KOTA KINABALU: The Sabah Government Employees Cooperative Society Berhad (KOPEKS) yesterday made its foray into Shariah-compliant pawnbroking when it signed a franchise agreement under Ar-Rahnu X’Change with Rakyat Management Services Sdn Bhd, a fully-owned subsidiary of Bank Rakyat.

Ar-Rahnu was a new business venture by Kopeks in view of the untapped market potential in Islamic pawnbroking, banking on the transfer of know-how and experience of Rakyat Management Services Sdn Bhd. It was the first cooperative in Sabah to take up the challenge, and Kota Kinabalu was chosen as the first location to launch Ar-Rahnu X’Change in the state.

Bank Rakyat’s expertise and experience in Islamic pawn-broking put it as market leader. The first half of this year saw the cooperative bank giving out loans totaling RM631 million under the scheme with outstanding balance of RM892 million.

Speaking at the signing ceremony, Kopeks’ chairman Datuk Maznah Haji Abdul Ghani said its partnership with Rakyat Management Services was the result of negotiations since 2006 and market research on the product’s viability and potential. Kopeks, with its large membership base drawn from the state and federal civil services and statutory bodies, was well primed to take advantage of the opportunity of Ar-Rahnu.

The new board of Kopeks, who were elected at the Annual General Meeting on June 6, declared its commitment to sound strategic planning responsive to the current business environment.

“Two areas of concern to Kopeks are to ensure the profitability and delighting its members who are also its internal customers as well as all its stakeholders, particularly Bank Rakyat and the Cooperative Commission of Malaysia,” she said.

“Today’s business and financial activities have become more and more challenging coupled with the economic crisis which has plagued the world.

“Kopeks is not the only cooperative operating in Sabah but many other peninsula-based organizations have spread their wings and market reach in the state.”

On this note, