MAS managing director Ravi Menon said at the Fintech Conference yesterday that under the pilot system, banks will deposit cash as collateral with the MAS in exchange for MAS-issued digital currency.
The banks can later redeem the digital currency for cash.
The banks can pay each other directly with this digital currency instead of first sending payment instructions through the MAS.
“This is an improvement over current large-value payment systems that are centrally operated,” Menon said. “It strengthens resilience and lowers costs.”
The project, he added, marks the first step in the MAS’s exploration of ways to harness the potential of central bank-issued digital currency.
It is also just one of several initiatives that the MAS has embarked on in its quest to create a smart financial centre in Singapore, Menon said at the conference, which is part of a week-long Singapore Fintech Festival.
For example, he also announced that the MAS was yesterday publishing its “regulatory sandbox” guidelines (software security mechanism) to encourage and enable experimentation of innovative technology to deliver financial products and services.

Guidelines
These guidelines incorporate feedback from the public and learning points from actual sandbox applications, and clarify the MAS’s expectations on the sandbox, while allowing for greater flexibility to firms looking to enter a sandbox.
Menon also announced the launch of a “finance-as-a-service: API PlayBook”, developed by the MAS and the Association of Banks in Singapore.
API, or application programming interface, is a set of codes for building software and applications.
A company can open up its API so that third-party developers can integrate them into new apps. For example, a start-up could make use of the Google Maps API to build a new app that has a map function within it.
The playbook includes common and useful APIs that financial institutions could expose and standardised as digital services, to foster collaboration within the financial sector and with other sectors.
It also includes technical and information security standards for financial institutions and broader financial technology, or fintech, ecosystem to securely share data and conduct transactions, as well as remove technical uncertainties that may hinder the adoption of APIs.
Menon also announced yesterday that the MAS will now allow insurers to offer online a full suite of life insurance products without advice.
Up until now, insurers were only allowed to offer online, without advice, simple term life and direct purchase policies with broadly standardised features.
The MAS will be issuing guidance on the safeguards to be put in place for online distribution of life insurance products.

