Wednesday, December 10, 2008
Takaful Malaysia looking for Indonesian partners
By ALFEAN HARDY
SYARIKAT Takaful Malaysia Bhd (Takaful Malaysia) is injecting up to RM21 million into its Indonesian operations, both to meet Indonesian regulatory needs as well as to make its operations there attractive enough for possible partnerships with Indonesian banks, its group managing director Datuk Mohamed Hassan Md Kamil said.
Speaking at a press conference in Kuala Lumpur yesterday, Hassan (picture) said Takaful Malaysia could see the injection of capital into its PT Asuransi Takaful Keluarga (Takaful Keluarga) sub-subsidiary once it gets the green light from the relevant authorities.
Takaful Keluarga, as of June 2008, is the 56%-owned Islamic family insurance arm of Takaful Malaysia's 56%-owned PT Syarikat Takaful Indonesia (Takaful Indonesia) operations. Takaful Indonesia is also the parent company for the company's Indonesian Islamic general insurance business, PT Asuransi Takaful Umum. "The Indonesian regulators have a risk-based capital requirement in place.
The injection is to partly meet this riskbased framework and partly to expand on the infrastructure capabilities of the company there in IT and distribution capabilities,' he added.
Hassan said Takaful Malaysia felt the injection of capital would also make its Indonesian operations an attractive prospect for a local partner, which he sees is essential to make in-roads in a very large country that was almost equal in size to the US lengthwise.
"We currently have between 33 and 34 branches in Indonesia, which isn't enough to have a meaningful presence. We feel that having a strategic partner with a ready distribution network is the ideal option to expand our business in Indonesia.
"We would prefer a bank, a Shariah bank, which has branches all over the country. In today's environment, the bancassurance model is probably the most effective and costefficient method to expand your business," he added. Hassan said potential partners had already been identified but no talks had yet begun.
"We've decided to inject the capital first to strengthen the infrastructure of the company and then continue to source for the strategic partner, perhaps towards the middle of next year," he added.
Takaful Malaysia had late last year been given the green light by Bank Negara to negotiate a proposed strategic alliance and possible stake sale to Dubai-based Islamic Arab Insurance Co PJSC (Salama) and Abu Dhabi-Kuwait-Malaysia Strategic Investment Corp. The talks with Salama officially ended on Tuesday (Dec 9), which Hassan acknowledged was a decision made by Takaful Malaysia's 65.22% parent, BIMB Holdings Bhd, but that negotiations with Abu Dhabi-Kuwait were still on-going.
Asked if a potential Indonesian strategic partner could be offered stakes in Takaful Malaysia, he said it was possible. "The partner has to have value-added to the company. The potential thing we're looking for is the distribution capabilities, cross-selling opportunities and the like. Market speculation and other earlier reports had said Takaful Malaysia had sought out Middle Eastern partners in order to penetrate the West Asian market.
Asked if this was the case, Hassan said the Middle East had become quite saturated. "Especially now with the price of oil falling below US$50 per barrel, I believe purchasing power had been quite affected. There are also many other takaful operators operating out of the Middle East," he said.
"Our strength, I believe, is to focus in Asia. At the near future, we want to strengthen our company in Indonesia. Depending on how long this financial crisis will stretch, we may differ plans to expand overseas until late next year or early 2010," he added.
(The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays edited by its associate editor, Habhajan Singh)