Fintech can improve the financial industry

Korn Chatikavanij, former finance minister, said he truly believed that start-ups, especially those in the area of financial technology, are the revolution that can push a country like Thailand forward.

Thailand has millions of people with bank accounts but no access to formal banking services.

Fintech start-ups can improve the quality of access and reduce the cost of financial services.

Thailand’s basic telecommunication infrastructure and smartphone penetration are pretty |good. Thailand’s PromptPay will digitise money but fin-tech is one step forward to monetise data, which is creating value-added from data.

Not only fintech, other areas of start-ups can also help improve the quality of real sector businesses. For example, agriculture-tech can help farmers to use better technologies to unitise the existing resources that have to be much more productive and efficient.

“About 40 per cent of the population is in agriculture. Those 40 per cent actually make about 8 per cent of the country’s GDP. That is clearly unproductive.

“Start-ups can come to |help them improve productivity through the use of technology,” he said.

Awareness, collaboration and incentives are key to driving a start-up nation

Suphachai Chearavanont, president and chief executive officer of True Corporation, said that if Thailand makes the ecosystem correctly and incentivises the talents around the region, then Thailand can become a start-up nation.

Thailand can get a head start. Thais can work with foreigners, expatriates or young entrepreneurs around the world.

“We can catch up really fast, because the brainpower is the same. It’s the learning curve.

“How you force the cluster/community of start-ups that is big enough to collaborate and interact to accelerate the learning curve in each area of technology?

“We can leverage on the strengths we have and utilise them,” he said.

To evolve, the first thing that needs to be created is an awareness-like session like this panel.

For the country to move forward, it needs incentives to drive the ecosystem. Venture capital, seed funds, accelerator programmed – all of these have to be put in place.

Also, government incentives are quite important to attract all these funds, not only from Thai corporations or Thai funds but also from around the world.

“Thailand is the melting pot for the region. It is an open culture. It is the place that attracts people from around the world.

“That is the key thing for a start-up nation or to go to the start-up nation,” he said.

Government policy is important

Barak Sharabi, head of the Economic and Trade Mission at the Israeli Embassy, said Thailand had a lot of potential to become a start-up nation. It just needs support to grow faster.

Israel and Thailand have almost the same GDP. Thailand should take certain things from Israel in terms of innovative capability.

Israel has the highest per capita density of start-ups in the world. It has a very good research and development ability, and different mentality.

Israel created a venture capital environment and it formed the funds. The government provided support for the private sector. That helped the country improve its economy.

Thailand has about 40 per cent of its population working in agriculture, which needs to create more value-added products.

“The challenge for Thailand is to dare to do, in the certain time you have to do. Sometimes, they take some time, more than required.

“Thailand can do so much better by adapting certain technologies. You do not to create everything at the beginning. Thailand already has strengths in different capabilities. You just utilise these strengths with the use of technology,” he said.

The Thai government should execute a policy to support the market and the private sector to attract foreign direct investment in the country. There are lots of funds for |start-ups out there around the world. Start-ups are the next generation of Thailand that the government should support as much as it can.

The system will be started in September and should be fully operational by next year. The model will also be adopted for other key export products so that trade will grow strongly.

Under the measure, the ministry aims to reduce trade regulations by 83 per cent, which could cut exporters’ costs by 60 per cent and reduce the time consumed by rice-export paperwork by 20 days.

Commerce Minister Apiradi Tantraporn said her ministry would continue to apply this model to other products so that exporters would be able to save cost, time and effort.

“With this added convenience, the country’s trade should growth strongly as exporters will be encouraged to ship more at any time,” she said.

Other products that will adopt this model include sugar, rubber and frozen foods.

Under the strategy, the ministry has followed the “national single window” plan and facilitated a paperless system. It has also adjusted the export system to an electronic platform to make procedures less complicated and reduce documentation. An e-payment system has also been adopted so that exporters will be able to save time and transport costs.

