ASEAN Market Watch: Indonesia Foreign Ownership Rules, Philippines Internet Speeds, and Thailand Manufacturing

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Indonesia: Foreign ownership in digital payment companies reduced

Indonesia’s central bank, Bank Indonesia, has reduced foreign ownership in local companies that offer electronic payment services. As per Regulation No. 18/40/PBI/2016, effective on November 9, foreign ownership in such companies has been reduced to a 20 percent stake on the Operation of Payment Transaction Processing. This applies to companies that operate as card providers or offer switching, clearing, or settlement services for electronic payments.

The regulation does not retroactively apply to existing companies. Rather, companies in the digital payments sector, existing companies that expand into the sector, and existing companies in the sector that change ownership will have to abide by the new rules. Apart from this, other rules apply, such as e-wallet service providers that have 300,000 users will need to obtain a Service Provider license from Bank Indonesia.

Professional Service_CB icons_2015 RELATED: Pre Investment and Market Entry Advisory from Dezan Shira & Associates

Philippines: Internet speeds lag

The Akamai State of the Internet Report stated that fixed broadband connection in the country remains the second slowest in the Asia Pacific region. This is despite network expansion done by the telecom companies. The results showed that out of 15 countries, the Philippines ranked 14, with a speed of 4.2 Mbps – a little faster than India’s average of 4.1. Nevertheless, the Department of Information and Communication Technology is pushing for faster connectivity with the deployment of fiber and wireless technology throughout the country.

The report also noted that this is the first time that all the countries surveyed have speeds above 4 Mbps, while seven exceeded the 10 Mbps limit. Still, the Philippines saw the biggest drop of 13 percent for broadband adoption in the last quarter. In order to boost internet connectivity, the government has warned the two telecom companies PLDT and Globe Telecom to improve speeds and reduce costs or else risk opening up the country to foreign players by changing the 60/40 foreign ownership in the telecom sector. If this happens, the move will be welcomed by foreign investors and may ultimately benefit consumers.

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Thailand: Manufacturing slows in November

Manufacturing in Thailand further slowed in November, in part due to the passing of the country’s king. The Purchasing Managers’ Index (PMI), which measures the manufacturing sector, recorded a new low of 48.2 in November. A PMI reading of below 50 indicates a contraction. In Thailand’s case, this has been happening for the past seven months. The decline was further exacerbated by a sharp fall in output and new orders. Manufacturers also continued to cut jobs over the past 11 months.

Business is expected to normalize next year, particularly after the mourning period following the king’s death is over. Nevertheless, domestic and international demand remain slow. The only silver lining is the government’s plan to fast track infrastructure project initiatives next year, which may help the manufacturing sector.


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