Bank Islam offers RM250mil to SMEs going abroad (October 31, 2007)

KUALA LUMPUR: Bank Islam Malaysia Bhd hopes to get loan applications worth RM250mil from small and medium entrepreneurs pursuing overseas projects by the financial year ending June 30, 2008.
To date, it had identified 20 companies for that purpose, for which RM120mil worth of loans were in the processing stage, managing director Datuk Zukri Samat said yesterday.
“Most of the companies are involved in construction, having either secured contracts or in the bidding stage.
“So far, most projects are in the Middle East,” he told reporters after Bank Islam and Exim Bank signed an agreement on an overseas guarantee facility.
Exim Bank, which manages Bank Negara's Overseas Projects Fund worth RM1bil, will provide guarantees up to 80% of the financing extended by Bank Islam to eligible customers under the facility.
It is for Malaysian-owned or controlled companies that are negotiating, bidding or have secured contracts overseas and is open to all economic sectors, except privatisation and concession type of contracts.
Government-linked companies are excluded from this programme.
Bank Islam, which has just undergone a rebranding exercise, also plans to increase its share of corporate loans.
“Of course, we would like to increase our share in the corporate segment ... we have set up a corporate banking division to concentrate on sukuk (but) the business will take a while (to generate),” he said.
Of its total loans portfolio, 63% is in consumer financing and the rest corporate loans.
Exim Bank managing director Datuk Kamal Mohd Ali said the bank had disbursed over RM100mil in loans and another RM100mil were in the pipeline for disbursement by year-end.
“We actually targeted to approve RM300mil to RM400mil, but dealing with cross-border contracts also involves other countries.
“So it takes time, and there are areas that we have to consider before disbursement,” he added.
Bank Islam can finance up to 90% of the contract value in ringgit and major currencies such as the US dollar, sterling, euro and yen with a tenure of up to 10 years.
The maximum financing per application is RM100mil or equivalent, with a competitive financing rate at effective cost of funds plus a maximum spread of 1% a year . – Bernama

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