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Source: wemall.com

Ascend Corporation has officially launched its own online marketplace, Wemall on June 6, reports Bangkok Post. Wemall is an $8.5 million (300 million THB) investment by the corporation and is positioned as Thailand’s first ‘online brand marketplace’.

Wemall has replaced Ascend Corporation’s iTruemart.com and now has over 100 brands participating with the company’s platform, providing approximately 60,000 product items after launching for one trial month. Wemall’s goal is to have 3,000 brands in its marketplace by 2017, selling products ranging from beauty, fashion and electronic gadgets.

Thailand’s online retail commerce will continue to grow by at least 30% over the next few years, driven by increased smartphone penetration and intense competition among ecommerce operators

The government’s PromptPay service under the national e-payment scheme is also speculated to spur the nation’s ecommerce growth. According to Punnamas Vichitkulwongsa, Chief Executive of Ascend Commerce, Thailand’s online retail commerce accounted for 2% of the total retail market in 2015. Punnamas Vichitkulwongsa, Chief Executive of Ascend Commerce comments,

We expect online retail will account for 10% of the total retail market within the next few years. 

As reported by The Nation, Wemall is focusing on end-to-end services, with two main forms of partnerships with brands; one being full-scale services and the other self-formulated services. Brands will be able to run their own online outlets via ready-to-use features, which can be adjusted in real time to accommodate increasingly competitive environments.

Mr. Punnamas also expressed optimism about mobile commerce, as the sector claims 49% of total ecommerce transactions.

Ascend Corporation plans to expand regionally in ASEAN using Wemall as a business role model for other countries. Nothing concrete has been announced regarding regional expansion.

A version of this article appeared in The Bangkok Post on July 7. Read the full version here.

CIMB Thai Bank Working With Fintech Providers To Expand its SME Customer Base

Source: acnews.net

CIMB Thai Bank is in talks with 10 local fintech providers about designing a trade-finance solution catering to SMEs that have exposure to the ASEAN market, reports The Nation. This is part of CIMB Group’s three year business strategy as it sees fintech “as a journey leading to new innovations and increased efficiency for the group and its business units.

The new product would help the bank expand its SME customer base, while its fintech venture would enable it to connect more closely to what the parent CIMB Group network has been doing in the fintech area.

“The bank has an open platform for fintech providers with business ideas that might meet its requirements, with any income derived to be shared amongst them,” said Phisit Sucharitsopit, executive vice president for CIMB Thai’s Transaction Banking Group.

Although no official description has been released about the somewhat metaphorical “product” expected to launch end of year, CIMB Thai expects the open platform for local fintech providers will help it increase income from transaction banking, which it hopes will grow 70-80% annually over the next three years.

CIMB Group has two fintech strategies:

  1. The partnership with Startupbootcamp FinTech, an accelerator programme for start-ups wishing to expand in the region to develop financial products and services for the group and its subsidiaries in the region.
  2. The adoption of innovative solutions to reinforce existing businesses, “unique” to CIMB Group, which believes it must adjust itself to ride the fintech trend.

The bank currently claims 2.5% of the Thai transactional-banking market, with targets to increase to 4% in three years time.

The Bank of Thailand has made CIMB Thailand an appointed cross-currency dealer for this settlement of Malaysian ringgit-baht trade under the recently launched Local Currency Settlement Framework. The central bank in Malaysia is expanding the framework to other countries in the region, in which should also benefit the Thai office in terms of fintech partnerships across ASEAN.

A version of this story appeared in The Nation on July 7. Read the full version here.

Vietnam's Advantage In European Trade Deal

Share of total EU-Asean Trade in 2015. Vietnam following behind Singapore, Source: Bloomberg.com

Vietnam may continue to take market share of the European Union trade from other Southeast Asian countries this year. The country accounted for 19.1 percent of the $227 billion (201.4 billion euros) in total trade between the EU and ASEAN nations last year, an increase from 15.8 percent in 2014 and could increase again 2016.

The country’s market growth combined with the finalization of the free trade pact indicates a more dynamic trade relationship in the future, according to the EU.

Vietnam has been steadily growing since 2014 when it overtook other ASEAN countries as the United States’ biggest exporter leaving traditional manufacturing hubs behind.

