Thailand
(USD71.26 billion), Indonesia (USD68.35 billion), Vietnam
(USD65.48 billion) and the Philippines (USD38.07
billion)4. This all adds up to a region that is a highly
attractive destination for MNCs to house mission-critical
operations.
Treasury in ASEAN
A company’s treasury function is one such operation,
as treasury teams manage the cash flows and risks
resulting from a firm’s collections, disbursements,
investments and other financial transactions.
Establishing treasury teams that can help a firm maximise
their ASEAN trade and investment opportunities demands
a multitude of prerequisites. These include a robust legal
and regulatory environment, skilled labour, state-of-the-art
technology and communications systems, and being part
of a vibrant financial services hub. A country’s ease of
doing business is also an important consideration.
Companies that trade within Asia are capitalising on
the competencies presented to them by ASEAN. There
is manufacturing excellence in countries like Vietnam,
the Philippines has expertise in operating call centres
and outsourcing, Malaysia is a shared services hub and
an emerging destination for regional treasuries, and at
the core of the region is Singapore, which acts as the
region’s financial centre and leading hub for treasury
centres and newer operating models such as re-invoicing
centres and global procurement hubs which, alongside
in-house banks, can further improve firms’ treasury
activities.
Aside from these key considerations, the city-state
enforces high trading standards, boasts world-class
education and training institutions, and ensures that both
domestic and foreign entities have the tools necessary to
conduct their businesses effectively and competitively.
Furthermore, there is zero tolerance on corruption.
All this adds up to a place where foreign businesses feel
very comfortable. Singapore is business friendly, a place
where it is easy to attract and retain a talented workforce.
The fact that it is just a few hours flying time from most
cities in the region further strengthens its appeal.
Conclusion: the right combination
Singapore’s modern infrastructure, legal framework
and skilled labour force allow companies to establish
treasury centres within the city-state with ease. In
addition, the nation’s strategic location enables business
leaders to reach neighbouring Asian cities that may
house other business units within a few hours’ journey.
This is particularly advantageous for companies looking
to capitalise on the unique capabilities offered by each
ASEAN state.
Nevertheless, businesses determined to make the most of
the opportunities in ASEAN need an international bank with
in-depth knowledge of doing business across ASEAN, and
the ability to service treasury teams in key hubs such as
Hong Kong and Shanghai, as well as Singapore.
Given that ASEAN is a region with a wide array of
currencies, clearing systems and regulatory frameworks,
a banking partner that can provide all transaction data
and balances in a consistent format that integrates easily
with the corporate enterprise resource planning (ERP)
system is clearly invaluable. Alongside delivering efficient
services, a bank with a long standing presence in the
region could help clients connect to opportunities and the
many possibilities the region presents to them, thereby
enabling them to realise their business ambitions.
ASEAN’s promise, in terms of both business and treasury
opportunities, is increasingly self-evident. As a result, it
is now possible to access its commercial potential while
also maximise the resulting returns through efficient inregion treasury management.
Singapore’s role as a treasury centre
As ASEAN’s treasury centre, Singapore leverages
the large number of MNCs that house their regional
headquarters within its borders. Furthermore, the citystate capitalises on the multitude of financial institutions
that use the country as a base from which to service
neighbouring markets, such as Indonesia and Malaysia.
An added bonus is the robust legal framework under
which Singapore is governed.
“Investing in ASEAN 2013-2014”, http://www.asean.org/resources/item/investing-in-asean-2013-2014
IHS Top 10 Economic Predictions for 2014 http://www.ihs.com/info/ecc/a/economic-predictions-2014.aspx
“Key Indicators on Trade & Investment”, ASEAN-China Centre. Source: General Administration of Customs of China.
http://www.asean-china-center.org/english/2014-03/06/c_133164797.htm
4
“Key Indicators on Trade & Investment”, ASEAN-China Centre. Source: General Administration of Customs of China.
http://www.asean-china-center.org/english/2014-03/06/c_133164797.htm
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Integration and collaboration
How businesses can capitalise on ASEAN’s growth story
Simon Constantinides, HSBC’s Regional Head of
Global Trade and Receivables Finance for Asia Pacific,
explains why ASEAN-based companies, as well as those
further afield, are well positioned to capitalise on the
opportunities made possible by regional trade flows and
the unique resources of each member state.
