The backers of the digital currency, called ETA Coin, say it will be the first in Thailand focused on expanding the funding sources for local-level enterprises.

ETA president president Satapol Channarong said that, with the initial capitalisation set at Bt500 million by the middle of this year, the ETA Coin initiative would help small and medium-sized enterprises (SMEs) and community enterprises to gain access to new sources of funding for their business operations, especially for expansion plans.

The association recently bought ETA Coins through an initial coin offering (ICO) for its members. Under a project known as ICO BC Warehouse, investors will gain ownership rights to income from planned ICOs.

An ICO involves an enterprise raising funds by offering investors tokens in return for their cash or other kinds of cryptocurrency.

Satapol said that about 5,000 shops are expected to join the ETA Coin initiative over the next year. By doing so, they will gain connections with investors in member countries of the Asean Economic Community (AEC), such as Malaysia and Cambodia, as a means of spurring the global use of ETA Coin and supporting the tourism industry.

In less than a month, the price of ETA Coin has soared by 20 times from 0.001 coin per US dollar to 0.21 coin, Satapol said.

Holders of ETA Coins can exchange the coins through a trading website or the digital wallet of Waves’ Decentralised Exchange and other exchanges dealing in digital currencies, Satapol said.

Authorised shops can accept payment by ETA Coin. Other interested shops or non-profit organisations with an operating record of at least one year and a solid foundation in technology, as well as solid accounting procedures and income, can contact ETA for inspection and authorisation.

Any proposed state regulations for digital currencies would bring clarity, rather than limitations, and the association is ready to act if such regulations are issued, Satapol said.

The ETA is teaming up with the public and private sectors to hold Thailand’s first digital currency event, Crypto Expo Thailand 2018, in Bangkok on April 30.

Official numbers total approximately US$518 billion (Bt16.17 trillion) in non-performing loans (NPLs) is on the balance sheets of Asian banks. However, unofficial figures suggest this is likely to be much higher. With the likely impact of further unofficial distress remaining within the system, NPLs are rising up the regional agenda, according to new analysis from Deloitte.

Andrew Grimmett, restructuring services leader at Deloitte Southeast Asia, said that foreign buyers have become increasingly active in Asia Pacific, particularly considering that from 2008 until last year, the market had seen very little activity from foreign buyers. A key regional block, Southeast Asia is showing some signs of NPL growth. However, each country presents a different degree of market maturity and challenges for stakeholders, especially legal regimes and servicing.

In Singapore, the banking system is resilient and banks have strong liquidity and capital buffers, but they still need to remain alert. The banking system’s ratio of NPLs was 2 per cent at the beginning of 2017, up from 1.6 per cent the previous year and following a decade of low NPL ratios. Exposure to slowing regional economies and to the energy industry have contributed to the modest rise in NPLs, although most bank exposures are in regional economies other than Singapore, Andrew said.

As a result of increasing NPLs across Asia Pacific region, financial institutions are beginning to explore options to improve their NPL volumes and capital ratios alongside enhanced portfolio management, given the upcoming implementation of IFRS 9 standards for financial instruments. Having seen the success of European banks in managing to dispose of and de-leverage their non-performing and non-core assets over the past decade, Asian banks are beginning to assess whether this is a route they too could take.

The ongoing implementation of regulatory, accounting and other initiatives developed in response to the global financial crisis will also contribute to an increase in Asian NPL stock, with the introduction of IFRS 9 likely to play a leading role. In Europe, supervisors are relentlessly focusing on the quality of IFRS 9 implementation and on NPL stock resolution. Much depends on whether the Asian regulators will follow a similarly robust approach in the future.

With the exception of some countries, the legal environment that enables asset recovery in Asia remains challenging. It is often characterised by delay, uncertainty and excessive cost. In several jurisdictions, such as Malaysia, India and Vietnam, reform appears to be imminent. All of this is positive for the ongoing development of individual NPL markets within the region.

The last few years have seen loan sale activity primarily concentrated around Europe, said Andrew Orr, global transactions leader of portfolio lead advisory services at Deloitte UK.

While the NPL market in Europe will continue to be looking forward to 2018 and beyond, the company is likely to see an influx of investors – and investment – pouring into Asia, he said.

A number of international investors have attempted to benefit from first-mover advantage, acquiring small portfolios across the region in an attempt to familiarise themselves with legal and servicing frameworks.

This has not only enabled investors to enhance their understanding of local markets, but also set up business to allow for the acquisition of further, bigger portfolios across the region as the market develops.

