KULIYYAH OF ECONOMICS AND MANAGEMENT SCIENCES (KENMS)

ISLAMIC FINANCIAL MANAGEMENT (ISF 2203) SEM 2 2018/2019

SECTION 2

FINANCING PROPOSAL FOR ECO PARADISE AT LUMUT AND PANGKOR ISLAND,

PERAK
By: ECO WORLD DEVELOPMENT GROUP BERHAD

Lecturer’s name:
Asst. Prof FADHILAH BINTI ABDULLAH ASUHAIMI

Date of Submission:
19 MARCH 2019

Group members:
Name Matric Num.

NOOR AYUNI BT TARMIZI 1510868

DAING AISHAH BT DAING MOHD NASIR 1523008

NOOR SYAHIRAH MAULAT AMZAH 1515234

NURUL ATIQAH NAJMINA BT ZULHIJAR 1620244

NORAZIERA BINTI MUHAMAD LATIF 1515192

 CONTENTS

1.0 EXECUTIVE SUMMARY……………………………………………………………….

2.0 BACKGROUND COMPANY AND PROJECT………………………………………..
3.0 CREDIT VALUATION…………………………………………………………………..
4.0 PROPOSED FINANCING STRUCTURE……………………………………………..
5.0 STRENGTH AND WEAKNESS……………………………………………………….
6.0 RECOMMENDATION………………………………………………………………….
7.0 REFERENCES ………………………………………………………………………….
8.0 APPENDIX………………………………………………………………………………
1.0 EXECUTIVE SUMMARY

The objective of this proposal is to assess and recommend the ideal financing structure to be
given to Eco World Development Group Berhad to finance their new tourism area development, namely,
Eco Paradise at Lumut and Pangkor Island. Eco World Development Group Berhad is a well-known
Malaysia-based investment holding company engaged mainly in property development activities. Eco
World has succeeded in establishing a strong brand presence that spread across Malaysia with its
property portfolio comprises 20 development projects including new townships, integrated commercial
development, high-rise apartments and green business parks.

According to the proposed development, Eco Paradise is a tourism area development plan that
includes 65 acres of land located at two places which are 35 acres of mainland in Lumut, Perak and 30
acres of the Pangkor Island, Perak. The project is estimated to begin in February 2019 and completed
within three years. The project incorporates the development of a four-star resort, jetty and access road
from the jetty. At the same time, there are several residential and commercial projects will be
developed in Lumut, Perak.

As the Head of Business Financing of Maybank Islamic Berhad, we are required to evaluate the
viability of Eco World and suggest suitable financing package for each of the projects. Before we make
decision for financing, we have to perform several background checks on Eco World to gather necessary
information including the financial performance of the company and the details about the proposed
development project. This information is very crucial to find out the company’s potential and capability
to manage the project efficiently. This proposal also helps in identifying the strength and weakness of
the project to ensure that the project can be carried out and progress smoothly throughout the given
period.

This proposal will first introduce the overview of the company and the development projects
that has been proposed to us. In this proposal, we will provide the company’s profile including the
background of the company, current management team, latest financial position and the detailed
information of each of the proposed projects. Before identifying the suitable financial facilities for the
project, we conduct the credit evaluation method which is guided by the Principles of 6’Cs of credit to
determine the company’s creditworthiness. In the last section of this proposal, we also offer some
suggestions or recommendations to the bank’s management based on our assessment on the proposed
development project.
2.0 BACKGROUND OF THE COMPANY AND PROJECT

ECO WORLD DEVELOPMENT GROUP BERHAD OVERVIEW

Figure 1.0 Eco World Development Group Berhad’s logo

Eco World Development Group Berhad is an investment holding company based in Malaysia
which engages in property development activities. Eco World Development Group Berhad is mainly
owned by three individuals who is Tan Sri Abdul Rashid Bin Abdul Manaf, Dato’ Leong Kok Wah and Liew
Tian Xiong. They control about 66% of the company among three of them. It was formerly known as
Focal Aims Holdings Berhad and changed its name to Eco World Development Group Berhad.

