Category: Finance

Retail News Asia is committed to providing both local and global retailers with the latest Finance news throughout the Asian market. This on a daily base.

  • Indonesian Bitcoin Market Rises, Rapid Increase in User Base Reported

    Indonesian Bitcoin Market Rises, Rapid Increase in User Base Reported

    Bitcoin Indonesia, a prominent online Bitcoin marketplace for Indonesian traders and investors, revealed a rapid development in its user base after adding over 170,000 members within 12 months.

    At the beginning of 2016, Bitcoin Indonesia served 80,000 active users on its marketplace. Tens of thousands of members purchased and sold Bitcoin through Bitcoin Indonesia through simplistic deposit and withdrawal methods such as bank over-the-counter cash settlement and online transfer.

    Over the past year, Bitcoin Indonesia’s user base grew from 80,000 to more than 250,000 active members. In January of 2015, Bitcoin Indonesia operated a platform with less than 50,000 members, thus, in essence, throughout the entire year of 2015 the platform only added 30,000 consumers.

    In comparison, this year’s growth is equivalent to nearly 6x of the average user base growth of last year, which can be considered to be an optimistic sign for the long-term development of Bitcoin Indonesia and the Indonesian Bitcoin market in general.

    Massive increase in daily trading volume

    Bitcoin Indonesia revealed a massive increase in its daily transaction volume, which currently stands at $1.48 mln. While the platform’s trading volume is only a fraction of other major Bitcoin exchanges, it is substantially larger than other markets such as the Philippines and Thailand.

    Suasti Atmastuti Astaman, the business development manager at Bitcoin Indonesia, attributed the growth of the platform’s user base and trading volume to the legalization of Bitcoin in various countries including China, the US and Russia.

    The clear regulatory framework and policies on Bitcoin are allowing local Indonesian users to better understand the benefits and advantages of using Bitcoin instead of fiat or other banking services.

    Astaman said in an interview with a local publication:

    “Bitcoin’s value completely depends on supply and demand in the market. At present, as more and more countries have relaxed their stances on the digital currency, including the United States, China and Russia, more and more people are putting their trust in it. That’s why Bitcoin’s value has been rapidly surging.”

    However, the operators of Bitcoin Indonesia and other startups in the region must attempt to educate users on the basic concepts of Bitcoin to prepare for the inevitable legal conflicts that will arise in the future.

    If certain governments such as China attempt to ban Bitcoin and the entire motivation of using Bitcoin relies on the current regulatory frameworks, it may significantly affect the long-term survivability of the company.

  • JPMorgan lashing by Indonesia signals global threat to analysts

    JPMorgan lashing by Indonesia signals global threat to analysts

    The world is getting more hazardous for skeptical analysts, the banks that employ them and investors who rely on their published research.

    Even by the rough-and-tumble standards of emerging markets, Indonesia’s punishment of JPMorgan Chase & Co this week for a bearish analysis of the nation’s stock market stands out. The country’s finance ministry cut business ties with America’s biggest bank, telling reporters on Tuesday that the firm’s November research note wasn’t “accurate or credible.”

    Official attempts to deter such research are nothing new in developing economies, but rarely do governments retaliate against a Wall Street powerhouse for publishing opinions that contradict official views. The move builds on a trend: In July, Turkey’s banking regulator issued an industry-wide warning to avoid negative reports. In 2014, Brazil President Dilma Rousseff chastised an analyst for suggesting her election would hurt the economy.

    “It’s definitely been getting more aggressive recently,” said Paul McNamara, a London-based emerging markets fund manager at GAM Ltd, which oversees client assets of about US$65bil.

    As money managers around the world pull capital from developing economies on concerns over rising US interest rates and a stronger dollar, policymakers are becoming especially sensitive to critical analyst opinions, according to Medley Global Advisors. The risk for Indonesian authorities is that their actions backfire by undermining investor confidence in the country’s market research.

    “Published research is already a diluted view, but these kinds of actions will make it even more bland,” McNamara said. “Retail investors will have no idea what analysts are really thinking because the written reports won’t say anything real.”

