ENHANCING THE EFFECTIVENESS AND INTEGRITY OF BILATERAL REMITTANCE TRANSFERS BETWEEN MALAYSIA AND INDONESIA June 9, 2008 by MERCHANTRADE ASIA SDN BHD
CHALLENGES IN THE INDONESIAN CORRIDORS FOR NON BANK RSP IN MALAYSIA by DR ABDUL RAHMAN MOKHTAR (PhD) GENERAL MANAGER MERCHANTRADE ASIA SDN BHD
RSP IN MALAYSIA NON BANK Non Bank Remittance Service Providers (RSP) are new players in the Malaysian financial industry, a result of the liberalization of the financial sector by BNM Estimated around 18 license holders at the moment Modus Operandi is either direct tie up with partners in the corresponding countries either banks /private remittance houses or using the platform of International Remittance Service Providers Mostly focusing into outbound remittances Majority situated in urban areas
MERCHANTRADE ASIA SDN BHD Established in 1996 Start off as international long distance telephony services Provider Launched own Mobile Services in 2007 Specially for migrant workers in Malaysia Obtain RSP license from BNM in 2007 First remittance branch in operations from Feb 2007 Operating under the name of Merchantrade Express Remittances Long history of association with migrant workers in Malaysia Currently operating 13 remittance branches in Malaysia Providing remittance services to 7 countries
MERCHANTRADE KL MAIN OFFICE No.10, Gr Floor, Wisma GTK, Jalan Hang Lekiu, 50100 KL Tel : +603 2031 9896 Fax : +603 2031 8978
CHALLENGES IN THE INDONESIAN CORRIDOR TWO MAJOR CHALLENGES 1. REACH OUT ABILITIES 2. INFORMAL CHANNELS
CHALLENGES IN THE INDONESIAN CORRIDOR 1. REACH OUT ABILITIES The TKIs are being employed in almost every industries and geographically divided as follows: Domestic helpers are mostly located in the urban areas and suburban areas Plantation sectors are located in rural areas Construction sector are positioned in the urban and suburban areas Manufacturing sector are within the urban areas Service sector are within both urban and suburban areas Agricultural sector are mostly in rural areas
CHALLENGES IN THE INDONESIAN CORRIDOR 1. REACH OUT ABILITIES Cont.. The 3 sectors of plantation, agriculture and domestic helpers consist about 55% of the total TKIs in Malaysia. RSP has difficulties in reaching out to these groups of TKIs in view of the geographical distribution and constraints: Plantation and Agricultural sectors Located in ultra remote areas No proper transportation facilities Restricted accessibility situated within private properties Workers free movement is restricted to its surrounding
Domestic Helpers or House Maids CHALLENGES IN THE INDONESIAN CORRIDOR 1. REACH OUT ABILITIES Cont.. Located in scattered localities within urban and suburban areas Restricted mobility Low literacy level Employer provide all basic requirements Employer will remit on their behalf Other constraint: Habit of sticking to their own ethnic groupings such as Acehnese, Madurese etc. and seldom mix with other ethnic groups
CHALLENGES IN THE INDONESIAN CORRIDOR 2. INFORMAL CHANNELS The following 3 informal channels are being widely used by the TKIs in remitting money home: Money Changers Mostly concentrated in urban areas Servicing both documented and undocumented workers from the manufacturing,construction and service sectors Estimated about 700 active money changers involved in these business A TRUSTED REMITTANCE CHANNEL among the TKIs due to its long existence in the country
CHALLENGES IN THE INDONESIAN CORRIDOR 2. INFORMAL CHANNELS Cont Pickup Services Operated by illegal courier companies Deliver and pick up goods together with the remittances Servicing the plantation and agricultural sectors for both the documented and undocumented workers
CHALLENGES IN THE INDONESIAN CORRIDOR 2. INFORMAL CHANNELS Cont Mobile coupon from Indonesia New trend in the market Fast delivery TKIs buy the Indonesian mobile reload coupon in Malaysia Can be easily purchased via POS terminal and any mobile retailers in Malaysia. Send the mobile reload pin to the beneficiary in Indonesia Beneficiary redeem money with mobile retailers in Indonesia Servicing both documented and undocumented workers
OVERCOMING THE CHALLENGES The following measures are suggested: e Remittance Able to reach out to the workers in the plantation, agriculture and domestic helpers Plantation owners can remit on behalf of their employees online Employer of domestic helpers can remit electronically at their convenience Opening more branches for better reach out abilities to challenge the informal channels such as the money changers network Education and to simplify the existing e Money facilities to overcome the impact of the Indonesian mobile reload coupon
MERCHANTRADE S INNOVATION Merchantrade s Corporate Philosophy is to serve customer based on our Personal Touch Approach
MERCHANTRADE S INNOVATION CONTINUES TWO INNOVATIVE PROJECTS 1 st Separating the remitters according to gender Successfully launched as a Pilot Project at our KL Main Branch Special counters assigned for female remitters only Encouraging response among the Filipino female workers and Indonesian female workers too They felt more secured and can remit at ease To be implemented at all our branches soon
PERSONAL TOUCH APPROACH SPECIALLY DESIGNATED COUNTER FOR FEMALE REMITTERS
MERCHANTRADE S INNOVATION CONTINUES 2 nd Setting up of dedicated branch/kiosk/counters ONLY for the Indonesian TKIs The First TKI dedicated branch will be rolled out for operations tentatively on 1 st September 2008 Expected to roll out at least 20 TKI dedicated branches/kiosk/counters throughout Malaysia soon
SUMMARY Pre departure Financial literacy programmes organized jointly by the authorities of Indonesia and Malaysia is necessary to equip the TKIs with the right financial knowledge on the right remittance channel to choose when they arrive in Malaysia.
THANK YOU MERCHANTRADE ASIA SDN BHD