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Saturday October 20, 2007

Transforming Bank Pertanian

ESTABLISHED in 1969, Bank Pertanian Malaysia (BPM) is a development finance institution directly involved in financing the agriculture sector. With the agriculture sector's contribution to Malaysia's gross domestic product weighing in at around the 7.2% mark, with an annual growth expectancy of 5%, intimations that the sector has had its day in the sun are far from correct. 

Zainul: We hope to be a different entity and in a better position to really help make this agenda a reality
That's the stance adopted by Zainul Kamar Mohd Zain, BPM's general manager, who notes that the Agriculture Ministry has big plans for the sector. Not only are efforts under way to transforming and modernise the sector by 2010, that's when Malaysia is targeting to become a net food exporter.  

Zainul recognises the role BPM has to play in this, but points out that the sector lacks support from commercial banks, which he reckons have relatively nominal exposure to the agricultural sector. 

“We're looking at modern, high-tech agriculture that is capital intensive. The Government is expecting investment in agriculture to be RM27bil for the five years from 2006 to 2010. Out of that figure, the Government will pump in RM6bil to RM7bil, and the remaining RM20bil will be from the private sector. BPM cannot do this alone.” 

He's well aware of some of the stigma surrounding the sector, due in part to its inherent volatility. However, given the Government's identification of agriculture as the third engine of economic growth, he maintains that BPM will remain relevant for the foreseeable future. 

“In that light, we are looking to be a corporatised entity, hopefully by next year. We've completed almost 95% of the work. By that time we hope to be a different entity and in a better position to really help make this agenda a reality,” says Zainul. 

“The bank has come a long way. We've been preparing for corporatisation over the last eight and half years. In 2004, we had a very serious transformation when we streamlined our non-performing loans into a six-month cut-off as opposed to a 12-month cut-off, bringing us in line with Bank Negara guidelines,” he explains. 

The importance of staff 

The decision plunged BPM into a loss of RM74mil for the year. Zainul, however, remained undaunted; under his guidance, the bank clawed its way back into the black, improving to a profit of RM34.4mil last year. 

For the current financial year, Zainul is aiming to surpass that figure; according to him, the only question is by how much. He's understandably proud, but he's also swift to point out that the achievement was borne very much on the back of his staff. 

Harvesting padi
Zainul strongly believes that corporate culture is the soul of an organisation. He enthuses about BPM's “patriot culture”, one that views patriots not just as those on the frontlines, but also the farmers and herders working hard behind the scenes. 

“If they don't sacrifice and work to feed us, we are dead,” he says. Expounding on this theme, he stresses that each and every member of an organisation is important. Part of his credo involves building up individuals, ensuring excellence in each member of a team so that the entire organisation is founded upon excellence. 

“What makes the organisation are the people, who can be regarded as assets if highly competent and highly motivated. With that and a vibrant, dynamic and positive corporate culture as a base, I'm sure the pillars as far as being customer-focused, market-driven and a one-stop centre, transparent and efficient will be strong enough to support our ultimate goals,” says Zainul. 

General manager since May 2004, Zainul's tenure at BPM extends over three decades, from his days as an agricultural science graduate from Universiti Malaya to a stint in charge of the bank's human resources division. It is during the latter term that he dreamed of building a versatile, dynamic, well-rounded team, one that will help establish BPM's branding in image in the public eye. 

Yes, this was a challenge, but Zainul says it's the challenges that drive him. Although it may not be at the pace he desires, he is nonetheless pleased to be the architect of change at BPM – though he immediately places credit for positive changes at the bank firmly with his team.  

Looking forward 

Zainul regards cluster financing and contract farming as the way to go into the future, opining that its success with chicken farming could well be replicated in other industries and pointing out its high points in terms of transfer of technical knowhow and management. 

“We would like to really grow with our customers. When they start out small, their needs are simple, but as they grow and progress, they might need products like trade financing which we currently cannot offer. That means that when they reach a certain level, we have to bid them farewell, and it's a sad thing,” he adds. 

As such Zainul hopes that BPM's corporatisation process will open up the doors towards the provision of more lucrative products, allowing the bank to maintain a business relationship with customers which it has helped from the very beginning. 

He's also justifiably proud of BPM's microcredit scheme, which has been running since the Government first mooted the idea in 2003. In 2005, BPM came up with another microcredit programme, its the Modal Usahawan Tani programme, which has a recovery rate of 98%.  

This means that in total, BPM's microcredit programme has financed 35,000 people with a total of RM372mil. As Zainul says, microcredit financing is well on the way to becoming BPM's forte. 

Going forward, BPM has plans to work with Felda, Felcra and Mara, in addition to its successful Ar-Rahnu or Islamic pawnbroking activity. As at Sept 30, BPM has approved a total of RM98mil involving 66,930 transactions. By the end of the year, Zainul hopes that Ar-Rahnu will be available in 74 BPM branches nationwide. 

Despite the flurry of new activities, Zainul takes pains to emphasise that the bank's focus will be agriculture, and that it will continue to be the nation's centre of agricultural excellence, playing a pivotal part in the development of the agriculture sector. 

“I would like my era in charge to be known as the era of transformation,” sums up Zainul. “For those who are bankable, who have projects that are viable and sustainable, please do not hesitate to approach BPM for financing. Together, we will materialise our dreams, and prove that agriculture is business – as per the oft-mooted slogan by Tan Sri Muhyiddin Yassin, the Minister of Agriculture and Agro-Based Industries.”  

·This article is provided by Volvo