The Thai government joined this trend when it announced in 2015 that it would implement new legislation that controls the export of good related to WMD including dual-use items (DUIs); goods that have a civilian purpose but which can also be used for military ends. This legislation, in the form of the Trade Controls on WMD Act (TCWMD Act), is nearly completed and is expected to come into force beginning of 2019.

What to watch out for in the new legislation?

Goods which the Thai government considers to be DUIs will be subject to strict controls and are required to go through an approval procedure prior to being exported. Specifically, goods classified under the DUI list (List I) would require an export license, while goods which fall under the designated HS code list (List II) would need to be self-certified that they are not a dual-use item.

The exporter will be required to request for a licence or self-certify every shipment. Nonetheless, this Act also provide an opportunity for the exporter who operate the Internal Compliance Programme (ICP), a programme for self-screening and monitoring trade transactions, to apply for an annual export license. During the annual license period, an annual license holder will not be required to request for a licence for every shipment. The annual licence’s application period is expected to begin in September 2018.

For the purpose of DUI classification, an exporter will need to provide details of goods by responding to questionnaires on the e-TCWMD system operated by the Ministry of Commerce. This system will classify whether the goods require an export license, self-certification or such goods are non-DUI items which are not on any of the aforementioned lists. Thus, the details of goods, including the HS code and CAS No. (for chemical products), will play a significant part in classification of dual-use items process. Inputting wrong information may lead to incorrect classification and the consequent risk of non-compliance with the regulations.

The Department of Foreign Trade (DFT) recently announced that they will issue another controlled list that will cover all weapons controlled under the TCWMD Act, the Military list (ML List).

In addition to the mentioned three lists and similar to the European and US regimes, Thailand will also impose catch-all controls. Even though goods destined for export are not mentioned on any of the three lists, they can still be subject to control, if authorities suspect that they will be used in making WMD or for terrorism purposes. The catch-all control obliges exporters to always perform sufficient due diligence on its exports concerning the final use of the goods, the destination, and the recipient. As an exporter, you are required to prove that the goods will not be used for any of the suspected reasons.

The Act will apply to exports, re-exports of goods, as well as transit, transshipments, and transfer of technology. Offshore brokers will also be subject to the obligations if the goods are classified under ML List.

What are the consequences of non-compliance?

In case of non-compliance with the Act, authorities can impose both criminal charges and civil penalties on the exporter. Exporting goods without the proper DUI licence may lead to imprisonment of up to 30 years and fines to a total of Bt30 million or both in case where the goods end up in WMD which cause death. In a worst case scenario for companies, the Thai government has the authority to decide to suspend all export activities of a company.

Contributed by STUART SIMONS, Tax Partner and SUJITRA SUKPANICH, Director, Tax & Legal Services, Deloitte Thailand.

email: ssimons@deloitte.com and ssukpanich@deloitte.com.

He said the Cabinet also signed off on a budget to establish a Fintech Fund worth Bt650 million for the 2018-19 fiscal year and Bt513 million for the years from 2020 to 2022.

Also gaining the green light was a measure to support the banking system by facilitating mergers and acquisitions, especially through tax incentives.

Smartphone banking is outpacing all other types of digital growth, highlighting the challenges for traditional banks in the region and the opportunities for their online-only counterparts, according to the latest survey entitled ‘Asia’s digital Banking race: Giving customers what they want” by McKinsey yesterday.

Key findings from the survey, which covers 15 Asian markets, including Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, Myanmar, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam.

The survey also focus on the doubling of digital banking penetration in Emerging Asia, growing 1.5 to 3 times since the last survey in 2014.

Smartphone banking penetration has grown at a faster pace than overall digital banking, jumping 2- to 4-fold in many Emerging Asian countries

Nearly half of Emerging Asian respondents not using digital banking today are likely to do so in future, meaning digital banking penetration here is expected to accelerate significantly.

The percentage of digitally active customers has grown significantly since 2014, doubling in Emerging Asia and growing 1.2x in Developed Asia.

Approximately 55 to 80 per cent of customers in Asia would consider opening an account with a branchless, digital-only bank 35 per cent to 50 per cent of consumers change their buying decision based on evaluation done on digital channels.

Vinayak HV, Partner at McKinsey & Company and Head of the Asia Pacific Digital Banking Practice, said for banks, these changes represent both a challenge and an opportunity. What’s clear is that they cannot rely on their existing business models and need to consciously invest to change their businesses in line with rapid changes in consumer sentiment and behaviour. Many are already doing this or looking to both protect their existing share and capture newer opportunities. Meanwhile, shifts in consumer behavior is also creating opportunities for newer attackers both platform players and emerging fintechs.”

