ASEAN Regulatory Brief: Thai Insurance, Malaysian Finance Law, and Impending Tech Regulation in Indonesia
Thailand: Proposed Regulatory Framework for E-insurance
As part of the Thailand’s promotion of the digital economy and e-commerce, the Office of Insurance Commission (OIC) in partnership with location insurance associations plans to come out with a regulatory framework for e-Insurance. The regulations aims to promote the emerging industry while protecting consumers when they obtain personal insurance through electronic transactions. Main points of the regulation include:
- Insurers must have a secured IT system which complies with the law, specifically the Thai Electronic Transactions Act
- E-Insurance must still allow customers the right to choose whether to obtain policy documents in an electronic version or a traditional hard copy
- Insurers must have a search engine system, where customers can access their insurance policy and coverage provided
- OIC representatives may conduct an annual assessment to check if insurers comply with all e-Insurance regulatory requirements
At present, insurance policies procured via electronic transaction are regulated under the electronic transactions Act. New regulations are expected to be published and opened to public consultation in the latter half of the year.
Malaysia: New Regulations for Peer-to-Peer Financing
The Security Commission of Malaysia (SC) has come out with a regulatory framework for peer-to-peer financing (P2P) which became effective May 2. The regulations set requirements for registration of a P2P platform under amended guidelines regarding recognized markets. The guidelines clarify the responsibility of a P2P operator, and the type of issuers and investors that can participate in a P2P. The regulatory framework aims to enable sole proprietorship, partnerships, incorporated limited liability partnerships, primate limited, and unlisted public companies to access market-based financing as a means of funding their projects via an electronic platform.
Business enterprises that want to operate a P2P platform must submit their application to the SC and be locally incorporated with a minimum paid capital of US $1,246,901 (RM 5 million). In addition, other regulations must be met such as compliance with platform rules, having an efficient and transparent risk scoring system for issuers, and instituting contingency arrangements to ensure business continuity. P2P operators are required to ensure that funds obtained from investors are placed in a trust account until the minimum target amount is met. A P2P operator must also provide all relevant information to the investor. The P2P regulatory framework is part of the government’s ongoing effort to provide greater access to market based financing through the use of technology. Malaysia became the first ASEAN country to introduce regulatory framework for crowdfunding; six registered equity crowdfunding platforms are expected to commence operations in 2016.
Indonesia: Single Authority Likely for Financial Tech Companies
The government is preparing new rules for financial technology (fintech) companies that will be completed by the end of the year. The most important components of regulations will allow fintech startups to grow and collaborate with traditional banks. Officials from the Financial Services Authority (OJK) have stated that they will consult China, Australia, Singapore and Malaysia and seek their suggestions on such regulations.
At present, fintech startups do not clearly fall under any single authority. While technology startups are regulated by the Communications Ministry, financial services are governed by the OJK. Analysts say that the sector is in need of a new regulation, particularly as the country has attracted several fintech startups and crowdfunding sites. While some see fintech as threatening the traditional banking industry, others see it as complementing it.
Analysts say that fintech companies can particularly cater to the ‘missing middle’ – the ‘unbankable’ small-and medium-sized enterprises (SMEs) and lower-to-middle-income individuals. This ‘missing middle’ consists of enterprises with a monthly revenue between US $740 (Rp 10 million) to US $7507 (Rp 100 million) and lack access to finance. A study says that by 2020 there will be more than 57 million potentially bankable micro businesses.
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