    JPMorgan downgraded Indonesia’s equity market by two notches to underweight from overweight in a Nov 13 report, calling it a “tactical response” to Donald Trump’s election win. The bank also cut its rating on Brazil, while noting that both countries may provide a “better buying opportunity” later.

    Indonesia’s finance ministry said on Tuesday it would stop using JPMorgan as a primary dealer and as an underwriter of its sovereign bonds. While Finance Minister Sri Mulyani Indrawati said the government is open to improvement and respects the assessments of research providers, she said banks should take responsibility for economic reports that “could influence fundamentals and psychology.”

    “The finance ministry and the government are very open to criticism, but JPMorgan’s research result was pretty weird and unfair,” Sofjan Wanandi, head of the experts team at the vice-president’s office, said in an interview on Wednesday.

    JPMorgan’s business in Indonesia continues to operate as normal, the bank said in an e-mailed statement on Tuesday. “The impact on our clients is minimal and we continue to work with the Ministry of Finance to resolve the matter,” the bank said. On Wednesday, the finance ministry clarified that it won’t stop JPMorgan from conducting private-sector business in the country.

    Government retaliation for negative research can have a chilling effect on market analysis.

    Some investment banks in Turkey scaled back commentary on sensitive political subjects after the banking regulator warned brokerages last July against publishing “reports that would turn expectations and the atmosphere negative.”

    That same month, the head of research at one of Turkey’s largest brokerages was stripped of his professional license and charged criminally over a report analysing the impact of a failed July 15 coup targeting President Recep Tayyip Erdogan. The criminal charge was later dropped, but an investigation started by the capital markets regulator is still ongoing. An official for the Ankara-based market regulator SPK, who asked not to be named citing the institution’s policy, declined to comment on the investigation.

    In 2014, Rousseff publicly shamed an analyst at Banco Santander Brasil SA for forecasting a deterioration in the country’s currency and stock markets if she were re-elected. The firm later said it fired the analyst, disowning the remarks as that person’s opinion, not necessarily reflecting the company’s view. The episode spooked other analysts, according to Klaus Spielkamp, head of fixed-income sales at Bulltick LLC. “If anybody had anything bad to say about Brazil at the time, they wouldn’t say it,” he said. “Everybody was afraid.”

    Rousseff’s campaign press office declined to comment at the time, as did the nation’s banking association, Febraban. Rousseff was replaced as president last year after being impeached for breaking budget laws.

    Other governments’ moves also have stoked concerns among research analysts. China’s crackdown on hedge funds and broker-dealers for alleged trading abuses during its 2015 stock market rout was seen by some as targeting negative financial views. And in Italy prosecutors accused Fitch in 2012 of mismanaging its analysis of the eurozone debt crisis. The firm disputed the claim, and the case against it was later dismissed.

    While governments usually go after negative research during political or economic turbulence at home, the biggest concern for emerging markets today is capital outflows tied to the prospect of faster interest rate increases under a Trump presidency. International investors pulled US$23bil from developing-nation funds from the start of October through mid-December, according to the Institute of International Finance.

    “Governments are sensitive to criticism, especially in countries where there are large capital inflows that can quickly turn into outflows and prompt a currency sell-off,” said Nigel Rendell, London-based senior analyst at Medley Global Advisors.

    Yet even the most developed market isn’t immune to concerns that free speech is being stifled. S&P Global Ratings initially claimed that the US government’s 2013 lawsuit against the firm for allegedly inflating ratings on subprime-mortgage bonds was in retaliation for S&P’s downgrade of America’s sovereign credit rating. The firm dropped that accusation when settling the government’s case in 2015, acknowledging in a statement of facts that it hadn’t found evidence to support the claim. The company didn’t admit wrongdoing in agreeing to pay US$1.375bil to federal and state authorities.

    Still, Indonesia relies on international securities firms to market its sovereign bonds to overseas investors, who accounted for about 40% of local government debt holdings as of September, according to the Asian Development Bank. If policymakers were to alienate more banks with similar spats, they might undermine the government’s ability to finance its spending plans.

    “JPMorgan has been in the country for a very long time,” said Christopher Wheeler, an analyst at Atlantic Equities in London. “It will blow over them, but probably do more harm to Indonesia.”