Vietnam was also able to capitalize on shifting production patterns in Asia as labor costs in China rose.

The ability to capitalize production led to Samsung Electronics Co.’s investment, it now assembles and exports smartphones from Vietnam. Several Vietnamese supply chain companies have now joined forces with the Vietnamese arm of Samsung. 

Although Singapore is still the EU’s biggest partner in Southeast Asia, it’s market share has dropped along with Thailand, Malaysia and Indonesia who lost market share to Vietnam. Vietnam’s makes a very appealing trade partner with the EU by exporting electronic products, coffee and clothes. It is now the second country in ASEAN after Singapore that the EU has signed a free trade pact with.

Vietnam’s rise as a key player in overseas trade

The EU has begun to target Vietnam and Singapore in a new business initiative aimed at giving European SMEs more exposure and opportunities in Southeast Asia. This means that countries such as Thailand and Indonesia risk being completely overtaken by Vietnam, as the country has managed to capitalize on many advantages. This will provide Vietnam with international growth potential, whether through trade or online.

As Thailand and Malaysia were enjoying its traditional manufacturing perks, Vietnam was struggling to catch up, but now it seems that the country is benefiting from slower initial growth. Samsung’s investment made a significant contribution, and now Vietnam is on track to becoming a key player in trade with the European Union.

A version of this appeared in Bloomberg Technology on June 16. Read the full article here.

obama-vietnam

Source: abc.net.au

President Barack Obama identified Vietnam as one of the partners to be developed under the President’s “rebalancing strategy“, directly linking to Vietnam’s role in the “Trans-Pacific Partnership” (TPP), an important regional trade agreement involving 12 Asia-Pacific countries. If fully implemented, the TPP would eventually cover 40% of the world’s GDP. This would allow Vietnam access to the US market and foreign direct investment. In return, Vietnam’s position as the fifth-largest US trading partner in the TPP group means that it is a key destination for US exports and capital. TPP is set to encourage more regional integration between countries.

Evaluating how the US-Vietnamese relationship may change under Democratic nominee Hilary Clinton or likely Republican nominee Donald Trump is not only important for Hanoi and Washington stakeholders, but for the international community as Vietnam plays a prominent role in issues such as territorial disputes in South China Sea.

The impact of US-Vietnam relations on trade: Clinton as President

In keeping consistency with President Obama’s economic policies, Hilary Clinton will seek to expand US Trade agreements in the Asia-Pacific region. In her role as the Secretary of State, Clinton vocally supported the TPP on numerous occasions and highlighted the potential for TPP to lower barriers and drive long term growth across the region. Most recently, Clinton stressed the important role of American’s network of allies in the Asia-Pacific. President Clinton should be expected to expand trade relations with Vietnam and promote the institutionalization of the South China Sea. However, investors should not be too optimistic as Clinton has expressed her concern in wanting to see changes in the agreement which might lead to negotiations.

The impact of US-Vietnam relations on trade: Trump as President

The unconventional Republican candidate has always been strong about his ‘America First’ policy evident from insisting on a wall between the United States and Mexico, its third largest trading partner and his vocal opinion on the TPP as a ‘horrible deal‘. Trump has also been very skeptical of the United States’ role as guarantor of the liberal international order, which sees the nation as the purveyor of global public goods and maintaining the freedom of the seas.

Vietnam’s ecommerce potential

Ho Chi Minh City is a hotbed of startups. In 2015, the country’s economy grew by 6.7%, boosted in part by investments from Samsung Group and Intel Corp. If the TPP is actualized, Vietnam could benefit the United States and eventually further open the market for clothes and electronic gizmos exports. There is also a shared concern over China’s dispute over territory control of the South China Sea, as $5 trillion US in trade passes through water every year, and China has began building artificial islands on the atolls.

The US-Vietnam partnership shows a lot of potential but the TPP agreement needs to be put into action. Even if Clinton wins the race, it is likely that the agreement will be modified and passed through congress for approval, a process that could take longer than a year. However, the United States should not overlook the strategic importance of Vietnam’s location.

