KUALA LUMPUR: G Capital Bhd (GCB) today announced that the Company, Datuk Phan Ying Tong and ES Packaging Co Ltd (Cambodia) (ESP) entered into a head of agreement (HoA) to focus on a commercial banking business in Cambodia.
Cambodian central bank - National Bank of Cambodia - has given the approval-in-principle for the establishment of a commercial bank under the name Oriental Bank Plc in the country.
The approval-in-principle by the National Bank of Cambodia comes with the approved capital of US$100,000,000 (equivalent to around RM407 million).
GCB shall hold not less than 20 per cent in the institution, the company's Bursa Malaysia filing today showed.
GCB executive director Tan Sri Dr Ali Hamsa said it is not very often to see private institutions investing into a new bank nowadays, all the more so when it is in Cambodia.
"However, after months of careful deliberation, our group has come to a conclusion that this is one historic investment opportunity that we cannot afford to miss," he said in a statement today.
Ali Hamsa said the approval-in-principle allows GCB to jointly establish and operate an associate company offering banking products and services to the nation of 17 million people.
Upon the execution of a definitive agreement with its partners, Oriental Bank Plc plans to establish its head office in Phnom Penh, the capital city of Cambodia.
"We are pleased to be part of the granting of the approval-in-principle to establish a banking presence in Cambodia with our partners.
"We are excited about the long-term prospects for the Cambodian economy and believe with our well-established banking partners we can contribute to the development of the Cambodian domestic banking market, as well as to facilitate more trade and investment flows between Cambodia and Malaysia and other ASEAN markets," Ali Hamsa said.
Foreign direct investment (FDI) in Cambodia continued to rise, supported by strong investment activities in finance, real estate and other services, including retail.
The entry of more foreign banks led to a rise in FDI in banking and finance.
Besides, digital and internet services firms are also investing in Cambodia due to the increase in smartphone uptake, internet usage and tourism activities.
Ali Hamsa said the investment in Oriental Bank Plc is expected to offer GCB a good exposure to the banking sector, as well as to provide long-term recurring income for the group.
"GCB is very fortunate to have found some excellent partners in this business venture. We are confident that Oriental Bank Plc will raise the corporate profile of our group in Cambodia. In the not-too-distant future, I am sure the investors will realise that GCB is a good proxy to the banking and finance sector," he said.
Ali Hamsa said the main competitive edge of Oriental Bank Plc is that the bank will adopt a hybrid business model, which will be focusing on digital banking and online banking, without neglecting conventional banking.
"Cambodia aims to transition into a predominantly digital economy with its Digital Cambodia 2023 plan, which is expected to boost digital literacy among citizens and enhance students' digital abilities in key areas, as well as develop e-commerce to diversify the economy, create new jobs and advance financial inclusion.
"The country's future direction bodes well to financial institution like us," he said.
Ali Hamsa further said that when Oriental Bank Plc embarks on its listing exercise on the Cambodia Securities Exchange or any other stock exchange, it would unlock the value of GCB's investment.
Cambodia is now a developing country that is enjoying tremendous economic growth, Ali Hamsa said.
"Cambodia is an emerging economy, with a lot of incentives for foreign investors. The FDI inflows have grown rapidly over the past few years due to the country's sound macroeconomic policies, political stability and regional economic growth," he said.
According to Asean Investment Report 2018, the FDI flows to Cambodia had more than tripled from US$783 million in 2010 to US$2.7 billion in 2017. Finance, real estate and manufacturing dominated inflows in Cambodia.
Ali Hamsa highlighted that the Cambodian government is investor-friendly as companies could also enjoy a corporate tax rate of maximum 20 per cent.
Cambodia is an unique economy with over 75 per cent of the currencies in circulation are US dollars.