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Banks are not cutting back on
financing to the local maritime industry despite
the global financial crisis but are more prudent
in disbursing them.
Financial institutions in Malaysia are still
willing to offer credit facilities to finance
shipping companies’ expansion despite the global
economic crisis.
This could be because a majority of local
shipping players support the oil and gas (O&G)
industry and are seen to be somewhat sheltered
by the downtrend in the global liner and dry
bulk markets.
The international container shipping market is
hardest hit by the trade slowdown and the
looming over-capacity that have slashed freight
rates by more than 60%.
The Dry Baltic Index, the barometer of dry bulk
shipping rates, plunged 87.2% to 1,506 points on
Oct 16 - the lowest in almost six years - from
11, 793 points on May 20.
In Malaysia, only a handful of companies are hit
by the effects of the credit crisis: MISC Bhd
and Halim Mazmin Bhd, which are involved in
container shipping as well as Malaysian Bulk
Carriers Bhd and Hubline Bhd, both are in the
dry bulk market.
This is because almost 90% of our consumer goods
for import and export as well as most of our
palm oil are carried on foreign vessels.
The credit squeeze emanating from the US to date
has not caused traditional lenders in the
country to restrict financing to the local
shipping industry.
They are still issuing credit to the industry
but they are doing so prudently.
Bank Pembangunan Malaysia Bhd president and
group managing director Datuk Tajuddin Atan said
the bank was not limiting its credit to the
shipping sector at the moment.
“In fact, under Budget 2009, Bank Pembangunan
was entrusted to manage an additional RM2bil
Maritime Fund that will benefit shipping
companies and shipyards.
“Application for financing under the said fund
will be subject to a credit evaluation process
and is dependent on the merits of each case,’’
he told Starbiz.
Providing financing to the maritime industry,
Tajuddin added, was one of the bank’s mandated
roles and it would continue to provide financing
to the sector for vessels’ acquisitions.
Over the years, Bank Pembangunan had financed
more than 300 vessels including tugs, barges,
general cargo vessels, tankers, container
vessels and other offshore support vessels.
He said the bank’s loan portfolio over the past
three years (2005 to September 2008) had
recorded a cumulative average growth rate of
51%.
Asian Finance Bank Bhd has also not cut down
lending facilities to shippers.
Chief executive Datuk Mohamed Azahari Kamil
said: “As shipping is a capital intensive
industry, we have been prudent in extending
financing. We conduct due diligence with respect
to the terms of the charterer, valuation of the
vessel, credibility and track record of the
shipping operator to ensure ability of
repayment.”
Azahari said the bank, via its RM1bil Safeena
Islamic Marine Fund, practised risk management
and high level corporate governance for its
funding exercises.
The Fund, launched in June, is the first syariah-compliant
marine fund in Malaysia and Southeast Asia. It
provides a sale and lease back arrangement
whereby the fund will own the vessel and lease
it back to the vendors with a medium to long
term contract.
Maritime Institute of Malaysia’s senior fellow
Nazery Khalid said despite the fact that the
industry appeared to have weathered the
financial storm well, the industry would
inevitably feel the pinch of the credit crunch
if it continued.
Traditional and seasoned players in ship
financing would no doubt still lend albeit
cautiously but newcomers of ship financing on
the ther hand would be apprehensive to enter the
fray.
On the outlook of the shipping sector, Tajuddin
said: “The sector has grown steadily since 2003
and Bank Pembangunan remains bullish especially
on local and intra regional trade as well as
offshore support activities.
“At the same time, we are mindful of the current
global economic situation, which will
inadvertently affect international trade and
hence the sector.” |
