With investment into ASEAN countries from Chinese enterprises seeing a notable increase year-on-year, the regions diversity and regulatory complexity are front of mind for the Chief Financial Officers and Treasurers of such organisations. While the region holds tremendous opportunity for growth, its heterogeneous regulatory environment requires expert advice.
HSBC’s recent unique series of Corporate Treasury Forums held across the region, in partnership with KPMG, to help such Chinese corporates ‘go global’ highlighted just how much more needs to be done to inform and educate busy executives looking to drive growth across the region.
The event held on 13 November 2019 in Singapore and playing host to more than 40 of HSBC’s Global Banking and Markets and Commercial Banking clients highlighted several key areas of interest.
Singapore, for instance, has seen its strategic importance amplified with a significant increase of Chinese corporates in 2019, providing them with a vital foothold into other cities and countries across ASEAN.
In the midst of such growing investment, the role of treasury functions has surged in importance, and with it the need for these departments to stay abreast of a host of issues that were in the past potentially restricted to the C-suite alone. Evolving trends in treasury management functions now go beyond risk management, cash and liquidity management, in-house banking, and capital structure management, and are impacted by geopolitics as much as they are by fast-paced technology developments. There has also been a considerable shift in the focus of treasuries from traditional role of cost centres to being profit centres, even as they continue to balance funding risk and liquidity risk. They are also expected to evaluate the advantages of centralised treasury management structures and characteristics of a regional treasury centre and a shared services centre model while delivering automation of financial operations and cashflow forecasting, automated operations, data driven analysis, and embedded compliance functions alongside dynamic, real-time performance indicators. “In an uncertain world, it is now a necessity for corporates to equip themselves with deep market knowledge, an understanding of inter-related factors and network in order to navigate the complexities and capitalise on the opportunities in ASEAN”, said Irene Zeng, Head of Sales, North Asia, Global Liquidity and Cash Management, HSBC.
A survey of participants at the Singapore event show that 53% of attending corporates see law and regulation as the top challenge they face when considering whether to set up treasury centres in Singapore versus other ASEAN countries. Foreign exchange controls are front of mind for 30%, and treasury and cash visibility keep 10% of treasury leaders up at night. Staffing only bothers a mere 3%.
Meanwhile, a full 52% look to technology to help them drive work efficiency, while 26% see it as a means of enhancing fund management processes. Ironically, “digital transformation” features as a driver of technology usage for a mere 11%, the same percentage who see technology as helping them reduce financial management costs.
As such it is unsurprising that technologies such as biometrics, blockchain, application program interfaces (APIs), the Internet of Things (IOT), artificial intelligence (AI), machine learning, data and cloud, 5G, and mobile payments are all of interest from a technology perspective. Survey results would suggest, however, that the regulatory requirements for setting up a company in Singapore and Indonesia, as well as details of the foreign exchange controls imposed on Indonesian rupiah and Thai baht in terms of declaration and documentation requirements are of more immediate concern for Chinese corporates expanding across ASEAN.
Importantly, the ability to be briefed in detail on such topics by experts from KPMG, HSBC’s strategic partner in the delivery of these informative events, is highly appreciated by such customers of HSBC. As one such customer said: “The ability to learn about ASEAN regulations was most relevant as we manage a lot of projects in ASEAN and the regulations are often not the easiest to work through.”