FINANCING PROPOSAL Suppose You are the Head of Business Financing (Team 1) of CIMB Bank Berhad . Your team has been assigned to evaluate the viability of a new tourism development project and propose a suitable financing package or structure for SP Setia Berhad, the owner of the project. The project is knowns as Integrated Leisure and Health Tourism at Perhentian Island, Terengganu. (Note: We use SP Setia as an example for this group assignment only. The development projects indicated in this assignment are not real projects undertaken by SP Setia. Hence, please do not contact SP Setia and the selected Islamic bank for any information). The whole development involves 65 acres of land at two locations. The first location is on a 35- hectares of land on Perhentian Besar Island and the second one is on a 30-hectares of land on Perhentian Kecil Island (refer to the location map in Figure 1 below). The project is scheduled to commence in June 2017 and expected be completed within 4 years. Currently, the land area on Perhentian Kecil Island is a small jungle. Site clearance needs to be done and the process is expected to be completed in 2 months. The total cost of the site clearance is RM850, 000.00. The proposed development project can only commence upon the completion of site clearance.

This project will be financed by CIMB Islamic Bank to develop Pulau Perhentian Besar and Pulau Perhentian Kecil consists of 8 development projects. The development projects include site clearance, construction of 4 Star resort, construction of new modern jetty, upgrading of existing jetty, the purchase of new ferry, the construction of integrated specialist hospital, the development of SME halal hub as commercial area, beautification of Perhentian Kecil beach, and the construction of sea turtle rehabilitation centre.

Due to the risk mitigation factor, CIMB Islamic Bank will finance most of the project, leaving behind a small portion for the SP Setia Berhad to contribute the capital. Still, most of the project will be financed up to 90% of the total finance amounting RM 1,164,250,000.

INSTRUCTIONS IMPORTANT: Assume that today is 31 March 2017. Based on the above proposed development projects, your team is required to prepare a paper to evaluate the viability of the proposed development and propose a suitable financing package for SP Setia Berhad to undertake those projects. For this purpose, you are required to browse the list of Islamic Banks in Malaysia and choose one of the Islamic banks (refer BNM website for the list of Islamic banks). Imagine that you work with and represent the chosen Islamic bank. As for the company assessment, you may refer to reliable and valid sources to get information about SP Setia. You may also refer to the Malaysia Budget 2017, to get information on the government initiatives to promote priority sectors and economic growth in Malaysia. You are also expected to conduct research on the economic and industry prospects between 2017 and 2019 to support your project assessment. Your assessment must not be based on the current economic conditions (i.e. 2020 and 2021). Subsequently, you are required to perform a credit assessment of the financing application made by SP Setia. To avoid redundancy you may skip the assessment of the conditions as you will be assessing the economic and industry outlook in the separate parts of the financing proposal. You need to conclude the financing proposal with a strong recommendation to Chief Credit Officer of your chosen Islamic bank. The recommendation must include the financing package or structure that you wish to propose and the overall recommendation whether your bank should grant or approve the financing facilities to SP Setia. You are expected to be resourceful in obtaining support or evidence to justify your credit assessment and recommendation. Your recommendation must be based on all the assessment that you have done in this proposal (i.e. company and project, economic and industry outlooks and credit analysis). You must not introduce new information or analysis in your recommendation. Therefore, team leaders must ensure that the recommendation is written once the earlier sections are completed. Further, whoever is writing the recommendation must read the entire financing proposal first. Finally, team leaders are to ensure that all team members have a copy of the completed financing proposal, read and digest it. Otherwise, learning does not take place effectively if each team member knows his or her part of the financing proposal only. You may refer to reliable and valid sources to get information about SP Setia or the chosen Islamic bank. However, you MUST NOT contact the chosen bank or SP Setia A for any information. Remember to assume that the timing of your proposal is on 31 March 2017.

Required: Please write at least 4 pages

1. Background and Assessment of the Company ( Give a background of the company and assess its management team, financial position, future business prospects etc. Provide tables/figures to present your information. )

2. Assessment on the Strengths and Weaknesses of the Proposed Projects ( Assess the strengths and weaknesses of the proposed individual projects, focusing on its viability. Viability of a project depends, among others, on its economic benefits and economic costs. The former relates to the economic contributions of the project to the company and society. The latter includes the environmental impacts and external factors. A viable project should have a positive net contribution to the company and its stakeholders )