This is not straightforward, however. “Sometimes it can be difficult to convince people to change how they behave,” Wan explains. By way of example, Wan says that he has been working to move the company away from cheque collection and onto electronic channels. “This will clearly enable the company – not just treasury – to be more efficient and remove a lot of risk,” he notes. “But it has been hard to sell this idea, because we have teams of people whose job is to process cheques. It is hard for managers to follow strategies that will leave these teams redundant.”
It is here that best in class interpersonal skills come to the fore. “I have spent a lot of time talking to people within the business about this issue,” he says. “The government in Malaysia is mandating this switch and I have made a case around the benefits we could have by being part of the first group of companies to move. Treasury is well placed to lead these enterprise-wide projects.”
Wan says that the more treasury follows this path, the easier it will become for the department to get things done. “Once you convince the business that your strategy is sound, and they see that the project is successful, it is much easier to push your plans through next time,” he says. “It is about gaining the trust of senior management and the business.”
More to do
Despite his progressive approach to treasury and his successes in developing the function within the company, he admits that there is still a lot more to do. One main area of focus at present is looking at how best to leverage technology. “I believe this resonates with treasurers in Malaysia, and other markets around the world,” he says. “Technology continues to transform how the function operates. It is vital to stay ahead of the curve, otherwise you will fall behind.”
Tan Chong is at the start of this journey and Wan is currently exploring how treasury can best streamline the financial value chain of the business. This includes analysing areas such as collections and promoting real-time electronic transfers and bank account auto reconciliation; improving visibility by replacing Excel worksheets with a treasury management system (TMS), and streamlining the payment process. “We have made great strides and have already brought in numerous efficiencies and greater control over core processes,” he says. “Nevertheless, it is a long-term project and we are aware that it will take many more years to complete.”
Core to this is installing a TMS. “This will help greatly with the visibility and control that we have over our cash,” Wan says. “But it comes at a cost. Culturally our organisation is very cost-conscious, as most family-owned businesses are. As a result, there is not a great incentive to invest unless something goes dramatically wrong. It takes time to sell the idea to the key stakeholders and we are currently making our case.”
Dealing with volatility
A system such as this would greatly help Wan, especially given the complexity of the markets that Tan Chong is operating in. “Emerging markets (EMs), and particularly those that we work in with weak fundamentals like Vietnam, Malaysia and Indonesia, have experienced a fair degree of volatility lately,” he explains. “There are various reasons for this, most notably quantitative easing being unwound in the US, low oil prices and China’s slowdown.”
He notes that for corporates this volatility can create numerous risks including a significant impact on cash flow. “In my opinion, the best way to mitigate this risk is to use hedging solutions, enforced and controlled by a robust treasury policy,” he adds. “To ensure that the best results are obtained from hedging it is vital to work closely with your banking partners, as they have the expertise to help you find the optimum solution.”
Moreover, Wan leans on the banks to provide information about the regulatory changes occurring in various markets and the impact these have on hedging strategies and various other treasury activities. “I believe this is particularly important in the markets that we operate in, such as Vietnam, Myanmar, Cambodia and Laos, because regulations are frequently changing,” he says.
Although banks may be well placed to help with advice around regulatory change, Wan notes that their product suites could be better suited to the needs of corporates in Malaysia. “The foreign banks in the country are quite keen to push their products to the local corporates,” he says. “The problem is that quite often these products do not suit what we are trying to achieve. They are just products that have been successful elsewhere.”
Wan highlights off-balance sheet financing as one solution that banks have been talking to him about recently. “This is a sophisticated product and most corporates in Malaysia are not quite ready to use something like this yet,” he explains. “I believe that these banks need to take a step back and understand what the market really wants – and then either adjust existing solutions or build new solutions to meet these needs.”
However, he is sceptical that this will happen, due to the changes in the banking environment. He notes that pressures from Basel III and other new regulations are forcing banks to make tough decisions regarding the markets in which they operate. “I am not convinced that some foreign banks operating in Malaysia will be here in the long run,” he says. “We have already seen a few begin to pull out of the market.”
His hopes are higher for the local and regional banks, however. “These banks are growing their product suites and talent within the banks, and that is making them more competitive,” he says. “But what is most crucial is that ASEAN is their home market and they have a deep understanding of the market. I foresee these banks dominating the region over the coming decade.”
The ASEAN factor
ASEAN is a region with immense potential for corporates as well. This is beginning to be realised with the integration of the ASEAN Economic Community (AEC) at the end of 2015. “The AEC is a similar project to the EU,” Wan explains. “It aims to create a highly competitive economic region with a single market and production base. This of course will have many benefits for businesses, such as higher productivity and cost efficiency through economies of scale as well as the elimination of tariffs in countries like Vietnam, Myanmar and Cambodia.”
For conglomerates operating in ASEAN, the free flow of goods and services can also boost competitiveness regionally and globally. But Wan believes this will lead to greater complexity in treasury because a greater volume of transactions will be made across multiple geographies. “This will place an even greater emphasis on treasury best practice, automation and control,” he says.
Recognising this challenge, Wan has worked to centralise the function after being granted Treasury Management Centre status by Malaysian Industrial Development Authority (MIDA) – a programme that offers a number of incentives to companies who base their treasury operations out of Malaysia.
“As a result of this, we have been able to utilise an in-house bank structure enabling us to better manage our internal cash flows, reduce float and transaction fees, and subsequently bring down the operating costs of working across such a large market,” he explains. “I expect to see many more companies in Malaysia and across ASEAN replicate this structure going forward.”
Aiming for the top
Looking ahead, Wan has big plans not only to continue to develop the treasury function within the company, but also to raise his own profile and become a business leader in his own right. “Working in treasury gives you a great chance to immerse yourself in the business and how it operates and I am looking to take full advantage of this opportunity,” he says.
“My ambition is to lead the business as CEO. This is not a typical aim for most treasury professionals, but I believe it makes a lot of sense when you combine the financial knowledge that we have alongside the increasing knowledge of how the company operates.”
With such ambition, Wan has fully dedicated himself to his career and achieving his ambitions. “The phone is always on and I am always there to tackle whatever situation is needed at any time,” he explains. “Don’t forget, money never sleeps.”