CGC confident of approving RM4.6b guarantees and lending this year

PETALING JAYA: Credit Guarantee Corporation Malaysia Bhd (CGC) is confident of approving RM4.6 billion worth of guarantees and financing benefiting 9,800 small- and medium-sized enterprises (SMEs) in 2019 as it leverages on technology, despite missing its previous year’s target due to the review of infrastructure projects in the country.

President and CEO Datuk Mohd Zamree Mohd Ishak (pix) said CGC is targeting 20% growth in its business income to RM280 million in 2019, from its 2018 target of RM236 million, driven by guarantees, direct financing and asset securitisation deals.

“I’m fairly confident of achieving that (RM4.6 billion target for 2019). We want to reach out more via our iSME (SME online financing and loan) platform. That is one of the many ways we can achieve those numbers,” he told SunBiz in an interview recently, adding that CGC will also strengthen its alliance with banks, of which some deals are in the pipeline.

CGC missed its revised RM4.7 billion approved guarantee and financing target in 2018, but met 78% of it at RM3.68 billion.

The guarantee provider had in last year revised its target from RM4.9 billion previously, taking into consideration the latest economic landscape after several infrastructure projects were being reviewed.

Zamree admitted he was disappointed for not being able to achieve its 2018 target. “I know that we’ve tried our best. I understand there are factors beyond control and globally everyone is affected. Taking that into account, we did fairly well,” he said.

He said the broad strategy for CGC this year will be harnessing technology for it to be more effective in its outreach to SMEs, operational excellence, elevating brand awareness and optimising human capital.

Despite the change in government, Zamree said, the way CGC conducts its business remains the same, as SMEs will continue to be the backbone of Malaysia’s economy and, in relation to this, CGC’s role does not change.

“Our vision has not changed for us to be an effective financial institution (FI) dedicated towards promoting the growth and development of competitive and dynamic SMEs. That vision has been there for many years. When CGC was launched in July 1972, we aimed to reach a situation in which poverty or the lack of capital is no barrier to business. That is still relevant today.

“What changes is how we adjust ourselves with emerging trends, with disruptions within the economy as a result of technology,” explained Zamree.

He highlighted that CGC is on track in its five-year plan (2016-2020) and added digitisation in the plan in 2017 during a review.

CGC is working to enhance imSME, Malaysia’s first SME online financing and loan platform this year.

“We’re talking to FIs whereby we want to have straight-through processing from imSME to disbursements done by banks to reduce turnaround time. Currently it’s just a referral platform.”

imSME was launched on Feb 9, 2018 and serves as an online one-stop centre for SME loan/financing by providing an array of financing products and services that are offered by participating banks and agencies.

“To date, we have over 400 SMEs that have obtained financing from imSME totalling over RM45 million. It is encouraging,” said Zamree.

He disclosed that in the first quarter of this year, CGC will embark on partnerships with three FIs to provide assistance to those in the car industry, to help women entrepreneurs and to use big data in its lending activities.

Since its establishment, CGC has availed over 460,000 guarantees and financing to SMEs valued at more than RM70 billion.

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We welcome the government’s targeted measures to enhance the well-being of the rakyat, particularly the lower income group. Budget 2019 reflects significant strategies and initiatives to address the need of the rakyat, especially those in the Bottom-40. While we see that the nations’ GDP-to-debt ratio and deficit has increased, we are nevertheless encouraged by the measures to promote growth, attract investment, reduce cost of mega projects, and the focus on private-public partnerships to drive the economy.

Artificial Intelligence and digitisation are two areas in which we see great potential, especially for the financial services sector, which should tap into the infinite potential of technology to innovate and improve the client experience, lower costs and improve security. We welcome the move by the government to invest in the future and move into the Industrial Revolution 4.0 through the High Impact Fund. AI will be a huge boost to the financial services industry as it helps to improve the client experience, lower costs and reduce fraud.

We see the government continue to prioritise Islamic financing. Standard Chartered is the first international bank to offer Islamic products in the country, and we laud the move to grow this sphere via an extension on tax deductions when issuing sukuk. We also welcome the setting up of a special committee for Islamic finance, to be led by the Finance Ministry. These will ensure that Malaysia continues to lead the way in Islamic financing.

We also see the government doing its part to grow the halal product industry in Malaysia and make us a global halal hub by 2020, with an MYR 100 million allocation to grow the SME segment. We also laud the further allocation of MYR1 billion for a Shariah-compliant SME Financing Scheme to finance halal products exporters by Islamic financial institutions.

The government is showing its commitment towards reducing income inequality. It’s announcement that public-listed companies would now be required to declare its’ wage ratio means there will be transparency in the way employees are rewarded. As Standard Chartered in February 2018 announced our Fair Pay Charter for equal remuneration, we welcome this move.

Not only that, the government’s push for women to take on greater leadership roles within the private sector and achieve a 30% representation by 2020 is very much in line with Standard Chartered’s commitment to do the same. Currently, nearly 60% of the Bank’s total employees in Malaysia are women; the executive committee also has a strong 42% female representation.

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