There’s nothing quite as satisfying as pulling out a couple of luxuriant golden-brown thousand-dollar Hong Kong bills from your wallet to pay for that meal at a fancy restaurant. The trouble is, the banknote may one day be out of circulation

Looking to curb crime and facilitate the smoother functioning of economies, regulators across Asia are staying away from large-denomination bills and, whenever possible, moving toward cashless alternatives.

This push to do away with bills is gaining traction partly due to the spread of new payment solutions that bypass paper cash altogether.

A number of countries across Asia are looking for ways to minimise the use of cash. Leading the way is South Korea, which aims to eliminate paper money by 2020.

Singapore had the last large-denomination bill in the region, and removed it from circulation to tighten its anti-money-laundering controls. The city-state officially discontinued the S$10,000 ($7,400) note in October 2014.

Singapore was somewhat of an anomaly across Asia, as few other countries have ever had high-denomination bills. Even Japan, which developed its monetary structure in tandem with the West, only issues banknotes ranging to the largest value of 10,000 yen ($90).

The spread of mobile payments and new technologies makes it unlikely that other countries in Asia will ever print large bills. In fact, it is more likely to head the other way, leading to less paper money all around.

Among Asia’s poorest countries, the highest value banknotes tend to be around $10. The biggest bills in places like Laos, Mongolia, Myanmar, Nepal and Pakistan are all worth around that much. The largest bill in the Chinese mainland is 100 yuan ($15). Cambodia bucks this trend with a bill worth around $25.

“In countries where poverty and corruption are issues, you have to think very carefully about the size of the banknotes,” said Keith Pogson, a senior partner of financial services with consultancy EY.

“Where poverty is an issue you need to have small bank notes so people can pay for small items, say, fruits,” he added. “Smaller banknotes are easier to accommodate for poor people and keeping the number small is important in poor economies.”

In more affluent Asian economies, such as Hong Kong and Singapore, there are bigger bills, but the trend is toward smaller denominations. Ever since Singapore eliminated the S$10,000 note, Hong Kong tops the chart with a HK$1,000 ($130) note.

The push to clamp down on big bills is coming from the West and gradually making its way to Asia.

Banning big bills

The European Union is considering a ban on high-denomination notes like the 500 euro ($570) bill, as it may be too large for practical everyday use.

Authorities fear that such a large-denomination bill could be helping support criminal activities or even terrorism. In fact, the banknote has even been given an unpleasant nickname — the Bin Laden — due to the ease with which would-be terrorists can transport the banknote.

The United States is also considering taking the $100 note out of circulation for similar reasons. The big bill makes it easy to move large amounts of money around. A million dollars in hundred-dollar bills weighs 1 kilogram, about the same as a laptop.

Even in developed economies, big bills are not always welcome. In day-to-day life in the US, using the $100 dollar bill is often reason enough to apologize. In Hong Kong, the HK$1,000 note is available but is not a frequent sight and is often reserved for one-off transactions like rent payments.

“You have to balance the needs of the people,” said Fred Kwan Yum Keung, an associate professor at the City University of Hong Kong. “From time to time you see that people can still do all kinds of trafficking, like taking suitcases (full of cash).”

He added that it is undesirable to remove the HK$1,000 bill as the Hong Kong economy needs it for practical reasons such as business transactions.

Kwan’s views contrast with those of governments around the world, especially those with high-denomination notes in circulation, who are increasingly considering banning big bills to deter tax evasion, financial crimes, terrorism and corruption.

In February, during a meeting of the Economic and Financial Affairs Council in Brussels, France’s Finance Minister Michel Sapin said that “the 500 euro note is more used to conceal than to purchase, more used for (conducting) dishonest transactions than to allow you and I to buy something to feed ourselves”.

The 500 euro note is the second highest currency denomination in the G10 economies, after the 1,000 Swiss franc ($1,040) note. Around 307 billion euros worth of 500 euro notes are currently in circulation.

During the same meeting, 28 EU finance ministers urged the European Commission to “explore the need for appropriate restrictions on cash payments exceeding certain thresholds”.

Academics agree. Harvard professor and former US treasury secretary Lawrence Summers published an op-ed in The Washington Post calling for the elimination of the $100 bill under the headline: “It’s time to go after the big money”.

“A moratorium on printing new high-denomination notes would make the world a better place,” Summers wrote.

“In terms of unilateral steps, the most important (player) by far is the European Union. The 500 euro note is almost six times as valuable as the $100.”

