Uneven Market Conditions and Uncertain Regulatory Landscape Hampering Trade Finance, ICC survey shows

The International Chamber of Commerce (ICC) 2013 survey on trade and finance, released today, has found that a continued shortage of trade finance for international trade remains a major challenge for economic recovery and development, with many traders depending on overdraft and other corporate loans to finance exports and imports.

According to the survey, nodes of uncertainty over the US presidential election results, crises in the Middle East, and Sino-Japanese tensions all contributed to the lacklustre pace of world trade which fell back to 3.8% growth in 2012, down from 6.1% the previous year. Sluggishness in the Eurozone economy prompted weak global demand by midyear, as economies in China, India, Brazil and other emerging markets slowed down in turn.

The proliferation of new regulation in recent years has increased cost pressure on financial institutions and depressed markets. Some 65% of surveyed experts said implementation of Basel III regulations is to some extent or a large extent affecting the cost of funds and liquidity for trade finance. While many regulatory changes have already been implemented or proposed, the regulatory future remains unclear as harmonization of regulatory principles remains a major problem for trade financiers and their clients.

The survey positively indicates that despite uneven performance around the world in 2012, the market for trade finance does show signs of slow and steady growth, with temporary trade measures imposed during the financial crisis – including the rise in fees for trade –slowly being removed.

“This shows that financial intermediaries are continuing to satisfy the demand for financing and that investing in trade assets is part of a more sustainable model of banking, said Pascal Lamy, Director-General of the World Trade Organization, in the survey’s foreword.

Entitled Rethinking Trade and Finance – An ICC Private Sector Development Perspective, the ICC survey reveals that developing economies remain the drivers of international trade growth despite the ever-rising level of regulation in the wake of the financial crisis and a clear trade finance gap for small- and medium-sized enterprises (SMEs) in the southern hemisphere. Yet the resilience and increasing importance of developing countries has become more evident, according to the survey, which says that although developing country exports fluctuated throughout the year, they surpassed pre-crisis levels rising to 8.5% in 2012.

Trade facilitation programmes by multilateral development banks (MDB) also increased in 2012 according to the survey, which predicts the role of MDBs will become even more instrumental in supporting global recovery, economic development and poverty alleviation in future years.

The survey includes analysis of trade traffic data, from financial messaging service provider SWIFT, indicating that by the year 2020, a third of global trade will likely be South-South. The data reveals a signature shift in the Asia-Pacific region where 73% of all export transactions took place in 2012 together with a rise of 2.32% in import traffic. By contrast, import traffic decreased most noticeably in the Europe-Euro zone: a drop-off of 13.5%.

“We are encouraged by the continuing effort to fine tune various capital treatments for trade finance whether at the supranational level, or in national implementation. It is important for the business community to press on with the current dialogue with regulators as there is still a lot to be done. On the macroeconomics front, we also expect to see a credible plan in place for the budget issues that are plaguing certain countries, leading to restored confidence but perhaps with a longer drawn out and bumpier recovery than we hope for,” said Kah Chye Tan, Vice-Chairman, Corporate Banking, Barclays, and Chair of the ICC Banking Commission.

Providing a detailed statistical analysis of the regional and global trends in trade finance, Rethinking Trade and Finance 2013 received responses from representatives of 260 banks in 112 countries. Expanded in scope, the 2013 Survey includes a new section on potential market developments, which includes the views of some of the world’s leading experts in global trade finance on the drivers and potential solutions to a more robust and resilient market.

The 2013 survey also received the participation of two new partners: the International Trade Centre (ITC), to cover credit constraints and non-tariff measures in trade; and Factors Chain International (FCI), providing business trends in factoring.

Rethinking Trade and Finance 2013 fulfils ICC’s commitment to bridge the information gap on trade finance through market intelligence reporting and monitoring that leads to a better understand and markets worldwide.

Thierry Senechal, ICC Banking Commission Senior Policy Manager said: “Trade finance is the oil that powers the engine of global economic growth but despite encouraging signs, this stellar image of the industry is imperilled as trade finance faces headwinds that may completely upend the global landscape in which it operates in the next five years. This includes a welter of regulations, a two-speed financial system, a disruptive deleveraging process and new SME entrants starved of trade finance in several emerging countries.”

source : ICC

BUSINESS EMPIRE WITH RHB ISLAMIC PFM

Malaysian businesses now have an option to build BUSINESS EMPIRE WITH RHB ISLAMIC Program Financing Model (PFM).

The Islamic Commercial Business financing offers upto RM 2.0 million working capital for eligible company with minimum 3 years in operation and management owned more than 50% of shares. Most importantly company and key personnel must have clean CTOS and CCRIS record.

