Banking on agriculture for progress

AS Malaysia celebrates its 59th anniversary of independence, we must not forget the history of trade and industry in our nation. Agriculture is one of the major contributors to economic growth in Malaysia and Agrobank is proud to be part of this national progress for the past 47 years.

Agrobank, formerly Bank Pertanian Malaysia, a government-owned entity, was established in 1969 to finance irrigation projects for padi double-cropping in Kedah and Perlis and provide credit assistance to farmers. By 1980, Bank Pertanian Malaysia had emerged as the largest credit service provider to the agriculture sector.

In 2008, Bank Pertanian was corporatised and became known as Agrobank. It is under the purview of the Finance Ministry and its financing of the agriculture sector is guided by policies determined by the Agriculture and Agro-Based Industry Ministry (MOA).

Agrobank strongly supports Bank Negara’s initiatives to increase financial opportunities by providing access to a range of quality financial services at competitive rates.

On July 1, 2015, Agrobank achieved another significant milestone when it became a fully-fledged Islamic bank and its syariah-compliant business transactions instilled confidence among clients and stakeholders.

The bank provides comprehensive financing products and services particularly for the agricultural community and businesses. Currently, it offers financing for agriculture, including upstream activities such as the supply of agriculture production inputs and downstream activities such as processing and selling agriculture products, as part of its initiatives to broaden access to finance.

Agrobank also recently introduced a customised financing programme for people with disability known as Agro Bakti which encourages physically-challenged Malaysian agroprenuers to improve their socio-economic situation.

Although agriculture’s contribution to the gross domestic product (GDP) has been declining since 1970, from 28.8% to 9.2% in 2014, in terms of absolute value, it has increased from RM51.3bil in 2010 to about RM58bil in 2014.

Agrobank has just completed its first phase of transformation and is now all geared up for the second phase.

“The bank needs to reposition itself given the dynamics of the food industry today. To carry out their roles effectively in the new millennium, banking institutions have to be strong, resilient and innovative in financing,” said Datuk Wan Mohd Fadzmi, the bank’s president and chief executive officer.

At present, the bank’s mandated financing portfolio is 92% primary agricultural and 8% agrobased, where 51% of total financing is channelled to primary agriculture. “The GDP for the agricultural sector is projected to reach RM93.2bil and the figure is estimated to reach RM110.7bil by 2020,” Wan added.

For the first half of 2016, Agrobank recorded the highest total financing with a total of RM8.1bil, which is also the highest growth recorded for five years, and achieved a total financing of RM4.9bil for the agriculture primary sector which includes 60.6% or RM3bil for the agrofood segment. As of the first half of 2016, the bank achieved 8.29% of total growth in financing or RM617.04mil in total value.

As food security becomes a key concern worldwide, Agrobank is considered vital in supporting the United Nation’s Sustainable Development Goals.

More than 71% of Agrobank’s branches are located in rural areas, reflecting its commitment to servicing the rural sector. In certain locations, it is the only bank around. Agrobank has also appointed more than 264 banking agents particularly in rural areas in its effort to support the Government’s initiatives to improve the lives of the underserved community and drive economic growth as well.

With competitive and affordable financing rates, Agrobank has supported thousands of entrepreneurs in the industry to expand their business empires.

Agrobank is honoured to be given the opportunity to contribute towards the success of notable agropreneur (entrepreneurs in agriculture) giants in Malaysia who have built empires and distinctive brands locally and are now venturing into the international market. Among them are household brands like Ramly Group, which manufactures frozen food; Jalen, the famous soy sauce; and Melawati Kebab.

As our second Prime Minister Tun Abdul Razak once said, “Our country is really lucky as we have been blessed with such wealth from agriculture as well as people of different races who are mainly the youth. This is the wealth of human resource which, if harnessed in unity, could allow us to achieve our national goals to the fullest.”

This is the pillar of Agrobank’s foundation in developing the agricultural sector and being a catalyst for economic development.