The central bank of Malaysia is working with ASEAN 5 (Indonesia, the Philippines, Singapore, Thailand, and Malaysia), together with the Bank for International Settlements Innovation Hub in Singapore, to put in place a multilateral platform for cross-border payment connectivity, news agency Bernama reported on Thursday.

Bank Negara Malaysia Assistant Governor Suhaimi Ali said the project, known as Project Nexus, aims to make transactions across borders to be efficient, similar to the domestic payment system.

He said the launch of bilateral cross-border payment linkages on Thursday is in the right direction, even though bilateral connectivity remains a challenge, as it is expensive and may not be scalable.

“Bank Negara is trying to resolve this, because as an open economy, we have many trade partners, wherein there are two-way flows that need to be managed,” he was quoted as saying.

“Besides, we will also need to address know-your-customers issues to ensure that people who are [making the] transactions are not related to crimes and illegal activities,” he said in a panel discussion titled “Digitalisation in Payments: Going Digital with Confidence in an Innovative Landscape”.

The panel discussion was held in conjunction with Bank Negara Malaysia’s Sasana Symposium 2023, and the launch of bilateral cross-border payment linkages at Sasana Kijang, on Thursday.

Suhaimi said the complexity of Project Nexus cannot be undermined, and among the factors that need to be considered before implementing the platform in the real world is the governance arrangement for the entity that would manage and operate the Nexus solutions.

“This would require, among others, the right structure, who is going to be the vendor running it, and what kind of oversight that BNM needs to have and so on.

“At this point, we do not know the final outcome of this, as it is an exploration together with ASEAN 5,” he added.

The announcement to set up a multilateral platform for cross-border payment connectivity comes as ASEAN countries are pushing for better integration. According to the Diplomat, ASEAN has signed a number of agreements to encourage internal integration. The ASEAN Trade in Goods Agreement (ATIGA) of 2010 reduced intra-ASEAN tariffs to 0.2 percent in 2017. The 10th package of the ASEAN Framework Agreement on Services was agreed upon in 2018 and covers broader sub-sectors of services. The ASEAN Agreement on Electronic Commerce entered into force in December 2021. The development of an ASEAN Digital Economy Framework Agreement is high on the bloc’s agenda. The ASEAN Comprehensive Investment Agreement (ACIA) was signed in 2009 to position ASEAN as a preferred production and investment hub.

Meanwhile, a key highlight at the symposium is the showcasing of Malaysia’s cross-border QR payment linkages with Indonesia, Singapore, and Thailand. It features an exhibition with food vendors from Malaysia, Indonesia, Singapore, and Thailand.

Event participants can experience making live cross-border QR payments by purchasing local delectables from food vendors from the participating countries.

Customers of participating financial institutions can now make retail payments by scanning QRIS, NETS, and PromptPay QR codes via mobile banking or e-wallet apps. It supports in-person payments at physical stores and online
e-commerce transactions. The same also applies to tourists from these countries to Malaysia.

Bank Negara hosted its first BNM Sasana Symposium 2023 on Thursday in Kuala Lumpur. In her opening remarks, the central bank Governor Nor Shamsiah Mohd Yunus emphasised the importance of structural reforms.

“To secure our future, the country must stay the course in implementing vital reforms. We must fortify our defences against crises. We must critically examine our priorities to increase our growth potential and meet sustainable goals,” she said.

“We must rebuild the buffers we have drawn down on to strengthen our resilience to future shocks. And we must enhance our capacity to adapt and change in order to manage risks and exploit opportunities that we may not yet see today. For many of the challenges Malaysia faces, the solutions require a whole-of-nation approach. Hence the theme of this Symposium – Structural Reforms for a Stronger Malaysia,” said the Governor.

Over 700 guests attended the one-day discourse on pertinent topics through seven panel sessions. The sessions discussed macroeconomic topics and current pressing issues such as financial scams, digitalising motor insurance claims, and social protection, among others.

Indonesia and Malaysia announce commercial launch of cross-border QR payment linkage