TAIPEI – Major companies in Taiwan, both locally based and multinational corporations, will increasingly use offshore China Renminbi (RMB) for payments, according to data compiled and analyzed by Bank of America Merrill Lynch. The data was collected from Taiwan-based treasurers and chief financial officers (CFOs) who attended the bank’s Global Transaction Services’ (GTS) annual Taiwan Treasury Exchange conference that took place yesterday in Taipei.
According to Taiwan’s leading treasurers, offshore RMB usage in cross-border payments continues to expand and will gain further traction in 2015. Fifty-five percent of Taiwan-based treasurers polled yesterday stated that the RMB is the most relevant currency to the future of their business, ahead of the U.S. dollar (29 percent) and the Taiwan dollar (13 percent).
Offshore RMB is currently used by over one-third of Taiwan corporations, with utilization in international business poised to expand significantly. For instance, approximately 30 percent of Taiwan-based treasurers estimate that offshore RMB will be used more frequently by their corporations for cross-border payments over the next year.
Outside of Greater China – Hong Kong and Taiwan – treasurers also see opportunities to expand offshore RMB payments into other geographies. Specifically, approximately 25 percent of Taiwan-based treasurers forecast that their corporations will use offshore RMB for cross-border payments into regions outside of Greater China, including Southeast Asia and Europe, over the coming year.
“Taiwan’s corporations will continue to embrace the opportunities afforded by the ongoing RMB internationalization program, which is consistent with our ongoing dialogue with clients,” said Kitty Yen, head of Corporate Treasury Sales, Taiwan, Bank of America Merrill Lynch. “As currency liberalization will continue and business ties with China will inevitably evolve further, Taiwan-based treasurers understand that having a sustainable RMB strategy will be an increasingly vital component of their larger treasury management operations and structure.”
Taiwan-based treasurers also believe full convertibility of the RMB will be a measured and controlled process, which is consistent with statements made by China’s policymakers. Over 40 percent of respondents believe that that the RMB will be fully convertible by 2020, while approximately 55 percent of Taiwan-based treasurers estimate that full convertibility will not be achieved within this timeframe.
Other key findings include:
* Corporations in Taiwan cite intra-Asia opportunities as a driver of future revenue. Sixty-one percent of respondents believe that Asia Pacific offers the greatest opportunity currently, compared to 18 percent in North America and 12 percent in the European Union.
* Foreign exchange will increasingly impact treasury performance in Taiwan. Approximately two-thirds of respondents cite foreign exchange as a primary driver of treasury performance in 2014.
Bank of America Merrill Lynch’s Taiwan Treasury Exchange was hosted at the W Hotel in Taipei on August 7. The one-day event was attended by over 100 treasurers, CFOs and treasury professionals representing Taiwan’s largest corporations operating in this market.