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Major Japanese banks expand through Southeast Asian partnerships

/ 05:05 PM July 30, 2018

BANGKOK — Major Japanese banks are teaming up with Southeast Asian financial institutions to increase their presence in the region.

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By partnering with local entities that are well-versed in their nation’s regulations and trade practices, Japanese banks can reduce risk while taking advantage of business opportunities created by the region’s growing economy.

Sales fairs

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MUFG Bank and Security Bank it has a stake in held a sales fair Wednesday in Manila. In cooperation with MUFG Bank’s Thai subsidiary, Bank of Ayudhya, and its Vietnamese partner, Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank), more than 200 business discussions were held with 88 companies from four countries.

The growing economies of Southeast Asia offer a huge consumer market of more than 600 million people that is undergoing drastic change.

“There are small and mid-sized local companies, which gives us confidence to expand,” said a department chief at Kyoto-based Pharma Foods International Co., which deals in raw materials for supplements.

Makoto Kobayashi, a managing executive officer at MUFG Bank, said that the company will take advantage of its expanded banking network in Asia through acquisitions and other means, and “offer comprehensive financial services so we can grow along with our customers.”

MUFG Bank is also planning a sales fair in Indonesia, where it is in the process of purchasing a major local bank.

Mizuho Bank teamed up with the Thai authorities in March to develop a special economic zone, in which the Thai government is investing more than ¥5 trillion to improve local industries.

With Japanese and Chinese companies competing over orders, Mizuho is supporting Japanese firms by conveying their needs to parties in Thailand, and using its network of bases in about 40 countries and regions to attract firms from all over the world.

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Anticipating the effectuation of the Trans-Pacific Partnership trade pact that includes Vietnam and 10 other nations, and the possible future entry of Thailand, regional banks are pouring resources into establishing new bases in the region.

Shimizu Bank in Shizuoka Prefecture and Hokuto Bank in Akita Prefecture have formed a partnership for overseas business.

Based around a representative office in Thailand, they are seeking to complement each other as they make new moves through exchanges with customers, attracting tourists and expanding exports of specialty products.

Downside risk

Japanese banks are seeking to increase their presence in Southeast Asia because, unlike Japan and other developed nations, there is still room for considerable growth in lending and other banking services there.

In Japan, the long stretch of low interest rates has harmed profits. Hopes are high that Southeast Asia will be a growth area.

However, many Southeast Asian nations are reliant on exports. Increased trade friction, such as that between the United States and China, “is a clear downside risk,” an Asian Development Bank official said.

Higher U.S. interest rates have raised fears among some analysts over the outflow from Southeast Asia of investment money and sudden currency devaluations. There is also risk that political situations could suddenly destabilize.

Japanese banks are expected to find some difficult waters to steer through.

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TAGS: banks, Business, Japan, Southeast Asia
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