Blueprint to Treasury in Asia-Pacific

Kyriba.com Copyright © 2019 Kyriba Corp. All rights reserved.
Blueprint to Treasury
in Asia-Pacific
December 17th, 2020

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Today’s Presenters
Thomas Hunt
Director, Treasury
Services
Association for
Finance
Professionals (AFP)
Francois-Dominique
Doll
Partner, Global
Treasury Advisory
Deloitte - Southeast
Asia
Yunting Zhu
Head of Market
Development &
Value Engineering
Kyriba

Agenda
● Treasury Roadmap
○ Opportunities & Challenges
○ Best Practices
● Treasury goals in APAC
● APAC Countries in Context
○ Regional Treasury
● Treasury 2025
● Kyriba as a solution
4

About the Handbook
• eDoc Reference for Treasury
• 175+ pages
• 15 Country Profiles
• In Partnership with 3 Associations:
• AFP Thanks Kyriba for Underwriting
• https://info.kyriba.com/em/afp-apac-treasury-management-handbook
5

Treasury Plays the Lead Role for the Following Functions
Percent of Organizations
20202017
Borrowing: long term
Investing: long-term
Payments strategy
and execution
Counterparty risk
analysis
Capital
planning/allocation
Working capital
management
Insurance
purchasing
Treasury is Expanding Lead Roles in
Selected Areas
6
Source: 2020 AFP Strategic Role of Treasury Survey, Association for Financial Professionals with support of Marsh & McLennan

…While Increasing Scope of
Support for other Functions
7
Treasury Plays the Support Role for the Following Functions,
Percent of Organizations

Position of Treasury Team on the Maturity
Spectrum
• Foundational – Lack of dedicated or centralized
treasury staff/treasury tasks at subsidiary level
• Developing – Dedicated treasurer with some support
staff/centralization of some core treasury activities
• Established – Clear central treasury structure and
governance model/adequate staff/experienced
qualified treasury team
• Enhancing – Internal consultant to other corporate
functions and subsidiaries
• Strategic/Optimized – Optimal centralization of
activities/strategic, proactive business
partner/advisor to CFO on complex business
investments
Stages of Maturity
8

All Less than
$500 Million
$500 Million -
$4.9 Billion
At Least $5
Billion
Truly
Global
APAC/EMEA/
LATAM
Less than 5 43% 68% 48% 12% 43% 35%
5-9 24% 23% 25% 20% 17% 29%
10-19 18% 2% 20% 35% 20% 18%
20 or more 15% 7% 7% 33% 20% 18%
Number of People in a Treasury Department
9

Treasury Teams: Skill Gaps Last 9 Months
10

Kyriba.com Copyright © 2019 Kyriba Corp. All rights reserved.11
Treasury Teams:
Next Three Years
(Technology is very critical or critical)
Technology Implementation for underlying teams are well
positioned better for implementation.. Best in Class Teams.

Top Key Performance Indicators – Next Three
Years (Somewhat critical and not critical) Stage of Maturity (Very critical or critical)
Technology Will Elevate Treasury, with less reliance on Cash
Planning, Forecasting Int Exp and Credit. Most will Move the
needle from Established to Strategic over the Next Three
Years.
12

APAC Goals Treasury Departments
Controls
CommunicationsEfficiency
13
• What can the Treasury Center
have control over?
• Decisions need to be efficient
• Transparency through
communication to other
entities

Country Profile Highlights
14
• Banking Overview
• Payments/Collection
• Instruments
• Systems
• Taxation
• Corporate Incentives
• Liquidity/Fx abilities

