I I Partnership for Global Reach Trade Products Brochure I I INTRODUCTION Whether you are a buyer or seller of goods or services, we at Hong Leong Bank, with our extensive network of agent banks worldwide have the capability and commitment to fulfil your every business goal to reach and penetrate both the Local and Global Markets. We are always committed in handling each transaction accurately and in a timely manner to help you earn the credibility and be ahead of your competitors in securing the most lucrative deals. Not only that, for advice on any trade issues and trade expansion plans that you may have, our Trade Team, equipped with trade knowledge and experience are only too willing to be of service to you. As part of the Hong Leong Financial Group, all our resources are harnessed towards giving you top value business advantage. Together we can truly form an ideal Partnership for Global Reach!
Trade Services Letter of Credit (LC) Trade Services Collections In order for you to purchase with a peace of mind, our LCs offer you assurance that you will only pay for your goods if your suppliers present complying documents in accordance to the terms and conditions that you have set forth in the LC. Our team of expert document checkers are there to deliver that promise to you. As your business partner, we will issue LCs on your behalf to most parts of the world and through our 500 plus and growing agent banks in more than 60 countries worldwide, you can be sure that there are lots of dedication and support from the point you issue the LC to making payment for the goods that you have purchased for your business needs. Payment will only be made when LC conforming documents are presented Better opportunity to negotiate with the supplier for better credit terms and pricing May obtain import financing Bank may assist to clear Exchange Control matters and related trade issues when the LC is issued The LC constitutes an irrevocable and definite undertaking of the issuing bank to honour a complying presentation. It can be issued on Sight or Usance basis, depending on instructions given by the LC applicant. The main governing set of rules for an LC is the latest version of Uniform Customs and Practices for Documentary Credit (UCP) and Uniform Rules on Reimbursement (URR) published by International Chamber of Commerce (ICC). LC Issuance Commission 0.1% per month or part thereof LC Amendment Commission If related to extension or increase in amount, 0.1% per month or part thereof On the other hand, if you are the Seller, we will also be equally committed in advising you your Incoming LCs promptly whilst at the same time authenticating and giving you the assurance that your Incoming LC is genuine. The terms under which the payment will be made are known prior to shipment hence giving more control over cash flow Payment is assured by submitting LC compliant Documents Need not worry about financial standing of buyer as it is replaced by Issuing Bank's undertaking Control over the shipping documents is retained until payment/ acceptance is received Confirmed order and no worry of cancellation without consent May obtain export financing If you wish to enjoy the flexibility of purchasing without an LC, we can assist in handling your Inward Bills for Collection (IBC), whereby we will promptly inform you upon receipt of shipping documents from your supplier. We provide intermediary services to facilitate trade settlement on terms agreed between you and your supplier. You can be sure that your documents will be presented to you in good timing upon payment or acceptance (whichever applies) and financing could also be arranged at your request. Payment is made only upon release/after acceptance of documents with greater flexibility This payment method is simpler and cheaper If you are the Seller, our Outward Bills for Collection (OBC) product offers you the flexibility and cost-effective way in managing your collection, whether be it obtaining payment/acceptance from Buyer upon the release of documents. We strive to monitor and update you on the status of your collection bills that are yet to be paid or accepted. Control of goods retained until the Buyer makes payment/gives acceptance Financing may be obtained against advances from Collection bills proceeds An accepted bill of exchange is legally binding to the drawee (Buyer) a form of security to Seller This payment method is simpler and cheaper than LC Collections are done based on the instructions given by the Supplier to his bank (The Remitting Bank) who in turn forwards the shipping documents to the buyer s bank (Collecting Bank) to collect payment/obtain acceptance from the buyer upon the release of said shipping documents. There are two types of Collections D/P (Documents against Payment) and D/A (Documents against Acceptance). IBC Commission at 0.1% on bill amount, subject to a maximum and minimum rate as prescribed by the bank OBC Commission at 0.1% on bill amount, subject to a maximum and minimum rate as prescribed by the bank If not related to extension or increase in amount, a flat fee is charged LC Advising Flat Transaction Commission is charged
Trade Services Shipping Guarantee (SG)/Endorsement of Airway Bill/Parcel Post Receipt Under the unforeseen circumstances whereby the goods that you have purchased are already at the port whilst your bill of lading is yet to arrive at the bank, we provide this service that will save you hundreds of needless demurrage charges, not to mention sleepless nights! The SG/Endorsement of Airway Bill/Parcel Post Receipt enables you to take delivery of the goods prior to the receipt of the transport documents. The ability to obtain goods faster especially in cases of unforeseen delay in the arrival of the Bill of Lading/Airway Bill/Parcel Post Receipt Massive savings on port charges and demurrage fees etc The SG is an indemnity document issued by the Bank addressed to the shipping company on the instruction of the importer to take delivery of goods from the shipping company or its agent in the absence of the original bill of lading. The Endorsement of Airway Bill/Parcel Post Receipt is done for goods