Optimising liquidity and risk amid geopolitical and economic shifts

Treasury operations in Asia, particularly Southeast Asia, in 2025 and 2026 are navigating a complex and evolving landscape shaped by economic, geopolitical, and technological forces. The region is experiencing easing inflation and interest rates yet remains challenged by heightened geopolitical tensions, especially between the US and China, which impact currency volatility and supply chain strategies.

Bond markets in Asia show positive fundamentals but face vulnerabilities from fiscal deficits and debt risks. Treasury functions must adapt to rising cyber threats, digital transformation demands, and the complexities of managing cash flow across multiple jurisdictions.

Simultaneously, opportunities arise from increased M&A activity, sectoral shifts towards technology and infrastructure, and innovative financing methods such as green financing and alternative deal structures. To succeed, treasury leaders must enhance risk management, optimise capital structures, and develop talent with new skills to sustain resilience and seize growth prospects.

Treasury transformation and digitalisation

Namit Kamra, CFO of PT Indorama Polychem Indonesia and country lead of corporate banking, treasury & risks for Indorama Ventures (Indonesian subsidiaries), observes that treasury functions in Asia are undergoing a significant transformation driven by technological advancements and evolving economic conditions.

"Companies increasingly adopt digital tools to improve cash flow forecasting, automate reconciliation, and manage liquidity more effectively," he adds. He highlights the emergence of AI-supported dashboards that provide real-time cash visibility and dynamic scenario analysis, enabling more informed decision-making in volatile environments.

Kamra emphasises, "If the cash is king, the DATA is queen; we need to ensure we manage both Cash and Data optimally. Users and decision makers are moving from just Data to "Real-Time Data" – for faster and more accurate decision making."

He notes that treasury functions are becoming more intelligent and more automated with the influx of Software and supporting tools; "though the pace still needs to pick up, however, the direction is perfect. Smart & Intelligent treasury solutions are available and getting more and more acceptability by the users."

In terms of scalability, he opines that there are big shoes to fill, and Asia has a long way to go.

Liquidity management amid easing interest rates

With interest rates expected to ease in markets like Indonesia, Kamra advises treasury teams to focus on enhancing cash flow forecasting accuracy and reassessing investment policies. He recommends using advanced forecasting tools integrated with real-time data to improve cash flow predictions and allocate surplus funds more effectively.

"Additionally, diversifying into slightly longer-term or higher-yielding instruments, such as short-duration bonds or high-quality commercial paper, can offer better returns while maintaining a robust risk management framework," he continues.

Kamra stresses that liquidity optimisation extends beyond quick cash conversion from sales; it encompasses managing both sides of the balance sheet—payables, receivables, inventory turnover, surplus cash deployment, and capital expenditure management.

"Liquidity management is now seen in tandem with working capital efficiencies," he says, highlighting the importance of metrics like DSO, DPO and DIO ratios. "Having said that, whatever may be the interest rate cycle, the optimal use of liquidity is of key importance," he adds.

Mitigating risks from Us-China tensions and currency volatility

The ongoing US-China trade tensions introduce significant risks for Asian businesses. Kamra advises treasury professionals to employ dynamic hedging strategies, utilising forward contracts and options to mitigate currency exposure.

He also recommends diversifying supply chains and exploring alternative markets to reduce reliance on volatile regions, a shift that could represent a paradigm change if tensions escalate.

"The supply chain dynamics are changing, and corporates are looking out to shift the procurement and supply channels from one country to another, even from one continent to another. This is going to be a paradigm shift if the tensions escalate." Namit Kamra

Given the weakening US dollar and volatility in currencies like the Indonesian Rupiah, timely and accurate currency risk measurement and hedging are critical.

Leveraging digital transformation for treasury efficiency

Digital transformation is revolutionising treasury operations in Asia. Kamra highlights fintech innovations that enable real-time payments, automated reconciliation, and predictive analytics for dynamic risk management. Integration platforms that connect ERPs and banks provide seamless, real-time insights, enhancing decision-making.

"Data-driven AI Powered risk models using ML, NLPs and other AI techniques support liquidity risk forecasting models, forecasting future cash flows and raising alarms of liquidity shortfalls and traps expected to come in future," opines Kamra.