Seven government agencies and three private-sector organisations will be involved in the streamlining effort. They include the Internal Trade Department along with provincial Commerce Ministry offices, the Foreign Trade Department, the Customs Department, the Agriculture Department, the Disease Control Department, the Office of the Rice Inspection Committee, surveyors, and the Board of Trade.

The government plans to reduce the 14 activities exporters now need to carry out to only four, the number of documents required from 70 to 38, and time consumption from 24 days to four. The average cost of a rice-export operation has been cut from Bt12,140 to only Bt2,076.

The ministry will also provide a “digital signature” system for each export document to help reduce the cost of transport for enterprises.

He added that there would be no more spectrum auctions under the current commission, whose term will end in October next year.

Under the allocation plan, there will be three spectrum bands waiting for auction: 2.6 gigahertz, 1,800 megahertz and 700MHz.

“We will propose that 45MHz of the 1,800MHz spectrum be put to auction in early 2018, or six months before Total Access Communication’s concession contract with CAT Telecom expires in September 2018,” Takorn said.

The minimum starting bid for the auction should the same as the top bid for the last 1,800MHz auction.

Last year subsidiaries of Advanced Info Service and True Corp tendered the winning bids for 15MHz each on the 1,800MHz spectrum at Bt40.986 billion and Bt39.792 billion.

Total Access Communi-cation (DTAC) is the only cellular-service provider that did not win a licence to the 1,800MHz or 900MHz spectrum at auctions held by the NBTC last year.

Takorn said 144MHz on the 2.6GHz spectrum currently held by MCOT was expected to put up for the auction if the new NBTC bill is passed by the National Legislative Assembly and made effective soon.

According to that bill, the NBTC will be able to reclaim spectra currently under concession contracts or state ownership for reallocation and the state agencies that hold them will be compensated after they release their spectra to the NBTC.

The NBTC plans to put the 2.6GHz spectrum to auction for fourth-generation cellular service, and MCOT has said that it will return part of the spectrum to the commission if it is fully compensated.

Takorn said the NBTC planned to auction the 45MHz on the 700MHz currently used by television channels for reallocation for telecom service in 2020.

Natee Sukonrat, chairman of the broadcasting committee of the National Broadcasting and Telecommunications Commission (NBTC), said that under the first option, the committee would postpone outstanding payment schedules for upfront licence fees, if the government believes that this option would not affect state finances significantly.

Under NBTC rules, it must transfer all of the fees it collects from this source to the state. If the Cabinet agrees to this option, it should grant official permission to the NBTC to amend its rules, and it should do so before the fourth fee instalment is due next May.

Originally, holders of licences to broadcast on digital television channels were required to pay the upfront fee in six instalments.

Under the second option, the payment schedules would remain unchanged. However, after the broadcasting committee transfers each payment to the state, the government would instruct its agencies to allocate their public relations budgets for the 22 digital-TV channels. The total amount spent on each channel should be equal to its licence-fee instalment.

Three of the five members of the broadcasting committee approved these two options at their July 11 meeting. The resolution was in response to a request from the Office of the Permanent Secretary of the Prime Minister’s Office that the committee seek ways to help struggling digital-TV licence holders.

The permanent secretary’s office had looked into the matter at the request by eight digital-TV broadcasters seeking financial assistance by revising the licence-payment regime. Those stations were One 31, GMM 25, Bright TV, Nation TV, Now 26, PPTV, Thairath TV and Springnews TV.

Speaking on their behalf, Kematat Paladesh, president of Bangkok Media and Broadcasting, the operator of PPTV, said he wanted to see relief measures similar to what the government had provided for small and medium-sized enterprises by offering them debt restructuring. Both SMEs and digital-TV broadcasters are victims of the sluggish economy.

An NBTC source said that as the state had already received about 60 per cent of the total upfront licence payments of Bt50.862 billion, government finances were unlikely to suffer any impact from relief measures provided to the broadcasters.

A banking source said some digital-TV broadcasters had considered returning their licences to the broadcasting committee because of the difficulty in making a profit from the business.

