Setbacks to trade integration
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Some Asean countries still lack global-standard payment
Asean countries could face challenges in intra-regional trade and investment as payment systems in some member countries are not yet ready for the integration due to come into full effect in 2015, said an executive at the Bank of Thailand.
Salinee Wangtal, assistant governor for the central bank’s Supervision Group, said the countries lacking well-established payment systems included Myanmar, Cambodia and Laos.
“The most difficult part of the financial and banking system is the payment system,” she said in a group interview recently.
Many investors inside and outside Asean are interested in entering resource-rich Myanmar, but no internationally recognised payment system has been established there yet.
About 96 per cent of foreign direct investment in Myanmar since 2007 has come from China including Hong Kong, South Korea, and Thailand, according to Myanmar’s central statistical office. More than three-quarters of the FDI is in the power and oil-and-gas sectors.
If an internationally accepted payment system is not set up, the banking system cannot be put in place, as all banking transactions and services require payments to be made.
“We support Thai commercial banks helping Myanmar establish a payment system in that country. Establishing such a system requires a colossal budget and needs government subsidy,” Salinee said.
Thai commercial banks may need to tap into Myanmar as their customers begin doing business there.
“If Thai commercial banks do not follow their customers into Myanmar, they will be missing the train,” Salinee said, noting that banks must also decide on which projects, based on commercial viability, they can provide support.
Recently, Siam Commercial Bank announced that it was setting up a representative office in Myanmar.
Thai commercial banks now have 47 branches and five representative offices in Asia. Most are based in Hong Kong and elsewhere in China.
“Going overseas requires patience, as it takes time to build brands for banking services. Thai commercial banks may join forces with local banks to assess local demand first,” Salinee said.
