Incorporating 11 states in South-East Asia, ASEAN serves as both a vibrant consumer market and a fast-growing manufacturing hub. In recent years, it has emerged as a key destination for investment across sectors ranging from industrial manufacturing and electronics to consumer goods and digital businesses.

But for treasurers, ASEAN also presents numerous challenges. An uncertain macroeconomic environment, geopolitical tensions and evolving interest rate cycles make this a complex part of the world to navigate. High inflation has increased the cost of doing business, while supply chain disruptions proliferate.

As Adrian Ong, Managing Director and Head of Global Cash Management Sales at UOB explains, the need to maintain adequate liquidity buffers while optimising working capital and putting surplus cash to good use “has made liquidity management increasingly complex – particularly in a region as diverse and fragmented as ASEAN.”

From cash visibility to cash velocity

According to Ong, the treasury agenda has evolved significantly over the past decade, shifting from cash visibility to cash velocity – meaning that “the ability to move liquidity quickly and effectively has become a critical objective.”

In light of this shift, treasurers in ASEAN are focusing on several key priorities:

1. Real-time visibility and control over liquidity. Treasurers are increasingly moving beyond traditional cash reporting, instead focusing on real-time visibility over their cash positions, liquidity and working capital across different markets. “This has driven growing demand for real-time reporting, API-enabled connectivity and centralised treasury infrastructure,” Ong notes.

2. Mobilising and optimising liquidity efficiently. Treasurers’ focus has shifted from simply knowing where cash is to actively putting excess liquidity to work, a change that has become critical in today’s volatile operating landscape. In higher interest rate environments, this means minimising idle balances and using surplus cash to reduce borrowing costs – while in lower rate environments, the focus is on enhancing returns on excess cash through effective investment and liquidity management.

3. Enabling 24/7 liquidity management. The rapid growth of digital businesses, e-commerce platforms, fintechs and real-time payment ecosystems “has fundamentally altered treasury operating requirements,” says Ong. “As such, ensuring 24/7 liquidity monitoring and funding availability – as well as predictive cash forecasting capabilities – has become a mandatory requirement to support an ‘always-on’ operating environment.”

Centralisation in a fragmented environment

ASEAN remains one of the most challenging regions globally for treasury centralisation and liquidity optimisation – not least because the environment is so fragmented.

For one thing, says Ong, ASEAN jurisdictions maintain different rules and regulations governing cross-border fund movements, foreign exchange (FX) controls, intercompany lending activities, and the permissibility of domestic and cross-border liquidity structures.

ASEAN’s regulatory spectrum includes everything from more liberal regulatory frameworks like Singapore to restrictive markets with tighter controls. “For example, in Vietnam, cross-entity domestic cash sweep structures and cross-border sweeping remain restricted and subject to prior regulatory approvals,” says Ong. “In Malaysia, while cross-border sweeping is permitted, the amount of liquidity that can be repatriated may be capped where domestic external borrowings exist.”

Meanwhile, the lack of legal certainty about certain banking and liquidity structures – such as notional pooling, cash sweeping and intercompany funding arrangements – can expose both corporates and banks to implementation risk, while discouraging the adoption of more sophisticated treasury structures.

Furthermore, outside of Singapore, “most ASEAN currencies remain subject to varying degrees of FX regulations and are not freely tradable offshore.”

But despite these challenges, Ong believes that regional treasury centralisation “remains highly relevant and beneficial.” He explains the goal should not necessarily be to establish a single liquidity structure across all ASEAN markets, “but rather to establish a consistent regional treasury policy framework while accommodating local regulatory realities.”

No one-size-fits-all

In practice, Ong says there is no one-size-fits-all model for treasury centralisation in ASEAN. Instead, successful treasury transformation requires a multi-pronged approach combining technology enablement, operating model redesign, regulatory expertise, bank account rationalisation – “and, where appropriate, banking partner consolidation.”

He points out that the optimal liquidity structure needs to be tailored to each organisation’s operating footprint and regulatory environment, taking into account factors such as the size and currency composition of surplus balances, and the predictability of cash flow generation.

Equally important, says Ong, is having a robust cash forecasting framework. “Treasurers need timely visibility into expected cash flows, capital expenditure plans and funding requirements to make informed decisions on liquidity deployment and optimisation,” he says.

“Ultimately, the objective is not merely to centralise cash, but to achieve the right balance between regional consolidation and control, local flexibility and efficient deployment of liquidity across the group.”