Eco World Development Group Berhad has launched 19 development projects in total all across
Malaysia including new township, integrated commercial developments, luxury high-rise apartments
and also green business park. Eco World Development Group Berhad’s Eco Forest green wonderland
anchored by a Central Park and soothing lakes is approximately 510 acres. Its Bukit Bintang City Centre
(BBCC) is situated within the Golden Triangle on approximately 20 acres. Its Eco Sanctuary eco-themed
township is approximately 310 acres. Its Eco Business Park 1 is built and located in E zone in Iskandar as
an integrated industrial hub. Its Eco Grandeur which is approximately 1,400 acres Mass Township is on
the North-West corridor of the Klang Valley. Basically Eco World Development Group Berhad have a land
bank of approximately 8,126.4 acres. Eco World Development Group Berhad also has a minority
investment in its associate company that is Eco World International. Eco World International has
development projects in the United Kingdom and Australia. Its other properties include Embassy
Gardens, London City Island, Wardian London and West Village.

Other than that, Eco World Development Group Berhad is also involved in the supply of building
materials, manufacture and trade of prefabricated and precast components besides promotion,
marketing and other activities related to property management, as well as provision of project
management and building and construction services.
 CORPORATE INFORMATION
Board of Directors Risk Management Committee
Founder & Non-Independent Non-Executive Dato’ Voon Tin Yow (Chairman)
Director Dato’ Sundarajoo A/L Somu
Tan Sri Abdul Rashid Bin Abdul Manaf Datuk Hoe Mee Ling
Non-Independent Non-Executive Chairman Dato’ Soo Chan Fai
Tan Sri Dato’ Sri Liew Kee Sin Lim Eng Tiong
Non-Independent Non-Executive Deputy Ong Yew Leng
Chairman
Dato’ Leong Kok Wah Company Secretaries
Executive Director and President & Chief Chua Siew Chuan (MAICSA 0777689)
Executive Officer Mak Chooi Peng (MAICSA 7017931)
Dato’ Chang Khim Wah
Executive Director and Chief Financial Officer Registered Office
Datuk Heah Kok Boon Level 7, Menara Milenium,
Executive Directors Jalan Damanlela,
Dato’ Voon Tin Yow Pusat Bandar Damansara,
Liew Tian Xiong Damansara Heights,
Senior Independent Non-Executive Director 50490 Kuala Lumpur,
Tang Kin Kheong Wilayah Persekutuan.
Independent Non-Executive Director T : 03-20849000
Dato’ Idrose Bin Mohamed F : 03-20949940, 03-20950292
Dato’ Haji Obet Bin Tawil
Dato’ Noor Farida Binti Mohd Ariffin Registrar
Low Mei Ling Securities Services (Holdings)
Sdn. Bhd. (36869-T)
Audit Committee Level 7, Menara Milenium,
Tang Kin Kheong (Chairman) Jalan Damanlela,
Dato’ Idrose Bin Mohamed Pusat Bandar Damansara,
Dato’ Noor Farida Binti Mohd Ariffin Damansara Heights,
Low Mei Ling 50490 Kuala Lumpur,
Wilayah Persekutuan.
Remuneration Committee T : 03-20849000
Dato’ Noor Farida Binti Mohd Ariffin F : 03-20949940, 03-20950292
(Chairperson)
Dato’ Idrose Bin Mohamed Auditors
Tang Kin Kheong Baker Tilly Monteiro Heng (AF 0117)
Chartered Accountants
Nomination Committee Baker Tilly MH Tower,
Dato’ Idrose Bin Mohamed (Chairman) Level 10, Tower 1,
Tang Kin Kheong Avenue 5, Bangsar South City,
Dato’ Noor Farida Binti Mohd Ariffin 59200 Kuala Lumpur,
Dato’ Haji Obet Bin Tawil Wilayah Persekutuan.