A version of this story was published in The Diplomat on June 11th. Read the article here.

 the India-Thailand Free Trade Agreement

Thailand Prime Minister Prayut Chan-o-cha and Indian Prime Minister Narendra Modi. Source: livemint.com

India and Thailand have outlined a road map for cooperation in areas spanning defense and maritime security in efforts to increase trade and economic interaction between the two countries. Both sides have agreed to speedily conclude the India-Thailand Free Trade Agreement and bilateral investment treaty, and also implementing an infrastructure project linking Thailand and India on a fast track (like the Asian Trilateral Highway which links Thailand to Myanmar).

Thailand’s physical proximity to India has allowed Prime Ministers Prayut and Narendra to forge a close partnership as they share similar regional goals and interests. Prime Minister Narenda’s “Act East’ policy creates a greater focus on India’s interaction with Cambodia, Laos, Myanmar, Philippines, Vietnam and Thailand. Prime Minister Prayut’s visit to India comes amid tensions between China and several Southeast Asian nations over rival maritime boundary claims in the South China Sea.

There are ample avenues for greater manufacturing and investment linkages. We see a particular synergy between Thai strengths in infrastructure, particularly tourism infrastructure, and India’s priorities in this field- Prime Minister Narendra Modi.

The India-Thailand Free Trade Agreement will enhance the safety and security of navigation in the Indian Ocean and also extend to an anti-piracy cooperation and coast guard cooperation.

In terms of trade opportunities, both countries agreed to encourage their businesses to invest in the other country. This leaves a lot of room open for bilateral opportunities and potential for cross border trade. The key idea of this partnership was to link India’s underdeveloped north-east to Southeast Asia with the goal of boosting economic growth. This is yet another interesting trade agreement between Southeast Asia and a neighboring country, one which should boost the region’s capacity for development.

A version of this appeared in Live Mint on June 18. Read the full article here.

Much has been published about ecommerce barriers in Southeast Asia. This article on PaymentsJournal emphasizes the need for developing ecommerce markets, but acknowledge the complexities within the region. Using Colombia and Thailand as key case studies and insight from A.T. Kearney’s research, it highlights the opportunities for cross-border sellers who should be looking to developing upcoming markets as mature ones are experiencing a slow down.

Offshore merchants have an opportunity to infiltrate a market such as Thailand, if they can jump through the ecommerce barriers in Southeast Asia. The ability to localize offers, support local payment methods and cope with the changes in developing markets will take companies a long way. For example, Thais are very comfortable with shopping on mobile, so a business would do well if they optimize mobile commerce.

Thailand Overview

According to the research published by A.T. Kearney, Thailand’s ecommerce value is projected to grow at 25% year over year through at least 2017. With Thailand’s young population (47% between age 25 and 54), nearly 1/3 of the population is under 25 which means a large influx of future online consumers waiting to enter the market.

ecommerce barriers in ASEAN

Over half of digital buyers in developing countries distrust online payment systems

Ecommerce barriers in Southeast Asia

Industry analysts have projected high hopes for Southeast Asia, with the recent Google and Temasek Report predicting the region’s internet economy growth to reach $200 Billion. There is a lot of buzz surrounding the industry’s potential, but there has also been a surge of commentary which points out regional roadblocks.

The three main roadblocks are:

  • Difficulty surrounding online payments
  • Logistical complexity, especially in Indonesia
  • Compliance to local laws and regulation for global companies

Solving ecommerce barriers in Southeast Asia

Increase broadband access: Use state-aid funding if needed. Cross-border connectivity needs to be stronger.

Support the local players: Improve funding access so that startups have cash flow to scale, not just start. Encourage local partnership with global companies, especially in logistics and fulfilment. Raise awareness of local marketplaces.

Improve and promote e-payments and e-wallets: Startups that are facilitating other businesses with new payment platforms, such as Indonesian credit based startup FinAccel and India based Paytm are helping to disrupt the payment industry, coming up with solutions to encourage consumers to purchase goods through e-payment, rather than use the trusted method of cash-on-delivery, which is harder for businesses to manage.

Improve logistics and trade efficiency: DHL recently published research about trade possibilities in Southeast Asia, ASEAN opens up various trade opportunities, which goes on to impact cross border ecommerce. Supporting e-retailers by forming logistics partnership would also be beneficial, especially in terms of assisting in regulation compliance.

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