Bala Chakravarthy, professor of strategy leadership and execution at IMD Southeast Asia, said disruptive technologies would have a significant impact on the product and service, media, entertainment, retail, financial, telecommunications, tourism, manufacturing, health, medical, and oil and gas industries.
Disruptive technologies will replace old technologies and spawn new industries and products.
In his keynote speech at the “Thailand: Moving with Disruptive Technologies” forum held by the Thammasat Economics Association, Chakravarthy said the evolution of technology would create great successful start-up companies called unicorns, those with more than US$1 billion (Bt35.5 billion) in market capitalisation.
There are more than 174 unicorn companies around the world. Of the top 25 unicorns, about 13 are in Asia, including eight in China, four in India and one in South Korea.
“For Thailand, the country needs to create an environment that is appropriate with the growth of local start-ups.
“They include the development of science and technology, the granting of free funding support and the creation of a market to cater to those start-up companies,” he said.
Varakorn Samakoses, a well-known economist and educator and rector of Dhurakij Pundit University, said disruptive technologies and innovation would produce significant changes not only in businesses’ circumstances, but also in people’s daily living and behaviour.
It is quite different from sustaining technologies, which have been changed gradually.
Examples of disruptive technologies are mobile Internet, automation knowledge work, Internet of Things, advanced robotics, the cloud, nearly autonomous vehicles, next-generation genomics and storage, 3D printing and renewable electricity sources.
“In the banking sector, for example, we can see many evolutions driven by disruptive technologies, such as the emerge of online and mobile banking and the unbundling of banks by financial technology providers, the expansion of ATM capabilities, peer-to-peer payments and other new payment technologies,” he said.
Thepchai Yong, editor-in-chief of Nation Multimedia Group (NMG), said digital technology had significantly affected the media industry, especially newspapers, which have been facing a gradual slide in both sales and advertising revenue.
“It is close to the day when newspapers will be displayed in museums. It is not expected that in the future our children will read newspapers any more,” he said.
The challenge for NMG is that it has launched its digital TV channels in the market among many alternative media.
“While traditional media have decreased their role, we are not able to raise enough revenue from digital media,” he said.
NMG has operated many diversified media, from printing to TV and radio. The big question is that in five years, will these businesses still exist?
“Do we still operate the newspaper business in the future when people do not read them? How we will adjust our people, who have worked with the company for 20-30 years and are familiar with those traditional media?” he said.
Local media operators have also been facing a big challenge, as people can access information very quickly. They need not wait for the mainstream media any more, Thepchai said.
“In the past, mainstream media, especially newspapers and television, were opinion leaders to the public. However, with the emergence of new media, power has been shifted to the hands of individuals and people, who become reporters themselves,” he said.
In social media, for instance, there is no screening for any wrong information that might arise.
“Mainstream media need to keep their role of credibility. They should be a trust pillar for society so that the people can access real information,” he said.
Kamonwan Wipulakorn, president of Erawan Group, said the hotel industry had been dealing with technologies, such as in online booking and accounting, for a long time to cater to individual travellers from around the world.
“Technologies help us to be more efficient. However, we need to adjust all the time to deal with any new technologies and cope with the changes in people’s behaviour,” she said.
For example, guests can now check in with their own mobile phones.
Disruptive digital technologies, such as social networks, have had a positive impact on hotel operators, she said. While in the past consumer profiles were limited to the 25-60-years age group, now the range is 18-80.
“What we need to do to deal with such disruptive technologies is to stay focused on our core competencies and find the right partners along the supply chain,” she said.
“Hotels is an experience business. The interaction with humans is still our basic requirement.”
Amy Kunrojpanya, director of public policy and communications for Asia-Pacific at Uber, said disruptive technologies would bring opportunities and benefits to companies.
“Disruptive technologies will allow us to see pictures in the future, and make them real for today,” she said.
“For Uber, which is an American worldwide online transportation network company, we have seen the cause of traffic congestion, as everyone needs to have and drive their own vehicle.
“And we deal with disruptive technologies to return time to individual passengers, giving them safety while travelling, and providing a chance for everybody to reach the source.
“They can build additional income,” she said.

The two partners plan to build a world-class PLA polymerisation plant with a capacity of 75,000 tonnes per year at Corbion’s site in Thailand that already has a lactide (PLA monomer) production unit that will become part of the joint venture.
Corbion will supply the lactic acid necessary for the production of the PLA and the lactide.
The new company will be based in the Netherlands and will launch operations in the first quarter of 2017, subject to regulatory approvals.
PLA is a bio-based, biodegradable polymer obtained by fermenting renewable resources (sugar or starch) to produce lactic acid.
PLA is mainly used for food packaging, disposable tableware and textiles, as well as in numerous other industries such as oil and gas, electronics, automotive and 3D printing.

STIEBEL ELTRON EYES ISAAN

Stiebel Eltron, a Thai manufacturer of water heaters, water filters and hand dryers, says it is stepping up marketing efforts in the Northeast.
Outside of Bangkok, the Northeast market has shown continuous growth over the past few years, which provides great confidence in investing in the region, it says.
“We have been very encouraged by our growth across the country, and the Northeast region is very important for Stiebel Eltron. We are focusing efforts on supporting this growth by improving our network of marketing and sales channels throughout the nation,” said Roland Hoehn, managing director of Stiebel Eltron Asia.
The company is also developing its product line to meet the needs of new Thai consumers and has recently introduced several new products at its Ayutthaya plant.

LOYALTY REWARD APP LAUNCHED

UTU, a cross-border loyalty and rewards platform based in Singapore, has chosen Thailand for the first launch of its mobile-phone application, with a projected roll-out to include other Asian countries and the UK, Europe and the US anticipated next year.
The mobile app is available on both iOS and Android operating systems.
The UTU mobile app lets members decide where and when they can earn, redeem, convert and accumulate loyalty points at home or abroad in real time. Earning points at a fashion boutique and redeeming them at a cafe is just one of the many ways members can benefit from UTU.
UTU members can combine loyalty points from different credit and debit cards and choose where to redeem their UTU Thai or Traveler Points as cash back.