The distraction of China’s growth has seen much of the
world overlook one of the greatest trading opportunities
of the post-global financial crisis economy: ASEAN.
The region has exceptional potential, as collectively the 10
members of the Association of Southeast Asian Nations
(ASEAN) comprise a market of more than 600 million
people with a combined GDP of some
USD2.4 trillion1. In addition, the region offers sustainable
economic growth, low manufacturing costs and a rising
middle class who are hungry for the consumer experience.
A decade ago, the majority of Western companies
that came to Asia identified China as the preferred
option when setting up manufacturing facilities. They
were encouraged by the nation’s competitive wages,
developing infrastructure and the vast opportunities
presented by its domestic market. However, this is
beginning to change as Southeast Asian markets become
more accessible and increasingly cost-competitive.
http://investasean.asean.org/index.php/page/view/about-the-asean-region/view/707/newsid/932/integrated-asean.html
1
In 2013, Foreign Direct Investment (FDI) into China
increased by almost 10% year-on-year, reaching
USD117.6 billion2. However, FDI into just the top five
ASEAN economies3 for the same period overtook this
figure for the first time in 2013 with a 7% jump year-onyear to USD128.4 billion4.
ASEAN trade, past to present
Since the association’s formation in 1967, economic
growth throughout the region has been exponential. For
instance, in 1975 manufactured goods made up around
18% of ASEAN exports. Yet by 1991 its share was
around 63%5. Between 2010 and 2013, the association’s
GDP grew by more than 27%6. Trade with China and
India, which rose from a total of just under USD42
billion in 2000 to more than USD391 billion in 20127,
contributed significantly to this rise.
Looking across the various member states, it becomes
apparent that a key factor behind ASEAN’s success is its
diversity:
• There are frontier markets like Cambodia, Laos
and Myanmar that are largely untouched by foreign
investors, but which manufacture low-value
goods such as agri-commodities and export them
elsewhere.
• Vietnam, which has now become a hub for textiles,
garments and footwear.
• Malaysia and Indonesia, each with a huge
commodities base, while the former has also become
very strong on the technology front.
• Singapore, which houses high-value chain industries
– including pharmaceuticals, IT and chemicals – and
acts as the region’s financial hub.
As such, ASEAN boasts all stages of the value chain,
which in turn has made it a highly competitive trading
bloc. Furthermore, each member state has built up a
competent labour force in their respective sectors.
Stemming from this, the trading opportunities for
businesses from all corners of the region are remarkable.
Not only can they look to trade with counterparties from
neighbouring ASEAN states, but they can also capitalise
on trade flows that carry goods to China, India and the
rest of the world.
Indeed, the burgeoning growth of trade volumes
between each member state has given rise to the
proposed ASEAN Economic Community (AEC), which
is due to commence in 2015. Among many other
goals, the AEC aims to encourage inter-regional trade
and investment, free movement of capital, and freer
movement of skilled labour. Furthermore, it is hoped
“What a globalising China means for ASEAN: Two-way benefits on the
rise”, HSBC Global Research, August 2014
2
http://www.industryweek.com/finance/foreign-direct-investment-chinarebounds-53-2013
3
The Asean-5: Indonesia, Malaysia, Thailand, Philippines and Singapore
4
http://focus-asean.com/foreign-direct-investments-china-focus-asean-2
5
http://www.asean.org/communities/asean-economic-community/item/
industry-focus
6
http://www.asean.org/images/resources/Statistics/2014/
SelectedKeyIndicatorAsOfApril/Summary table_as of 30Apr14_upload.pdf
7
http://www.asean.org/images/resources/Statistics/2014/ACIF 2013.pdf
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that the community’s formation will boost the region’s
competitiveness within the global economy and thus
expand on the trade and investment opportunities
currently presented to the region.