  • Indonesia introduces new regulations for fintech startups

    Indonesia introduces new regulations for fintech startups

    Indonesia’s financial services authority (OJK) has issued its first regulations relating to financial technology, or fintech, companies running peer to peer (P2P) lending services, Deal Street Asia has reported.06 Jan 2017

    The regulation lays out minimum capital requirements, interest rate provision and education and consumer protection rules.

    Every fintech P2P lending firm must now register and secure a business licence from the authority, the report said.

    A company must have Rp1 billion (£61,000) in capital to register, and a further Rp2.5 billion to apply for a business licence. These figures are approximately half those that had been proposed in draft regulations, the news site said.

    Foreign ownership is limited to 85%, Deal Street Asia said.

    No maximum interest rate has been set, which again contradicts previous drafts of the regulations which set a cap of seven times Bank Indonesia’s seven-day reverse purchase rate per annum, the news site said.

    Muliaman Hadad, chair of OJK, told that the regulation was only an initial step in the authorities’ efforts to regulate and supervise the business.

    “What’s important is they get onto our radar because we don’t want to regulate the prudential aspects hastily. We want to provide business transparency guidelines first,” Hadad said.

    The OJK also has implemented a regulatory sandbox for firms to test services for consumers, the newspaper said.

    Bryan Tan of Pinsent Masons MPillay, the Singapore joint venture partner of Pinsent Masons, the law firm behind Out-Law.com said: “The Indonesian fintech market is one which has huge potential for its large consumer base and the unbanked, which is different from the financial service hub role that Singapore, Hong Kong and London play.”

    “This means that fintech regulations on payments and digital banking would be more keenly looked at, as opposed to fund-raising type activity,” Tan said.

    “A large potential customer base that is largely unbanked is a huge attraction for banks looking to expand and technology may be an enabler to that. The Indonesian regulation is clearly an evolving one and picking a leaf from the markets around it,” he said.

    Bank Indonesia set up a dedicated office and regulatory sandbox in November 2016 to help fintech developers.

    It will also provide services to help developers to understand Indonesia’s regulatory policies on fintech, gather and disseminate information on developments, and hold regular meetings with authorities and international bodies interested in the use of technology in finance, Bank Indonesia said.

    Indonesia’s launch of a regulatory sandbox for fintech follows similar announcements from Singapore and Hong Kong, with both countries following the lead taken by the UK’s Financial Conduct Authority (FCA) in developing a regulatory sandbox initiative.

    Singapore launched a sandbox in June, and released updated guidelines for the service this month.

  • Finance minister urges to improve the nation’s securities market

    Finance minister urges to improve the nation’s securities market

    Minister of Finance Đinh Tiến Dũng yesterday struck the gong to open the first trading session of 2017 on the Hà Nội Stock Exchange.

    Dũng urged Government agencies and market members to improve the current conditions of the securities market to promote it as a channel to raise funds for socio-economic development and increase the competitiveness of the economy.

    “The securities regulators need to improve the policies to meet the country’s economic conditions and match international standards,” Dũng said.

    “We should keep restructuring the securities market and regulatory agencies, including the merger of the two local exchanges, increase the scale and quality of the market, diversify the products and make sure the market runs efficiently and sustainably.”

    “We have to be well-prepared to launch the derivatives market in the second quarter of 2017, study and develop derivative products to meet the demand of investors and improve risk management for the derivatives market,” Dũng said, urging Government agencies to complete the legal and technical system so that corporate bond market can operate in 2018.

    “Market regulators and relevant agencies need to improve the quality of Government bond issuance to raise more capital for the country’s development, seek for more investors to buy Government bonds and diversify bond products, tighten the policies to monitor local authorities in using the money raised from bond issuance and encourage them to actively call for the participation of private investors in the local areas.”

    “We also need to push State-owned enterprises (SOEs) to sell the State’s capital and get listings on the securities market, work with large-cap corporations and Government agencies to implement more effectively the policies on equitisation and restructuring of the SOEs.”