It will make them more closely aligned with their international peers under similar solvency regimes.
The RBC 2 regime is being formulated in line with the terms of the ICP17 (insurance core principles) capital-adequacy standards.
“The more robust rules will increase confidence around the financial strength of the sector. But several challenges lie ahead, in particular for medium and small players that will need to cope with potentially more stringent capital requirements,” Jeffrey Liew, head of Fitch’s Asia-Pacific insurance ratings group, said at an industry briefing organised by Fitch Ratings (Thailand) in Bangkok.
Liew also discussed Fitch’s insurance rating methodology and Prism factor-based model used in assessing the financial strength of life and non-life insurers across the Asia-Pacific region.
Underwriting, investment and capital assessments are among the many fundamental building blocks of the agency’s approach to rating the insurance sector’s financial strength.
Chuchatr Pramoolpol, deputy secretary-general of Thailand’s Insurance Commission, outlined the outlook for the country’s regulatory framework and the changes in investment and solvency rules.
Julien Godart, senior manager and Asean technology lead for Accenture Consulting Singapore, discussed the use of big data and analytics for the insurance industry to tackle fraud and improve regulatory compliance.
More than 80 participants from the regulatory, insurance and financial sectors attended the briefing.

Bangjongjitt Angsusingh, director-general of the Commerce Ministry’s Business Development Department, yesterday witnessed a signing ceremony between Hevta and Ardeco, an advisory company for engineering and architecture in Laos.
She said the franchise agreement reflected the fact that many Thai firms have competency to do business overseas, particularly via franchise systems, as they save costs and are low-risk.
Hevta has been doing business in Thailand for 20 years. It believes franchising should help increase its business growth strongly. So far, Hevta has 12 branches in Thailand.
Wantha Piemphongsuk, managing director of Hevta, said the company also planned to do business with Cambodian and Myanmar firms through franchising as it was convenient and saved cost. Hevta expects to sign a contract with a Cambodian company early next year, and is looking for a partner in Myanmar.
Moreover, Hevta plans to expand into other Asian countries next year, such as Indonesia and India.
Hevta has foreseen greater opportunities to expand in Laos after Asean integration as people there earn higher incomes, while demand for construction is on the rise, Wantha said.

Akkapol Sorasuchart, chairman of the group known as the Subcommittee for MICE and Public Sector Cooperation, said the group was working to establish the new committee to enhance competitiveness and facilitate the MICE industry.
Currently, the Thailand Convention and Exhibition Bureau is the key body driving the MICE industry. However, it seemed that TCEB was unable to deal with some issues, particularly coordinating with other public and private organisations.
The government earlier formed the Public and Private Cooperation Scheme or Pracha Rath and used MICE as one of the key sectors to rebuild the economy.
Akkapol plans to propose that the new committee is approved by TCEB’s board of directors on November 28.
The group hopes the new organisation will help pass practical suggestions regarding MICE development to enhance competitiveness.
“If TCEB’s board of directors agrees with the proposal, the new committee will be able to propose action plans or suggestions to the cabinet for approval directly,” he said.
Akkapol said the new committee would consist of more representatives from the private sector to expand cooperation in the provinces.
Major MICE operators and related businesses such as the Queen Sirikit National Convention Centre, Impact Muang Thong Thani, Bangkok International Trade and Exhibition Centre, Asia Hotel, Jet International Travel, and Rose Garden have expressed interest in being part of the new committee.
These major MICE and hospitality operators have already started working on some projects over the past few months resolve problems and facilitate MICE business.

