According to Krungsri Research, ASEAN countries are on the road to recovery, with economic growth expected to be strongest throughout 2022 in Indonesia, the Philippines and Vietnam. This is due to a rapid normalization of domestic demand driven by higher vaccination rates and government policy support, which lead to faster private consumption rebounds and the return of foreign direct investment (FDI) as well as external tailwinds including the global economic recovery, commodity booms, and re-opening of cross-border tourism.
"As business recovery accelerates, business owners and executives look for new opportunities to expand, Krungsri has identified three areas that are keys to success in today's fast-moving digital business environment. These high-quality insightful business advisory services support the value chain, instant cross-border transactions, and QR-enabled cross-border payments. Leveraging on our regional network in collaboration with MUFG, we can offer the right services and advices that can help our customers go beyond Thailand in the post-pandemic age," said Mr. Pairote Cheunkrut, Krungsri Chief Strategy Officer.
The economic outlook across ASEAN
Consumption makes up the lion's share of ASEAN members' GDP, particularly in the Philippines and Vietnam, as well as Laos and Cambodia, where the share of final consumption in GDP is more than 50%. As a result, Krungsri expects a strong and resilient rebound in private consumption in the ASEAN region in 2H 2022 when vaccination coverage reaches at least 80% of the population.
Retail sales figures and imports of consumer goods are also showing a healthy recovery, which should accelerate as consumer confidence becomes more positive, fuelling private consumption.
Exports remain a crucial tailwind to support the ongoing normalization of economic activity in ASEAN. In 2022, ASEAN exports should continue to benefit from the global economic recovery, and commodity exporters such as Indonesia and Malaysia should benefit from the recent surge in commodity prices. In addition, based on the latest trends for freight rates, headwinds to exports, including soaring freight costs and shortage of container shipping capacity, are expected to be gradually resolved.
"There are opportunities for a wide range of businesses to go ASEAN, and Krungsri has identified Indonesia, the Philippines, and Vietnam as important focus markets," added Mr. Pairote.
To facilitate ASEAN connectivity opportunities, Krungsri is boosting several services to help Thai business to go beyond Thailand and prosper.
Business advisory services: Working with partner banks in ASEAN together with the MUFG network, Krungsri offers business advisory services with in-market insights from their ASEAN connectivity expertise, ready to support customer needs. These include the Cross-border Value Chain Advisory, a team of experts who advises and supports businesses looking to expand overseas with know-how and innovative solutions, and Value Chain Solutions that make operating businesses beyond Thailand easier for customers. Thai Desk to facilitate Thai's businesses and entreperneurs in Cambodia.
Cross-border remittances: Working with partner banks in Indonesia and Vietnam, Krungsri now facilitates instant money transfers between banks without having to go through intermediaries, making it easier and more convenient for customers to make payments and send money internationally.
Cross-border payments: In the same way as QR payments have become common in Thailand, Krungsri has introduced this in Japan and Indonesia in 2021.
In addition to these three key services that the Bank is ready to assist customers to expand beyond Thailand, Krungsri has partnered with banks in ASEAN to enhance its ASEAN connectivity which is one of its key focuses for 2022.
In Cambodia, Hattha Bank PLC, a leading commercial bank in Cambodia and a subsidiary of Krungsri, has just received a "BBB+" credit rating with a "stable" outlook from TRIS Rating this year, despite the economic impact of the COVID-19 pandemic. The bank offers Thai Desk service to facilitate Thai business customers planning to expand their businesses to Cambodia. It has introduced a realtime payment and transfer solution from Cambodia to Krungsri in Thailand, enabling customers to obtain fast, secured, and cost effective service with current promotional price $2.5 per transaction.
With SHB Finance in Vietnam, Krungsri is in the final stage to obtain regulary approval from State Bank of Vietnam to complete the acquisition which SHB will transfer 50% of SHB Finance's charter capital to Krungsri in the first year and the remaining 50% after 3 years. Currently SHB offers personal loans with a growing focus on on digital lending via mobile applications. It plans to launch credit card business soon to capture high growth in retail and consumer spending.
In the Philippines, Krungsri offers personal loans, Car4Cash loans, and motorcycle loan with SB Finance, its in-country partner, as well as the Zuki mobile application which allows customers to apply for loans directly from the app when buying things such as motorcycles.
In Indonesia with Bank Danamon, MUFG P2P Remittance Network enables instant money transfers which bypass intermediaries as well as QR cross-border payments.
"Despite the slowdown in economic activity from China, we believe there are many opportunities for business expansion across the region. Krungsri has been continuing to expand its business to the ASEAN region over the past 10 years to lay a strong foundation for being a regional bank. As a result, together with MUFG, Krungsri currently has a network and businesses which cover the whole region and enable Krungsri to bring new opportunities for our customers to go beyond Thailand. With our solid foundation in ASEAN connectivity, not only we are reaffirming our position as a regional bank, but we are also ready to advise, assist, and partner with our customers to help them grow their business in ASEAN," added Mr. Pairote Cheunkrut, Krungsri Chief Strategy Officer.
Source: Bank of Ayudhya PCL