"Integration platforms connecting ERPs and banks provide seamless real-time insights that enhance decision-making. AI-powered risk models using machine learning and natural language processing support liquidity risk forecasting and alert treasury teams to potential shortfalls." Namit Kamra

For multi-jurisdictional operations, robust treasury discipline is essential, including proper currency hedges, cross-country fund utilisation, and related party funding.

In terms of improving cash flows, he observes that the treasury function is evolving to include a holistic approach with real-time integration with Banks "through APIs with open banking allowing direct Bank feeds and Swift GPIs allowing real-time payment tracking for cross-border transactions."

Strengthening cybersecurity and fraud prevention

With cyberattacks and financial fraud on the rise, Kamra emphasises the need for robust cybersecurity measures. Secure payment systems combining permissioned blockchain with central bank digital currencies can enhance transaction security and operational efficiency. "Regular training for treasury staff is vital to recognise and mitigate threats," he continues.

Kamra highlights recent ransomware attacks in Indonesia as a warning and stresses the importance of system controls to prevent fictitious money transfers, duplicate payments, and payment risks. "Additionally, data protection is gaining traction not only on the corporate side but also with the regulators who are coming up with stringent and clear rules on this. We need to take data protection seriously and ensure compliance to its entirety," he affirms.

Balancing M&A growth with financial resilience

Kamra underscores the importance of financial discipline and strategic clarity when pursuing M&A-driven growth. Acquisitions must align with long-term objectives and capital priorities.

"Rigorous due diligence, a clear understanding of integration risks, and prudent liquidity management are foundational to ensuring that growth initiatives do not compromise our financial resilience," he continues.

He adds that post-merger integration should focus on capturing synergies and operational efficiencies to deliver sustained shareholder value.

Addressing talent gaps and upskilling treasury teams

The evolving treasury landscape requires continuous upskilling. Kamra notes that treasury professionals must combine finance knowledge with technological aptitude.

"The evolving landscape of treasury operations necessitates continuous upskilling of treasury teams. Investing in training programs focused on data analytics, advanced forecasting techniques, and the use of Treasury Management Systems (TMS) is essential," says Kamra.

Additionally, he believes collaborations with educational institutions and industry bodies can provide specialised courses and certifications. Kamra calls this "Learning & Talent upgrade" a must for future readiness.

Optimising bank relationships amid rising interest rates

In a high-interest-rate environment, Kamra advises treasury teams to adopt a proactive and strategic approach to liquidity and risk management. "Engaging early and consistently with our banking partners allows us to secure competitive terms for both funding and hedging arrangements."

Regular reviews of banking structures and market developments ensure capital strategies remain cost-effective and aligned with growth objectives. He stresses the critical importance of comprehensive hedging for multi-currency and multi-country exposures.

Adapting to prolonged high interest rates and inflation

Kamra acknowledges that the persistence of high interest rates since 2022 has increased treasury costs and slowed capital investments. However, some economies are beginning to see rate cuts. Inflation is mainly under control except in some countries.

To maintain operational efficiency, treasurers should optimise working capital by extending supplier payment terms, accelerating receivables, and reducing inventory. "Additionally, reassessing capital expenditure plans and prioritising investments that offer the highest returns can help mitigate the impact of inflation on profitability," he adds.

He posits that collaboration among treasurers, banks, regulators, and fintech providers is essential to developing sustainable solutions.

When it comes to impacting treasury dynamics, Kamra firmly believes in emerging trends such as decentralised finance, automated trade finance tools, smart contracts, AI-driven CRM systems, and blockchain in supply chains. "This could do wonders if adapted well with Data Privacy and Cyber security aspects well covered," he continues.

Broader market context

Supporting Kamra's insights, the Asian Development Bank's June 2024 report on bond market developments notes that Southeast Asia's bond markets are expanding but remain relatively small compared to those of other East Asian economies.

Government bond issuance in ASEAN increased significantly in Q1 2024, driven by countries such as the Philippines. Meanwhile, corporate bond markets showed a recovery, supported by issuance in China, Hong Kong, and Singapore. However, fiscal deficits and debt risks remain concerns that could affect market stability.