Whistleblowing Committee Stock Exchange Listing

Dato’ Idrose Bin Mohamed Bursa Malaysia Securities Berhad
Dato’ Voon Tin Yow (Main Market)
Low Mei Ling
 ECO WORLD DEVELOPMENT GROUP BERHAD

STATEMENT OF FINANCIAL POSITION AS AT 31 OCTOBER 2018

GROUP COMPANY
2018 2017 2018 2017
RM’000 RM’000 RM’000 RM’000
ASSETS

Non-current assets
Property, plant and equipment 250,112 227,942 67 156
Investment property 19,440 19,149 - -
Land held for property development 3,877,520 3,900,199 - -
Investment in subsidiaries - - 3,601,317 3,352,317
Investment in an associate 57,018 12,127 56,438 12,728
Investment in joint ventures 1,112,584 1,139,208 14,000 14,000
Trade and other receivables 675,775 507,520 1,180,696 1,115,740
Deferred tax assets 96,676 78,743 14 6

Total non-current assets 6,089,125 5,884,888 4,852,532 4,494,947

Current assets
Property development costs 2,567,368 2,431,575 - -
Gross amount due from a customer 6,882 6,882 - -
Inventories 140,489 24,707 - -
Current tax assets 49,037 46,999 981 3,350
Trade and other receivables 869,184 786,775 206,048 408,836
Other current assets 194,074 234,611 - -
Cash and bank balances 510,297 433,824 59,571 91,645
Total current assets 4,337,331 3,965,373 266,600 503,831

TOTAL ASSETS 10,426,456 9,850,261 5,119,132 4,998,778

EQUITY AND LIABILITIES

Equity attributable to
owners of the Company
Share capital 3,614,865 3,614,865 3,614,865 3,614,865
Warrant reserve 194,395 194,395 194,395 194,395
Foreign currency translation reserve (22,216) (541) - -
Retained earnings 620,907 455,315 20,990 16,193
TOTAL EQUITY 4,407,951 4,264,034 3,830,250 3,825,453

Non-current liabilities
Loans and borrowings 1,925,831 2,202,608 - 101,625
Finance lease obligations 307 - - -
Other payables - 92,671 - -
Deferred tax liabilities 32,435 48,563 - -

Total non-current liabilities 1,958,573 2,343,842 - 101,625

Current liabilities
Trade and other payables 1,328,546 1,464,920 482,257 486,700
Other current liabilities 816,827 481,462 - -
Bank overdrafts 19,208 26,497 - -
Loans and borrowings 1,886,180 1,250,466 806,625 585,000
Finance lease obligations 76 - - -
Current tax liabilities 9,095 19,040 - -

Total current liabilities 4,059,932 3,242,385 1,288,882 1,071,700

TOTAL LIABILITIES 6,018,505 5,586,227 1,288,882 1,173,325

TOTAL EQUITY AND LIABILITIES 10,426,456 9,850,261 5,119,132 4,998,778

ECO PARADISE OVERVIEW

Eco paradise is site at Lumut and Pangkor Island, Perak. The project is owned by Eco World
Development Group Berhad. The whole development involves 65 acres of land which located at two
different places. 35 acres of mainland located in Lumut while another 30 acres are of the Pangkor Island.
The project is to be completed approximately within 3 years, starting from February 2019.

Figure 2.0 Proposed development areas of Lumut and Pangkor Island

To begin with, total cost of the project allocated by Eco World Development Group Berhad for
the development of the four star resort is RM 200,000,000 with 230 rooms, exclusive dining restaurant,
spa, gym and swimming pool which is planned to be placed at the resort. Also, construction cost will
took up RM 97,000,000 as 60% of the construction materials will be imported from Japan, China and
Indonesia while the interior and furniture will cost RM 55,000,000 as 70% of the materials will be
imported from Korea and China. This project is expected to be done within 24 months.
 Figure 3.0 Illustration of four star resorts by Eco World Development Group Berhad

Next, new modern jetty will be constructed by Eco World Development Group Berhad at
Pangkor Island. The construction is estimated to be done within 12 months with total cost of
approximately RM 2,400,000.

Figure 4.0 Illustration of new modern jetty in Pangkor Island

Furthermore, Eco World Development Group Berhad also plans for the upgrading of existing
jetty located in mainland of Lumut. Eco World Development Group Berhad allocated RM4,500,000 to
upgrade the jetty and the upgrading process is expected to be done within 15 months. Moreover, this
project obtained via contract award of RM 4,800,000 from the Tourism Ministry. The project is to
upgrade the existing jetty and also to expand the jetty size to cater bigger operations capacity.
 Figure 5.0 Existing jetties in Lumut that will be upgraded by Eco World Development Group Berhad

Other than that, a residential area which comprises 30-unit double storey Semi D houses facing
the beach also planned to be developed by Eco World Development Group Berhad. The 18 months
development project will cost them RM 44,000,000.