Criminals move more than $2 trillion around the world each year. Corruption payments amount to around $1 trillion and tax evasion robs countries of up to 70 percent of their tax income, according to Peter Sands, the former chief executive of Standard Chartered Bank, who advises the British government.

Tackling the ‘bad guys’

In his paper for the Harvard Kennedy School in the US titled: Making it Harder for the Bad Guys: The Case for Eliminating High-Denomination Notes, Sands wrote that “high-value notes play little in the functioning of the legitimate economy, yet a crucial role in the underground economy”.

He added that denying those engaged in illegal activities access to high-denomination notes would increase their costs and create a greater risk of detection. Eliminating high-value notes would disrupt their “business models”.

Even if big bills are taken out of circulation, however, doing away with the black economy is not likely to be easy. Sands points out that these “bad guys” would likely adapt quickly to the next highest-denomination note in the same currency, digital currencies or valuables such as gold or diamonds.

EY’s Pogson takes a similar stance: “There are always different ways for illegal transactions. Take diamonds — there’s a market for it although it is becoming increasingly hard for diamond traders.”

Kwan from the City University of Hong Kong concurs. “From what I have read, even criminals stay away from $100 dollar bills,” he said.

“The reason is, you can attract a lot of attention and it’s difficult for them to hide it (compared to $20 bills). All I’m saying is that it is not an effective way of curbing criminal activities. In principle you will reduce it, but in practice, I doubt it.”

A recent case in the Philippines underscores this view. Maia Santos-Deguito, who was a branch manager at Rizal Commercial Banking Corp, is currently under investigation for allegedly laundering $81 million without ever really touching a single bill.

According to a press statement issued by BIBD, the SME 360 offering was launched during His Royal Highness Prince Haji Al-Muhtadee Billah, the Deputy Sultan’s working visit to the Darussalam Enterprise Business Support Centre in Anggerek Desa.

In the statement, Mubashar Khokhar, BIBD Managing Director commented that, “Today’s launching, along with all our other products and services, aligns us closer towards His Majesty’s vision of the country in developing a dynamic and sustainable economy. Along with building on our relationship with DARe, we will be pursuing more partnerships with government institutions to create improved solutions and opportunities.”

“We are also very thankful and supportive of the efforts and policies in place by the Government of His Majesty.”

Khokhar said that BIBD is confident that SME 360 will create more avenues for SMEs to grow and develop more business and industry leaders in Brunei Darussalam.

The SME 360 offering provides a comprehensive banking solution that complements the needs of businesses, especially SMEs, which includes dedicated relationship management team, financial solutions and digital payments.

The dedicated relationship management team provides access to sound banking advice and financing solutions which include working capital, property, bridging, supply/procurement contract, trade finance, and guarantees.

On top of that, businesses will have access to BIBD’s array of digital payment solutions including card merchant services, e-tunai, e-bayar, MasterCard Internet Gateway Service, and Corporate Internet Banking.

Interested and budding entrepreneurs are encouraged to call the BIBD Contact Centre to get more information and arrange an appointment.

World Bank lead economist in Vietnam Sandeep Mahajan stressed in a press briefing of the bank’s East Asia and Pacific Economic Update early this week that Vietnam should map out a medium-term fiscal plan aimed at increasing State income and keeping regular expenditure stable.

According to the report, public and publicly guaranteed debt has increased from 59.6 per cent of GDP in 2014 to 62.5 per cent in 2015. The bank predicts that the proportion will rise further, reaching 63.8 per cent in 2016, 64.4 per cent in 2017 and 64.7 per cent in 2018.

He attributed the rise to a long term loosened fiscal policy. An increase in public investment was necessary during the previous global economic downturn which caused a decrease in private investment and consumption, Mahajan said.

However, the situation had changed, he said, domestic investment and consumption had bounced back, so fiscal policy should be tightened.

The economist also said that Vietnam should be aware of growing fiscal pressure, with the fiscal deficit estimated at 6.5 per cent of GDP in 2015, “reflecting a weak revenue outturn and increased current and capital spending”.

“The Government is yet to announce credible measures to implement medium-term fiscal consolidation (on either the revenue of expenditure sides)”, the report said.

Mahajan said that reducing the fiscal deficit could not be done overnight, but it was time for Vietnam to consolidate its fiscal policy.

Mahajan said that Vietnam was still able to pay all due debts.

However, economists expressed their concern over the payment terms because most debts were short-term which pressured the budget, particularly in light of the country’s current high budget deficit.

Mahajan said that if the Government spent up to 16 per cent of the country’s budget every year to pay public debt, investment for development in various areas such as education and health would be cut, so the Government needed a stable spending plan.