Businesses that have good SCORE record by SME Corp may eligible for 2% rebate on the interest rate.

SALIENT POINTS OF HINDRAF - BN MOU

We are seeking views and comments from readers on Hindraf- BN MOU in terms on Malaysian Indian Economic development. Below are the salient points of the MOU.


A special division functioning and funded under the direct supervision of the prime minister is to be set up to implement the Hindraf memorandum of understanding (MOU), said the Hindu rights group.

Since the MOU was signed between Hindraf and the BN last Thursday, the public, especially Indians, have demanded to know the details that has led to the Hindu rights group supporting its former arch enemy.

Hindraf national adviser N Ganesan said to address this, the organisation has run full-page advertisements in Tamil newspapers to explain the so-called “new deal” with the ruling party.
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Key points in the advertisement in last Sunday's edition of Tamil Nesan are:

1. To bring progress to displaced former estate workers

1.1. To raise the income of the former estate workers

• Those who qualify for it are all the Indian Malaysians whose family income is lower than RM3000.

• To double their family income by 2020.

• A committee of experts will conduct research and decide on various programmes, policies and allocation of finance.

• The committee of experts will submit its Indian-centred coordinated plans to the government by Oct 31, 2013.

• The government will accept in total the plans, policies and financial allocations as recommended by the committee of experts.

1.2. House ownership programme for former estate workers

• Those Indian Malaysians whose monthly family income is not above RM3,000 will qualify.

• This will be done by 2018 in areas where the displaced workers are concentrated. The department or the ministry will provide the necessary finance and allocate 100,000 national standard grade houses.

• To relocate in housing projects which are complete with facilities such as temples, burial grounds, community halls and playgrounds with the view to protecting socio-cultural aspects and preventing the growth of squatter areas in towns.

1.3. Retraining and alternative skills training for former young estate workers.

• The purpose of this programme - which requires great effort - is to bring out the hidden talents of Indian youth and change them into skilled and useful citizens for constructive action.

• Discover the hidden talents of the youths and provide them with the necessary prerequisites to undertake vocational training and have them admitted into the 176 Giat Mara centres and 78 community colleges to obtain proper skills training.

• After the training, based on their capability, they will be employed in the government and government-linked companies.
• To those who wish to start small scale businesses, support will be given through the Entrepreneurial Group Economic Fund (Tekun) loan scheme.

• For this purpose, RM20 million will be allocated annually.

1.4. To maintain the temples and the burial grounds of the former estate workers

• To protect the temples and the burial grounds that were constructed by our forefathers and which stand as testimony to our history in this country from being destroyed and removed.

• All the temples, small places of worship and burial grounds in the country shall by 2018 be on lands specifically allocated and registered for this purpose.

• A division of an experts committee shall undertake a detailed research on temples, small places of worship and burial grounds and submit its recommendations on their maintenance.

• With the permission of the prime minister and acceptance by the government, a council composed of religious scholars will propose solutions to complicated problems relating to temples and the Hindu religion. This committee shall be accountable to the prime minister and the person to be appointed as the head of the new administration under the prime minister.

2. The problem of Indians without identification documents

• To those without any birth certificates, a solution is to be found through an open, sympathetic and simple plan.

• To find solutions to the problems of people without documents by accepting statutory declarations deposed by people held in high esteem by the society.

• To change red identity cards (ICs) to blue ICs through open and systematic policies.

• To find ways and means to identify those who have legally obtained their citizenship from those who have not.

• The head of the new department under the prime minister shall within three months from the date of his appointment submit his recommendations on the matters mentioned above and obtain the approval of the prime minister.

3. The plans to increase the employment and business opportunities for the Indian Malaysians

• To allocate RM500 million in order to raise the Indian Malaysians’ equity ownership to three percent.

• To confirm that the Indians get 7.5 percent of the amount that the government allocates for small business loan schemes and micro-credit schemes.

• To confirm that the Indians get 7.5 percent of all the business licences and permits issued by the government.

• To confirm that the Indians get 7.5 percent of all the franchises granted by the government.

• To confirm that the Indians get 7.5 percent of all the contracts offered at national, state and local council levels.

• To confirm that qualified Indians get 7.5 percent of all government jobs.

• To confirm that qualified Indians get 7.5 percent of all government-linked company jobs.

• To confirm that the Indians will get, in the next five years, RM200 million from the Tekun loan scheme.

• To confirm micro-credit loan schemes for Indians in accordance with the recommendation of the expert committee.

4. To develop/increase the opportunities for education from pre-school to university

• To allocate enough funds and necessary measures for the relocation, development and construction of new buildings to make by 2020 all the Tamil schools equal to the national schools.

