MEDIA CENTRE - Speech by John Zinkin
Tuesday, 22 April 2008
John Zinkin
CEO, Securities Industry Development Corporation
Programme Collaboration of the Corporate Finance Qualification
Between SIDC, ICAEW and CICA
Securities Commission, Kuala Lumpur, Malaysia
22 April 2008
Dr. Raymond Madden, Yang Berbahagia Dato’ Gan Ah Tee, Distinguished Guests, Ladies and Gentlemen, Friends
Good morning and welcome to today’s launch of the Corporate Finance Qualification!
It is a great privilege for SIDC to be introducing the Corporate Finance Qualification or CFq to Malaysia with the Institute of Chartered Accountants of England and Wales (ICAEW). SIDC will be the first programme provider of the CFq outside the United Kingdom and Canada, where it was jointly developed in partnership by ICAEW with the Canadian Institute of Chartered Accountants (CICA).
SIDC is proud to be launching the CFq for two reasons:
First, SIDC is proud to be associated with ICAEW: ICAEW is the oldest association of accountants in the world and is the UK’s leading auditing body. It was the only international professional body to be invited to join the World Economic Forum in Davos in 2007 and the only accountancy body to be appointed by the European Commission to study the implementation of International Financial Reporting Standards and the modernized accounting directives throughout the EU. It is a founder member of the Global Accounting Alliance set up in 2006 to represent more than 700,000 of the world’s leading professional accountants.
Working with ICAEW exemplifies SIDC’s brand promise of “delivering professional excellence” by working only with the best globally and by introducing world-class benchmark qualifications to the Malaysian Capital Market.
Second, the CFq itself: a programme which is fast becoming recognized as the gold standard in the field of corporate finance. It combines comprehensive technical knowledge of finance with the skills needed for developing high level strategy, applied in a practical way.
The need for the CFq
Although the CFq is a niche programme that will satisfy a local demand of perhaps 25 to 30 people a year, SIDC still believes it is an important addition to our programmes designed to enhance the professionalism of the capital market in today’s turbulent times for two reasons:
First, the CFq helps CFOs create defensive corporate strategies.
Defensive strategies are necessary when industries are threatened with eroding profit margins caused by either a decline in demand or a rise in costs. The CFq will help companies that are operating in industries that are forced to merge as a result of the ripple effect of the sub-prime crisis and the consequent fall in economic activity and customer demand. It will also help those companies that are faced with rapidly rising costs that they cannot pass on as fast, as a result of rising prices of oil and other key commodities, driven by the growth in demand in China and India.
These factors combined are likely to mean that defensive mergers and acquisitions will be on the increase – we have seen, and can continue to expect to see consolidation in not just finance (Bear Stearns), and airlines (Delta and Northwest, the failed Alitalia merger with Air France, and so on), but in primary industries as well (the creation of the new Sime Darby, the bid for RTZ, the stake just taken in BP to name a few).
The rise of sovereign wealth funds (SWFs) with money to invest in strategic stakes (Merrill Lynch, Citigroup, UBS) also means that the premium on having the highest levels of competence in corporate finance has never been higher. CFOs of target companies will need to know how to extract the best defensive deal from SWFs; and the CFq will provide them with the necessary knowledge and skills.
Second, the CFq will help CFOs create offensive corporate strategies.
On a more optimistic note, over the long term, Malaysian companies like other Asian corporates have increasing opportunities to go abroad and enter new markets via acquisition. The Indians, Arabs, and Chinese have shown that Asian companies no longer need to set up subsidiaries to enter developed markets via organic growth – the route followed by the Japanese and Koreans - but can do so by aggressive acquisition. Companies like Mittal and Tata from India, Dubai Ports and SABIC from the Gulf, Huawei and Petrochina from China have chosen to acquire or take strategic stakes in significant European and American companies and there will be more opportunities as economic power shifts towards Asia. Asian SWFs are increasingly prominent, starting with Singapore’s acquisitions in telecoms some ten years ago. Malaysian GLCs and GLICs are also looking hungrily across borders at acquisition now that their domestic markets are increasingly saturated.
To conclude
What all these activities have in common is that they reflect the need for defensive or offensive strategies designed to capture value or market position at the right price.
So whether we are looking at defensive or offensive financial strategies, there is no better way to prepare for these trends than to have a CFq. That is why SIDC is delighted to be announcing today’s launch of the CFQ in collaboration with ICAEW and CICA.
Thank you.