The current global environment is still dealing with post-Covid inflation, encroaching isolationism from several countries, most notably the US, as well as civil unrest and instability. That doesn’t even include the ongoing work of digital transformation in the sector and the fast-growing influence of artificial intelligence and automation tools. As a response, the treasury and finance functions within corporations are growing in strategic influence and playing a significant part in shaping the long-term direction of businesses worldwide.
While these trends are universal, the impact is acute in Asia Pacific. The region is a unique mix of developed and emerging markets, fragmented regulatory environment, as well as playing a central role in the current trade war drama involving tariffs imposed by the US government. Asia Pacific is serving as a microcosm for treasury and finance strategies globally.
According to a survey released last year by DBS Bank in Singapore and FT Longitude, the old world order of hyper-globalisation is ending, while a new era of globalisation is now emerging. That era will be heavily influenced by Asian markets, with three-quarters of those in the survey citing expansion in Asia as a strategic priority for their business, specifically the Association of Southeast Asian Nations (ASEAN), India and Mainland China.
The research, Pivotal: How treasury and finance enable the new era of globalisation, was based on a survey of 570 senior leaders in nine sectors and 15 markets, as well as in-depth discussions with 12 experts in the field.
The DBS survey expects the new globalisation era to be powered by digital innovation, data-enabled business models, and manufacturing and shipping. While this era “is centred on Asia” it is “reliant on a multi-polar economic system, and it is more sensitive to sustainability and net zero than earlier forms of globalisation”, according to the report.
According to Ankur Kanwar, Global Head of structured Solutions Development, Head of Transaction Banking, and Head of Cash Management in Singapore and ASEAN at Standard Chartered Bank, “Asian markets are much more complex and fragmented than in the Americas or Europe, each has its own regulatory requirements on trade, foreign exchange (FX), and related party transactions.”
Asia Pacific is also broken up between “developed” economies such as Japan, Singapore and Australia, and emerging markets such as Malaysia and Vietnam, according to several benchmarks, including analysis from the International Monetary Fund. While global powerhouses such as China and India often run the gamut between “developed” and “emerging” depending on which economic factors are being measured.
Central, regional and hybrid
This fragmentation can be complex to navigate. However, around 60% of the needs of each nation are similar, says Kanwar. Those common needs include running a business with a minimum amount of “operating cash” (typically below 5% of revenue), centralising the management of liquidity risk, FX risk, and payment at regional treasury centres (RTC) to achieve best execution, risk control and efficiency.
“The differences lie in the challenges that these treasuries face – corporate treasuries in emerging markets have to navigate idle cash issues, higher currency fluctuation and geo-political risks,” says Kanwar.
While centralised global hubs are a broad trend for treasury departments at multinationals, in Asia a hybrid model is emerging as more companies are setting up RTCs, “designed to serve a different cluster of markets”, says Kanwar.
For example, “Payments-on-behalf-of (POBO) can be done in Singapore, Hong Kong, Japan and Australia but not in many other markets where Payments-in-the-name-of (PINO) is implemented instead,” he adds.
“These RTCs are data-driven, real-time connected with global treasury enterprise resource planning and treasury management systems, forming a new matrix of liquidity, payment and FX structure unseen in the last three decades,” he says.
Three factors have shaped the RTC landscape post-Covid, according to Kanwar. The first is re-globalisation, with foreign direct investment companies shifting to India and ASEAN. “The new supply chain clusters mean more intra-regional trade and more complex cross-border payment flows,” he says.
Second is the availability of new and more robust technology that accelerated treasuries’ transformation. For example, he adds that a “remote RTC” can be structured as a bank-sponsored account to support cash pooling, payments and FX.
Third are the new international tax rules (Base Erosion and Profit Shifting or BEPS 1.0 and BEPS 2.0) that RTCs are helping companies navigate due to their proximity to the markets.
However, Inga Kudzmaite, Treasury and Tax Director, Asia at the Carlsberg Group, says the dichotomy between developed and emerging markets can be more pronounced.
