Treasury Today Asia November/December 2014

Published: Nov 2014



Leveraging change

Throughout 2014, there have been a number of major economic, infrastructural and political developments in countries across the Asia-Pacific region. These changes have both challenged treasurers and created opportunities for innovation and efficiency.

Inevitably, a large degree of focus has been on slowing GDP growth in China. Although the figures still remain impressive compared with developing markets (7.4% as forecasted by the World Bank) some are questioning whether the slowing economy will distract Chinese officials from the reform agenda. Nevertheless, a significant amount of progress towards renminbi internationalisation has been achieved this year, with Beijing appointing three new clearing banks in London, Frankfurt and Seoul. Corporate activity onshore has also been liberalised with companies now able to purchase renminbi-based swaps and options when looking to hedge risk. The Shanghai Free Trade Zone (SFTZ) continues to be a hot, although somewhat divisive, topic and 2015 is sure to see further innovative cash management solutions coming out of the SFTZ.

Away from China, other APAC economies have also witnessed slowing growth, not least India. Political uncertainty has been an additional feature of 2014, with a military coup in Thailand and much controversy over the elections in India.

In more positive news, this year has also seen one of the world’s most closed countries take a step onto the international stage, with Myanmar making significant efforts to attract foreign business to the country and issuing banking licences to a number of international banks, which is good news for corporates. Elsewhere, there has been a great deal of progress in the APAC payments space. Singapore, for example, launched its Immediate Payments G3 scheme in March, while in Australia, faster payments will soon be ushered in, as we explain in this Issue’s Country Focus article.

Of course, regulation remains a key theme and treasurers must keep an eye on changes to derivatives regulation in the coming months. One of the main challenges here is that each country in the region is taking its own approach to implementing derivatives reform – there is no co-ordinated, integrated approach – meaning that there is no silver bullet for corporates. Similarly, integration challenges still exist in the ASEAN region. Although progress is (slowly) being made towards the establishment of an ASEAN Economic Community, it remains to be seen whether the region will meet its deadline of 31st December 2015.

Finally, it is expected that global trade will remain sluggish in 2015. This will undoubtedly affect the growth of economies in the region and impact the strategies that corporates operating there must adopt in order to thrive. Against this backdrop, and alongside their business-as-usual duties, treasurers must aim to be nimble enough to take advantage of appropriate efficiency or optimisation opportunities arising from challenges and change. Working closely with industry bodies and business partners will be invaluable here, as will knowledge sharing among peers. Treasury Today Asia will continue to support you throughout 2015, reporting on the latest industry developments and analysing the issues that matter to you.

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