In Indonesia, for instance, producers of commodities
and other low-value goods could capitalise on the trade
routes that carry coal from the archipelago to Japan and
South Korea, which is eventually used to make steel.
From the beginning to the end of its journey, the coal
will pass through various ports. The movement of this
coal is heavily reliant upon people and infrastructure,
which could be used to help shift other commodities and
manufactured goods along the same route.
Likewise, Malaysia’s particular expertise in
manufacturing high-tech goods could encourage other
industries that involve similar skill sets. This too provides
opportunities for various manufacturers from other
ASEAN states.
Trade facilitation
A key challenge associated with inter-regional trade
is that member states are at vastly different levels of
development and market sophistication. With regard to
labour, some markets are less open to foreign workers
than countries like Singapore. This is particularly
challenging when companies are looking to upskill
their staff, yet do not have the management in place
to transfer knowledge and expertise. In the financial
services industry, for instance, there are certain markets
where it is very hard to find skilled workers, which has
had a detrimental impact on the sophistication of banking
services offered in such places. The same can be said for
IT and other high-value chain industries, which means that
unless certain countries modify their labour laws, these
places will be unable to rise further up the value chain.
19
Infrastructure, too, plays a significant role in the
facilitation of trade and investment, as without
ports, railways, highways and airports, commodities,
manufactured goods and people are simply unable to
move elsewhere. Across ASEAN there are instances
where infrastructure development has significantly
led to GDP growth. Singapore is a fine example of
this. However, there are countries where connectivity
remains a big challenge. In Indonesia, infrastructure
development cannot keep pace with the nation’s
burgeoning economy, which causes bottlenecks in the
supply chain. In addition, transportation costs are among
the highest in Asia, which impacts the efficiency and
profitability of trade. Frontier markets such as Cambodia,
Laos and Myanmar are attractive to businesses because
of their low-wage workforces, but the infrastructure
needed to transport goods from these economies is
greatly underdeveloped. In the wake of the Thai floods of
2011, companies have learnt that having just one plant in
a particular destination exposes them to production risks.
Corporations are therefore operating in multiple locations
or are using several suppliers for the same goods to
mitigate potential concentration risks.
Collaboration and future growth
All the above challenges can be overcome, irrespective
of how large they may appear today. Nevertheless, it will
take much collaboration between importers, exporters,
service providers and government agencies to remove
these hindrances.
The introduction of the AEC will also go some way
to alleviating these challenges. With each member
state promoting the free flow of goods and services,
investment and capital, and skilled labour, many of the
barriers that stand in the way of inter-regional trade will
eventually disappear.
What is clear is that opportunities for ASEAN-based
businesses are in abundance, and that these will grow
further with the advent of the AEC. While vast openings
are being created, companies will need to approach
these new opportunities with some caution. A trade
bank willing and able to work with regulators in order
to make international trade and investment easier, and
fully aware of the many pitfalls associated with particular
economies, is an essential partner.
Regulatory transparency and consistency of financial
services are other areas required to facilitate trade. With
regard to the former, markets need reporting systems
and processes in order to guide companies on what
they need to do to make trade and investment easy
and hassle-free. Furthermore, ASEAN’s markets must
enforce strict rule of law and bring their local regulations
in line with one another. Without these, businesses
cannot trade effectively throughout the region. Banks too
must play their part in enabling businesses to achieve
their growth ambitions. Apart from performing in a
transactional capacity, they must also act as a voice for
their customers when speaking to regulatory authorities.
Banks must also ensure that they are governed to the
highest of standards.
20
New China, new openings
As China’s economy matures, the nation’s industrial
base is moving further up the value chain. Helen Wong,
Deputy Chairman, President and CEO, HSBC China,
and Bruce Alter, Head of Global Trade and Receivables
Finance, HSBC China, explore the drivers of this shift
and suggest where opportunities for ASEAN-based
businesses can be found.
