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A High Level Panel on East Asian Financial Markets
Practical Measures to further develop the Financial Markets
– the corporate perspective
Peter Wong FCT
Convenor, Hong Kong Association of Corporate Treasurers
Board Member, International Group of Treasury Associations
Presented at World Bank/HKMA Joint Conference East Asian Financial Markets – the Next Frontier
at the Auditorium of the Hong Kong Monetary Authority, Hong Kong, June 22 – 23, 2006.
The World Bank
Be vigilant to financial risks
• Too much money chasing too few goods, generated by capital inflows
from within as well as outside the region
– Implication (to corporate treasurers): Asia interest rates may one day
converge to US/Europe rates. Low spread (perceived risk premium and
supply/demand of short term funds) may not be sustainable. Benefit in
issuing fixed rate bonds or swapping floating into fixed to maintain a
flexible financing structure. Low interest costs may not be a good long
term business assumption.
• High savings, capital inflow and trade (visible and invisible) surplus
create appreciation pressure to Asian currencies and challenges to
central bankers
– Implication: Currency volatility increases, aggravated by portfolio money
flow. Export competitiveness and cost dynamics of domestic factors of
production (land, labour, service) will change
• Lack of hedging products can introduce currency and liquidity risks
for corporate. We support public sector in developing the bond and
currency market like the use of repo and more benchmark issuance
Invest for the future
• Asia has a total of foreign exchange reserves of over US$2.5 trillion.
Last year East Asia and Pacific received a net private capital flows of
US$138 billion versus US$6.5 billion in 1998.
– Promote the development of pension market (like deferred tax incentive) to
address the aging future and allow more private sector participation
– More privatisation to channel short term funds into long term investments
• Build up the talent pool
– Training/cost tax incentive or education grant to approved national and
internationally recognized professional qualifications (like ACT, AFP, TMA)
• Asia has made good progress in rehabilitating the banking sector and
upgrading financial infrastructure. However there are rooms for
improvement.
– Domestic banks, particularly some state-owned, have to improve their
system and service capability to reduce operational risk, be more financially
transparent and adopt a responsive governance structure
What make it full of challenges to the private sector
(cash & liquidity management related)
 Different financial market systems and infrastructures in different
Asian countries
 How to make bulk payments across these countries efficiently?
 Multiple in-country clearing systems
 Is ACH payment effective as expected? RTGS system exists in
every country?
 Variation of payment culture - cash, cheque, paper-based and
electronic
 Compliance with different local regulations - central bank reporting,
FX reporting, withholding & reporting of tax etc.
What can be done?
The World Bank
Practical measures to improve the level of
sophistication of cash & liquidity management in the
region
 Development of standardized clearing system in-country for bulk
clearing, payment and receipt
 Migration to RTGS system to facilitate PvP and PvD settlement
locally and across the region
 Less regulatory restriction on techniques to improve cash & liquidity
management such as use of overdraft, pooling and netting
 Receptive to new cash management ideas such as using alternative
channels for non-deposit taking cash receipt service to be provided by
post offices, convenience stores etc. eventually allow Straight Through
Processing in automating receivables data capture and cash
concentration
The World Bank
Hong Kong Association of
Corporate Treasurers
Selected list of HKACT members
• AIG, Astec, Cathay Pacific, CLP Holdings,
Dragonair, Hongkong Electric, Hongkong
Land, Hongkong and China Gas, Hongkong
and Shanghai Hotels Group, Hong Kong
Jockey Club, Hong Kong Mortgage
Corporation, Hutchison Whampoa, Hysan
Development, Jardine Matheson, KCRC,
McKinsey, MTRC, Orient Overseas, Philips,
Sun Hung Kai Properties, Swire Pacific
International Group of Treasury Associations
• In recognising the globalisation of the Treasury
profession, the IGTA was formed to enhance activities of
National Treasury Associations (NTAs)
• Over 20 member NTAs held annual conference in rotation
in Americas, Europe and Asia. Plan for Hong Kong in
2007.
• HKACT takes an active role, a member of IGTA Board
– Promote pan-Asia private sector cooperation: the
Asia Pacific Treasurers Forum initiative
– Form new NTA: the China Treasury Forum initiative 
IACT China
– Participate in private sector-public
sector partnership initiative
e.g. TMA chaired by the HKMA
2005 IGTA Conference hosted by AFP, USA
Asia Pacific Treasurers Forum
to create a pan-Asia network of senior treasurers
and CFOs to share treasury best practice
• CP Group, Procter & Gamble Asia, Jabil Circuit, Agilent,
ABB Treasury Center (Asia Pacific), Wing Tai Holdings,
Dow Chemical Treasury, Sony Global Treasury Services,
Royal Brunei Airlines, Genting International, HewlettPackard Far East, Ikea Asia Pacific, McKinsey*, PSA
Corporation, Lenovo, Singapore Technologies Engineering
Ltd., Jardine Matheson Ltd.*, Philippine Airlines, Sime
Darby Berhad, Hutchison Whampoa Ltd.*, Starhub Pte
Ltd., CLP*, MobileOne, Astra International, Jardine Cycle
and Carriage, Singapore Airlines (*HKACT members)
• Future meetings in rotation in different Asian cities. Next
meeting scheduled on 18th September in Singapore, 6th
November in Shanghai, 20th November in New Dehli…
Asia Pacific Treasurers Forum
co-founded by HKACT and ACT(S) in May 2006
Senior advisors to ATF include Asia Development Bank,
American Chamber of Commerce, international rating
agencies, domestic and international banks
Kickoff Meeting in Singapore on the 8th of May 2006
International Association of CFOs
and Corporate Treasurers (China)
•Registered in Hong
Kong in April 2006
•Evolved from the
CHINA TREASURY
FORUM initiative
started by HKACT
•Launching events
•Hong Kong 5th July
•Beijing 22nd Sept.
•Shanghai 6th Nov.
Corporate Treasury Roundtables
Hong Kong Road Show
co-organizers
Invest Hong Kong, HKSAR Government
Hong Kong Trade Development Council
Private Sector and Public Sector Partnership
In developing regional and local financial markets:
Regulator
Bank
Corporate