HSBC Global Trade and Receivables Finance Promo/ng Palm Oil Export to China by Renminbi Trade September 2015 Vincent C Sugianto Country Head Global Trade & Receivables Finance Prepared for: 28 March 2012
Overview on Malaysia Export Business Palm Oil remains top five core trade business for Malaysia providing an export business of MYR20.37b (5.5%) from the total Export of Malaysia MYR368.33b
Palm Oil (Tonnes) Major Palm Oil Export Countries for Malaysia (Ex EU & Other Palm Products) 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 JAN - JUL 2015 JAN - JUL 2014 India overtakes PRC due to lower import of Palm Oil from Indonesia PRC Exports declined due to the higher import of Soybean locally in PRC
How The Interna/onal Businesses View RMB As A Currency For Trade RMB usage is increasingly driven by commercial considerations, with over half of Chinese companies ready to offer discounts in exchange for using RMB 73% believe their level of RMB cross-border trade business will increase 56% of Chinese companies would be willing to offer a discount 80% quoted buyer / supplier relationship as a primary reason for using RMB 42% consider documentation requirements as complicated HSBC commissioned survey. Base: 791 businesses from China, HK, Singapore, Australia, UK, US, Germany; RMB users and non-users; July 2013
Trade Instruments to Accommodate RMB Palm Oil Trade Flows for Exporters Export RMB Le8er of Credit Products Offered - Lecer of Credit Advising & Confirma/on - Lecer of Credit Discoun/ng - FX Hedging Open Account Product Offered - Receivables Finance - FX Hedging Commodity Structured Trade Finance Product Offered - Pre Export Finance - FX Hedging Benefits - Funding with compe//ve RMB rates - No limits/facili/es required on Corporate - Country and Bank Risk mi/ga/on - Intra HSBC Flows between China & Malaysia Benefits - Funding with compe//ve RMB rates - Off Balance sheet treatment* - Providing Balance Sheet treatment to reduce DSO - Buyer Risk Mi/ga/on backed by Insurance Benefits - Mone/za/on of future long term Commercial Contract with Buyer in RMB - High Value of funding up to 80% of Contract Value - Providing self- liquida/ng structure via exports of Palm Oil * Subjected to further due diligence
How Using RMB and HSBC for Trade Seclement Can Benefit You HSBC Competitiveness Exporter Chinese Counterparty Gain Diversify Hedge Competitive hedging pricing between RMB USD & RMB-MYR All in pricing to be offered for both Hedging and Funding Able to connect more Buyers in China with local Exporters in Malaysia End to End communication for easy and fast Trading transactions 175 outlets across 57 cities in China Able to include the cost of hedging in its price of goods Fix the profit margin as soon as LC is opened or earlier upon Contract signing Currency portfolio diversification Access to wider buyer base Improved buyer relationships and sales Helps exporter to support working capital of their buyer via RMB flows Competitive RMB facilities locally in Malaysia Natural hedge Save FX costs as payables and receivables would be in RMB Regulatory convenience for LC transaction of long tenors (from 90 days to 360 days) Improved working capital management by increasing their DPO via longer term of credit
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