Figure 6.0 Illustration of double storey Semi D houses facing the beach

In relation to that, a commercial area with 1 block of 2-storey building which consists of 20-unit
shop/office lot will be built along. The seen to be profitable building will took up 24 months for the
completion and will cost Eco World Development Group Berhad for about RM 10,000,000.

Figure 7.0 Illustration of the commercial area by Eco World Development Group Berhad
 In addition, Eco World Development Group Berhad also wants to develop SME Halal Hub which
will be divided into 2 sections. First section would be Sea Collection, Processing and Packaging Center
which will require 20 lots and provided second section is for Sales Centre also with 20 shop lots mainly
to market products from Sea Collection. Total for both will cost RM 30,000,000 and this project is
estimated to be done in 24 months. This project is awarded by the Ministry of Agriculture and Agro-
Based Industry Malaysia with a contract value of RM 35,000,000.

Figure 8.0 SME Halal Hub for Sea Collection, Processing and Packaging Center

Last but not least, Eco World Development Group Berhad also believed that the beautification
of Pangkor Island Beach is also needed for tourism purposes. It will cost RM 20,000,000 and expected to
be done within 12 months. This project is also awarded by the State government with a contract value
of RM 25,000,000.

Figure 9.0 Pangkor Island Beach

3.0 CREDIT EVALUATION 6C’s

Financing has become a good source of income for Maybank Islamic as it will be the Maybank’s
asset and it is important to ensure that the financing is given to the right developer so that it can provide
a good return to the bank.

As the Head of Business Financing of Maybank Islamic Berhad, we are evaluating the viability
and proposed a suitable financing structure for new tourism area development area, namely, Eco
Paradise at Lumut and Pangkor Island. The whole development involves 65 acres of land consist of two,
Lumut and Pangkor Island. This project is seeking financing for the projects at two places.

From Maybank perspective, bank has to do the credit evaluation process on the Eco World
Development Berhad that is well known on their Greenish Initiatives which had received many awards
to make sure that bank proposed a suitable financing structure for new tourism area development.

The 6c’s used by the bank to ensure the creditworthiness. Creditworthiness is the main focus to
identify the Eco World Development Berhad ‘s ability to carry debt obligation. After identifying all 6C’s ,
Maybank would be able to consider the company to have creditworthiness when they are able to make
repayment on time and default risk is minimal. Maybank is evaluating 6 six components, namely;

i. Capacity
ii. Character
iii. Cash
iv. Condition
v. Capital
vi. Collateral & Collectivity

i) Capacity

Banks look carefully at borrowers before they lend money, especially in this tough financial
time. Capacity is the ability of the company to generate revenues in order for the Eco World
Development Berhad to pay back the loan.

Legal capacity of the Eco World Development is compliance with the Companies Act 2016
because the company can provide the Form 9, Form 24 and Form 49. In the form 9 (certificate of
incorporation of private company) Business Registration Act 1956 indicates that Eco World Development
Berhad had successfully registered under Companies Commission of Malaysia under [Company No.
17777-V). Form 24 and 49 give the fact of who governed the company (board of directors) and also lists
of their shareholders.
 Board of Directors of Eco World:
Kee Seen Liew 57 Eco World Development Group Bhd.
Non-Independent,Non-Executive
Chairman

Khim Wah Chang, 52 Eco World Development Group Bhd.

President, CEO & Executive Director

Kok Boon Heah, 49 Eco World Development Group Bhd.

Chief Financial Officer & Executive
Director

Tin Yow Voon, 59 Eco World Development Group Bhd.

Executive Director

Tian Xiong Liew, Eco World Development Group Bhd.

Executive Director

Abdul Rashid bin Abdul Manaf, 70 Eco World Development Group Bhd.
Non-Independent Non-Executive
Director

Kok Wah Leong, 63 MUI Continental Bhd., Eco World Development Group Bhd.,
Non-Independent Non-Executive Deputy Eco World Development Holdings Sdn. Bhd., Salcon Bhd.
Chairman

Low Mei Ling, 58 Eco World Development Group Bhd.

