CALCULATED APPROACH

Malaysia 2019 | FINANCE | INTERVIEW

The largest issuer of debt instruments in the Malaysian capital markets, Cagamas Berhad continues to strengthen the country's position as a global Islamic finance hub.

Datuk Chung Chee Leong
BIOGRAPHY
Datuk Chung Chee Leong has been the President & CEO of Cagamas Berhad since April 1, 2012. He spearheaded Cagamas’ entrance into the international bond market. Under his leadership, Cagamas also concluded the country’s largest sukuk issuance in 2013. Prior to his appointment, he had 29 years of experience in central banking, focusing mainly on financial system stability and the financial sector. He has served as the director of Bank Negara Malaysia’s banking supervision department as well as the risk management department. He holds a Bachelor of Economics degree from the University of Malaya.

How do you assess Cagamas' performance in 2018, and what have been the company's main accomplishments?

In 2018, Cagamas' business strengthened because the company continues to provide liquidity and support to local financial institutions via competitive cost of funding raised from a diversified pool of investors. 2018 was another successful year, as the total assets purchased amounted to MYR12.1 billion and total issuances jumped to MYR15.8 billion, the highest since 2008, with 22 new Cagamas debt securities and five new Cagamas foreign currency issuance exercises. Issuances raised from the domestic market amounted to MYR14.62 billion and MYR1.13 billion was raised from our multi-currency programs established in 2014. In July 2018, Cagamas' tenacity to engage with investors resulted in the inaugural issuance of US dollar floating rate notes (FRNs). The issuance also represented the company's second FRN. The first FRN was in the Australian dollar, issued in October 2017. We have also issued similar financial products for Hong Kong dollars. The Bond Pricing Agency Malaysia (BPAM) during its annual BPAM Bond Market Awards presented Cagamas with the award for Top Issuance-All and Top Traded Amount-Conventional categories for 2018.

How does Cagamas promote affordable housing?

Cagamas continues to play a role in government-initiated housing programs. In promoting homeownership, Cagamas' role is providing competitive, long-term, and ready financing for mortgages. Cagamas is actively involved in the My First Home Scheme and the Youth Housing Scheme introduced by the government. These affordable housing schemes provide support and financing options to eligible Malaysians to own their first homes. For both schemes, our sister company, Cagamas SRP Bhd, acts as the guarantor with the banks on financing above the 90% level. SRP has recently allowed first-time home buyers who are self-employed and with monthly household income of MYR5,000 and below to purchase their first home priced up to MYR300,000. As of December 2018, Cagamas had provided guarantee for housing loans totaling MYR3.7 billion, enabling about 18,000 individuals and households to own their first homes. Innovative schemes such as shared equity funding, Rent-to-Own, and alternative funding options will enable targeted borrowers to be more 'bankable' when purchasing their first homes. In addition, this will enable socially responsible or green investors to include these products in their portfolio, broadening Cagamas' pool of investors.

Are you planning to further strengthen your Islamic finance offering?

Being the largest issuer of debt instruments in the Malaysian capital market, we have contributed to the strengthening of Malaysia's position as a global Islamic finance hub. Cagamas' Islamic finance offering will continue to progress alongside the conventional offering. In term of sukuk issuances, Cagamas will continue to issue bonds to meet growing domestic demand as well as create international awareness and acceptance of sukuk. The existing MTN program is being upsized and will see additional features to the existing sukuk offerings. Cagamas is also working to add additional sukuk structures to the existing EMTN program to tap the international market. In line with Bank Negara Malaysia's guidelines for a value-based intermediation (VBI) initiative, the company is embarking on purchasing loans and financing related to environmental and social impact projects, in addition to piloting the issuance of sustainability bonds and sukuk to fund these initiatives and mortgage REITS. With VBI, Cagamas aims to deliver the intended outcomes of shariah through practices, conduct, and offerings that generate positive and sustainable impact for the economy, community, and environment, consistent with the shareholders' sustainable returns and long-term interests. Through this initiative, Cagamas will be able to broaden its investor pool to include socially responsible or green investors that would help open the market further.