SINGAPORE – Insurers and financial planners in Southeast Asia should gear up for the long haul.
A poor grasp of basic concepts such as inflation, a deluge of information and uncertain economic prospects are hurting the ability of individuals to plan ahead.
Basic financial knowledge and skills across Southeast Asia – and the wider Asia-Pacific – fell in 2014, according to the MasterCard Financial Literacy Index published last week. The survey of more than 8,000 people last year measured basic money management as well as knowledge of financial products.
“A lot of knowledge is being made available, but there are also a lot of changes too to investment options, and that only adds to the complexity,” said T.V. Seshadri, MasterCard’s Asia Pacific group executive for global products and solutions.
The subindex measuring overall knowledge about financial products, services and concepts, as well as ability to plan for long-term financial needs dropped in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Myanmar.
Indonesia and the Philippines scored the lowest in the region. On basic money management, the Philippines scored 73, while Indonesia scored 70. Both were lower than the Asia-Pacific average of 75.
Only Vietnam improved from 2013, albeit slightly.
The decline coincides with easier credit conditions in the region as central banks lower interest rates to stimulate economic growth. Loans are now cheaper, but savings deposits are also yielding less.
“In our current low interest rate environment, peoples’ savings and time deposits – traditional sources of retirement income – are no longer an option,” Seshadri said. “House prices are also falling in many markets, and other safe haven investments such as gold are not as attractive any more. People are worrying more about retirement.” –Miral Fahmy, Reuters
c/o National Trade Union Center Philippines
Suites 8 N & O, Future Point Plaza 2, 115 Mother Ignacia St., South Triangle, Quezon City 1103, PHILIPPINES