Independent Non-Executive Director

Idrose bin Mohamed, 59 Independent Eco World Development Group Bhd.

Non-Executive Director
Kin Kheong Tang, 60 Eco World Development Group Bhd.
Senior Independent Non-Executive
Director

Obet bin Tawil, Four Seasons Residences Sdn. Bhd., Eco World Development
Independent Non-Executive Director Group Bhd.

Noor Farida binti Mohammad Ariffin, 70 Eco World Development Group Bhd.
Independent Non-Executive Director
 Lists of Shareholders of Eco World:
(Mutual Funds Shareholders)
Vanguard Total International Stock Index Fund 12,486,200 (shares held)

Vanguard Emerging Markets Stock Index Fund 9,892,000

Amanah Saham Gemilang - Kesihatan 7,741,400

DFA Emerging Markets Small Cap Series 7,256,900

Amanah Saham Gemilang - Persaraan 5,628,400

Vanguard Global (ex-US) Real Estate Index Fund 5,523,800

DFA Emerging Markets Core Equity Portfolio 5,475,600

Amanah Saham Nasional 2 4,469,000

DFA Dimensional Emerging Markets Value Fund 4,203,400

Amanah Saham Nasional 3 Imbang 3,327,800

(Institutions Shareholders)
Permodalan Nasional Bhd. 121,322,100 (shares held)

Kumpulan Wang Persaraan 45,350,600

Public Mutual Bhd. 34,825,000

The Vanguard Group, Inc. 30,796,600

Great Eastern Life Assurance Co. Ltd. 26,770,000

Dimensional Fund Advisors LP 21,119,900

Fullerton Fund Management Co. Ltd. 3,698,576

CA Indosuez (Switzerland) SA 2,115,100

Dimensional Fund Advisors Ltd. 1,353,840

Parametric Portfolio Associates LLC 1,188,100

ii) CHARACTER

Character of the company refers to the company’s reputation or track record for repaying debts.
To evaluate the company character, the bank can view the credit histories of the Eco World
Development Group Berhad. In the last 5 years, the total liabilities of the company was keep increasing
which is RM361 billion (2014), RM3780 billion (2015), RM5055 billion (2016) and RM5886 billion (2017)
and RM6016 billion (2018). Eco World development is a well- known company. With all the huge
projects that has been taken by the company, it has no track record that the company has not paid their
debts for 6 months or more even the company’s total liabilities was increasing from 2014 to 2018. This
character gives a good reputation for the bank and it convinces the bank to give financing for Eco World
Development Berhad because the bank is confident that the company can pay back the financing.
 Another Eco World exposure the bank can view is through the CTOS Data System Sdn Bhd which
contains the company status. CTOS also provide the utilities bills of the Eco World. Bank have done
some research of the company through this credit reporting agency and Eco World had fulfilled their
obligation to pay all the services and the bank hope that the company will keep the attitude and
commitment in this new financing.

Furthermore, Eco World has a good reputation among competitors which is in 2017, the
company got reward for the second year running as ‘The Best of the Best Employers in Malaysia’. This
shows that the company management is good and reliable and managed by excellent board of directors.
Other than that, the media, star on 13 Dec 2018, also quoted the statement of Datuk Chang Kim Wah
the CEO and Chairman of the Eco World;

“2018 has been a landmark year for the Group on many fronts. Our partnership-for-growth
strategy put in place two years ago to enable us to grow strongly without over-extending our
balance sheet is now bearing fruit. All our joint ventures, whether within or outside Malaysia,
have commenced revenue and profit recognition – these numbers are set to grow healthily as
the projects mature and become more established," (The Star Online, 2018).

iii) CASH

It is important for the bank do the analysis of the cash flow performance on the Eco
World Development Group Berhad. The information is from the Wall Street Journal. Bank focus on the
cash flow from the operating activities and analyse for 5 years.

Year Cash Flow (RM thousand)

2014 2265.3

2015 205661.0

2016 243024.0

2017 288804.0

2018 188042.0
 From the chart, annually we can see the net cash flow of the company decrease in 2018.
However, quarterly net operating cash flow increase from RM38622.0 thousand (31 July 2018) to
RM141001.0 (31 October 2018). The net growth also increase quarterly from 187.61% (31 June 2018)
until 265.08% (31 October 2018) .

