Every June FCI publishes its Annual Review giving an overview of progress made by the world's biggest and most important factoring network. The Annual Review also presents FCI's annual figures as well as global factoring statistics. In this extract, we explore South & South East Asia's Regional Updates, presented by Mr Thompson Lui, FCI Regional Manager South and South East Asia.
2022 has been a great year in terms of growth. Compared to the global figures from members of around 18.3%, South & South East Asia (SSEA) figures presented a higher number of over 44.6% though these numbers are only estimates. The SSEA market consists of both mature and emerging ones. Outstanding growth from the Indian emerging market witnessed 83.4%, and Singapore, as a mature market, saw 52% YOY growth. Vietnam showed growth of 11.1%, while other markets remained flat.
Legal, Regulatory and Advocacy
Last year was quiet in specific markets in this area but not India. On 14 January 2022, the Reserve Bank of India issued the Registration of Factors (Reserve Bank) Regulations 2022, a notification in exercise of the powers conferred under Section 3 read with Section 31A of the Factoring Regulation Act, 2011. The industry is on a continual journey of clarification, enabling it to adapt and evolve based on clear guidelines. This is a clearer direction from NBFC-Factors and NBFC-ICC perspectives on the requirements to obtain a Certificate of Registration as a factor to start a factoring business within six months.
Promotion and Awareness
Travel in 2022 was challenging for the SSEA region, but many restrictions were lifted in 2023. Due to this, it was difficult to visit potential and existing members, so FCI hosted the Regional Networking E-vent for Asia Virtually. This event was for members in the region to expand their networks while hearing from a few key regional leaders on important topics. I also was able to join various partner events virtually, including the FIDN ‘Movables Finance & SCF Market’ in the Philippines and Other Developing APEC Economies under the Context of Post-COVID Recovery, the International SCF opportunities in the ASEAN market: connecting new factors to create opportunities for SCF and receivables funding/risk mitigation virtual networking event and the future of SCF and Receivables financing online event. I was able to establish awareness of FCI and promoted our organisation through these events.
Compared to the previous year, 2021, when FCI only had one new additional member from Bangladesh, in 2022, we saw a more diversified addition. FCI welcomed eight new members from the South and Southeast Asia region in 2022, including four from India, one from Indonesia, two from Singapore, and one from Vietnam.
SSEA mainly consists of emerging nations where many are categorised as tier 2 by the World Bank income tiering system, lower middle and upper middle-income groups to be precise. Banks and NBFIs here are relatively more sensitive in costs associated with developing international factoring and related fees in joining FCI. However, some nations in this region still need a clear regulatory landscape that can foster a conducive environment for the development of international factoring. This process takes time and effort. To meet these challenges, FCI is determined to work with regional partners like ADB, IFC, FIDN, etc.
Anticipate a more dynamic 2023 market with positive momentum as regional events return to enhance awareness and promote international factoring, including educational initiatives focused on SCF-related products. FCI’s proactive initiatives promoting education and expanding memberships will be added to the already healthy pipeline. Despite budgetary constraints for 2023 travel, I will focus on high-growing markets and remotely develop markets like that of Oceania. Finally, we should also pay keen attention to the development of fintech and the concept of ‘Marketplace’ as this may take this region to a new level of advancement.
(Photo: © Sadik Boujaida)