The increased import of wheat has led to a decline in the prices of maize and tapioca chip made from cassava, as producers have swapped domestic maize and tapioca with imported wheat.

According to the Commerce Ministry report, import of wheat increased from 593,000 tonnes in 2014 to 3.46 million tonnes last year.

This year, it is expected that wheat imports could surge to over 5 million tonnes as feed-meal |producers enjoyed zero tariff instead of the previous tariff of 27 per cent.

A source from the ministry said that almost 1 million maize and cassava farmers had been impacted by the government removing the tariff.

About 450,000 farmers grow maize and some 520,000 grow cassava.

Since the 2013-14 harvest season, the price of maize rose from Bt8.70 a kilogram to Bt9.39 during the drought-hit 2014-15 harvest season before dropping to Bt8.50 now.

The price of tapioca chips decreased from Bt7.37 per kilogram in 2014 to Bt6.40 per kilogram now.

After government waived the import tariff, the price of wheat has fallen by Bt1-Bt2 a kilogram.

The ministry also found that the import of DDGS (distilled dried grains with solubles made from maize) has increased from 226,000 tonnes in 2014 to 462,000 tonnes last year.

More imports of DDGS to supply feed-meal manufacturing caused a drop in maize use.

The ministry reported that major importers of wheat were feed-meal producers Betagro, Laemthong Corporation, Sun Feed, and United Flour Mill and one food producer – Bangkok Producer Merchandising, a subsidiary of CP Group.

The initiative will support the government’s goal of tripling exports in five years; strengthen the ability of the government and the legal system to provide accountable and transparent oversight; and help modernise the agriculture sector which will be the driver of employment over the next 10 years, said Ben Rhodes, US deputy national security adviser.

Rhodes was on his fifth visit to Myanmar last week.

He said more reforms were needed in the structure, legal and regulatory framework to make it easier for companies to invest. He also mentioned the possibility of a full lifting of sanctions against Myanmar, which have been an obstacle for US companies. Reinstatement of the generalised system of preferences (GSP) was also in sight.

“We may make changes in our sanctions, and big businesses are coming here, especially in Yangon where there is a highly educated young population. They are also creating space, making it easier for [business] people to start business here. In that area, the US can help,” he said.

Rhodes sees Myanmar as a potential market for American companies.

“Entrepreneurs always complain about our sanction policies. What they see is small-scale economic growth. A business employs 10 or 20 people. Over time, if you open up the space for that type of knowledge-based, innovation-based economic growth, then that can achieve much more.”

Last week, State Counsellor Aung San Suu Kyi accepted US President Barack Obama’s invitation to visit the US.

Rhodes emphasised the US commitment to strengthen support for democratic consolidation, national reconciliation, and people-to-people engagement. The focus will be on helping President Htin Kyaw’s administration to establish the rule of law and strengthen the agricultural sector.

“Many people have sacrificed so much for change. Your success is in our interest. Our interest in Myanmar is for you to succeed. We are here to support that,” Rhodes said.

He stressed that given the high ratio of young population, he believed Myanmar people could take control of their own future. The first civilian government in decades is burdened with high expectations but, as seen in Indonesia, the process takes time. He said transparency would be a good start to smoothe communications with people.

In a public talk at Yangon University, Rhodes stressed the need to improve civilian-military relations to pave way for full civilian control over the military. He was pleased with the fact the civilian government and military were working together in developing the country, something vital for the successful transition. The next step should involve reconsideration of the number of parliamentary seats controlled by the military, he said.

“Every year, Myanmar will need about $4 billion. This is a big number. That is why we have the transport policy note, especially to help the government address some problems for projects over the next couple of years,” Bambang Susantono, ADB vice president for knowledge management and sustainable development, said.

ADB last week launched a new report entitled “Myanmar: Transport Sector Policy Note”, which has recommendations for the civilian government. The report says 20 million people, or about half of rural population, live in villages without access to an all-season road, as the country only invested 1 to 1.5 per cent of gross domestic product (GDP) in transport improvement over the past decade.