which are dispatched by air or parcel post. The customer may receive a copy of the Air Waybill or Parcel Post Receipt prior to the arrival of the documents. Under such circumstances, an authorization on the Air Waybill/Parcel Post Receipt will be done in order to enable the customer to take delivery of the goods. Trade Services Bank Guarantee (BG) /Seller The BG is usually a written undertaking issued by the bank at your request in favour of a third party (the beneficiary), guaranteeing payment in case of default or non-performance of a certain requirement. We understand the importance of trust in the business world, hence we always strive to issue the BG for you in a timely manner to support and sustain your business needs. The BG constitutes a formal and trustable source of undertaking that supports business needs The BG is a document whereby the Bank as guarantor undertakes to pay an agreed sum if the customer fails or defaults in fulfilling his obligations under the BG. There are Financial and Non-Financial BGs. BGs should have an expiry date and claim period. All BGs issued must be specific as to the amount and period of liability including claim period. Commission ranging from 0.1% per month or part thereof or as per rate specified in the Letter of Offer 0.1% flat on invoice value subject to a minimum rate as prescribed by the bank
Banker s Acceptance (BA) /Seller In order to help improve your cash flow and help you manage your funds better, we can assist to finance your purchases or sales via Banker s Acceptance (BA). Through the presentation of necessary shipping documents and BA drafts, you are well on your way to enjoying fantastic financing rates and tailor-made financing tenor that suits your business needs. Easy to apply with great financing flexibility Onshore Foreign Currency Loan (OFCL) /Seller The OFCL is a form of financing specially designed to help you mitigate foreign exchange risks faced as the financing is advanced in foreign currency. As financing is done in foreign currency, it mitigates the risk of foreign currency fluctuations by providing you with a natural hedge against untoward currency movements Bankers Acceptance (BA) is a usance bill of exchange drawn by the customer and accepted by the Bank to finance business-related purchases or sales of goods to another person who may be a resident or non-resident, evidenced by proper and adequate documentation. BA facilities are used only for genuine working capital requirements and must not be used to finance purchase of fixed assets or services. Minimum period of financing is 21 days and the maximum period must not exceed the approved financing tenure subject to a maximum period of 365 days. The minimum financing amount is set at RM50,000 and should be in multiples of RM1,000. BA Cost of Fund + Customer s Spread OFCL is a trade facility in Foreign Currency. The minimum period of financing is 14 days and the maximum period must not exceed the approved financing tenure by the bank subject to a maximum period of 180 days. OFCL is drawn against presentation of necessary supporting documents and the financing amount is up to 100% of invoice value. The minimum OFCL financing amount is set at USD50,000 or its equivalent. OFCL Cost of Fund + Customer s Spread
Invoice Financing (IVF) /Seller The IVF is yet another financing tool that is customized for the financing of both purchases and sales transactions that you might have. Additionally, IVF can also finance your local Operational Expenses and Services payables. We love to spoil you with choices on how best to finance your trading needs! Trust receipt (TR) The TR is yet another customised financing tool that you, as an importer or buyer may use. You can finance the whole invoice amount and you can even choose to early settle the amount due at any time according to your own convenience. Easy to apply with great financing flexibility especially with regards to the smaller minimum financing amount of RM10,000 Greater scope of financing that includes local Operational Expenses and Services payables IVF is the financing of customer s business related foreign and local sales (on credit) or foreign and local purchases (sight terms or remaining usance for credit purchases). Additionally, IVF can also finance your local Operational Expenses and Services payables. Minimum period of financing is 14 days and the maximum period must not exceed the approved financing tenure by the bank subject to a maximum period of 365 days. The minimum financing amount is RM10,000. IVF COF + Customer s Spread Financing for full invoice amount Early settlement option available with interest calculated up to settlement date only The TR is a method of financing whereby the Bank retains the legal title to the goods but relinquishes physical possession to the buyer/importer of the goods who acts as trustee or agent of the bank. The buyer/importer will dispose of the goods and repay the Bank (amount owing plus interest) out of the proceeds of the sales on or before maturity of the TR. TR is strictly for financing of working capital requirement and must not be used to finance purchase of fixed assets e.g.plant, machinery, etc. The minimum period of financing is 7 days and the maximum period must not exceed the approved financing tenure by the bank generally subject to a maximum period of 90 days. The minimum financing amount is RM2,500. BLR + Customer s Spread
