BANK Islam Malaysia Bhd has approved more than RM500 million to finance over 150 oil and gas services equipment (OGSE) vendors under the Petroliam Nasional Bhd's (Petronas) Vendor Financing Programme (VFP).
Initiated in 2018, the VFP is one of Petronas' efforts to strengthen the Malaysian OGSE ecosystem amid an accelerated energy transition environment.
The programme supports vendors in the facilitation of access to financing, priming them to compete globally while boosting the nation's economic growth.
The partnership links Petronas with nine banks, including Bank Islam, which had financed more than RM1.7 billion in contract value to date.
Bank Islam group chief business officer (institutional banking) Sharifah Sarah Syed Mohamed Tahir said Petronas initiated the partnership with Bank Islam when Malaysia's OGSE vendors were adversely impacted by the oil price crisis, particularly in securing working capital and increasing cash flow to sustain their companies.
"The principal purpose of the VFP is to lighten their financial burden and to provide vendors across all segments with the funds required to complete the contracts secured from Petronas," she said.
Through the programme, Petronas helps financial institutions in verifying vendors' information on the awarded contracts and performance, prior to and during the contractual or financing period.
"Bank Islam continues to pursue growth in structured financing programmes, like the VFP with Petronas, to allow better access to financing solutions for vendors, especially small and medium enterprises (SMEs).
"Applications through the VFP also facilitate faster credit decisions by the bank compared to standalone credit applications," Sharifah Sarah explained.
She said the bank offered competitive financing rates to vendors participating in the VFP via three facilities: Business Cash Line-i, Ijarah Thumma Bai'-i (AITAB-i) and Multi Trade Facilities.
The support will allow suppliers to take on more tasks and expand their ventures.
She said the three facilities served OGSE suppliers in direct supply or trading, supply installation and commissioning, testing, commissioning, training, and business services such as service and maintenance, as well as other contracts subject to the bank's approval.
Licensed vendors registered with Petronas or its subsidiaries, especially SMEs, are highly encouraged to apply for financing through this programme.
Application is also open to principal contractors who have secured a contract or work order directly from the group.
On further plans to extend support to SMEs or vendors, Sharifah Sarah said Bank Islam was taking steps to improve customers' experience through the digitalisation of the VFP.
"The digitalisation is being implemented progressively, where we are targeting to complete the initiative this month. Our vendor financing customers will enjoy a seamless banking experience with a simplified transaction process and faster service delivery by the bank," she said.
In the future, she said Bank Islam would like to collaborate with Petronas in the area of sustainability to support the country's goal to achieve carbon neutrality.
The bank aims to provide green financing and solutions through programmes like the VFP that encourage the transition to a low-carbon economy.
"We believe Petronas is moving towards the same agenda, progressing to a more sustainable way of managing Malaysia's energy resources. Hence, Bank Islam is honoured to work with Petronas and explore financing solutions for the vendors with such related efforts and activities," added Sharifah Sarah.
Interested applicants can learn more by visiting the bank's website or Petronas' website.