  • Sompo Insurance eyes retail customers

    Sompo Insurance eyes retail customers

    Sompo Insurance (Thailand) is embracing innovation and digital channels as key strategies to build brand awareness among individual Thais, who are a new customer base for the Japan-based firm, which aims to be in the top 10 in Thailand’s |insurance market by 2020.

    Sompo Insurance eyes retail customers

    Sompo Insurance, formerly known as Sompo Japan Nipponkoa Insurance (Thailand), is focusing more on retail customers after securing a strong corporate base, mainly Japanese firms operating in Thailand.

    The company has been in Thailand for 19 years, tapping only corporate clients before starting to expand |its customer base to |individuals three years ago with motor insurance by partnering with Japanese auto companies.

    Chief executive officer Isorasak Thesratanavong said yesterday that motor insurance was the largest |segment for the insurance business in Thailand, so if his firm wants to expand its retail base, it needs to offer such policies.

    Another strategy is travel |insurance. This year Sompo’s retail customers are expected to generate 30 per cent of total premium income of Bt3 billion, but if the company wants to promote its brand |awareness to Thai customers, |travel insurance should help, because Japan is the No 1 destination of Thai tourists.

    The company yesterday |introduced a travel-insurance policy called Sompo Go Japan. Customers can buy the policy at traveljoy.sompo.co.th, after which the company will send an SMS link to |their mobile device. The |customers will then receive the |policy in a PDF file on their mobile.

    The company has added |threefeatures to its travel insurance. Sompo Assist helps policyholders contact hospitals in Japan and make appointments with them. Thai policyholders are not required to pay medical expenses to the hospital when they use its services, Isorasak said.

    Recognising the growing digital trend in Thailand and as a new player in the retail market, Sompo believes that innovation and digital channels will help it rise into the top 10 and sustain annual premium-income growth of 15 per cent. Its corporate-customer base might not grow much as before, and the company estimates that premium income from corporate clients will grow by no more than 5 per cent as Thailand has been spared any major disasters, reducing premiums of industrial all risks (IAR) by 20 per cent in 2017.

    Cyber insurance considered

    The company is discussing with its headquarters in Japan the possibility of offering cyber insurance to |corporates in Thailand as the risk of cyber-attacks rises from the growing use of digital technology, Isorasak said.

    Premium income from retail customers is expected to grow by 15-18 per cent a year, and if Sompo can retain this growth, its retail base will be contributing half of its premium income by 2020, he said.

    Sompo Group in Japan sees Thailand as a hub for its business in Cambodia, Laos, Myanmar and Vietnam, so it is ready to inject |investment capital to use this country as a springboard for investment in those countries, he added.

    Sompo Thailand has been assigned by its headquarters in Japan to cover Japanese investors in Laos.

  • India, Indonesia key areas of focus for DBS in 2017

    India, Indonesia key areas of focus for DBS in 2017

    India and Indonesia will be the Development Bank of Singapore’s “big” areas of focus for this year, its chief executive officer Piyush Gupta has said. “We also remain focused on building leading regional cash management, foreign exchange, debt markets and wealth management franchises,” Gupta said here.

    “So India and Indonesia will be our big areas of focus in 2017,” Gupta was quoted. DBS leads foreign banks with expansion plans in India.

    DBS’ wealth management business has quadrupled over the past six years, and now accounts for to 13 to 14 per cent of group revenue.

    “Over the next five years, we think it could get up to 20 per cent,” he said in a report on Singapore banks’ prospects during this year.

    “The world will have to grapple with massive consequences behind technological disruption on jobs displacement, both blue-collar and white-collar workers. My own bet is that you will find a lot more entrepreneurship, or what people call the gig economy,” he said.

    “It is likely that there will be a new wave of redistributive economics. Governments may prove inadequate to do this entirely under their own steam, and the private sector will have to play a meaningful role,” said Gupta.

    DBS’s top priorities for this year is to be prepared for volatility as markets will continue to be choppy.

    An increase in US dollar rates could also create negative impact, he added.”Step up the pace on transformation of the bank that is re-imagine banking, and be a 22,000-person start-up,” stressed Gupta. “The third priority is to continue our steady business expansion,” he said.