Single-bank, multi-bank or hybrid?

Asia-headquartered corporates have traditionally adopted a multi-bank approach – so while many multinational corporations aspire to single global or regional banking models, executing such a strategy in Asia remains challenging.

Single-bank and multi-bank strategies both come with their own benefits. A single-bank model, for example, can support more standardised processes, reporting and controls, as well as simplifying liquidity consolidation and cash visibility. Meanwhile, a multi-bank model can be used to harness best in class domestic banking capabilities in individual markets.

As Ong explains, a further option is a hybrid banking model that seeks to balance operating efficiency with business resilience.

“Under a hybrid model, corporates typically appoint one or two strategic regional banks to serve as overlay partners for treasury and liquidity management, while retaining selected domestic banking relationships to support market-specific regulatory, operational and collection requirements,” he notes.

“This approach allows organisations to capture the benefits of centralisation and standardisation while preserving the flexibility and local capabilities needed to navigate Asia’s diverse operating landscape.”

Harnessing technology

Technology has an important role to play in enabling cash centralisation in ASEAN. For example, M&A activity may leave businesses with multiple legacy ERP environments – and harmonising these systems can take years to achieve.

As such, businesses may use a treasury management system (TMS) as an intermediary layer to consolidate bank connectivity across banks and jurisdictions, and aggregate cash positions from different ERP platforms – an option that Ong says can help treasury teams achieve central visibility and control much faster.

APIs also have a role to play in helping treasurers achieve real-time visibility, payments and liquidity management.

“Traditionally, treasury teams have relied on batch-based reporting through end-of-day or intraday bank statements delivered via internet banking, host-to-host channels or SWIFT,” says Ong. “APIs are changing this model by enabling real-time connectivity between corporate systems and banking platforms.”

He adds that real-time, round-the-clock liquidity management is predominantly a domestic capability today, which can be achieved using local schemes such as FAST/PayNow in Singapore, DuitNow in Malaysia, PromptPay in Thailand, NAPAS in Vietnam and BI-FAST in Indonesia.

But while real-time regional liquidity management remains “an evolving proposition”, banks are exploring next generation solutions, such as blockchain-based infrastructure, distributed ledger technology and tokenised deposits.

Adding value with RTC and IHB models

Despite ASEAN’s fragmented regulatory landscape, regional treasury centre (RTC) and in-house bank (IHB) models have much to offer corporates.

As Ong explains, RTCs can add value in numerous ways, including centralised liquidity management, streamlined FX management and enhanced treasury risk management and governance. They can help companies build standardised and more efficient treasury operations. RTCs may also provide a centralised capability for monitoring and responding to evolving regulatory requirements.

Turning to IHBs, Ong says a pure IHB model can be challenging to implement across ASEAN – “and, in many cases, may not be fully achievable.” It can be particularly difficult if payment execution is to be centralised from a limited number of bank accounts, or if the desired model involves the extensive use of payments on behalf of (POBO) and receivables on behalf of (ROBO) structures.

Nevertheless, he notes that the industry-wide adoption of ISO 20022 as a SWIFT messaging standard “further strengthens the effectiveness of both RTC and IHB operating models,” providing the standardised data framework needed to support operational efficiency, automation and scalability.

For example, the richer and more structured data included in ISO 20022 payment messages enhances transparency and improves reconciliation capabilities, “particularly in POBO and ROBO environments where multiple entities may participate in a simple payment or collection workflow.”

Optimising liquidity in ASEAN: where to start?

In summary, Ong says treasurers need to “view the region through a different lens” when embarking on liquidity optimisation and treasury transformation initiatives.

Rather than focusing on the underlying liquidity structure, he suggests that treasurers should first develop a clear understanding of what the organisation is ultimately trying to achieve.

“In ASEAN, liquidity optimisation is rarely a project that can be implemented through a single regional solution,” he says. “Treasurers should avoid pursuing centralisation for its own sake.”

While treasury management systems, APIs and real-time banking capabilities are powerful enablers, he notes that liquidity optimisation ultimately depends on disciplined cash forecasting, strong governance, accurate data and close collaboration between treasury, finance and business units.

“Finally, treasurers should view liquidity optimisation as a continuous journey rather than a one-time transformation programme,” he concludes. “Organisations that periodically reassess their treasury structures, banking partnerships and technology architecture are generally best positioned to maximise liquidity efficiency, while maintaining resilience in an increasingly dynamic operating environment.”