APAC Context
Wide geographical area fuelling world’s growth
Asia Market Size in 2020
Population in Million, GDP in Trillion USD dollars
Brunei, Cambodia, Indonesia, Laos,
Malaysia, Myanmar, Philippines,
Singapore, Thailand, Vietnam
North East Asia
Indian Sub-continent
China, Hong Kong, Japan,
Korea, Taiwan
22.5
Bangladesh, India,
Pakistan, Sri Lanka
1,603
South East Asia
10 ASEAN countries
ANZ
Australia, New Zealand
Source: Economist Intelligence Unit, 2020 Estimates, South East Asia population:
https://worldpopulationreview.com/country-rankings/asean-countries
3.2
1,787
3.0
667
1.5
30
Fifteen countries have formed the world's largest trading bloc, the Regional
Comprehensive Economic Partnership (RCEP), covering nearly a third of the
global economy. (16 November 2020, BBC News)
ASEAN to become the world’s fourth
largest economy by 2030
Source: Asia Pacific Economic Forecast, Deloitte University Press, 2016
▪ Rapid growing economy at US$ 3 Trillion with
annual growth rate (2007-15) at 5.2%.
▪ The 6th largest in the world, 3rd largest in Asia
ASEAN
Treasury challenges in the region
Supply chain
and Trade
Regulation on
cross border
transfers
Tax
components
Currency controls
and FX
Access to
financial market
and liquidity of
products
T
A
X

Regional Treasury Center
There is a growing trend of regionalization/centralization of treasury
function. Regional treasury center is a way to optimize treasury operation by
centralizing treasury functions.
16
• Optimize visibility and
access to cash
• Minimize transactions
and banking fees
• Centralise exposures
• Internal funding
• Optimal sources and
uses of funds
Cash pooling
(local/ regional/
global/cross ccy)
Cash
forecasting
Bank
account
management
Interco
loans
Centralized
investments
and
borrowing
FX and
interest
exposure
management
Interco
netting
Pay on
behalf,
receive
on behalf
Key Location of Choices:
Singapore, Hong Kong, China Free Trade Zone
Components and Benefits
Continuous improvement
Tactical cash
operations
Global cash
pooling
Centralized
treasury
operations
processing
In-house banking
(full service)
• Execution-focused,
sometimes dispersed
throughout multi-
national companies
• Addressing day-to-
day tactical issues
related to wires,
payments, receipts,
and bank accounts
• Processes are usually
highly manual and
repetitive
• Asia Pacific is
opening up in
many countries
• Proliferation of
bank accounts and
banking partners
require tools to
gain cash visibility
• Cash management,
FX execution, and
payments processing
are usually the first
processes to be
centralized
• Treasury could be
part of broader
finance shared
service centers
• Treasury may
perform functions in
the name of
subsidiaries
• Separate legal entity is
established to serve
as the internal finance
company in a tax-
efficient jurisdiction
• All intercompany
transactions run
through this entity
thereby facilitating &
automating netting
• Allows for “payments-
on-behalf” and
“collections-on-behalf”
models

Hong Kong CTC regime vs. Singapore FTC incentive
17
HK CTC Singapore FTC
Concessionary tax rate • 8.25% • 8%
Local WHT on interest • No • WHT exemption, subject to conditions
Standalone or multifunction entity • Standalone or multifunction
Local substance
• Centrally managed and controlled in HK
and carry on the qualifying activities in
HK
• Must meet the following minimum criteria (likely to be higher)
– Annual total business spending of SGD750k
– 3 professional staff employed by the FTC
– 3 qualifying FTC services to 3 or more approved network
companies
Qualifying profits
• Interest income
• Corporate treasury service income
• Income from corporate treasury transactions
Excluded companies
• HK associated corporations • Singapore companies are excluded if total annual revenue
exceed 10% of the Group’s total revenue
Approval process and validity
• Self election, no approval applications
necessary
• No sunset date
• Subject to approval of Economic Development Board (EDB)
• Sunset date: 31 March 2021
Reporting requirements
• Annual tax filing obligations to IRD
• None stipulated
• Annual submission of audited financial statements and
progress report on its FTC activities to the EDB
Other considerations
• New incentive − no practical experience
with implementation of qualifying
conditions
• Well-established
• Sustainability under BEPS Action 5 − requirement of substantial activity and improving transparency