“The needs are very different,” she says. “Quite commonly, a large degree of centralisation – either domestic or cross-border can be achieved in developed markets, while solutions in developing markets are largely localised to their unique set of issues.”
Sriram Ananthakrishnan, Director, Asia Trade at ELCY Ltd, says centralising global treasury hubs has gained momentum due to technological advancements, cost efficiency and the desire for better control over liquidity and financial risks. However, he agrees that centralisation presents challenges in meeting the complex needs of the various Asian regions and fragmented regulatory and legal environment.
“For example, countries like China, Korea and Taiwan have strict exchange controls, making it difficult to centralise liquidity and repatriate funds,” he says.
Cultural and operational nuances involving language or business and payment systems and technology limitations where local systems fail to integrate with global networks also present challenges.
Despite these challenges, Ananthakrishnan agrees with Kanwar that centralised hubs can adapt by adopting various strategies. Those strategies include establishing RTCs, leveraging local talent and partnerships with banks that understand regional nuances, and taking advantage of advanced technologies like application programming interfaces (APIs) and blockchain to enhance cross-border transparency and efficiency.
“Singapore is a preferred location for regional treasury centres due to its tax incentives, political stability and advanced fintech infrastructure. It ranks as the third-largest foreign exchange trading hub globally,” adds Ananthakrishnan. He also lists Japan as a preferred location for RTCs, but points to challenges like an ageing population and slower growth compared to emerging markets.
However, while India and China both have rapidly growing financial sectors, they face regulatory hurdles and infrastructure gaps, says Ananthakrishnan, in the form of China’s strict capital controls and India’s complex tax systems, which can complicate treasury operations. Despite the allure of those country’s large consumer markets and manufacturing capabilities their regulatory environments require tailored treasury solutions, he adds.
Technology is central
According to Sugandha Singhal, Senior Vice President and Head of Treasury at SRF Ltd, there aren’t many differences between treasury departments in Asia Pacific outside the compliance requirements. However, centralisation is a trend driven by AI, robotic process automation (RPA), and the related savings realised by those technologies.
“We centralise only activities that result in manpower reduction,” she says. “Otherwise we set policies and boundaries.”
Kanwar agrees that the most strategic technology is AI, which is expected to aid treasury, improve cash forecasting, aid business continuity planning for stress test scenarios and mitigate risk types such as liquidity and FX risk.
Kanwar also points to “just-in-time” funding capabilities that many banks offer that help companies automate the sweeping of funds from the pool to secure the debit balance position of sub-accounts held for each subsidiary. Using host-to-host bank connectivity, and increasingly APIs, will shorten the turnaround time for transactions to be executed and for records to be booked in the ledger, he adds.
As an example, RPA can automate the consolidation of bank information for non-standard (MT940) bank statements. AI-enabled FX platforms can automate the FX price discovery, trade execution, booking of trade and settlement. While in-house banking (IHB) within TMSs help automate the dual ledger requirements for inter-company transactions, he adds. Standard Chartered’s own FX platform offering is called SC PrismFX.
The business requirements are pushing partnering banks to better connect to corporate strategies in order “to design a solution and translate that solution to an operating structure”, says Kanwar.
“In offering liquidity management solutions, banks can offer single currency cash physical pooling and multi-currency notional pooling (MCNP),” he adds. “As more corporates adopt the IHB model, banks are offering virtual accounts and sub-account structures to segregate inter-company transactions.”
The adoption of digital currencies and blockchain technology is also gaining popularity with corporations, says Kanwar. Driven by this sector, many banks are on the lookout for payments-focused distributed ledger settlement networks to offer real-time, cross-border payment vs payments (PvP) or payment vs delivery (PvD) structures.
The technology provider ecosystem, where banks cooperate with fintech companies in Asia is “unique” and “creative”, says Kudzmaite.
“Often good solutions get adopted very quickly by the market, which is hungry for digital and efficiencies,” she says.