Following #OnlyEcoWorld campaign and EcoWorld Help2Own (EW-H20) financing package, the
edge reported that the sale of the Eco World Berhad doubled until RM2 billion sales from RM923 million
recorded in the first six months of the Eco World financial year ending 31 October 2018. According to
the CEO, the reasons of the company quick growth are cost of savings on transaction, marketing and
administrative expenses and the beginning of the revenue and profit recognition of the entire joint
ventures project.

Despite the slight decrease of the net operating cash flow the between the second and third
quarter, Eco World managed to curb and found other alternatives to increase the company’s sale. This
illustrate that the company has an upstanding image and there is no reason for bank not to finance it.

iv) CAPITAL

Eco World is a well-known company that have owned many projects and are performing well
despite of all the economy problems. Therefore, we believe that Eco World before this had seek
financing from other financial institutions. Based on our assessment on that, the Eco World managed to
keep their commitment of Eco World Berhad based on their report.
 v) CONDITIONS

In giving financing, bank has to recognize the risk of any possible problems that will derive from
giving the financing especially the ability of the company to repay back the money. Since the Eco World
want to develop new area, it is quite risky. However, based on the comprehensive report and
information about the Eco World Development Group Berhad, the bank sure that this financing has
potential to make the project expand successfully.

Notwithstanding, there are many potential problems that may arise such as policy impose by
the government and performance of the economy. If the government make an action to increase the tax
for the tourist to come to Malaysia, this may affect the profit of the project and ability of the repayment.

Furthermore, the performance of economy also can give effect to the project. Company that is
not performing well affect the revenue of the project. The change in the currency in Malaysia will
increase the cost of raw materials and the company may charge high price for the services. This situation
will reduce the number of tourist and also reduce the revenue. Hence, the company will not able to pay
back the bank on time.

VI) COLLATERAL & COLLECTIVITY

Because of the project involve high risk, the bank ask for collateral from the Eco World before
giving the financing. This Eco World has a lot of assets that can be collateral. The company has a lot of
assets such as Eco Business Park V , Eco Forest, Eco Sanctuary, Bukit Bintang City Central and many else.
These past projects are high in value and have the same or more amount of the financing that the Eco
World seeks from the bank. This is to make sure the company pay the financing. Collectivity is the
assessment linked to the ability of the company to repay back the loan. This is associates with the
default of the company and bank does not want to bear any risk if the company not able to pay back. As
mentioned, Eco World has a very good reputation in terms of repayment. Due to the company ability to
remain good during economy slow down, the bank trusts that this company will be able to make
repayment of the financing.
Credit Scoring on Eco World Development Berhad:

1 2 3 4 5

Worst Poor Average Good Best

Components of 1 2 3 4 5 Justification
7C’S

1) Capacity /
● Board of directors
won many awards
and can maintain the
good reputation of
the company.

2) Character / ● Eco World Berhad

have a good credit
history.

3) Cash / ● Only slight decrease

in cash flows

4) Capital / ● Eco World willing to

contribute some
capital to the project.

5) Condition / ● There are many

potential problems
that can affect the
project.

6) Collateral / ● The bank will be able

& to collect and get
Collectivity repayment from the
Eco World Berhad
 4.0 PROPOSED FINANCING STRUCTURE

No Types of Project Cost Types of Types of Margin of Financing Tenure Profit

development (RM) financing Contract Financing Amount (months) Rate
(RM)

1. 4 Star Resort 200,000,000

which consist of
230 rooms,
exclusive dining
restaurant, spa,
gym, swimming
pool.

a) Construction 97,000,000 Trade Murabahah 80% 46,560,000 30 4%

cost (60% of the financing
construction 58,200,000
materials will be
imported from
Japan, China and
Indonesia Project Tawarruq 90% 34,920,000 25 5%
financing
38,800,000

b) Interior and 55,000,000 Trade Murabahah 90% 34,650,000 20 3%

furniture (70% of financing
the materials will 38,500,000
be imported from
Korea and China) Asset Tawarruq 90% 14,850,000 15 4%
financing
16,500,000