    But he also cautioned that uncertainties over US President-elect Donald Trump’s policies will be a headache for Asian strategies and could result in heightened market volatility in the short-term. At the same time, global growth is expected to remain subdued, said Gupta.

    “To navigate these uncertain times, we need to remain watchful and vigilant, as well as disciplined about costs and the risks we take,” he advises.

  • Maybank launches mobile money transfer service in Malaysia with Western Union

    Maybank launches mobile money transfer service in Malaysia with Western Union

    Maybank and Western Union have launched a digital remittance service in Malaysia via the Maybank2u (“M2u”) mobile banking app and Maybank’s website.

    The service enables Maybank customers to transfer money to more than 500,000 Western Union® Agent locations in over 200 countries and territories. The money transfer service is available 24 hours a day and customers to transfer up to RM10,000 daily. Recipients will be able to receive money quickly after it is wired by the sender.

    “This new service reflects the same commitment we have as Western Union in providing consumers the best in cross-border financial services. Maybank customers are now able to enjoy fast, convenient and reliable cross-border remittance transfer services digitally around the world,” said Maybank Group Head, Community Financial Services, Datuk Lim Hong Tat.

    “We have revolutionised the money transfer processes for Maybank customers when comparing with current practice where they need to visit a Western Union Agent location in order to transfer money. Now, all they need to do is log in to the M2u App and select the Western Union service, and they are good to go,” added Lim.

    Lim added that new service will help the bank to grow its digital transactions business.

    Bassem Awada, Western Union Vice President for Key Initiatives, Middle East, Africa, Asia Pacific, Eastern Europe and CIS, said, “This mobile banking app not only grows our relationship with Maybank, but also strengthens our position in Malaysia’s cross-border money transfer market. The combination of Maybank’s strong presence in digital banking and Western Union’s growing digital network, geographic reach and ability to exchange in 130 currencies enables us to move money quickly and reliably.”

  • PPCBank set for more digital and retail growth in 2017

    PPCBank set for more digital and retail growth in 2017

    When new Korean shareholders boosted Phnom Penh Commercial Bank (PPCBank) with a $20 million capital increase this year, they had placed the commercial bank, then already among Cambodia’s largest, on a path primed for further growth and pioneering developments.

    As a result of Korean banking know-how and increased capital, PPCBank has been able to further its ambitions in the Cambodian market. Shin Chang Moo, President of PPCBank and an industry veteran with more than 30 years of finance experience in Korea and other countries, said, “The Korean financial industry has come a long way, from emerging to being developed. This gives us the honour of knowing what developments the Cambodian banking industry is facing now and in the future.”

    Understanding banking market evolutions, PPCBank, headed by Shin, has defined priorities for the bank’s business operations in Cambodia’s developing financial industry.To become a leading retail bank in Cambodia and Southeast Asia, PPCB will boost its retail business and focus on promoting digital banking and building up human resources, according to Shin.

    In a first step, the $20 million capital increase has enabled the bank to expand and diversify their loan portfolio with a strong focus on small and medium enterprises (SMEs) – the economic backbone of the economy, Shin said.

    To effectively reach retail customers with their new loan products, Shin said PPCBank was set to open more branches where clients were met with “strong consultations and more financing options through combined and customized products and services.”

    Other than increasing clientele and improving services for Cambodian customers face-to-face in new branches, PPCBank aims to put a strong focus on mobile and digital banking; adding convenience for customers through social network, providing top-up through mobile and transfers to non account holders.

    Lining out their digital and mobile payment strategy, the president explained PPCBank was promoting its “Open Banking System”.“To promote synergies and nationwide networks for the benefit of our customers we aim for collaborations with financial technology companies and utilize third party payment providers to expand banking services to even more people,” Shin explained, adding that he also plans to adapt to customers’ data analytics and integrate services with the third party to serve customers even better.

    Shin said speed, convenience and quality of service and attractive overseas remittance options, especially from Korea to Cambodia, were among other customer benefits.

    Looking to continue the path of success from 2016 into 2017, president Shin said that he and PPCBank’s staff are excited to further the mobile growth, offer even more products and services and improve business efficiency – all for the benefit of the customers.

