ASEAN KEY DESTINATIONS
Renminbi dominated transaction a trend in ASEAN-China business
"As the robust development of Sino-Thai trade and investment, there has been an increasing stronger request among our clients that the trade be directly settled between the Chinese currency and Thai baht, without the involvement of U.S. dollars. Many clients from other Southeast Asian countries have made the similar appeal -- the RMB's direct settlement with their local currencies," said Wichai after a ceremony by the Bangkok Bank to mark the launch of Thailand's first credit card that adopts the standard of China Union Pay (CUP), the largest credit card provider in China.
The "Bangkok Bank China UnionPay" credit card itself, said the vice president, is an example that allows direct settlement between RMB and baht.
"Because when a client uses this card in the Chinese mainland, he is consuming with RMB, but when he repays the money back in Thailand, he is using Thai baht. Of course this is a special case only when using this credit card. But what is undeniable is that the tie between the two currencies is getting stronger and stronger," said Wichai, who is in charge of Chinese business of the Bangkok Bank, the largest commercial bank in Thailand.
His remarks came after the Bank of China Hong Kong said earlier this month that it has signed the "clearing and settlement agreement of Yuan-denominated trade transactions" with a number of commercial banks in the ASEAN and other relevant areas.
After signing the agreement, the Bank Central Asia, Bangkok branch of the Bank of China, Manila Branch of the Bank of China, Jakarta Branch of the Bank of China, Singapore branch of the Bank of China, Malaysian branch of the Bank of China will become participating banks of Renminbi business in the ASEAN region.
Actually with little fanfare last year, Beijing had embarked on the first step on a long road toward making the yuan one of the world's top currencies, allowing Chinese exporters and importers to start settling trade in yuan rather than dollars.
The FTA, the largest one in the world that will cover 1.9 billion people and 6-trillion-U.S-dollar GDP in this region, pledges to phase out most tariffs among ASEAN countries and between the ASEAN and China by January 1, 2010.
Also in a related development that coincides with the FTA's launch, the Bangkok Bank recently has received a license from the Chinese government to operate the Bangkok Bank (China), a locally incorporated bank in China.
To open on December 28 in Shanghai, this bank will be one of the about 30 fully-foreign-owned banks in the China mainland, said Wichai, adding that this indicates Bangkok Bank's resolution to get more involved in Sino-Thai cooperation in financial sectors under the larger framework of ASEAN-China FTA.
He said as a regional financial institution, the Bangkok Bank definitely benefits from the two huge economies of China and ASEAN's free trade and investment. "The cooperation and integration of China, with a population of more than 1.3 billion, and the ASEAN, with a population of about 6,000 to 7,000 million, is a huge opportunity for banks."
"We are glad to see the FTA is finally to be realized in early next year, for which every party has been working very hard for a long time," Wichai said.
And the Bangkok Bank, he said, hopes to play an important role in the development of this free trade area. "The development of our business largely depends on clients' demand. We set a branch or sub-company not out of our own will, but following the business outreach of our clients. And I believe the Bangkok Bank can get more benefit as the bilateral trade and investment between the ASEAN and China grows."
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