Launch of cross-border QR payment linkage between Malaysia and Indonesia 

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Bank Negara Malaysia (BNM) and Bank Indonesia (BI) launched a cross-border QR payment linkage that will enable instant, secure, and efficient cross-border payments between Malaysia and Indonesia. Through this linkage, consumers in both countries will be able to make retail payments by scanning the DuitNow or QRIS (Quick Response Code Indonesian Standard) QR codes displayed by offline and online merchants. This marks the beginning of a pilot phase that will pave the way for a full commercial launch in the third quarter of 2022. This linkage will be expanded in the future to support cross-border remittance where users in both countries can make real-time fund transfers with convenience. According to BNM deputy governor Jessica Chew Cheng Lian, the cross-border QR payment linkage between Malaysia and Indonesia marks a key milestone in the long history of collaboration between both countries. Phase 2 of the QR payment linkage between Malaysia and Thailand has also gone live this week. Such developments will bring us closer towards realising the vision of creating an Asean network of fast and efficient retail payment systems. This in turn, will further accelerate digital transformation and financial integration for the benefit of individuals and businesses. According to Bank Indonesia deputy governor Doni P Joewono, this initiative links cross-border payments through the interconnection of national QR codes of the two countries and also represents another milestone of the Indonesian Payment System Blueprint 2025. Bank Indonesia recognises the significance of cross-border payment system linkages and has continuously pursued such initiatives. This will give more options for users in the cross-border payment space and serve as a key to improve transaction efficiency, support the digitalisation of trade and investment, and maintain macroeconomic stability by promoting a more extensive use of Local Currency Settlement (LCS) Framework. Through the use of direct quotation of local currency exchange rates provided by Appointed Cross Currency Dealer banks under the LCS Framework, it will improve the efficiency of transactions thus lowering the transaction cost. The payment connectivity will further strengthen the close economic ties between Malaysia and Indonesia, and support post-pandemic economic recovery. As international travel resumes, tourism will be a key sector that will greatly benefit from this service. The sizeable traveller flows between the two countries recorded an average of 5.6 million arrivals yearly before the pandemic. Both countries are also key remittance corridors for their nationals working abroad who will benefit from faster, cheaper, and more transparent cross-border remittances. This initiative is also aligned with the G20 Roadmap for Enhancing Cross-border Payments developed by the Financial Stability Board and other international bodies. This project is made possible with the collaboration of various stakeholders from both countries under the joint stewardship of BNM and BI. These include Payments Network Malaysia Sdn Bhd (PayNet), the Indonesian Payment System Association (ASPI) and RAJA (Rintis, Artajasa, Jalin, and Alto) as payment system operators. The settlement banks are CIMB Bank Bhd, Bank Mandiri and Bank Negara Indonesia. Other participants include various banks and non-bank payment service providers from both countries. 

Malaysia’s 2021 PPI records largest annual rise in a decade after Dec’s 10% gain – DOSM 