The Chinese economic model that spanned the latter
part of the 20th century was straightforward yet
highly effective. The nation imported commodities
from elsewhere and transformed them into low-value
manufactured goods, such as garments, foodstuff and
smelted metals. These were either exported abroad or
used in the production of other low-value manufactured
items that were later shipped overseas.
Coupled with the nation’s high infrastructure spend, this
made China the world’s fastest growing economy, with
GDP growing at an average of 10% annually between
1980 and 2010, according to the National Bureau of
Statistics of China1.
The last few years have seen a shift in the nation’s
economic model, as China’s manufacturing base today
sits higher up the value chain. The drivers of this trend
are twofold: first, the Chinese government is consciously
moving the nation from being a low-value chain economy
to one where the service sector has an equal standing;
and second, other developing nations are today able to
manufacture low-value goods at a more competitive price.
http://www.stats.gov.cn/english/Statisticaldata/AnnualData/;
http://www.chinability.com/GDP.htm
1
China’s rising cost of living, the increasing cost of
doing business, and the nation’s move into higher
value industries mean that it no longer makes sense
for many businesses to produce low-value goods
there. China’s manufacturing base now imports goods
from countries like Cambodia or Vietnam and in turn
either consumes or re-exports elsewhere. China is
no longer purely seen as an exporter and will soon
surpass the US on import levels.
Progress and activity to date
Southeast Asia stands to benefit greatly from this
new paradigm. Not only does this open up exporting
opportunities for manufacturers of low-value goods
from the likes of Myanmar and the Philippines, but it
also creates demand in China for high-value goods and
services from ASEAN.
China’s increasing investment flows into ASEAN
prove that it sees the region as an important one.
For instance, Chinese companies are opening up
manufacturing plants across Indonesia in order to
capitalise on its rich commodities base and low-wage
labour force. They are also investing in infrastructure,
such as ports, telecoms and transportation, allowing
them to export these goods elsewhere or simply ship
them back to China.
Similarly, Singaporean businesses are meeting China’s
need for high-value services in sectors like marketing, IT,
healthcare and management consulting. Indeed, all these
trends present business opportunities for ASEAN-based
businesses more broadly, which are widely predicted to
grow over the next decade and beyond.
A significant number of ASEAN-based businesses
are now going into China, especially in regional
commercial centres like Kunming and Nanning in
Southwest China. These growing hubs have found
success so far in attracting businesses by providing
land and other incentives for foreign investors.
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22
HSBC in ASEAN
•
HSBC Brunei, HSBC Chambers, Corner of Jalan Sultan/Jalan
Pemancha, Bandar Seri Begawan, BS8811, Brunei Darussalam
First established in 1947 in Bandar Seri Begawan, HSBC operates
as both the central clearing bank appointed by the Brunei
Association of Banks, and through a network of nine branches.
•
HSBC Indonesia, World Trade Centre, Jalan Jenderal Sudirman,
Kav 29-31, Jakarta 12920, Indonesia
HSBC started its operations in Indonesia in 1884 with the opening
of its first office in Jakarta. Initially established to serve the
important sugar trade, it has expanded its operations throughout
the country with 24 branches across six cities: Jakarta, Bandung,
Semarang, Batam, Medan and Surabaya.
•
HSBC Malaysia, No. 2 Leboh Ampang, 50100 Kuala Lumpur,
Malaysia
HSBC’s presence in Malaysia dates back to 1884 when the
Hongkong and Shanghai Banking Corporation Limited established
its first office in the country on the island of Penang, with privileges
to issue currency notes. On 1 January 1994, HSBC became the
first foreign owned financial institution to be localised, and together
with a separate Islamic banking subsidiary licence, delivers services
through 68 branches nationwide.