2. Construction of 2,400,000 Project Istisna’ 90% 2,160,000 8 3%

new modern jetty Financing

3. Upgrading of 4,500,000 Contract Istisna’ 80% 3,600,000 10 3%

existing jetty financing
4. New Ferry 1,800,000 - - - - - -

5. Integrated 980,000,000 - - - - - -
Specialist Hospital
(Health tourism)
which consist of
300 wards, 50
consultation
specialists rooms,
laboratories,
pharmacy,
operation theatre
and cafeteria

Residential area – 44,000,000 -Bridging Istisna’ 20% 8,800,000 20 4%

6. 30 unit double Financing Maybank
storey semi D (syndication)
houses facing the 20%
beach Kuwait
Finance
House

20%
Affin

20%
Bank
Islam

7. Residential area – 170,000,000 - - - - - -

2 blocks of 15
storey
condominium
next to the Semi-
D

8. Commercial area 10,000,000 -Project Istisna’ Maybank 6,000,000 15 4%

– 1 block of 2 financing 60%
storey building (syndication)
which consist of Bank Islam
20 unit 40%
shop/office lot
9. Commercial area- 30,000,000 -Project Istisna’ Maybank 12,000,000 20 5%
SME halal Hub, financing 40%
which is divided (syndication)
into 2 Bank Islam
i) Sea collection, 30%
Processing and
Packaging Center
– 20 lots
ii) Sales centre
mainly to market
products from (i)
above – 20 shop
lots.

10. Beautification of 20,000,000 -Contract Istisna’ Maybank 12,000,000 15 4%

Pangkor Island financing 60%
Beach for tourism
purposes

 Total financing amount by Maybank = RM 175,540,000

 4 BANKS are participating in this project with combined total amount of financing of RM
214,940,000

 Maybank Islamic will be collecting 2.5% wakalah fee from all participating banks for
representing and protecting their interest in this project.

Projects that are not financed and justifications:-

1. Site clearance - we believe that Eco World is able to finance using their own funds because the project
is a minor project.

2. New ferry for Eco World - the available ferries are still in good condition. We want to avoid
overcrowding of ferries at the jetty.

3. Integrated Specialist Hospital – There is already a specialist hospital in Sri Manjong Lumut and to
finance another specialist hospital is unnecessary in regards to the small number of population of the
area.
5.0 STRENGTH AND WEAKNESS

Strengths

5.1 Experience

Eco World Development Group Berhad is one of the public listed Malaysian company and mainly
involved in the property development. The brand also has extended its reach to London, United
Kingdom (UK) And Sydney and Melbourne, Australia through Eco World International. This group is one
of most well-known in the development industry in Malaysia and deals with 20 development project in
total that include new townships, integrated commercial developments, luxury high-rise apartments and
green business parks.

Eco World Development have been actively spread the projects in Kelang Valley, Penang and
Iskandar Malaysia, Johor. One of the examples of on-going projects from Eco World Development that
shows good future is Bukit Bintang City Centre (BBCC) in Kuala Lumpur. This project has been awarded
with honours and excellence awards by starpropertymy in 2017.

Based on the good records that Eco World Development shows based on experience either in
Malaysia or in foreign countries, it can be summarized that Eco World Development is one of the
promising companies that can be trusted in property development industry and purchaser can expect a
good service and quality for their future own assets.

5.2 Profit

Eco World Development has recorded a good net profit for the past years. As stated in The Star
article, Eco World Development net profit in the fourth quarter ended Oct 31 2018 reached RM68.53mil
more than double recorded in 2017. The group also stated that total sales from Malaysian project
exceeded RM3.1bil and most from the total sales is coming from #OnlyEcoWorld campaign.
It shows that Eco World Development is the profitable company and shows a positive increase in
net profit.

5.3 Good facilities

Eco paradise is a project to be developed in Lumut and also Pangkor. This project includes the
development of resorts, jetty, residential area and also commercial hub. With the development of this
project, it can provide tourist and also local people to enjoy the stay and also beauty of Lumut and
Pangkor.
 Example such as the build of commercial area – 1 block of 2 storey building which consist of 20-
unit shop or office lot and also commercial area – SME Halal Hub that can be divided into two which
consists of sea collection, processing and packaging centre and sales centre for market products in
Lumut.

