China’s CCB to make Malaysian operation as regional hub

By NG MIN SHEN

China Construction Bank Corp (CCB) has officially started operation in Malaysia through its unit, China Construction Bank (M) Bhd (CCBM), making it the third Chinese bank to operate in the country.

The Chinese banking giants, considered as the “big four” among lenders in China, intends to make its local operation a regional hub and service key infrastructure projects in the country.

CCBM was the first first foreign commercial bank to be awarded the licence in the last six years. Bank Negara Malaysia awarded the licence late last year. Two other Chinese lenders in Malaysia are Bank of China (M) Bhd and Industrial and Commercial Bank of China (M) Bhd.

CCB has 21.7 trillion yuan (RM13.63 trillion) in total assets at the end of March 2017, or almost 19 times larger than Malaysia’s largest bank, Malayan Banking Bhd (Maybank), which has assets totalling RM735.9 billion at the end of last year.

According to Wang, CCBm will help in areas of M&As, financing credit approval, R&d clearance and other financial advisory services (Pic: Bloomberg)

“CCBM will predominantly focus on financing infrastructure projects in Malaysia to aid the country in becoming a high-income nation,” said CCB chairman Wang Hongzhang at the launch in Kuala Lumpur last Friday.

Listed on the Hong Kong Stock Exchange, CCB will leverage on its financial strengths in infrastructure construction, engineering cost consultation, housing mortgage and yuan business to support CCBM’s growth.

CCB, considered the “big four” among China’s lenders, was the world’s second-largest lender based on market capitalisation in 2015.

Besides enabling Malaysians to invest in China’s interbank markets, CCB is ready to provide more services in helping enterprises invest in Malaysia.

“We will help in areas of mergers and acquisitions (M&As), financing credit approval, research and development (R&D) clearance and other financial advisory services. We have provided more than US$300 billion (RM1.28 billion) to support in these ways,” Wang said.

Meanwhile, Prime Minister Datuk Seri Mohd Najib Razak hopes CCBM would participate proactively in financing high priority infrastructure projects such as railways, highways, harbours, airports, telecommunications, power and affordable housing.

“I would like to thank CCB for indicating that Kuala Lumpur will be its hub for the Asean region,” Najib said, adding that this was in view of Malaysia’s investment potential.

At the launch, 13 memoranda of understanding (MoUs) were signed. Parties that inked MoUs with CCBM included the Malaysian Investment Development Authority, InvestKL, Xiamen University Malaysia, Malaysia-China Kuantan Industrial Park, Guangxi Beibu Gulf International Port Group Co Ltd, Migao Corp and the East Coast Economic Region Development Council.

CCBM also signed a MoU with Ministry of Finance-owned Aroma Teraju Sdn Bhd and CCCG Overseas Real Estate Pte Ltd to facilitate project development in Tun Razak Exchange City by investing, financing and establishing their regional hubs in Aroma Teraju.

Meanwhile, a MoU between China Harbour Engineering Co Ltd South-Pacific headquarters and CCBM will see the two parties collaborating to develop affordable housing in Malaysia.

Maybank and CCB inked a MoU to collaborate on ringgit clearing and the China bond market, under which CCB and CCBM will open a ringgit clearing account with Maybank, while Maybank will cooperate with CCBM to facilitate China interbank bond market activities.

A yuan clearing agreement signed between CIMB Bank plc (CIMB Cambodia) and CCBM will see CIMB Cambodia opening a renminbi clearing account with CCBM.

This will see CCBM becoming the first bank in Malaysia to provide a regional yuan clearing service, in line with its efforts to be a regional hub. Both CCBM and CIMB Cambodia will collaborate to provide yuab clearing services in the Asean region.

Concurrently, a MoU between Public Bank Bhd and CCB will see CCBM opening a ringgit clearing account with Public Bank, while Public Bank will open a yuan clearing account with CCBM.

Under a ringgit clearing agreement between CCB and CCBM, CCBM will be the parent group’s global ringgit clearing centre and ringgit trading centre.

YTL Corp Bhd also stands to benefit from a MoU signed with CCBM, which entails the latter leading a global credit facility to finance YTL and its projects in Malaysia and other Asean countries.

A loan agreement was also entered into, between CCB Guangxi and Alliance Steel (M) Sdn Bhd, under which CCB Guangxi as the mandate lead arranger and bookrunner granted a US$1 billion syndication loan to Alliance Steel, and successfully completed a RM1.5 billion loan drawdown.

On the recent increase in Malaysia- China collaborations, Najib said the ties would benefit Malaysia in many ways.

“These relations do not compromise sovereignty one bit, contrary to what opposition politicians here have said. I will never sell Malaysia’s sovereignty,” he said, adding that Malaysia has long been an open and friendly country, with its status as a preferred foreign direct investment destination an indicator of external confidence.

“To turn away these investments out of a narrow and foolish belief — a fundamental misunderstanding of economics — would only be bad for this country,” Najib said.

He added that he “will never apologise for facilitating investment in Malaysia” as these ventures are in the interests of all including local citizens and partners abroad.

“To those critics who say ‘too much, too fast, too soon’, I say this: If you want to delay Malaysia’s development, if you want Malaysia to fall behind, and if you don’t want jobs to be created or levels of income to rise, then you go and campaign on that platform,” he said.

Najib said that some people seem to think it is better to have loss-making companies that are 100% locally owned instead of a smaller stake in a company that stands to gain access into bigger markets, economies of scale and cutting-edge technology.

“I ask you, which one will create more wealth and jobs for Malaysians? The answer is obvious,” Najib said.

Malaysia’s tourism industry has benefitted from the solid relationship between the two countries, he noted.

“For the first-quarter of this year, tourism receipts from Chinese tourists have more than doubled. Last year we received 2.1 million tourists from China. We expect this to increase to three million this year,” he said.