•
HSBC Philippines, HSBC Centre, 3058 Fifth Avenue West,
Bonifacio Global City, Taguig City, Philippines
HSBC has been operating in the Philippines since 1875 and is
licensed to operate as a universal bank. As one of the oldest banks
in the Philippines, HSBC offers a full range of banking and financial
services. Together with its 100% ownership and control of a local
savings bank now operating under the name HSBC Savings Bank
(Philippines) Inc., HSBC has a combined total of 16 branches
operating in key locations in Metro Manila, Cebu and Davao.
•
ASEAN opportunities
The economies of ASEAN and China are forecast to
grow annually at rates of between 5-6% and 7-8%2,
respectively, over the next few years, according to the
World Bank. Furthermore, significant trade growth
between the two regions during this time will present
an array of opportunities for ASEAN-based companies
looking to capitalise on China’s new economic model.
Having first opened its doors in 1877, HSBC operates in Singapore
as a full bank through nine branches, and has been awarded
Qualifying Full Bank (QFB) privileges by the Monetary Authority of
Singapore.
Nevertheless, tapping these growing Sino-ASEAN trade
and investment opportunities requires a banking partner
with very specific capabilities. On the one hand, the
bank will need a strong local presence in both China and
individual ASEAN markets. On the other, it will also need
a global network and sophistication capable of connecting
ASEAN opportunities with trade counterparties in both
China and elsewhere around the world.
Manufacturers of low-value goods from places like
Cambodia, Myanmar and Vietnam have the opportunity
to capitalise on China’s increased demand. Similarly,
high-value business and services found in Singapore
or Malaysia, for example, can take advantage of new
openings arising in these segments in China. As China
continues to invest in ASEAN, local businesses will also
have opportunities to service Chinese companies setting
up operations across the ASEAN region.
HSBC Singapore, 21 Collyer Quay, #01-01, HSBC Building,
Singapore 049320
•
HSBC Thailand, HSBC Building, 968 Rama IV Road, Silom,
Bangrak, Bangkok 10500, Thailand
HSBC’s history in Thailand dates back to 1865, when the Bank
appointed an agent in Bangkok. In 1888, a representative office
opened in Bangkok, becoming the first commercial bank in
Thailand. HSBC issued the country’s first currency note, guaranteed
the Thai Government’s first bond issue, and underwrote the first
offshore loan syndication to begin construction of the country’s
railway system in the late 1890s.
•
HSBC Vietnam, The Metropolitan, 235 Dong Khoi St. District 1,
Ho Chi Minh City, Vietnam
HSBC first opened an office in Saigon (now Ho Chi Minh City) in
1870, operating for more than 100 years until 1975. In 1992, HSBC
re-established its presence with representative offices in Ho Chi
Minh City and Hanoi, and in 1995 opened its full-service branch
in Ho Chi Minh City. On 1 January 2009, HSBC became the first
foreign bank to incorporate in Vietnam, after gaining approval from
the State Bank of Vietnam (SBV) to set up a Wholly Foreign-Owned
Bank (WFOB). Now the largest, HSBC Bank (Vietnam) Ltd. delivers
services through 18 branches and transaction offices.
For nearly 150 years HSBC has been where the growth is, connecting customers to opportunities. We combine extensive
global reach, notable financial strength, and a long term commitment to our clients. In the rapidly developing ASEAN region,
where we have had a presence in most of the member countries for more than 100 years, our deep understanding of local
markets enables us to help clients realise their business goals. Whether it is trade finance, working capital, foreign exchange,
cash or liquidity, HSBC provides the network and expertise businesses need to thrive.
For more information, visit www.hsbcnet.com
“Global Economic Prospects” World Bank, June 2014.
http://www.worldbank.org/content/dam/Worldbank/GEP/GEP2014b/GEP2014b.pdf
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Mark Troutman
Managing Director, Regional Head of Sales, Global Payments and Cash Management, Asia Pacific, HSBC
Tel: (65) 9119 3712
E-mail: [email protected]
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