Chief Executive Officer

Malaysian Rating Corporation (MARC)

Kuala Lumpur, Malaysia

Could you provide a brief journey of how you arrived where you are today?
I started in 1980 as a money market and foreign exchange trader at a large domestic trading bank. After a training stint in London in fixed income securities, I moved to a local merchant bank to take up a role as head of treasury. I was then hired by a large global bank to become their country treasurer in Malaysia, before joining a new management team hired to run a relatively small local commercial bank that was acquired by a government savings institution. In 2001, I joined a financial services group as a corporate planner.I assumed my current position at Malaysian Rating Corporation in January 2005.

What does your role involve?
My role is to provide business direction and leadership to my team. The operations must be highly efficient and the team must align with business objectives. The rating business is about maintaining integrity, independence and objectivity.

What is your greatest achievement to date?
During the last year, we have managed to grow the business further with increased revenues and a higher number of rating jobs. We have embarked on a number of initiatives which include reviewing our rating processes and methodologies in view of some emerging issues and market trends, tightening our surveillance procedures and beefing up our analytical team with more credit experience.

Which of your products/services deliver the best results?
We have achieved positive growth in 2005 and assigned a total of 72 ratings. This represents an increase of 20 ratings over the 52 ratings assignments completed in year 2004. In 2005, MARC rated a total of 55 Islamic debt instruments.

What are the strengths of your business?
Our edge lies in our capability to provide an objective and unbiased opinion of relative credit risk attached to a particular issue. In doing so, MARC’s rating methodologies are adhered to international standards and have achieved investors’ acceptance and recognition.

We have also built up a strong presence in the rating of Islamic debt instruments. MARC is the first rating agency to introduce a specific set of Rating Symbols and Definitions for the rating of Islamic capital market instruments. We have also appointed a Shariah Advisory Panel to advise on Shariah aspects of Islamic financial instruments, and review or endorse new or variations to Islamic rating products and rating definitions to ensure that they comply with Shariah requirements.

What are the factors contributing to the success of your company?
Human capital. We have put in place a capable team of experienced credit analysts to help drive our business.

We also have the strong support of the various stakeholders – our shareholders, the bankers and financial advisors, clients and investors who have contributed to the success of MARC today.

What are the obstacles faced in running your business today?
Risk management of a bond portfolio is becoming more challenging. The current broadening and deepening of the domestic bond market is expected to continue and credit rating agencies will have to continually strengthen their operational competencies to be more responsive to market trends.

One issue affecting the local industry is the imbalance of information between issuers and investors, particularly in the case of non-listed entities. The absence of management cooperation (in providing timely information) could affect the capacity of a rating agency to issue timely rating actions. There is thus a need to establish minimum disclosure standards for issuers and to introduce measures to encourage timely provision of information by issuers.

There is also a need to boost liquidity in secondary markets and to change investors’ current preference for bonds rated single A or higher. It is hoped that with the introduction of bond pricing agencies, this will encourage more secondary trading of lower rated bonds and provide greater accessibility to information.

Another challenge for credit rating agencies is staff attrition. The rating business relies on analysts who are carefully recruited and who are then trained, and subsequently gain experience in the rating process. Training and nurturing our analysts as well as strengthening our credit analytical resources is a continuous exercise at MARC.

Where do you see the Islamic finance industry, maybe in the next five years?
The Islamic capital market is proving to be an increasingly important component of the capital market.

We expect the Islamic financial sector to gain greater importance over the next five years. The various initiatives put in place by the regulators, including tax exemptions on certain Islamic instruments, guidelines on Islamic REITS, approval of Islamic bank licences as well as the recent move by Bank Negara Malaysia to launch an Islamic education centre, clearly spell the way forward for Islamic finance in Malaysia.

Name one thing you would like to see change in the world of Islamic finance?
Greater efforts must be directed to generate more Islamic instruments domestically and internationally to promote a cross-border flow of Islamic capital that would build the requisite liquidity to further strengthen the system. The more participants are involved in investing in Islamic instruments, the higher is the level of awareness and acceptance that are necessary to further promote product innovation and market liquidity.

Malaysian Rating Corporation (MARC) is a domestic credit rating institution in Malaysia that strives to provide quality ratings which are highly regarded locally and globally.