The move follows a complaint submitted by a group of consumers that the shortage had caused inconvenience to users, NBTC secretary-general Takorn Tantasith said early this week.
The involved parties are AIS, CP All – the operator of 7-Eleven – and True Corp.
CP All is part of the Charoen Pokphand group, which is the parent of True, while the latter is a major rival of AIS.
AIS chief executive officer Somchai Lertsutiwong said his company and CP All were still negotiating on the possible new revenue rate that AIS would pay to CP All for selling its refill cards at 7-Eleven convenience stores.
However, if in the end CP All still insisted that it wanted a higher rate than what AIS had in mind, the cellular operator might consider stopping the sale of its cards at 7-Elevens, he said.
True CEO Suphachai Chearavanont said True did not have a role to play as it was a matter for CP All to decide.
CP All stopped ordering the AIS prepaid cards early last month, pending the completion of renegotiations for a new revenue rate that AIS would pay the company for selling One-2-Call refill cards at 7-Eleven outlets.
CP All has reportedly asked AIS to pay 7 per cent of its card-sales revenue, which is the same rate as True pays to CP All for its refill-card sales.
AIS currently pays CP All 5 per cent of the revenue from its card sales at 7-Eleven stores.
Somchai said the sales of AIS refill cards at the 7-Eleven chain accounted for about 18 per cent of AIS’s total sales of such cards via all channels.
According to AIS, annual refill-card sales amount to around Bt100 billion.
The problem has, however, had little impact on AIS customers, Somchai said, adding, “We’ve kept expanding the card-sales channels to serve our users better.”
There are around 9,000 7-Eleven stores nationwide, but AIS customers can also pick up One-2-Call refill cards at outlets such as AIS customer-service shops, Telewiz outlets, Family Mart stores, post offices and B2S bookstores around the country.
These various sales channels add up to more 10,000 outlets, Somchai said.
Mobile phones can also be topped up at the 40,000 automated teller machines of 11 banks nationwide and via AIS’s mobile-banking service, mPay.

The US stock markets experienced turmoil a week before the election. The volatility peaked during the final hours of the election, with futures markets plunging steeply as Trump looked as he was headed to victory.
As the dust settled and the election results were unveiled, stock markets climbed at day’s end and computer screens were much greener than in previous days.
With the Republican Party sweeping both houses of Congress, it is clear that Trump’s tax cuts and fiscal policies will be enacted. Asset Plus Fund Management is positive about the US equity market. Over the long term, it will likely outperform because of the tax-cut policy and the relatively weakened dollar against the yen and euro, which will help boost corporate profit and earnings per share.
Dissecting Trump’s proposed policies, it is seems clear that the construction and logistics sectors will benefit from Trump’s infrastructure spending plan to improve roads, railways, airports and ports. Energy sectors such as petroleum, coal, exploration and oil rigs will benefit from Trump’s ruthless foreign policy targeting the Middle East, along with his stance on the domestic fossil-fuel industry.
Moreover, the healthcare sector will most likely regain its attractiveness after being pressured during Hillary Clinton’s election campaign, during which she promised to address unjustified drug pricing. In addition, there is a possibility that Obamacare could be repealed and replaced by a health-savings-account system, which would put the healthcare sector back on the map.
Most important, the financial sector will outperform when consumption and inflation yield curves get steeper, thus boosting the profitability of banks.
Furthermore, Trump has also promised to dismantle the Dodd-Frank Act, which regulates banks that are deemed too big to fail.
Investors could take this opportunity to invest in promising US stocks with the assurance of long-term expected returns. Those who do not have direct access to US equities or lack expertise in stock selection and timing tactics may approach professionally managed FIF (foreign investment fund) mutual funds with exposure in the US market.
However, in addition to corporate tax, Trump is in favour of lowering individual income tax. The tax savings will mostly be spent on consumption, thus pushing inflation higher. Therefore, the US economy will grow; its inflation yield curve will get steeper and cause a negative real interest rate.
Correspondingly, gold will be a good alternative asset when the interest earnings from financial products are perceived as negative relative to inflation. In the short term, gold continues to be a safe haven in the midst of the huge market volatility people are experiencing right now.
In any case, many other policies of the new president, such as on trade, are waiting for experts to follow up on closely. We also need to observe the widening fiscal deficit as a result of tax cuts and excessive government spending, while public debt is at its ceiling and private debt seems to be the only way to finance projects. This could result in rising borrowing costs in the future.

Investment contains risk. Everyone should thoroughly study prospectuses, product features, return conditions and risk before investing.
Contributed by Asset Plus Fund Management