    “The energy we put in won’t be to generate greater business profits but to give our banking service the love, confidence and trust from all customers we serve,” Shin said.

  • Bank Mandiri disburses Rp1.2 trillion for double-track railway

    Bank Mandiri disburses Rp1.2 trillion for double-track railway

    State-owned Bank Mandiri has disbursed Rp1.2 trillion to state-owned railway firm PT KAI for the development of a double-track railway in South Sumatra.

    Senior Executive Vice President of Bank Mandiri Alexandra Askandar in the signing of the agreement with KAI on Tuesday said the special transaction loan has a term of 10 years.

    “The development of a double-track railway in South Sumatra will accelerate the delivery of coal to the coal-fired power plant in Suralaya,” he noted.

    The double-track railway line links the mining area of Bukit Asam in Tanjungenim Baru to Tarahan, Lampung.

    The special loan transaction agreement was signed by Askandar and KAI Finance Director Didiek Hartantyo.

    Askandar said the disbursement of the loan was a form of support for the development of strategic infrastructure projects nationwide, one of which is the transport sector.

    By October 2016, Bank Mandiri had provided Rp37.1 trillion to the transport sector. This is the largest financial commitment in the infrastructure segment which totalled Rp96.9 trillion, or an increase of 53 percent on an annual basis.

    Besides the railway sector, Mandiri has also provided financing for power plants amounting to Rp32.1 trillion.

    Infrastructure financing is included in the corporate loan segment. Mandiri disbursed corporate loans until the third quarter of 2016, amounting to Rp212.4 trillion, up 14.3 percent year on year.

  • Nearly 70 million more shares listed on UpCoM

    Nearly 70 million more shares listed on UpCoM

    Unlisted Public Company Market (UPCoM) welcomed the listing of nearly 70 million shares of five companies on Monday, with share value registered for trading equal to VNĐ693.4 billion (US$31 million).

    The five companies are 36 Corporation (G36), Sài Gòn-Nghệ Tĩnh Bear Joint Stock Company (SB1), Hà Nội Water Manufacturing Joint Stock Company No 3 (NS3), Quảng Ngãi Water Supply Sewerage and Construction Joint Stock Company (QNW) and Bridge Joint Stock Company No 12-Cienco 1 (C12).

    Listings on UPCoM have witnessed a surge recently. On December 20, five companies were also listed on UPCoM, with total share value equal to VNĐ328.6 million.

    The market appeared to be more attractive to investors as many large companies had listed or planned to list on UPCoM, following the regulation that State-owned enterprises which were public companies must register for trading on UPCoM following equitisation, in case they did not meet requirements for listing on the official exchanges.

    UPCoM was founded in 2009 and currently more than 400 firms are listed on the market, with capitalisation value doubling the Hà Nội Stock Exchange.

    However, its trading value was modest at around one fourth of the northern bourse. More than 140 stocks did not see transactions conducted in the past one month, partly due to investors’ hesitancy over transparency.

  • Banks expand networks to attract more customers

    Banks expand networks to attract more customers

    Along with promotion programmes, banks have been expanding their networks in an aim to reach their annual targets.

    In recent months, more bank transaction offices and branches have opened to welcome both individuals and enterprises as customers.

    For instance, the An Bình Commercial Joint-Stock Bank has opened 11 branches and transaction offices in Đà Nẵng and the provinces of Lạng Sơn, Nghệ An, Bình Dương and Gia Lai.

    Bắc Á Bank, by the end of last quarter, had expanded to include 100 transaction offices in 20 province and cities. TP Bank also plans to open more offices in provinces and cities nationwide.

    A leader from An Bình was quoted as saying in Người Lao Động (The Labourer) newspaper that expansion was one of the most important steps in becoming a leading bank in the retail market.

    An expert told the newspaper that estimated growth of the national credit market this year would be 17-18 per cent against last year, if growth increases by 3 per cent per month in the last few months.

    He said this was a good time for banks to expand and introduce promotions to reach their year-end targets.

    As the banking system is too small to fully meet demand, expansion would improve service quality at banks, he added.

    The representative from An Bình Bank said there was strong demand for bank expansion, as this is a traditional channel to approach customers in all regions of the country.

