Post-pandemic thinking on the role of Asian regional treasury centers, often based in Singapore.
By Joseph Neu
I was excited to return to Singapore in February for the first time since 2019 to address NeuGroup for Asia Treasury, a group launched in 2011 to connect member companies to this vital region. While much has changed in a dozen years, Asia in 2023 remains crucial for MNC growth plans, so the group’s bridging mission remains more important than ever.
- When I met with members before the pandemic, I wanted to help them navigate a more strategic role for MNC regional treasury. Since then, NeuGroup has pivoted further to embrace strategic finance professionals who move beyond SG&A support roles to become valued business partners.
- It is my mission now to see regional treasury centers (RTCs)—especially those in Asia—join this pivot. The roles and responsibilities of RTCs must elevate to deliver more value. Treasury operations and low-value transactional work belong elsewhere—ideally in the hands of machines.
- The good news is that discussions with members suggest that RTC roles will be more customer- and supplier-facing—aligning them with the strategic finance focus.
Innovation that drives growth. Singapore has gained in strategic significance for MNCs as a gateway to Southeast Asia—becoming even more expensive as a result; the economics support the continuing trend toward local hires vs. expats doing “study abroad programs.” The city-state, meanwhile, has continued to successfully position itself as a finance and innovation center, including for liquidity structures, especially payments.
- Chinese tech and other companies are setting up shop to support their international businesses and leapfrogging traditional cross-border structures.
- The Monetary Authority of Singapore, the central bank, is supporting numerous projects to unlock value from the (regulated) digitalization of payments across borders. Among these, Project Ubin, has resulted in experimentation with blockchain-based payment rails for programable money.
- In 2021, DBS, JPMorgan and Temasek formed a special tripartite technology company “to reimagine and accelerate value movements for payments, trade and foreign exchange settlement in a new digital era.”
- Not all programmable money has to live on a blockchain, yet what banks are learning from experimentation with digital currency is showing up in the fiat world, segregating firm funds from those of ecosystem “marketplace sellers” and integrating bank accounts and digital wallets.
- Separating real solutions from hype is a role for Singapore-based RTCs. Speaking to experts there will help MNCs do this.
RTCs should be bridging all this innovation to drive business growth.
- Technology-enabled treasury operations with programmable money will free up time to do this.
- The data from digitalization of transactions will make forecasting and planning that better serve business ecosystems less time-consuming.
RTC incentives no longer tax driven. The other major change from 2011 is that tax incentives are no longer a driver of treasury center location. OECD corporate minimum tax and BEPS have taken tax incentives further off the table in 2023—if not eliminated them as an RTC consideration.
- Today, financial infrastructure, policy and government support are what matters. Grants to support strategic finance investment, including the training and development of future-oriented, strategic finance professionals have replaced incentivized tax rates.
- Cost and quality of living also count in our post-pandemic world. This is why Thailand is making a bid to attract start-ups and finance types who would rather not have to fly to play at the beach.
- Tax structures, of course, never fully go away, so check with your tax department to see if there isn’t something they can design that still works from a cash perspective.
Agility centers. The final lesson from the pandemic being applied at RTCs is how to remain agile and promote agility out to the periphery and back to the center. Indeed, promoting agility from the regional center may be the answer to unlocking the most growth and innovation in Asia.
- Supply chains are shifting and MNCs need to be agile to keep them both resilient and sustainable. Let RTCs support these shifts from a finance perspective.
- Shared services are transforming with the opportunities empowered by technology. What was once a RTC coordinating role with a low-cost center might become one for higher-value activities with a center of excellence.
- Finally, RTCs can educate local monetary authorities and other government policymakers to adjust policies to better promote direct investment and become more agile in how they manage their balance of payments.
The mission. Working with our members and their partners in the region, NeuGroup remains committed to:
- Supporting MNCs in Asia.
- Making regional treasury centers more strategic and agile.
- Connecting members with all finance-business partner activities in the region.
- Bridging those finance-business partner activities in Asia with those HQ is planning to bring into the region.
- Making the career paths for finance professionals in the region more rewarding.