According to Department of Statistics Malaysia (DOSM) chief statistician Datuk Seri Dr Mohd Uzir Mahidin, Malaysia’s Producer Price Index (PPI) for local production increased by 10% year-on-year (y-o-y) in December 2021 as opposed to a decrease of 2.1% recorded in the corresponding month of the preceding year, mainly due to slower pace in primary commodities’ prices but inflationary pressures continued. For 2021, the country’s PPI increased 9.5% from a year earlier, the largest on-year annual rise in a decade. The increase in December 2021 was attributed to the mining index that rose 45.1% from a slump of 40% recorded in December 2020, driven by higher prices for crude oil (46.8%) and natural gas (37%). Agriculture, forestry and fishing also increased at a moderate rate of 10.9% compared to 23.5% in December 2020, largely due to the incline in the indices of fishing (12.4%), animal production (11.6%) and growing of perennial crops (11.2%). The manufacturing index increased 7.6% in December 2021, contributed by the indices for subsectors of manufacture of refined petroleum products (22.3%), manufacture of vegetable and animal oils and fats (18.1%) and manufacture of basic chemicals, fertilisers and nitrogen compounds, plastics and synthetic rubber in primary forms (15.6%). The indices for the subsectors of manufacture of plastics products, manufacture of rubber products and manufacture of basic iron and steel also moved higher, while the utilities index recorded a marginal increase of 0.9% and 0.7% for water supply and electricity and gas supply indices respectively. On a month-on-month comparison, the PPI local production recorded a decline for the first time after a consistent increase for 14 consecutive months — dropped 0.6% in December 2021, with the decline mainly contributed by mining index that registered a negative 4.2%. The index of agriculture, forestry and fishing also recorded a decline of 2.9%, driven mainly by the price of oil palm fresh fruit bunches which fell 4.9% from November 2021. Chicken price also showed a 0.8% decline. Meanwhile, the manufacturing index increased marginally 0.1%, supported by a modest increase of 0.7% for manufacture of refined petroleum products subsector besides rising prices for construction-related products. However, the marginal increase in manufacturing index was also offset by a drop of 0.8% for manufacture of electronic components and boards. Similarly, the indices of water supply and electricity and gas supply rose 0.5% and 0.1% respectively. For 2021, the PPI local production recorded the highest increase in a decade to 9.5%. It was the first time increase after registering a decline for three consecutive years. In 2021, world economies experienced insufficient supply problems which cannot meet rebounding demand after movement restrictions in most countries were being lifted, which had caused disruptions to the supply chain and exerted pressure on the prices of commodity and raw materials. In addition, the unusual prolonged cold weather conditions in certain countries also led to the surge of primary commodities prices, especially natural gas. For 2022, the world is facing the threat of Omicron variant spread, which also made a significant impact on the prices of primary commodities especially crude oil. 

Financial Sector Blueprint 2022-2026 to support Malaysia’s next stage of development — BNM governor  

According to Bank Negara Malaysia (BNM) Governor Tan Sri Nor Shamsiah Mohd Yunus, the central bank envisions that the newly-launched Financial Sector Blueprint 2022-2026 will drive the financial sector to be agile and resilient to support the country’s transition to its next stage of development. BNM had identified five priorities that would anchor its efforts to promote a financial system that would secure long-term growth, planetary health and shared prosperity. The priorities are funding Malaysia’s economic transformation, elevating the financial well-being of households and businesses, advancing digitalisation of the financial sector, positioning the financial system to facilitate and an orderly transition to a greener economy, and advancing value-based finance through thought leadership in Islamic finance. While producing the blueprint has been a lot of hard work, the greater task is to turn its vision into reality. This requires work and outside-the-box thinking as the nation enters a new stage of development. Speaking at the virtual MyFintech Week 2022, she said that it is our desire and belief that the financial sector will continue to serve Malaysia well in the years ahead, doing its part to improve the well-being of the people now and for the generations to come. The financial industry is well positioned to play a stronger role in leading transformation and changes at the industry level, thanks to its strong foundation following two decades of development. BNM is committed to fostering conditions for greater market dynamism to respond to changing needs of the economy and society, which call for more and diverse actors in the financial system, operating within well-defined parameters that encourage healthy competition and innovation, alongside prudent and responsible conduct. BNM’s approach behind the blueprint would be that financial services must help the people and businesses grow their wealth, engage in trade and commerce, and build resilience. It must help customers manage financial risks and adverse events, including climate and environment related risks to secure lasting prosperity. To this end, the blueprint seeks to align the financial sector with the national aspiration to not only become a high-value-added and high-income economy, but also lay a solid foundation for a more dynamic, inclusive and sustainable development path. The blueprint was launched by Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz. 

Eye On The Markets 

This week, on Friday (28Jan), the Ringgit opened at 4.1995 against the USD from 4.1865 on Monday (24Jan). Meanwhile, the Ringgit was 3.1037 to the Sing Dollar on Friday (28Jan). On Monday (24Jan), the FBM KLCI opened at 1521.720. As at Friday (28Jan) 10:00am, the FBM KLCI is down 0.27 points for the week at 1521.45. Over in US, the overnight Dow Jones Industrial Average closed down 7.31 points (-0.02%) to 34,160.78 whilst the NASDAQ shed 189.3 points (-1.40%) to 13,352.8.  

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