Export Credit Refinancing (ECR) And if the range of financing for you as the Exporter is still not enough, we do have a short term financing scheme which is administered by the Export-Import Bank of Malaysia Berhad (EXIM Bank) for you. The EXIM Bank provides pre and post shipment financing through us as one of their channels so that you may enjoy the facility at competitive interest rates. The ECR scheme provides exporters with ready access to credit facilities at competitive interest rates Develop backward linkages in export-oriented industries The ECR is a short-term financing scheme provided to direct/indirect exporters by Export-Import Bank of Malaysia (Exim Bank) through designated commercial banks. ECR financing is divided into two types, namely Pre-shipment and Post-shipment financing: 1. Pre-shipment financing Pre-shipment Export Credit Refinancing (ECR) facility is defined as loan advanced by Exim Bank to facilitate the production of eligible goods for export prior to shipment and to promote backward linkages to benefit the indirect exporters (local suppliers). This facility is available to direct and indirect exporters (local suppliers) to fund their purchases of domestic inputs and overhead expenses incurred in relation to the production of eligible goods. Pre-shipment financing is divided into 2 methods:- Order-based (OB) Method The customer (Exporter/Local supplier) obtains pre-shipment loans against presentation of export order. Minimum nominal value lodged is RM10,000 and the minimum drawdown for each transaction is RM2,000. The maximum OB financing tenure must not exceed the approved financing tenure by the bank subject to a maximum of 120 days. Certificate of Performance (CP) Method The customer obtains pre-shipment loans against presentation of Certificate of Performance (CP). CP refers to a certificate issued by Exim Bank to the eligible customer (Exporter). The financing period is as specified in the CP. 2. Post-shipment financing Post-shipment Export Credit Refinancing (ECR) facility is defined as loan advanced by Exim Bank to finance exports of eligible goods on usance terms at a certain prescribed interest rate. Minimum period of financing is 7 days and the maximum period must not exceed the approved financing tenure subject to a maximum period of 6 months. The eligible goods are agricultural products, selected primary commodities and manufactured products that have significant value-added and utilization of local indigenous resources. Advance Against Trade (AAT) This is a financing product tailored for Exporters, which is a friendlier and simpler version for the fuss-free you! We provide you Pre and Post shipment financing to ensure that you are funded from the point of raw materials purchase to the moment you receive your export proceeds. The AAT provides exporters with ready access to credit facilities at competitive interest rates Develop backward linkages in export-oriented industries through a simpler financing mode The AAT is used to advance genuine purchases of raw materials/working capital requirement for production of goods for export that is related to customers nature of business. It must not be used to finance the customers purchase of Fixed Assets. The AAT provides financing to Exporters through: 1. AAT Pre-Shipment financing (AAT-Pre), against: (a) Export Letter of Credit and/amendment(s), Or (b) Purchase Order issued by Overseas Buyer (PO) or Sales Contract Provided post shipment documents MUST BE channelled to the Bank The minimum drawdown amount is set at RM20,000 or equivalent, and the minimum financing tenure is 7 days up to a general maximum of 90 days. 2. AAT Post-Shipment (AAT-Post), against: All documents required under Export LC or in the case of financing against PO/Sales Contract, original Invoice and Transport Documents. The minimum drawdown amount is set at RM20,000 or equivalent, and the minimum financing tenure is 7 days up to a general maximum of 120 days. AAT Cost of Funds + Customer s Spread ECR Cost of Funds provided by EXIM Bank + Customer s Spread
Foreign/Domestic Bills of Exchange Purchased (FBEP/DBEP) The FBEP/DBEP is a financing facility granted to you, as an Exporter(FBEP) or local Seller(DBEP). We purchase your export or sales bill and advance you the proceeds pending payment from your Buyer. We realize that the sooner you receive your sales proceeds the faster your business can move on to its next level. Advances granted will greatly ease your cash flow Simple and clear cut financing requirements The FBEP/DBEP is a facility whereby the Bank provides financing to the customer (Exporter/Seller) by purchasing/discounting bills of exchange accompanied by invoice and shipping documents/delivery order drawn by the customer on his foreign/local Buyer which are released to the said foreign/local Buyer through his Bank (Collecting Bank) against:- Full payment by the Buyer for FBEP/DBEP sight (D/P) - Documents against payment Acceptance by the Buyer for FBEP/DBEP usance (D/A) - Documents against acceptance Financing proceeds will be credited to the exporter /seller s account by the Bank pending receipt of payment. FBEP Foreign Currency ECOF + Customer s Spread DBEP BLR + Customer s Spread Foreign/Domestic Bills of Exchange Purchased-Authority to Purchase(FBEP/DBEP(AP)) The FBEP(AP)/DBEP(AP) is a facility designed for you as the Seller who has the capability of presenting LC compliant documents. We shall advance you the export (FBEP(AP))/local sales (DBEP(AP)) proceeds based on the strength of the LC issuing Bank. It s so simple, just present your Negotiation Application Form and LC documents and we shall do the rest! The Inward LC provides you with the certainty that the Buyer cannot amend/cancel without your consent Simple and clear cut financing requirements The FBEP(AP)/DBEP(AP) is a facility whereby the Bank provides financing to the customer (Exporter/Seller) by negotiating/purchasing/discounting export/sales documents presented with or without bills of exchange (sight/usance) drawn by the customer under an LC in compliance with its terms and conditions. FBEP (AP) Foreign Currency ECOF + Customer s Spread DBEP (AP) BLR + Customer s Spread Disclaimer: The information provided in this Trade Product Brochure is for general information only and should not be used as a basis for making any specific business or commercial decision. Hong Leong Bank Berhad does not make any express or implied warranties, representations or endorsements including but not limited to any warranties or title, non-infringement, merchantability, usefulness, operation, completeness, currentness, accuracy, satisfactory quality, reliability, fitness for a particular purpose in respect of the Product Brochure, the material, information and/or functions therein and expressly disclaims liability for errors and omissions in such materials, information and/or functions.