HSBC Bank Malaysia Bhd deputy chairman and CEO Mukhtar Hussain
KUALA LUMPUR: HSBC Bank Malaysia Bhd expects Islamic financing to complement conventional financing for the South-East Asia railway network project, given its long liquidity tenure, said chief executive officer (CEO) Mukhtar Hussain.
He said sukuk financing was a very important and powerful funding method for mega railway projects like the Thai-China rail project (Thailand), Gemas-Johor double-tracking project (Malaysia), Jakarta-Bandung High-Speed Rail (HSR), and Kuala Lumpur-Singapore HSR.
“All these projects have tenures of at least seven years. Therefore, sukuk, for example, will have a powerful means of financing and Malaysia has the expertise to provide this facility,” he told a media briefing in Kuala Lumpur on Tuesday.
Mukhtar said the bank, which is going to celebrate its 10th anniversary in providing Islamic finance facilities, is looking to provide both conventional and Islamic financing for such projects.
He said HSBC was the sole financier for the double-tracking rail project involving RM8.9bil.
“The project, which involves upgrading 197 kilometres (km) of track from Gemas to the southern tip of the country, will begin this month. Once completed, it will reduce the travelling time from Johor to Kuala Lumpur from six to three and a half hours,” he said.
Meanwhile, he said the ground-breaking for the construction of the US$13bil East Coast Rail Line project connecting ports on the east and west coasts of the Peninsula started in August 2017.
“Malaysia expects to invest US$85bil (US$1=RM4.22) in transport infrastructure until 2020. Of the amount, US$75bil is dedicated to railway development,” h said.
Mukhtar said said one of the Chinese power companies was reported to have shown interest in raising some sort of bond in 2018, and sukuk financing would definitely be a strong consideration for the company.
The CEO noted that the Asean region has become China’s largest supply chain source over the past decade.
“However, vast improvements in the railway network in the region are needed to accommodate the expected doubling of Sino-Asean trade between now and 2025,” he said.
He said the solution was in the form of the South-East Asian railway network, which is one of China’s seven main transport routes under its One Belt One Road Initiative.
“The plan involves building more than 3,000 km of rail lines from China’s Yunnan province through Laos, Cambodia, Thailand, Malaysia and Singapore, as well as in Indonesia, including spin-off tracks linking these countries’ industrial and commodities zones with major shipping ports,” he added. - Bernama
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