Celebrating Beautiful Stories of Successful Businesses, People and Inspiring Lifestyles
Top 10's List of the Most Inspiring Women in Malaysia
MAKING CROSS BORDER VENTURES A SUCCESS
EXIM Bank Malaysia’s raisond’tre is to facilitate Malaysians in their quest to set their business foot prints globally. The Bank with its array of solutions will enable companies to further explore foreign markets’ business opportunities. The Bank provides direct and indirect lending as well as credit insurance facilities in both conventional and Shariah-compliant products.
Malaysia’s geographical location being near to the world’s major shipping lanes adds favorably to the nation’s ability to participate in international trade. Since the glory days of the Sultanate of Melaka, over 800 years ago, and probably even longer than that, denizens of what is now Peninsula Malaysia have been sea-faring people. In those early days, the exports of exotic spices from South east Asia to Europe via sea-faring merchants were the harbingers of global commerce as we know it today.
The ability of a nation to partake successfully in global trading will have a significant impact on its economic growth. Malaysia’s domestic market of only close to 30 million people may not form an ample base to drive sufficient domestic economic activities, especially in that of doubling the nation’s GDP percapita to achieve the aspired high-income economic status for Malaysia. Hence the Malaysian companies need to expand their businesses not just domestically but also globally. Therefore, the ability to compete in the global markets is a pertinent factor for Malaysian companies. This is where EXIM Bank’s solutions come into the equation, to facilitate Malaysian companies to become more competitive in their cross border ventures.An export-led economic model has been a proven success for many countries. The importance of income from exports is demonstrated by the unmitigated success of export-drivencountries like Japan, Korea, Taiwan and Singapore.
Malaysia’s export-thrust in terms of products focus haveevolved through the years. In the 1960s and 1970s, Malaysia’s exports were focused on commodities like tin, rubber andcocoa. In the 1970s and the 1980s, Malaysia’s main exports wereelectrical and electronic appliances that were manufacturedby Japanese producers that have relocated to Malaysia for the cheaper labor. In the 1990s and 2000s, the focus of Malaysian exports were crude oil and palm oil.The early part of the second decade of the 21st century is witnessing Malaysian companies exporting their services in undertaking projects. These Malaysian companies are exporting their capabilities in engineering, architecture, designing, and construction of power plants, ports, airports, highrise buildings,houses, dams, tank farms, highways, bridges, stadiums, and even Formula 1 tracks in countries like Abu Dhabi, Dubai, Pakistan,Vietnam, Sudan, China and India. EXIM Bank has been on theforefront in partnering Malaysian companies realising their cross border ventures.In a recent interview with Top 10 of Malaysia, Dato’ Adissadikin bin Ali, the Managing Director of EXIM Bank Malaysia, says, “For these Malaysian contractors and construction companies, EXIM Bank Malaysia plays a very pivotal role in their ability to secure and deliver the completions of the projects in a foreign country.
“Dato’ Adissadikin continues, “There are many critical factors involved in securing projects in the international arena. The most important issue is the ability of the Malaysian contractor to raise the financing in order to undertake the project. There are few funding options available to them. They can solicit from the local banks where the project is located but the chance of success is slim given the unfamiliarity of those banks towards our contractors. In addition, the contractors can also solicit from their commercial bankers in Malaysia but that may also be difficultas these international projects may be deemed as too risky and therefore unbankable. In these instances, EXIM Bank will be able to realise the transaction, given our familiarity with international markets situation and requirements. Our experience in overseas markets gives us the edge in assessing such applications.
”Traditionally, EXIM Bank has been supporting Malaysian exporters of products in the form of Buyer Credit, Supplier Credit Facility, and Export Credit Refinancing. But in recent years, the major bulk of EXIM Bank’s export financing has been in the form of financing export of services. EXIM Bank’s main financial support for exporting of services are in the form of Project Financing or Contract Financing. EXIM Bank’s Balance Sheet for 2011 showed Contract and Project Financing having a total of over RM1.6 billion, which represented over 60% of total loans outstanding. Loans of over five years maturities, which are typical periods for projects and contracts to complete, mirrored this 60% in proportion to all loans maturity categories.Thus, EXIM Bank Malaysia is a preferred partner when ever cross border transactions are concerned. The Bank is able toexpand the frontiers of any aspiring Malaysian companies intheir global quest. In addition to direct or indirect lending, EXIM Bank with its credit insurance facilites has the ability to underwrite various risks of doing business in a foreign country. These risks may include that of non-payment to the contractor. Other risks of doing business in a foreign country may also be related to political stability, currency controls, profits limitations, financial compliance, environmental regulations, repatriation of funds,and local licensing and permits requirements.
“EXIM Bank Malaysia was formed in 1995 and is fully owned by the Ministry of Finance. EXIM Bank’s mission is to support Malaysian companies that are exporting their products and services overseas. Without this support, it will be very difficult for Malaysian companies to gain business in foreign countries,”Dato’ Adissadikin adds.
Dato’ Adissadikin further elaborates, “To support EXIM Bank’s mission to provide credit facilities to finance exports and imports of goods and services, EXIM Bank has forged many alliances with banks around the world. One major partner is the Asian Development Bank (ADB).” ADB Trade Finance Program being one of the example where, EXIM Bank will be able to facilitate trade in 16 countries, the likes of Azerbaijan, Armenia and Mongolia.
For the next two to three years, Dato’ Adissadikin is of theopinion that future EXIM Bank’s loan growth will continue to be inthe areas of project and contract financing as more Malaysian companies export their engineering expertise.
EXIM Bank’s successful implementation of its Corporate Improvement Program (CIP) that was initiated in 2008 has placed the Bank in a better position to grow its business. The CIP was designed for EXIM Bank to restructure its processes,procedures, governance, talent management and technology to work holistically to facilitate acquiring new businesses, loan applications, disbursements, collections and advisory in aseamless manner. The CIP program was implemented to prevent the repetition of the high occurence of non-performing loans in2008 that had coincided with the global financial crisis.