Malaysia:Key Nation on ASEAN's Stan

[moe@xxxxxxxxxxxxx]

Subject: Malaysia:Key Nation on ASEAN's Stand on Burma

AFP 9/5/97

                MBf Group sets its sights on Asean 


Reports by Ven Sreenivasan 

 Group is scaling down US, Europe operations in favour of
        replicating its Malaysian success in the region 



[SINGAPORE] WHILE most companies look to huge emerging markets such as China
and India
for new business opportunities, Malaysia's diversified MBf Group is
convinced that its future lies in
Asean. 

Indeed, so bullish is MBf's president and chief executive officer Loy Hean
Heong on the region that
he has been steadily scaling down the group's far-flung American and
European operations so as to
re-channel resources closer to home. 

The MBf group is one of Malaysia's largest and most prominent listed
conglomerates, with a strong
presence in everything from finance and services to properties and
manufacturing. 

It's a significant presence. The MBf stable -- comprising MBf Holdings, MBf
Capital and MBf Land
-- commands a market capitalisation of M$7.1 billion (S$4.1 billion) and
accounts for 1.33 per cent
of the benchmark Kuala Lumpur Composite Index and 4.41 per cent of the KLSE
Finance Index. 

Mr Loy's goal for the MBf Group is simple: replicate in the region the
success the group has
achieved in Malaysia. 

And his strategy is to use MBf Capital and its products as a springboard to
the region. 

"The Malaysian market is about 10 to 15 years ahead of countries like the
Philippines and Indonesia.
So the kind of financial services we provide will go down well with
consumers around the region.
We will adapt what we have done in Malaysia to suit local demand," says Mr Loy. 

One product that will be at the forefront of MBf's regional thrust is its
credit cards, of which it is the
biggest issuer in South-east Asia. 

With 1.5 million cards issued in Malaysia, MBf has a 30 per cent share of
the market there. It has
now set its sights on becoming the biggest card issuer in Indonesia and the
Philippines as well. 

It intends to issue 100,000 credit cards in Indonesia by the end of this
year, while in the Philippines
-- where it recently acquired a bank -- it plans to issue some 50,000 cards
within the next six
months. 

"We are talking about creating a whole supermarket of financial services
ranging from credit cards,
stockbroking, unit trusts, leasing, factoring to insurance and banking
around the region. The whole
works. Everything which we have successfully done in Malaysia," says Mr Loy. 

With barriers and costs still high in Asean financial markets, MBf has
adopted a tactic of getting "a
foot in the door" and then waiting for opportunities to expand later. 

In Thailand, MBf started a factoring company five years ago because it found
it too expensive to buy
a bank. With the factoring business now profitable, MBf is now taking
another shot at acquiring a
bank or finance company. 

"With the (Thai finance) sector now mired in problems, we are looking again
because we reckon
there could be some good deals to be had," Mr Loy explains. 

Similarly, MBf laid low in the Indonesian market for almost four years as
licensing regulations
prevented it from moving aggressively into the financial industry. 

But the group's prospects there now look brighter following recent changes
to the rules. 

"We wanted to move on all these things earlier but the government came up
with a new licensing rule
which required players to get a multi-financing license to engage in these
activities. It took us some
time to get this license. But we recently went into stockbroking and are
negotiating to buy a bank
and an insurance company," Mr Loy discloses. 

In the Philippines, the Manila-listed MBf Philippines is now venturing into
stockbroking, commercial
banking and assembly of Peugeot cars. It recently bought a 30 per cent stake
in Manila's Unitrust
Development Bank. 

MBf is following a similar strategy in Myanmar. Having set up a
representative office, it is now in
the process of tying up with a local partner to set up a bank there later
this year. 

"We have laid the groundwork for the past 30 years and have enjoyed a very
profitable run during
the last decade. During the next 20 years, our profits will come largely
from regional activities," he
says. 

With all resources in place and returns from regional operations starting to
kick in, Mr Loy sees the
MBf group becoming a major multinational corporation by the turn of the
century. 

"If everything goes according to plans, we will be like a Fortune 500
company in 15 to 20 years'
time." 

But with no bank in Malaysia? 

"It doesn't make sense to pay M$500 million for a banking licence here," he
says. "It is better to
look around the region where you can buy small banks for a premium of only a
few million dollars." 

But he does not entirely discount the possibility either. In recent weeks,
there has been widespread
market speculation that MBf Capital is eyeing an equity stake in Sabah-based
Suria Capital, which
owns Sabah Bank and Sabah Development Bank. 

While overseeing MBf's regional expansion, the 60-year-old Mr Loy has also
lately started giving
more thought to the question of succession. 

"My eldest son, Loy Teik Ngan, who is 35 years old, is being groomed to take
over when I step
down," he reveals. Teik Ngan's brother, Teik Hok, is also active in the
business. 

But Mr Loy says he does not see himself leaving the scene anytime soon. He
will be holding the fort
awhile yet, if only to ensure MBf's goals are realised. 

With the group poised to become a regional and even Pan-Asian financial
powerhouse by the turn of
the century, it would indeed be no surprise to see its name on the Fortune
500 list in the year 2015.