MDV eyes lower loan default rate

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KUALA LUMPUR: Technology financier Malaysia Debt Ventures Bhd (MDV) is targeting to lower its net non-performing financing rate (NPF) to 4% this year from last year’s 9%.

This is to be achieved via improvements in MDV’s financing process, such as the restructuring or rescheduling of loans and repayments.

As of December 2018, MDV’s gross NPF rate stood at 24%, and the aim is to lower this figure to 14%.

The net NPF takes collateral and provisions made into account.

Speaking at a briefing yesterday, MDV chief executive officer Nazim Mohamed Nadzri explained that MDV faces a much higher financing risk compared to conventional banks.

“We are funding new technology, so invariably, the risk is higher.

“In addressing concerns of the default rate, we are strengthening our capacity, in terms of project analysis, ensuring proper project implementation, and for financing, looking at how MDV releases the funds,” he said.

Despite the high NPF rate, MDV’s recovery rate remains high at an estimated 80%.

This ensures that MDV is able to repay its government loans and sukuk, which it borrows to finance technology firms.

MDV chairman Datuk Seri Lee Kah Choon said the growth of MDV’s financing mandate strategically aligns to the government’s economic development plans to further develop the information and communication technology (ICT), biotechnology, emerging technology and particularly, green technology.

MDV has identified that the development of an enabling financing ecosystem is a crucial aspect, particularly for technology-based entrepreneurs.

This is because the areas in which they operate are typically ones which traditional financial institutions are not ready to support due to a lack of business assets and track record.

“MDV will be growing in tandem with the Eleventh Malaysia Plan, focusing on green technology.

“MDV is currently financing 73 projects in the green tech sector with 150 megawatts of renewable energy financed.

“Currently, MDV is the only dedicated Energy Performance Contracting (EPC) financier in Malaysia,” said Lee.

MDV’s financing exposure for green technology stands at RM810.7mil comprising RM519mil in renewable energy and RM134.8mil in energy efficiency.

As of December 31, 2018, MDV’s total financing outstanding amounts to RM1.31bil, while total financing exposure is at RM1.78bil.

MDV is a financing agency focusing on technology-driven sectors under the purview of the Energy, Science, Technology, Environment and Climate Change Ministry.