    Morever, demand for lending at the end of a year is very high, prompting banks to expand to serve more customers.

    However, with the opening of more branches and transaction offices, risks can increase as customers worry that service quality and technology will be inadequate. Human resources and management skills may not be ensured as well.

    Experts, however, said there was no need for concern as regulations on controlling expansion in the banking sector, in which banks must show profits and have no more than a 3 per cent bad-debt ratio, would lower the risks.

    Bank expansion will help improve quality and competitiveness as well as increase each bank’s market share, according to experts.

  • President Jokowi wants Jakarta to become world sharia financial center

    President Jokowi wants Jakarta to become world sharia financial center

    President Joko Widodo (Jokowi) has said Jakarta should aim to become the global sharia financial center as Indonesia has the worlds largest Muslim population.

    “Ive ever conveyed (it) to chairman of the Financial Services Authority (OJK) that it is natural if we make Jakarta as the world sharia financial center,” Jokowi said, at a gathering of stakeholders related to the eight-year issuance of state sharia-based bonds at the state palace here on Friday.

    According to Jokowi, he had heard that an effort to make Jakarta as the world sharia financial center was being discussed by the OJK.

    “We have the potential and power, why we do not use (that), not only sharia financial services such as banks, insurance companies, I think many other things that can be developed, including sharia travel, and halal restaurants,” the president pointed out.

    The president stated that Indonesia should focus on its great market potential.

    “It will trigger economic growth in our country and eliminate issues that often appear such as rumors of 10 million to 20 million Chinese laborers coming into Indonesia, while actually it was only 21,000 of them,” he explained.

    On state sharia-based bonds for the national state budget, the president said that the essence of the budget is that it will be used for the welfare of the people, meaning to eradicate poverty, reduce unemployment, and social inequality.

    “Therefore, the government uses various ways to strengthen the state budget such as strengthening the tax base for instance through the tax amnesty, state sharia securities (SBSN) or the state bonds,” he disclosed.

    The president also declared that Indonesia should be proud that it is the issuer of the largest state bonds in US dollars.

    Up to November 2016, the issuance of SBSN in the international market reached US$10.15 billion with outstanding US$9.5 billion.

    “This means that we have huge potential and it plays an important role in the development and improvement of the welfare of the Indonesian people,” he cited.

    The president further said that Indonesia has a variety of sharia-based bonds (Sukuk), so there are many alternatives to invest.

    Jokowi also pointed out that in 2015 and 2016 as much as Rp20.8 trillion of Sukuk has been used to construct railway lines, including bridges that are beneficial for the people.

    “Then (the sukuk) is also to construct facilities of higher learning institutes and rehabilitate various buildings including those for preparation of Hajj Pilgrimage rituals” Jokowi added.

  • Bank Negara signs MoUs with Indonesian, Thai counterparts

    Bank Negara signs MoUs with Indonesian, Thai counterparts

    Bank Negara Malaysia, Bank Indonesia and the Bank of Thailand (BoT) signed two bilateral memoranda of understanding (MoUs) yesterday to facilitate the use of local currencies for settlements of trade and investments.

    A joint statement said Bank Negara and BOT, respectively, signed MoUs with Bank Indonesia on a framework of cooperation to promote the settlement of bilateral trade and direct investment in their local currencies.

    “Following the successful implementation of a similar arrangement between Bank Negara and BoT earlier this year, these bilateral arrangements will efficiently facilitate economic and financial activities among the three countries,” the statement said.

    “The enabling environment will benefit businesses by reducing transaction costs and enhancing efficiency of trade and investment settlements. Amid the current volatile global financial market conditions, this will offer businesses more options in choosing currencies for trade settlement.”

    The local currency settlement framework is expected to pave the way for wider usage of local currencies in the Asean Economic Community and spur further development of the regional foreign exchange and money markets, in support of wider economic and financial integration.

    The bilateral MoUs were signed by Bank Negara governor Datuk Muhammad Ibrahim, Bank Indonesia governor Agus D.W. Martowardojo, and BoT governor Veerathai Santiprabhob.

