The newest Malaysian bank to open its doors in the Kingdom hopes to tap into Cambodia's close-knit Muslim community with Islamic banking services
Photo by: HENG CHIVOAN
OSK bank’s first location in Cambodia was opened this week. Even with analysts divided on the impact that the global financial crisis will have on the local banking system, OSK says it has sufficient resources to expand in the local market.
MALAYSIA'S OSK Indochina Bank, the newest entrant into Cambodia's banking sector, hopes to tap into the Kingdom's Muslim community by offering the Kingdom's first Islamic banking services within a year, its chief operating officer and country head, Lim Loong Seng, said Wednesday.
"We are definitely looking into this market and hope to introduce [Islamic banking] services in one year," said Lim.
Islamic banking is a banking system that conforms with the principle of Shariah law, including a prohibition on interest-based loans, and has seen growing interest in Islamic countries.
Othsman Hassan, secretary of state at the Ministry of Labour and Vocational Training, said OSK's plans would offers Muslims in Cambodia an opportunity to obtain loans and to capitalise on the Kingdom's rapid economic growth.
Most of Cambodia's Cham Muslims live outside of Phnom Penh and have little experience with the traditional banking sector.
"I hope that the bank will give an opportunity for Islamic people to obtain loans in order to improve their businesses and standards of living, and to benefit from the growing local economy," Othsman Hassan said.
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Chan Sophal, president the Cambodian Economic Association, also said that OSK's Islamic banking would bring Cham Muslims further into the mainstream economy, as well as benefit Cambodians working in Malaysia and other Islamic countries.
With global finances in tatters and Cambodia's economic boom running out of steam, evidenced by expectations of slowing growth over the next two years, OSK is entering Cambodia in troubled times.
Once one of the darlings of local investors, Cambodia's banks are now threatened by declining foreign capital, increased restrictions on local lending and falling consumer spending.
But the OSK CEO Nik Mohamed Din Bin Datuk Nik Yosoff said the long-term growth projections for banks remain intact.
"Although the global financial crisis is spreading and Cambodia is confronting the border issue with Thailand, we are looking for long-term investment," Nik Mohamed said.
Most of Cambodia's banks rely on foreign capital to stay afloat, but OSK says its Malaysian ties are strong.
OSK, a 40-year-old company, is 100 percent owned by OSK Holding Berhad, which is listed in Malaysia.
"The banking system in Malaysia is resilient.... We are confident that our partner has sufficient resources," Lim said, adding that the company plans to soon expand.
According to Nik Mohamed, OSK "will expand to more branches in a few months to draw more customers".
"We also plan to list on the stock market when it launches," he added.
"The double-digit GDP growth in Cambodia means that all sectors are in need of financing - there are many opportunities for banks."
Tal Nay Im, director general of the National Bank of Cambodia, said OSK is the third Malaysian bank to open in Cambodia after Cambodian Public bank and May Bank.
"OSK Indochina reflects the increasing confidence among local and foreign investors in the Cambodian banking system," she said.
"I hope that OSK will cooperate with other banks and financial institutions to assure the prosperity of business operations in Cambodia."
Nik Mohamed told the Post that OSK would offer a full range of services, including saving accounts, fixed accounts, current accounts, money transfers, 24-hour ATMs and electronic cheque deposits.
Its general loan products include housing loans, individual loans, commercial loans, and car loans.
"The bank is here to grow with the country and with people's growing need for financial services and products," he said.
The bank currently employs 29 staff in Cambodia, but will likely increase, officials said.
The total paid-up capital is US$13 million.
In Malaysia, OSK operates 2,500 stalls at 50 locations, according to news reports.
ADDITIONAL REPORTING BY GEORGE MCLEOD