Regulation & Standards

Asian regulation: a cash management challenge

Published: Jan 2024

The regulatory landscape in Asia is complex, fast-changing; often ambiguous and requires robust internal treasury systems. Meeting the region’s regulatory challenges is also an opportunity for treasury to excel at cash management, secure tax benefits and cost-saving efficiencies.

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From a treasury perspective, navigating regulation in Asia, especially southeastern economies in ASEAN like Thailand and Vietnam, can be a bigger headache than other treasury challenges in the region like transacting in multiple emerging currencies, limited hedging options, capital controls and cultural and linguistic diversity.

Not only is regulation voluminous and fast-changing. It’s often ambiguous, subject to trends in protectionism and requires robust internal treasury systems. And aside from global standards like ISO 20022 or managing the IBOR transition, it invariably requires a country-specific knowledge. But meeting the region’s regulatory challenges (which broadly fall into exports and payments buckets) is an opportunity for treasury to excel at cash management and secure tax benefits and cost-saving efficiencies.

Taking money out

Reflected, perhaps, in the investment pouring into the region as MNCs establish businesses in countries like Vietnam, Thailand and Malaysia in China+1 strategies, the rules around moving money into Asian economies are more relaxed than the frameworks around taking money out.

Export-related regulations include strict timeframes around when money from export proceeds is delivered back into the country. Like Malaysia’s requests that exporters operating from the country bring the proceeds back into Malaysia in either foreign exchange or ringgit within six months of the original shipment.

And regulations don’t just govern export proceeds flowing back into economies in a timely fashion. Exporters must also navigate multiple rules around how they use export proceeds in some countries. Take Indonesia’s July 2023 circular ‘Foreign Exchange Export Earnings from the Business, Management and/or Processing of Natural Resources’ that stipulates foreign exchange pouring in from the country’s natural resource exports is deposited in special accounts.

Companies must put 30% of their foreign exchange revenue into a special account for three months and although it is possible to use these funds as security for loans or collateral for FX swaps, use is limited and funds must be tied up for the duration.

“Laws vary country-by-country, but the main gist is that these types of regulations exist in many countries whereby any foreign exchange coming in as export proceeds must be deposited with a licenced bank before companies can do anything with it,” says Standard Chartered’s Ankur Kanwar, Managing Director, Head of Cash Products, Singapore and ASEAN/Global Head Structured Solutions. He adds that in a treasury benefit, many regulators do give tax incentives for holding export proceeds in country with the interest on the proceeds taxed less, say at 0-10% compared to a standard rate of 20%.

Signs of change

Foreign exchange is another regulatory pain point with some currencies in the region with no convertibility and others with some form of managed float. But recent regulation signposts more relaxed and flexible rules for money transfers abroad in some economies. For example, the Bank of Thailand has removed complex paperwork for companies making foreign exchange payments outside the country. If corporate clients comply with their banks’ KYC processes, they can freely operate and make foreign exchange payments without paperwork.

“It goes beyond just making international payments,” enthuses Kanwar who says some of Standard Chartered’s clients operating in the country are already making use of it. “It means treasury teams can start including balances from Thailand in liquidity structures. Treasury can move Thai Baht, convert it into dollars and include it in a pooling structure on a daily basis. It’s more far reaching than just the FX regulation being simplified.”

Elsewhere, Thailand is also supporting the use of local currencies (JPY, IDR and MYR, for example) as an alternative to managing exchange rate risk to mitigate the impact of US dollar fluctuations. And in another sign of increasing flexibility for companies, Thailand is also expanding the scope of its Non-Resident Qualified Company (NRQC) programme (designed to allow some foreign companies more flexible processing of transactions) to allow more MNCs engaged in international payment transactions to participate under the NRQC umbrella.

The recent relaxation of FX regulation in South Korea is another sign of encouraging change – and flags the treasury gain from being across regulatory change. Government reforms, in effect since last July, include expanding overseas remittance-without-documentation thresholds and easing reporting on large scale foreign currency borrowing. Over the last year, the government has also softened double taxation by excluding 95% of dividend earnings from abroad from being taxed in Korea after they have been taxed in the country of residence, part of an effort to induce large Korean corporates to bring back their overseas income.

Even Vietnam, which prohibits any inter-company lending, has launched a pilot programme that is exploring alternatives around permitting restricted liquidity management.