• To convert all the Tamil schools to fully government-aided schools.

• To set up a special fund to develop the skills of the Tamil school students.

• To confirm that 7.5 percent of places in the government universities and institutions of higher learning are for Indian students.

• To confirm that 10 percent of places in the government polytechnic colleges are for Indian students.

• To confirm that 7.5 percent of places in the present residential schools, matriculation and technical colleges are for Indian students.

• To confirm that 20 percent of the places in the proposed nine residential schools for students of all races are for Indian students.
• To confirm that 7.5 percent of scholarships from the Public Services Department (JPA), other government scholarship schemes and state scholarships are for Indian students.

• A separate RM25 million annual special education assistance scheme for Indian students through the new department that is to begin operations under the prime minister.

"TALK ONLY NO ACTION" IN INDIAN ECONOMIC EQUITY PARTICIPATION

"TALK ONLY NO ACTION" IN INDIAN ECONOMIC EQUITY PARTICIPATION

A simple survey carried out my Klang Indian Chamber of Commerce reveal that awareness among Malaysian Indian on government commitment of increasing 3% Equity is very low.

Some 64% of respondent says they unaware of Malaysian Indian 3% Economic Equity target set by Federal Government since 2001.

While only 26% of 500 total respondents answered that the 3% Equity target was set by then Prime Minister Mahathir Mohamad in 2001.

The survey result indicates Federal Governments "TALK ONLY NO ACTION" when comes to their commitment of increasing 3% Malaysian Indian Economic Equity participation announce in the Parliament when presenting The Third Outline Prospective Plan on 3rd April 2001 by then Prime Minister Dr Mahathir Mohamad.

Skim Pembiayaan Mikro Penjaja & Peniaga Kecil Bank Rakyat

Small Business Loans - Encouraging Business Initiatives

Being a small business owner is not easy. Apart from the problems that the small business owners have to face in operating business, the severest of problems is in raising capital. It is not easy to raise capital for business use; particularly in an environment in which small business owners are accorded a status similar to borrowers with bad credit. Self employment is considered a bad credit

Crowdfunding - an alternative funding opportunity for fashion and design businesses?

Fashion labels and designer/makers have always found it difficult to raise external funding for their businesses, but in today’s challenging financial climate, it is even harder to raise money through the usual channels particularly if you are a new start up without a track record.

Which is why I find it surprising that the fashion and general design sector in this country have been slow to pick up on the crowdfunding phenomenon. Web based crowdfunding gathered momentum in 2011 and is set to grow in 2012 as businesses seek to bypass traditional lenders and find alternative ways of raising cash directly from their peers. The granddaddy of crowdfunding platforms is US based Kickstarter, which was established in 2008 and has had over  15,000 successfully funded projects. Musicians and artists were amongst the first creative disciplines to engage in crowdfunding activity.

There are now many crowdfunding sites that allow people to contribute small amounts of money, in support of an idea or project, in the creative and technology sectors. The UK has approximately 32 UK based sites, the second largest number compared to the US, which has around 185 . As they are web based, they are essentially a global platform and give businesses the opportunity to receive donations from anywhere, however some of the sites only accept pledges in certain currencies, and with Kickstarter you have to have a US bank account. Hence it can be easier to work with a UK based platform, and they also may be able to offer more support in creating a good campaign.

So what actually is it? Crowdfunding is the collective cooperation, attention and trust by people who network and pool their money and other resources together, usually via the internet, to support initiatives by other people or organizations(wikipidia)

There are two main business models – the first is the rewards system, which basically means people that pledge cash to support your campaign will receive  a ‘reward’ . Some projects offer a tiered selection of rewards, depending on how much money is being contributed towards the campaign. This model has had a huge impact to thousands of talented people with an idea, but without the financial backing to make that idea become a reality

There is also equity-based crowdfunding which is used to finance businesses in all sectors, where investors receive shares in return for their financial support. This option is facilitated by sites such as UK based Crowdcube.

This model is not going to be right for everyone and as with everything there are no guarantees that you will be successful, but overall it gives an important additional opportunity to raising finance and  is a boost for creative SMEs.

At Fashion Angel we are keen for designers to understand this method of raising finance so they can make an informed decision as to whether it is right for their business or not, and if it does seem like a good fit, we want to help you give yourself the best chance of success.

Our next business club networking event on 29^th March 2012, will be focusing  on this –  our speaker is Ben Hamilton from Pleasefund.Us. We will also be joined by designers that have had the foresight to go this route and successfully raised their targets for their projects.

For more information or to book at ticket click here.

By Alison Lewy

Follow @FashionAngel1

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