The future of treasury may be …
18
Traditional Treasury Talent
(Employed)
Traditional Treasury Talent
(Employed)
Managed Services or Alternative
Talent Models
Digital Treasury Talent
(Employed + Open Talent)
Core TMS
(Increasing Cloud-based)
Core TMS + Auxiliary Tools
(Early Cloud adoption)
RPA (emerging)
Visualization
Advanced
Analytics
AI
RPA (Core)
Cognitive TechnologiesVisualization
2015 2020 2022 2025
• RPA is emerging
• Visualization and insights became
a focus for many organizations
• TMS as core technology tool
• RPA has commenced deployment
in most large organizations
• Visualization widely used
• Digital Treasury Talent and
Managed Treasury Services
emerging in treasury departments
• RPA and cognitive automation
ubiquitous
• Advanced analytics and TMS as core
tools
• Cloud is prevalent in most
technologies
• Digital Treasury Talent in most
treasuries
• New treasury business models
emerging
• Open talent models being
implemented
• Artificial Intelligence (AI)
will be ubiquitous
• Machine Learning
Platforms (MLPs) core
• Advanced analytics and
cognitive interaction as main
user interface
• Digital Treasury Talent more
prevalent than traditional
treasury talent
• Open talent or managed
services more prevalent than
employment
Present Future

Impacts & Opportunities that will shape the
Future of Treasury
Digital Technologies, big data
and analytics are changing the
landscape of business at an
incredible pace and is in
everything we do. For the first
time in history, technology is
pervasive enough and cheap
enough that everyone is using it
with little or no learning curve,
creating business models and
opportunities that never
existed before.
Digital Impact on Treasury
• Automation
• Foresights
• Solve traditional challenges
=
Financial Performance
Digital Impact on Technology
• RPA to improve efficiency and focus on
analytics
• Faster processing via in-memory computing
• Visualisation and more advanced analytics
• Cognitive technologies that link markets and
data
• IT infrastructure on the cloud
Digital Impact on Leadership and Talent
⮚ Increasing expectations from board and CFO
⮚ Disrupt, lead and evolve exponentially
=
New type of treasury talent
• Focus on data science
• Flexible talent pool
• Virtual teaming
19

The Treasurer 2.0
20
TECHNOLOGY
EXPERT
TREASURY
PROFESSIONAL
• Soft skills
• Leadership
• Communication
• Negotiation
• Flexibility & mobility
• Scale-up
• Hire people with complementary skill set
• Digital pioneer
• SQL querying
• Data modelling
• Visualisation / Reporting
software
• Treasury
• Finance / Accounting
• Business knowledge
• Data analysis
THE TREASURER 2.0

Kyriba as a solution

Liquidity Management Evolution Journey

Digital technology is transforming the Liquidity
World
API
for instant
connectivity
ARTIFICIAL
INTELLIGENCE
for Smarter Treasury
NETWORK
to reinvent and activate
liquidity
Not big data –
REALLY BIG DATA
for more insight
CLOUD
PAYMENTS
ROBOTS
& AUTOMATION

We solve common Treasury challenges by
providing the broadest capabilities…
See
• Establish cash visibility
• Forecast liquidity
• Manage bank accounts
Move
• Automate, digitize payments
• Reduce cross border fees
• Ensure compliance
Optimize Returns
• Invest idle cash
• Maximize invoice discounts
• Increase DPO
Protect
• Eliminate FX volatility
• Manage financial risks
• Control fraud

…within an Active Liquidity Network
Value added services
• APIs to value-adding
Partners, e.g. Fircosoft
Electronic links to banks
More banks and more formats for
more automated processing across
• Balance enquiries
• Payments
• Hedging
• Working Capital Financing
Link to execution networks
• Payment networks, e.g. SWIFT
• FX platforms, e.g. 360T, FXAll
• Investment platforms,
e.g. Blackrock
Full internal integration
• Direct link into ERP Systems,
e.g. Microsoft, SAP, Oracle,
Workday
• White-label partnerships, e.g. Infor
• Certified partnerships

Questions?

Blueprint to Treasury
in Asia-Pacific
treasury@kyriba.com
Thank you for joining us for
https://info.kyriba.com/em/afp-apac-treasury-management-handbook

Blueprint to Treasury in Asia-Pacific

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