Mizuho

Banking & Cash Management Challenges in South East Asia

Report date: 
10 Jul 2025

Commentary

ASEAN (The Association of South East Asian Nations) has a population of over 600 million. This is more than the EU (450m) or the United States (340m). Its ten member states provide an impressive level of diversity, for history and culture, but also in politics, economic development and prosperity. The broad range of rules and approaches make it a challenge to manage treasury operations. But the population, economic dynamism and key role in global supply chains make it a crucial player in world trade.

The pattern on this call is not a surprise: Singapore is the most advanced and open economy in ASEAN. For most companies, it is part of their international cash pooling and sweeping mechanisms, along with Hong Kong, Australia and, to some extent, China. The Philippines, Indonesia, Malaysia and Thailand are open economies, but they generally require FX to be executed onshore, and cash pooling is usually via intercompany loans: automated sweeping is not allowed. Vietnam remains more difficult. Myanmar, Cambodia and Laos, continue to be highly regulated and short of hard currency. 

Despite their FX restrictions, several countries have incentives for MNCs to set up Regional Treasury Centres (RTCs). These are usually able to transact outside the exchange controls – usually excluding domestic transactions.

Cash pooling: Singapore is the only country in ASEAN where cross-border cash pooling does not present any issues. Regional cash pools are usually based there or in Hong Kong. Most of the other countries allow domestic pooling and sweeping, though experiences vary. They typically do not allow automated cross border pooling, which is instead achieved by making intercompany loans, usually manually, and subject to various approvals. 

Exchange controls: most ASEAN currencies are convertible, at least for goods imports. However, in many cases (again, excluding Singapore), the FX trade has to be executed onshore, with the USD or EUR then transferred outside the country. These trades are usually done from an offshore location. Thai baht can be paid out of Thailand, but the regulation is not ...

 

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Topics covered in this report: 
ASEAN, Bank Relationships, Cash Pooling - cross border, Cash Pooling - domestic, Trapped cash, KYC, Cash Repatriation, FX, Regional Treasury Centre, Regulatory relationships
Service providers discussed in this report: 
JP Morgan, DBS, Standard Chartered, Deutsche Bank, Citi, HSBC, Bank Ayudhya (MUFG), MUFG, Mizuho, Bank of America, Bank of PhilippineIslands, Bank Negara Malaysia, Bangkok Bank, Kyriba, Starfish Digital

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Managing Bank Relationships in Japan

Report date: 
18 Mar 2024

Commentary

With complex countries, we usually think of emerging markets. Japan is one of the most advanced, largest and affluent economies in the world – but it is also a very complex place for foreign companies to operate in.

Usually, the complexity for treasurers comes from regulation. In Japan, this is not the case: the yen is freely traded in one of the deepest markets; cash can be pooled and swept both within the country and across borders; one participant does POBO there; Japanese banks willingly report transactions and balances by MT 940; it has deep and open capital markets; and four of the world’s twenty largest banks by assets are Japanese. Instead, the complexity comes from a very strong culture, which is often not well understood by non Japanese, and which leads to a different way of doing business.

This call, which was well attended and quite animated, went into the challenges foreign treasurers face in this environment. Peers raised the following:

  • High bank fees: Japanese banks are reluctant to negotiate these down
  • Japanese banks are not used to RFPs for cash management – this is not how the domestic market operates. Many large Japanese companies have strong historical relationships with their banks, which often involve minority shareholdings.
  • While MT 940s are not an issue, one participant faced significant issues getting their Japanese bank to implement even a simple host to host communication
  • Communications challenges: it can be difficult to find Japanese employees who speak good English – very few bankers in domestic operations speak it.
  • The need to carefully manage business meetings: these are usually more formal than in many other cultures: deference to senior personnel is required
  • Difficulty managing onshore operations from a remote location: the local online banking tools are nearly all Japanese language only
  • The language issue is further complicated by the katakana character set
  • Resistance of local teams to change, especially if it involves working with foreign banks
  • Complexity in managing relationships and wallet share with Japanese banks, who are often key global providers of credit and FX
  • The use of company chops instead of signatures, and the related control issues
  • The requirement to use local bank accounts for certain types of tax payments
  • Security and confidentiality in Japanese online payment systems is not best in class – one participant had an issue with a single person (not in HR) making all payroll payments
  • Repatriating cash via dividends and intercompany loans is not a problem, but it brings the usual complications: the need for retained earnings (one participant’s business receives advance payments), withholding tax and currency hedging cost. 

How to handle these problems?

  • One peer did an RFP a few years ago, and awarded

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Topics covered in this report: 
Bank Relationships, Intercompany loans, Dividends, POBO/ROBO, RFPs, Cash Pooling - cross border, Cash Pooling - domestic
Service providers discussed in this report: 
Bank of America, JP Morgan, MUFG, Mizuho, SMBC, Citi, HSBC, Standard Chartered, Deutsche Bank

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