Kurnia Asia of Malaysia calls off proposed joint venture with Cambodian lender a due to the impact of the financial crisis, says Canadia deputy general manager
MALAYSIA’S largest general insurance company has pulled out of an investment plan in Cambodia due to the global financial crises, claimed the deputy general of Canadia Bank.
Canadia Investment Holding Plc (CIHP) and Kurnia Asia Berhad (KAB) have called off a deal to create a new life and general insurance firm in Cambodia.
Charles Vann, deputy general manager of Canadia Bank, which has 100 percent of its shares held by CIHP, said Wednesday: “It [the discontinuation] is not because of our side, it was on their [Kurnia Asia Berhad’s] side. They cancelled because their company has been affected by the global financial crisis.”
He declined to elaborate further.
According to a series of statements posted on the website of Bursa Malaysia KAB and CIH first announced the proposed joint venture to establish an insurance company called Cana Kurina Insurance Plc in Cambodia in April 2008.
Operations were expected to begin within six months, and KAB and CIHP would hold 49 percent and 51 percent of the company, respectively.
In March last year, KAB announced that the plan had been deferred, claiming that after due deliberation by the boards of both companies the scheme should be postponed until the global financial situation had improved.
On Monday, KAB said that – following deliberations – both companies had agreed to discontinue the proposed joint venture.
Alicia Mok, KAB group corporate communications officer, wrote in an email Wednesday that KAB has never doubted its own ability, or the ability of CIHP, to meet capital requirements to start up the firm.
She explained that the KAB group recorded RM57 million (US$16.8 million) in profits after tax in the financial year ending June 30. The company said it is anticipating good results for its financial period which ended on December 31, 2009.
Mok said that KAB’s decision to withdraw from the anticipated joint venture was in line with the company’s current strategic priorities of strengthening and expanding its operations in Malaysia, as well as its existing regional operations in Indonesia and Thailand.
According to the spokeswoman, that view was communicated to CIHP and the decision to abort the joint venture was mutually agreed.
“KAB recognises the growth potential of the insurance industry in Cambodia, and may revisit opportunities in Cambodia again in future,” she added.
Mey Vann, director of the government’s financial industry department, said Wednesday that CIH and KAB only announced their investment plans and had never applied for an insurance licence from the ministry.
He said the broken deal has not affected Cambodia's insurance industry, which he called “stable despite the impact of the global financial crisis”.