The build of resorts and also residential area with additional of jetty, it is a big opportunity for
Eco World Development in raising their capital and revenues. As this getting attention, it can attract the
investors and also buyers to buy any of the assets.

Weakness

5.1 Affordability Issue

Eco World Development Berhad is one of the property development company and mainly
involved in develop luxury buildings. Most of the projects are focusing on modern and luxury style. This
kind of property can’t be afforded by all people especially those in B40 (Bottom 40) or some of in M40
level. With this kind of issue, people can’t afford to own a house.

As we know Lumut is a village area and basically people who living there is not coming from a
rich family. So the development of the residential area in Lumut is afraid to be affected as not all people
there can afford to own one.

5.2 Ecosystem Damage

Since Lumut and Pangkor got an area with trees so when the project takes place, the area needs
a clearance. So all the trees need to be cut down so that the process of building a new residential and
resort will be clear. This process of clearance will slightly disturb the ecosystem as the development is
big.
6.0 RECOMMENDATION

Financing amount: Total financing amount for this project is RM 214,940,000. There will be 4
banks participating in this project through the means of syndication. Syndication is one way to mitigate
risk, especially, when it involves a huge amount of money. It is better to have more banks join in to
finance the products in order to reduce the risk of losses. Hence, Maybank Islamic Berhad will finance
only (blank). Bank Islam will also be collecting 2.5% wakalah fee from all participating banks for
representing and protecting their interest in this project.

Financing rate: The financing rate set differs according to each product and their underlying
contract that has been structured by Maybank Islamic Berhad. The financing rate on the project is set
between 6% to as high as 8%. We would recommend Eco World Development Group Berhad to provide
larger portion of their capital in the project so that the margin of financing can be reduced.

Tenure: Once the project is completed, we would have to wait for Eco World to start the
operation of Eco Paradise in order to generate cash flow. After Eco World has started the operation and
gains sales revenue from the houses that have been purchased combined with the income from the
jetty, resort and the commercial areas, only then Eco World would be able to start on the repayment of
the financing. Hence, we plan to give 8 years financing term for Eco Paradise project development.

Security: Presently, Eco World’s land bank is approximately 8,126.4 acres with a total gross
development value (GDV) amounted to RM87.5 billion. Eco World also has a lot of assets that can be
collateral. The company has a lot of assets such as Eco Business Park V , Eco Forest, Eco Sanctuary, Bukit
Bintang City Central and many else. These past projects are high in value and have the same or more
amount of the financing that the Eco World seeks from the bank.

Sustainable Development Goals: Through the development of Eco Paradise, out of 17

Sustainable Development Goals (SDGs), one goal achieved is goal 8 which entails decent work and
economic growth. Quality job opportunities are created for a huge number of people which can help
reduce the unemployment problem and stimulate the economic growth. Decent working condition is
also provided for the working population.
7.0 REFERENCES

Affin Islamic, Website. Retrieved from:

https://www.affinislamic.com.my/General/Tariff-Charges/Restricted-Investment-Account-i-
(Mudarabah).aspx

Bank Islam Malaysia Bhd, Website. Retrieved from:

http://www.bankislam.com.my/home/ms/perbankan-perniagaan/pembiyaan-berasaskan-
asset/pembiayaan-titian-projek-istisna/

Eco World, Website. Retrieved from: https://ecoworld.my/

Kuwait Finance House, Website. Retrieved from:

https://www.kfhonline.com.my/kfhmb/v2/contentView.do?contentTypeId=3000&displayPage=%2Fver2
%2Fcontent%2Fstandard.jsp&channelPath=%2Fver2%2Fv2_Navigation%2FCommercial+Banking&progra
mName=03_BBFinancing&tabId=2&cntName=02-ProjectFinancing

Maybank Islamic, Website. Retrieved from:

https://www.maybank2u.com.my/mbb_info/m2u/public/personalDetail04.do?channelId=&cntTypeId=0
&cntKey=LOA01.09&programId=LOA06-IslamicLoans&chCatId=/mbb/Personal/LOA-Loans

Online, T. S. (2018, December 13). Eco World Development's Q4 net profit jumps to RM33.71m.
Retrieved from https://www.thestar.com.my/business/business-news/2018/12/13/eco-world-devs-net-
profit-jumps-in-q4-to-rm33pt71m/