Banking loyalty varies significantly between Developed and Emerging Asia: while around 70 percent of Emerging Asia consumers would recommend their bank to a friend or colleague, only around 40 percent of consumers would do so in Developed Asia.

For banks, these changes represent both a challenge and an opportunity. What’s clear is that they cannot rely on their existing business models and need to consciously invest to change their businesses in line with consumer sentiment and behaviour. Many are already doing this or looking to partner with Fintech businesses at the risk of being left behind.

At the heart of this there is also the challenge of education. While many people are fully onboard with digital financial products, education still lacks in many respects. There is some resistance to certain types of products, and in some regions the regulatory landscape can pose a challenge for how services are delivered.

Meanwhile, yesterday Moody’s Investors Service also announces the latest reported that Blockchain technology has the potential to significantly reduce the costs and time involved in cross-border banking transactions, increasing banks’ efficiency but putting pressure on their fees and commissions.

Moody’s report focuses on two specific areas in order to assess the potential disruption that Blockchain could cause: cross-border transactions and fee and commission income. The report notes that these are just two of the channels through which the technology is likely to impact bank operations.

“Blockchain has the potential to substantially change how a wide range of financial services are executed,” said Colin Ellis, Moody’s Managing Director — Credit Strategy and the report’s co-author. “Banks could benefit significantly from the development and implementation of blockchain technologies in terms of enhanced efficiency, cost savings and risk reduction.

“But the adoption of these technologies will also limit processing fees, commissions and gains on foreign exchange transactions, which will pressure revenue.”

Swiss banks would be most exposed to reductions in fees and commission, with 50 per cent of their revenue coming from that source. Italian, Canadian, and Israeli banks follow at around 35 per cent. Meanwhile, banks in Asia Pacific, as well as some smaller European periphery countries, are relatively less prone to relying on fees and commissions in generating total revenue.

SCB Securities Co Ltd (SCBS) maintains a positive perspective on the benchmark index, holding to an earlier projection for 1,900 points before the end of the year, Its research cites a boost from state and private-sector investment, the spending stimulus from the mid-year budget, expected loan growth, and improved asset quality in the banking sector, the company’s senior vice president, investment strategy department, research group, Isara Ordeedolchet, said yesterday.

He said the performance of the overall global economy ended on a positive note in 2017, with a forecast for growth of 3.7 per cent year on year. Isara said the global economy was likely to sustain the momentum in 2018.

Still, the investment atmosphere would be affected by a sooner-than-expected rise in interest rates and any further slide towards a global trade war.

The economy grew 3.9 per cent in 2017 and is forecast to expand further in 2018, bolstered by a recovery in private investment and continued robust consumption from the previous year. Based on an economic forecast by the International Monetary Fund (IMF), the global economy is projected to grow 3.9 per cent this year, driven by an upward revision of the United States economic forecast. Under this outlook, Thailand’s exports will keep growing.

As for investment strategy for the second quarter of 2018, Isara said that the SET Index rose around 4 per cent from early this year to March, driven by a stock rally in the energy and petrochemical sectors. However, he sees the index moving sideways in the quarter.

Globlex Securities (GBS) expects the SET Index to move in a range of 1,745 to 1,790 points, with support likely from an improvement in first-quarter earnings from US listed companies and a rise in global crude prices to near three-year highs, Wilasinee Boonmasungsong, research director at GBS, said.

She said she expected the benchmark index would also gain a lift from the increased US corporate earnings to flow from tax reform in that country and China’s satisfactory economic figures for the first quarter. Wilasinee, too, is encouraged by the higher oil prices.

The brokerage advises that people should buy gold when the price weakens to US$1,300 to US$1,315 an ounce and sell when the metal is trading from $1,345 to $1,360.

Yesterday, SET Index closed 1,755.53 by dropped 11.64 points from Friday with trade value Bt54.73 billion.

The baht held steady at 31.20 to the US dollar when the morning trade session started yesterday, apparently reflected eased concerns over a widening in the Syrian war and the extent of US trade protection, Jitipol Puksamatanan, a strategist at Krungthai Bank, said yesterday.

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Markets are expected to pay higher attention on listed companies’ earnings than the political issues, he said.

In the overall, markets will likely risk on more and Asian currencies could appreciate if yuan appreciates on concerns over political issues and currency distortion, he said.