    Muhammad said in a separate statement that the arrangements signed yesterday were part of their continuous efforts to provide the institutional and policy framework to promote orderly financial market conditions and support the efficient management of financial risks.

    “In particular, these arrangements will enable exporters and importers in our countries to better manage foreign exchange risks by using local currencies to settle trade and investment activities,” he said.

    “In addition to improving cost efficiencies for businesses, the increased demand for local currency financial products will also contribute towards deepening the region’s financial markets.”

  • Big appetite for online platform to trade funds

    Big appetite for online platform to trade funds

    Most local and mainland retail investors will trade funds on an online platform if the Hong Kong Exchanges and Clearing sets up and operates one, according to a Hong Kong Investment Funds Association survey.

    The poll showed that 81 percent of mainlanders would like to use such a scheme – where funds can be bought and sold like stocks – and 51 percent of Hongkongers would opt for it.

    HKIFA surveyed 950 mainland and local retail investors in October. Some 70 percent of respondents were Hongkongers.

    It said setting up such a trading platform will enable fund managers to offer diversified wealth-management services to investors, most of whom are currently investing only in stocks.

    At the moment, about 70 to 80 percent of investments in funds are done through banks, which determine the service fees and commissions for their services.

    HKIFA chief executive Sally Wong Chi-ming said introducing competition via a new channel for selling funds will help bring down service fees, benefiting retail investors.

    She noted that though foreign experience suggests that having a new sales channel will not necessarily wean fund investors from banks, it’s the new investors who may be lured to try out funds.

    Wong said HKIFA has been in talks in the past two years with HKEx and local brokerages for the establishment of a fund-trading platform. Many markets in the region – including Taiwan, Korea, Thailand and Australia – have set up such a platform.

    She said talks with HKEx are focused on operations, with the bourse operator looking at prospects of setting up one.

    HKEx needs to update its fund- trading system, which is more diversified than the one used in trading standardized equity products, said Wong.

    HKIFA will also work with the Securities and Futures Commission, the local securities regulator, to formulate related regulations to help set up the platform.

    The SFC has to clarify numerous issues, including the online fund transaction process, the boundary between recommendation and solicitation, and the circumstances that will trigger suitability testing, said Wong.

    The SFC will soon issue a circular relating to suitability.

  • Local banks post 4.5pc pre-tax profit rise

    Local banks post 4.5pc pre-tax profit rise

    Local retail banks achieved a moderate 4.5 percent growth in pre-tax profit between January and September this year, the Hong Kong Monetary Authority said yesterday.

    Annualized net interest margin — which measures the difference between the interest income generated by retail banks and the amount of interest paid out to their lenders – stood at 1.32 percent during the period.

    The figure stayed broadly the same as last year, Hong Kong’s de facto central bank said.

    It noted though that the January to September figure marked a slight improvement from the 1.3 percent recorded between January and June this year.

    HKMA attributed profit growth of local banks mainly to an expansion of their income from foreign exchange and derivatives operations and in dividends received from subsidiaries.

    A decline in their operating expenses also boosted the banking industry, but a fall in fee and commission income may offset profit growth.

    As retail banks’ total deposits increased at a faster pace than total loans, the loan-to-deposit ratio of retail banks declined to 55.2 percent at the end of the third quarter from 57 percent a quarter earlier.

    Retail banks’ total loans increased by 1 percent during the period, with loans for use in Hong Kong rising by 1.2 percent and loans for use outside Hong Kong expanding by 0.2 percent.

    The authority said lending by local banks in the mainland expanded by 3.2 percent to a combined HK$4.55 trillion at the end of the third quarter from the previous quarter.

    The HKMA said the loan-to-deposit ratio of local banks declined to 55.2 percent from 57 percent and the setback is attributed to a faster increase of deposits compared to loans that were disbursed to customers.

    Meanwhile, the Hong Kong interbank offered rate, or the rate of interest charged on short-term loans, continued to rise for the 11th day yesterday. One-month HIBOR yesterday edged up to 0.68 percent from 0.675 percent a day earlier, while three-month HIBOR increased from 1 percent to 1.00964 percent, according to data from the Hong Kong Association of Banks.