The World Bank was working with the Government on fiscal matters, and the Ministry of Finance would make the final decision, the economist said.

When asked whether Vietnam’s ratio of public debt to GDP was too high, Mahajan said that there was no standardised measure for the risk of public debt of all countries.

For example, Japan’s public debt is 200 per cent of GDP but is not a concern as the country has an effective investment plan. In contrary, in some countries, the ratio is just 50 per cent but still alarming.

Bank M&A procedures

On the Vietnamese Government’s efforts to reduce the number of commercial banks, World Bank economists said the Government should focus on merger and acquisition (M&A) procedures and reform in the banking sector rather than aiming at the quantity.

Mahajan said that M&As should be done in a strict and suitable process to create a sharp fall in number of credit institutions.

Although substantial progress has been made in the shake-up of financial organisations, it will be hard to slash the number of commercial banks from 34 to 15-17 by the end of 2017, according to the World Bank.

Her current ward, Lee Ah Moy, is 74 years old and suffered a stroke four years ago.

Yet, when she attended a training course on how to care for the elderly that is administered by the Agency for Integrated Care (AIC), she learnt some new skills.

“They taught me how to properly transfer her from the bed to the chair, because she cannot walk,” said Rusmini, who goes by one name. “They also taught me how to give her a shower, and how to dress her. Before this, I didn’t always know what was considered safe or unsafe.”

The course will be offered to more foreign maids like Rusmini this year, under a new pilot programme by the Health Ministry to train them to give specialised care to seniors.

Called Eldercarer, it was announced in Parliament by Senior Minister of State for Health Amy Khor yesterday, during the debate on her ministry’s budget.

She was replying to Dr Tan Wu Meng and Joan Pereira, who had called for more care to be provided for seniors at home.

Dr Khor acknowledged that despite steps taken to make employing foreign maids more affordable, some people still find it difficult to get helpers who are experienced in caring for seniors.

Under the programme, the helpers will be trained before they start working with families.

“Trainers will go to the homes to observe the domestic helpers at work, and check that they can perform the required eldercare tasks competently,” Dr Khor said.

The programme comprises four days of classroom learning and on-the-job training – similar to that attended by Rusmini.

Helpers will learn techniques such as how to prevent falls, as well as soft skills such as communicating with seniors.

Dr Wee said a memorandum between the Secretariat for the Advancement of Malaysian Entre­preneurs (SAME), a unit under the Prime Minister’s Department; Halal Industry Development Corporation; and the Bank of China (BOC) was intended to encourage small-and- medium enterprises (SMEs) to enter the China market.

“We are here to help Malaysian SMEs tap into this market that has such a huge growth potential valued at US$1.5 trillion (RM5.8 trillion) to US$2 trillion (RM7.75 trillion),” he told a press conference yesterday.

Dr Wee said for Chinese halal industry players, the collaboration would enable them to link up with other halal players in the Asean Economic Community and beyond using Malaysia’s strong presence in the global halal industry.

He said the presence of BOC in the collaboration would make it easier for local SMEs to obtain financing and to make use of the bank’s extensive network and reach in the mainland.

“In the past, if you want to go into China, you need to think twice on where to get the money but now, we have a financial institution.

“Bear in mind that BOC has 10,000 branches in China, so the business networking is already there,” he said, adding that this would ease local SMEs’ entrance into the China market.

Dr Wee added that under SAME’s Halal Global programme next month, representatives from 50 local companies would be taken on a 10-day trip to Xian, Inner Mongolia and QingHai for “match-making” sessions with Chinese halal industry players who wanted to tap into these local companies’ expertise and certification in the halal trade.

The memorandum was signed on March 30.

On the upcoming Sarawak state election, Dr Wee said he was confident that Sarawak Chief Minister Tan Sri Adenan Satem would get a big mandate from the people.

“He is efficient, brave in implementing changes and is loved by the people,” he said, adding that Adenan was also popular among Sarawa­kians.

He said Adenan’s efforts towards a better Sarawak would not go unnoticed by Sarawakians.

“If a leader has done the best for his country or state, I am sure the people will feel compelled to give him their support. If someone is doing a good job, why would you cast your vote for another party?” he asked, adding that he was confident that Adenan would not take Sarawakians’ support for granted.

“I’m sure he will continue to bring more progress for Sarawakians,” he said.

On the recent announcement that the 714 top SPM students would be given bursaries, Dr Wee said he was grateful that the Public Service Department had implemented the Cabinet’s decision with immediate effect.

“The news is welcomed by parents of the deserving students,” he said.