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 CHALLENGES IN THE INDONESIAN CORRIDORS FOR NON BANK RSP IN MALAYSIANON 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 BHDMERCHANTRADE 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 OFFICENo.10, Gr Floor, Wisma GTK, Jalan Hang Lekiu, 50100 KLTel : +603‐2031 9896 Fax : +603‐2031 8978
CHALLENGES IN THE INDONESIAN CORRIDOR
1.1. REACH OUT ABILITIESREACH OUT ABILITIES
2.2. INFORMAL CHANNELSINFORMAL CHANNELS
TWO MAJOR CHALLENGESTWO MAJOR CHALLENGES
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 ABILITIES1. REACH OUT ABILITIES
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 areasNo proper transportation facilitiesRestricted accessibility situated within private propertiesWorkers free movement is restricted to its surrounding
CHALLENGES IN THE INDONESIAN CORRIDOR
1. REACHREACH OUT ABILITIES Cont..
Domestic Helpers or House Maids
Located in scattered localities within urban and suburban areasRestricted mobilityLow literacy levelEmployer provide all basic requirementsEmployer 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
1. REACHREACH OUT ABILITIES Cont..
The following 3 informal channels are being widely used by the TKIsin remitting money home:
Money Changers
Mostly concentrated in urban areasServicing both documented and undocumented workers from the manufacturing ,construction and service sectorsEstimated about 700 active money changers involved in these businessA “TRUSTED REMITTANCE CHANNEL” among the TKIs due to its long existence in the country
CHALLENGES IN THE INDONESIAN CORRIDOR
2. INFORMALINFORMAL CHANNELS
Pickup Services
Operated by illegal courier companiesDeliver and pick up goods together with the remittancesServicing the plantation and agricultural sectors for both the documented and undocumented workers
CHALLENGES IN THE INDONESIAN CORRIDOR
2. INFORMAL CHANNELSCHANNELS 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
CHALLENGES IN THE INDONESIAN CORRIDOR
2. INFORMAL CHANNELS Cont2. INFORMAL CHANNELS Cont……
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
MerchantradeMerchantrade’’ss Corporate Philosophy Corporate Philosophy is to serve customer based on our is to serve customer based on our
““Personal Touch ApproachPersonal Touch Approach””
TWO INNOVATIVE PROJECTSTWO INNOVATIVE PROJECTS
1stSeparating the remitters according to genderSuccessfully launched as a Pilot Project at our KL Main BranchSpecial counters assigned for female remitters onlyEncouraging response among the Filipino female workers and Indonesian female workers too
They felt more secured and can remit at easeTo be implemented at all our branches soon
MERCHANTRADE’S INNOVATION CONTINUES…
PERSONAL TOUCH APPROACH
SPECIALLY DESIGNATED COUNTER FOR FEMALE REMITTERS
2nd
Setting up of dedicated branch/kiosk/counters ONLY for the Indonesian TKIsThe First TKI dedicated branch will be rolled out for operations tentatively on 1st September 2008Expected to roll out at least 20 TKI dedicated branches/kiosk/counters throughout Malaysia soon
MERCHANTRADE’S INNOVATION CONTINUES…
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 YOUTHANK YOU
MERCHANTRADE ASIA SDN BHDMERCHANTRADE ASIA SDN BHD
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