Ananthakrishnan agrees that digital expansion, especially with supply chain finance, “is no longer a luxury but a necessity for sustainable practices, ensuring compliance and driving cost reduction in this rapidly changing global trade paradigm”.
However, despite the presence of “know-how” and experience with emerging technologies in Europe, in comparison to Asia, it “moves very slowly,” with several markets still running old legacy systems, “which are cumbersome to implement and/or doesn’t result in efficiencies”, adds Kudzmaite.
Tariffs and tax
At the start of this year, Deutsche Bank Research, in their Asia Corporate Newsletter Q1 2025: Welcome Year of the Snake, predicted that Asia markets will mainly be driven by preparing for the impact of tariffs from the new government in the US.
According to Deutsche Bank, Asia is more exposed to a protectionist US trade policy than other regions because several countries in the region have significant bilateral trade surpluses with the US; their economies are closely interlinked with China; and tariffs are expected to strengthen the US dollar, and many Asian countries have low real rate buffers to deal with a stronger dollar and higher core rates.
The Deutsche Bank Research also points to 2025 as pivotal for Vietnam. In the case of Vietnam, imports from China doubled from 2017 to 2023 – an addition of US$50bn – and its exports to the United States increased by US$60bn.
According to the data from the bank, Vietnam benefitted significantly after 2017 from the first round of tariffs introduced between the US and China – particularly in the electronics and consumer markets. China now accounts for roughly 30% of Vietnam’s FDI inflow, and approximately 40% of all ASEAN exports to North America originate in Vietnam, according to the report.
In the Asia Corporate Newsletter, Perry Kojodjojo, Asia macro strategist, Deutsche Bank Research says: “Given Vietnam’s trade surplus with the US is the third largest, it is more vulnerable to the threat of possible tariffs from the incoming US administration.
Ultimately, Deutsche Bank researchers predict that “Policy makers, as well as corporates, will have tough decisions to make for limiting the impact of tariffs on GDP, trade and FX.”
Writing in a post on LinkedIn, Ananthakrishnan warns that countries targeted by the US tariffs “are likely to retaliate with their own tariffs, escalating into a full-blown trade war. Such a scenario would disrupt global supply chains, stifle economic growth, and further fuel inflation”.
He adds that the potential for supply chain disruption “is particularly worrisome”. As businesses grapple with increased costs and uncertainty, this disruption could force companies to relocate production, leading to significant upheaval and long-term shifts in global trade patterns.
“This could undermine the very industries the tariffs are intended to protect,” says Ananthakrishnan.
Despite viewing the US’s current tariff policy as a “high-stakes gamble”, Ananthakrishnan says there could be some potential upsides.
“If implemented judiciously and for a limited time, tariffs could incentivise domestic production and create jobs,” he says. “They might also prompt trading partners to address unfair trade practices and level the playing field for businesses. However, these potential benefits are contingent on a delicate balance and a measured approach, which seems unlikely given the current trajectory.”
He recommends that companies adopt alternative strategies. Such as collaborating with like-minded countries to address shared trade challenges and promote “a more balanced and equitable global trading system”.
Some of these strategies were started several years before the complexities of the currency economic environment. Kanwar points to India’s Gujarat International Finance Tec-City (GIFT City) project, launched in 2007, as a “a game changer, making it easier for FDI investors to unlock their idle cash while arranging tax-efficient funding to help fund growth in India”.
“In comparison with Singapore and Japan, GIFT is expected to offer comparable RTC solutions with the added advantage of a ten-year tax holiday,” he adds.
India’s GIFT City is a project to develop a smart city that would host an International Financial Services Centre (IFSC) to provide a comprehensive platform for various financial activities, such as banking, insurance, capital markets, asset and wealth management, FinTech and access to global markets and currencies.
While China started deregulating RTCs deregulation, allowing both pan-China cash pooling and two-way cross-border sweeping a decade ago, says Kanwar. This promotes FDIs and advances the internationalisation of the renminbi through the creation of the Chinese yuan for onshore and offshore markets, the CNY and CNH, respectively.
