CIMB Group offers Islamic supply chain financing solution to PROTON

Published on August 10th, 2010

CIMB Group together with Perusahaan Otomobil Nasional Sdn Bhd (PROTON) today signed a Memorandum of Understanding formalising an Islamic supply chain financing solution made available to all PROTON vendors.

The primary objective of this financing is to alleviate the cash-flow burden faced by vendors by closing the working capital gap from the initial stage of procuring raw materials to the final stage of payment by PROTON. Each stage of financing is automatically liquidated by the succeeding financing or payment, allowing the cash flow to mimic the flow of produced goods in any commercial supply chains.

“For CIMB Group, this programme augurs well for our overall strategy in developing the trade finance business not just in Malaysia, but also in Southeast Asia,” said Dato’ Charon Wardini Mokhzani, Deputy CEO, Corporate & Investment Banking, CIMB Group. “We are proud to be the first financial institution to offer this Shariah compliant facility to the manufacturing industry and are honoured to be part of PROTON’s efforts to assist their vendors,” he continued.

The Islamic supply chain financing is divided into two parts – pre-delivery financing and post delivery financing. Through the pre-delivery financing, PROTON vendors will now be able to obtain financing based on monthly order value to pay for raw materials. Subsequently, the vendors will obtain the post delivery financing upon submission of invoices and documentations to PROTON for acceptance. This programme is Shariah compliant as it is based on tangible physical assets. The pre-delivery financing applies the Murabahah concept while the post-delivery financing applies the Bai al-Dayn concept.

The financial solution is designed specifically for the vendor community. At the same time, this programme will translate into benefits for the entire supply chain, both upstream and downstream. It is not designed just for the automotive industry, but it can also be applied to other industries as well.

“The introduction of this Supply Chain Financing programme is a critical component in our overall strategy to achieve the aspirations of becoming a competitive global car manufacturer,” said Dato’ Haji Syed Zainal Abidin Syed Mohamed Tahir, Group Managing Director, PROTON Holdings Berhad. “PROTON recognises that quality is not solely determined by way of refinements, better build, reliability and durability of a vehicle, but is also heavily reliant on the quality of components supplied from the vendors,” he continued.

Approved vendors will now be able to acquire financing assistance at competitive rates leveraging on the credit-worthiness of PROTON from CIMB at both pre-delivery and post-delivery stages for their working capital needs.

text: CIMB Group  pix: Syafril Ismail

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