1. Presented by Enoch Ch’ng Date 8 October 2004 ASEANPay – What’s the story?

2. Whose big idea? Look who is talking Ambitious, ambitious Hurdle #1 Not that unexpected Where do we go from here? Still peddling snake oil? Presentation Outline

3. Singapore Cross-border Payment Key Service Providers –Remittance Houses –Correspondent Banking Costs 20 times more than domestic transfers Estimated Remittances by foreign workers, excluding trade Estimated Volume/Value per month Singapore toVolumeValue China80kUSD41m Thailand40kUSD15m Indonesia100kUSD12m Philippines85kUSD10m

4. In 2003, Singapore’s largest trade partner was Malaysia, followed by US In 2003, Singapore was 13 th largest trade partner of US* * Source: International Trade Administration, US Department of Commerce Singapore Trade Statistics

5. What’s in it for Central Bank? Secure and efficient regional electronics transactions, payments and settlement. Facilitate regulation, supervision & monitoring of cross-border payments. Level playing field. Benefit smaller banks with no cross-border capability.

6. Look, Who is Talking? Promote Trade, Business & e-commerce –Removing cost barriers to regional expansion –Intra-ASEAN trade encouraged due to lower costs –Reduced payment cycle: better cash & risk management Foster ASEAN Spirit –Close cooperation among ASEAN countries promoted Gateway to International Payment –Preferred ASEAN Payment/Clearing Hub. –Act as gateway for linkages between International payment gateways and ASEAN Payment/Clearing Hub.

7. Ambitious, ambitious Secure, efficient and cost effective Avoid re-inventing the wheel –Leverage on existing ACH infrastructure –Use of national &/or international standards for submission & receipt of payments to ASEANPay Stakeholders reliant –Product responsibility lies with Financial Institutions (FIs) –Foreign exchange conversion carried out by originating / remitting FIs

8. Regional Payment Gateway eACH Vietnam eACH Brunei eACH Cambodia eACH Indonesia eACH Laos eACH Malaysia eACH Myanmar eACH Philippines eACH Thailand eACH Singapore Viable But Rejected

9. Complex But Preferred eACH Vietnam eACH Brunei eACH Cambodia eACH Indonesia eACH Laos eACH Malaysia eACH Myanmar eACH Philippines eACH Thailand eACH Singapore

10. Buyer Buyer’s Bank Seller Seller’s Bank Country A Country B eACH A 1 2 5 6 3 RegionalPaymentGateway eACH B Settlement Agent 4 Regional Payment Gateway

11. Not That Unexpected Central Banks and ACH operators were keen. Difficult to get banks’ buy-in. Uneven country readiness Currency exchange control for some countries Money always matters. –Coverage and convenience of Remittance Houses –Transaction volume low, cost per transaction high –Low costs in SWIFT messaging Borders still matters.

12. Where do we go from here? Revalidate requirements Assessment of countries’ readiness Formulation of Business and Technical Model Pilot Development in 2005?

13. Establish efficient, cost-effective & secure ASEAN cross-border payment infrastructure Improve efficiency for cross border payments. Currently, predominantly correspondent banking. High costs, long payment cycle Operate by Trusted Financial Institutions (Central banks, In-country National ACH) Address consumers' need for faster, cheaper & secure payment service supported by a trusted financial community Provide a complementary payment service to FIs Still Selling Snake Oil?

14. Thank You