Sustainability is also climbing the regulatory agenda for regional corporates. For example, the Hong Kong Stock Exchange requires all listed companies publish an ESG report and stipulates companies report climate-related disclosures in line with the TCFD framework and the new ISSB climate standards. It’s a sign of European and other international sustainability rules taking effect in local markets with a real impact on the region’s home-grown companies, explains Hanim Hamzah, KPMG Asia Pacific Regional Leader for Legal Services.

Singapore has become a gold standard in terms of payments regulation and now countries in ASEAN are trying to do the same.

Ankur Kanwar, Managing Director, Head of Cash Products, Singapore and ASEAN/Global Head Structured Solutions, Standard Chartered

“The social and governance elements of ESG are increasingly front and centre like AML regulation, whistle blowing and modern slavery, driven partly by bank requirements.” Similarly, laws that originated in Europe governing personal data protection (PDPD) are being enacted across the region like Vietnam’s Decree 13/2023/NĐ-CP dated 17/4/2023 on Personal Data Protection (PDPD) effective from 1st July 2023. Commentators also highlight burgeoning demand from acquisitive, listed Asian company hunting opportunities in Europe for regulatory guidance, mindful that European regulators will dig into ESG compliance in any merger or acquisition. Cyber risk is also adding another layer to the regulatory map as governments put in place new cyber security laws to keep pace with the roll out of digital solutions.

What can treasury do?

Positively, commentators point to examples of companies working with the regulators to secure some relaxation in the rules. For example, Kanwar cites Malaysia’s preparedness to extend the time limit on repatriation of export earnings from six months to 12 months depending on certain circumstances. But the process rests on companies building up a relationship with the regulatory authorities.

The importance and benefit to companies operating in the region of building credibility with regulatory authorities by accurately reporting flows is echoed by Sandip Patil, Head of Liquidity Management Solutions for Asia North, Australia and Hong Kong at Citi. “Regulatory approval to transact across borders is often tied to the comfort companies build with the regulator,” he explains.

For example, he notices that it is getting easier for some companies to move limited liquidity in specific currencies in and out of China and other restricted markets. Sure, it comes with caps and thresholds and must be attributed to specific purposes, but he says it offers proof of the benefits to treasury teams of working directly with regulators in the region.

But it is this grey area, and the absence of clear frameworks and transparency, that is often more of a headache than benefit for companies. It gives corporates leeway, but the ambiguity is not necessarily helpful. Again, commentators note that things are starting to change as some jurisdictions develop clearer frameworks often led by Singapore, spearheading clarity around payments regulation particularly.

Singapore’s new Payments Service Act, launched in 2018 and with subsequent upgrades, clearly lays out a payments landscape detailing which licences companies must apply for; what activities are permitted, and the controls corporates need to put in place. “Singapore has become a gold standard in terms of payments regulation and now countries in ASEAN are trying to do the same,” says Kanwar. “There is still a long way to go but rules around exports, foreign exchange, payments and liquidity are getting clearer and more transparent.”

Singapore is also leading by example in a new Quick Response Code Scheme (SGQR+), an enhanced QR code payment system that will enable merchants to accept 23 payment methods by signing up with just one financial institution. It recently issued guidelines on participation, giving existing SGQR members a transition period of six months to ensure they have enough time to get the new technology in place and make any changes to their business processes and arrangements with their merchants.


Banks are rolling out automated tools to support compliance. For example, Standard Chartered’s payment workflow tool Payment as a Service (PaaS) supports Indonesia’s 30% rule, taking 30% of export proceeds, and sending treasury daily reports on how much money is accumulated. After three months funds are automatically moved out. “It is an example of one of the tools we’ve launched to cater to the regulatory scene and help corporates manage payment challenges,” says Kanwar.

Elsewhere KPMG’s Hamzah counsels on the importance of corporates leaning into strong players on the ground with a country-by-country knowledge that reflects the nuances and requirements in each market. “Finding a local partner is very important.” She also echoes advice that companies can benefit from working with federal government departments (for example, Malaysia’s Ministry of International Trade) for better treatment and protection.

Robust internal processes are also important for companies’ managing complex regulation alongside meeting group liquidity, risk, and operational objectives. But for all the enduring complexity, the region’s dynamic growth and evolving business models is also accelerating the pace of regulatory change for the better, visible not only in fast-changing efforts to simplify FX and repatriation guidelines, but in the rules for new business models such as e-wallet providers.

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