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38 EMPOWERING EXIM BANK MALAYSIA
GROWTH

MANAGEMENT DISCUSSION

AND ANALYSIS

It also makes available competitively priced short-term trade finance facilities to direct
exporters and indirect exporters to promote the export of manufactured products, Medium- to long-term trade credit
agricultural products and primary commodities under the Export Credit Refinancing takaful/insurance facilities
(“ECR”) scheme. ECR Financing is categorised under pre-shipment and post-shipment.
Pre-shipment ECR is an advance to facilitate the production of goods prior to shipment Medium- to long-term trade credit
and to encourage the development of a network of economic inter-dependence takaful that has a policy term of more
between exporters and Malaysian suppliers in industrial development. Post-shipment than one year is offered by the Bank to
ECR is an advance to exporters to finance the export of goods after shipment, enable Malaysian companies to venture
pending the receipt of proceeds for the exported goods. into new and unfamiliar markets.
The Bank provides specific takaful
Furthermore, the Bank provides short-term trust receipt financing to importers policies to cover the export of capital
to bridge their working capital requirements, through the extension of credit under goods or services with lengthy
documentary credit transactions, until the receipt of sales proceeds. As the imported manufacturing and/or payment periods
goods are unavailable in the country of import, such financing has the ability to and high contract values.
enhance the competitiveness of the products imported. The Bank also offers financing
to Malaysian manufacturers that are involved or supported export-related industries Overseas investment takaful is provided
in selected vendor programmes developed by the Government or its agencies by to protect overseas investments
financing the working capital needs of such manufacturers for the post delivery of against certain political risks, such
goods or services supplied to their customers. as losses arising from restrictions
on the conversion or transfer of local
As at 31 December 2020, the Bank’s total loans outstanding relating to trade finance currency, expropriation, wars and civil
(including both conventional and Islamic facilities) amounted to RM1.02 billion. disturbances and breaches of contract
by counterparties.
PERFORMANCE OF TRADE CREDIT TAKAFUL FACILITIES IN 2021
Specific takaful facilities are offered
EXIM Bank continually offers insurance/takaful facilities for short-term trade credit to provide medium- to long-term
insurance/takaful and medium to long-term trade credit. Shariah-compliant coverage to Malaysian
contractors and manufacturers
Short-term trade credit takaful/insurance facilities undertaking one-off contracts for export
of capital goods, turnkey projects,
construction works or rendering
Short-term trade credit takaful covers export, domestic and import trade services abroad against commercial,
transactions with a policy term of less than one year. The facilities provide “umbrella” economic and political risks and losses
cover for exporters/importers, who make regular exports to overseas importers occurring outside Malaysia due to
and imports to domestic buyers on credit for up to 180 days. The facilities also events that are beyond the control of the
provide cover for exports directly from third country suppliers to their destination contractor, manufacturer or its buyer.
overseas, without passing through Malaysia. As part of the type of takaful
facilities available to cover short-term commercial credit risk, the Bank also As at 31 December 2021, the Bank’s total
provides Shariah-compliant bankers trade credit takaful facilities to protect financial exposure under medium- to long-term
institutions against the risk of non-payment by exporters, arising from the default trade credit takaful facilities amounted to
by their customers overseas. RM277.77 million.

In addition, the Bank provides bank letter of credit takaful policies covering
Malaysian banks against the risk of non-payment of irrevocable letters of credit
issued by overseas banks, in respect of Malaysian exports.
As at 31 December 2021, the Bank’s total exposure under short-term trade credit
takaful shipment amounted to RM319.07 million.