The Post speaks with Lim Loong Seng, the chief operating officer and country head for Malaysia's OSK Bank, the newest major player in the the Kingdom's growing banking sector
Photo by: May Kunmakara
OSK Bank country head Lim Loong Seng says Cambodia shows strong economic potential and should attract more foreign investment.
When did you get licensed in Cambodia and what was required from you?
We got the licence from the NBC on October 3, and we gave them the financial backgrounds and operational records of our shareholders, as well as those of our board of directors and management.
Do you have any Cambodian partners?
No, we are 100 percent owned by OSK Investment Bank Berhad of Malaysia. This is the first branch in Cambodia.
How much capital have you invested in Cambodia?
We have complied with the minimum requirement of US$13 million set by NBC.
The NBC prakas requires banks to maintain 36.5 percent capitalisation. How has the prakas affected OSK?
It has not had any impact on OSK because we are already following the guidelines related to capital reserves. We are also a wholly owned Malaysian investment bank, so we have already adapted to the new requirements to increase our capital. We don't have any problems because of our shareholders and the financial strength of our bank. We are listed on the stock exchange in Malaysia, and we remain one of the top investment banks in the country. I support NBC's raising of the capital requirement because it will ultimately strengthen banks' balance sheets and their capacity to help the Cambodian economy.
What kinds of products and services do you offer at OSK?
We concentrate mainly on retail commercial banking by offering housing loans, car loans and business loans to small and medium-sized enterprises, as well as to some larger companies. We are also looking into the area of financial trading in Cambodia. On the deposit side, we offer savings accounts, currency accounts, fixed deposit accounts and remittance services. We are also looking into launching a credit card. Many banks in Cambodia offer ATM services, but we are the first bank here to provide check deposit machines to make it easier for customers to make deposits 24 hours a day, free of charge. In the near future, we will offer cash deposit machines as well.
How much interest do you charge on loans, and how much will you offer depositors?
Our interest rates are in line with the international market, but they depend on the capacity of borrowers and collateral. In light of the financial crisis, rates will be adjusted from time to time. Rates on deposits in US dollars are currently set at 3.5 percent for one month. We offer 5.25 for deposits of six months and as much as six percent for longer-term deposits.
With the current global financial crisis spreading from the US to Europe and Asia, and as Cambodia faces an ongoing crisis with Thailand over border lands, why are you interested in investing in Cambodia?
OSK always looks at long-term investments and global change. The problems with Thailand will eventually be resolved peacefully among both governments, and the global financial crisis has not had the same impact here as it has elsewhere. Cambodia has good potential, and it has shown rapid economic growth and political stability that continues to attract new foreign investments. We want to stay in Cambodia and contribute to its economic growth.
Who are your target customers?
Our target customers are individuals and commercial businesspeople. At the same time, we also have branches in Malaysia. So, we are also looking to increase joint accounts between both countries.
Cambodia expects to launch a stock exchange in late 2009. What role do you see OSK playing in the new market?
We are looking forward to this and hope to receive a license from the government to be listed on the new exchange.
With an effective top-management structure and more than 40 years of banking experience in Malaysia as a listed member of the Malaysian exchange, we have considerable expertise to bring to Cambodia in this sector.
How do you expect to compete with other commercial banks in Cambodia?
Wherever you go, you will have competition. In Cambodia, there is considerable economic potential. Competition is strong here because the economy is growing. We think that we will serve specific market needs as the economy expands. The number of people doing business with banks is small, though the number of banks is growing. So, there is great potential for increasing our customer base in the near future.
Do you have other investment projects in addition to banking services?
In Cambodia, we offer only banking services, but later we hope to participate in the stock exchange, in other investment vehicles and in corporate banking. When Cambodia's stock exchange opens, we plan to introduce advisory services. In Malaysia, we have substantial investments in property development outside the OSK group. Our board of directors will also be considering the property development market in Cambodia.
What are your initial impressions of Cambodia's banking sector?
There are about 19 commercial banks in Cambodia. But only a small percentage of people take advantage of their services. So, there are many opportunities as the economy grows to provide credit, trade financing to facilitate the export markets and the garment industry. Cambodia is also attracting many more tourists, so there will be larger foreign exchange requirements. More Cambodians are also living and working in foreign countries, so they will need access to remittance services that OSK will now be able to provide.
What is OSK's mission and vision?
We want to be a premier bank in Cambodia. We want to serve the country and contribute to its economic growth. We foresee OSK Indochina Bank as a big operation that will expand rapidly by the end of next year, by which time we hope to open at least five or six additional branches. Besides commercial banking, we also want a place in the stock market here, subject to approval by the government. We will bring our innovation and technical expertise to Cambodia to participate in, and help further promote, its future economic growth.
OSK Indochina Bank Limited is one of 19
commercial banks, and the first Malaysian
bank, in Cambodia. It employs 29 people
locally. OSK is an international bank with
branches in Singapore, China, Hong Kong