New investment could save logistics costs by 30 per cent and save lives lost every year due to poor road safety.

Susantono said the ADB was ready to allocate at least $100 million per year over the next five years. Better transport would mean higher economic growth and equitable distribution of development to all Myanmar people. Rural road development was as important as urban transport infrastructure, he said.

Adrien Veron-Okamoto, ADB transport economist for Southeast Asia, noted that at a similar level of development, other countries in this region typically invest 3-5 per cent of their GDP in transport infrastructure.

With a higher budget, Myanmar should allocate the money to key national corridors, Yangon infrastructure and maintenance work. Yielding the highest impact on the public would be investment in bus rapid transit lines, parking and traffic management and circular railways in Yangon. Equally important was the upgrade of national and international corridors, like the road link from Myawaddy to Muse, the modernisation of the rail link from Yangon to Mandalay, implementation of low-cost navigation aids in the Ayeyarwaddy River, plus improving access to rural areas.

Myanmar was also urged to explore new water transport options.

He stressed that Myanmar needs a new policy to increase transport investment. A unitary ministry should take charge of the job, and state-owned enterprises should be corporatised for greater autonomy.

Myanma Railways which is supervised by the Transport and Communications Ministry should be corporatised as soon as possible, as its revenue covered only half of operating costs and losses during 2013-15, amounting to about $80 billion. The report urged the government to seek funds from development partners for mega-projects.

ADB country director for Myanmar Winfried Wicklein said the bank planned to provide aid of about $350 million per year to Myanmar, 85-90 per cent of which goes into infrastructure, notably transport and energy. Better connectivity with neighbouring countries is a priority.

“We are focusing on big cities like Mandalay… Aside from Mandalay, we work in other regions and states, mostly in the nation’s economic corridors (eg Mon State near the East-West economic corridor). We are trying to support local governments to improve infrastructure there,” he said.

Wicklein said the ADB was considering co-financing models in infrastructure projects and providing grants for environmental issues and climate change. The bank has worked on several projects with the France Development Agency.

“We are very open to other partners in our discussions. The AIIB [Asia Infrastructure Investment Bank] has just started operations. So we do not have any concrete updates in this regard. But we are open to work with all partners,” he said.

The department said Food Standards Australia New Zealand (FSANZ) had sent an announcement to the department about the inspection of seafood products imported into Australia.

Australia’s regulations strictly adhere to international rules, NAFIQAD director Nguyen Nhu Tiep said.

“Therefore, local enterprises must comply with those regulations if they keep exporting food to Australia,” he said. “The department has updated those regulations for local enterprises.”

FSANZ has categorised food imported to Australia, including groups of high-risk products and monitoring products, and announced regulations for checking each group.

The group of high-risk foods includes boiled crustaceans/shrimp, mackerel/tuna, processed and instant fish, and mixed seafood.

High-risk foods are referred to NAFIQAD by the Australian Department of Immigration and Border Protection. These foods are initially inspected and tested at a rate of 100 per cent of consignments, according to the website of Australia’s Department of Agriculture and Water Resources.

Once five consecutive consignments have passed inspection, the inspection rate may be reduced to 25 per cent; after a further 20 consecutive passes, the inspection rate may be reduced to 5 per cent.

Food under surveillance includes fish; fresh, frozen, dried and salted fish paste; sardines; salmon; and fish sauces.

All other foods are considered to pose a low risk to human health and safety and are classified as “surveillance food”. Each consignment of surveillance food has a 5-per-cent chance of being referred for inspection to assess its compliance with Australian food standards.

As surveillance foods are considered to be low-risk, they are subject to a “test and release” direction and can be distributed for sale before test results have been received.

Any consignment of high-risk and surveillance foods that fails forces a return to 100-per-cent testing of that product until a history of compliance is re-established for the producer of the food.

The export value of Vietnam’s seafood products to Australia increased sharply from US$15 million in 2011 to $225 million in 2014, but reduced to $117 million (about Bt4.1 billion) last year, according to the Ministry of Industry and Trade’s vinanet.vn website.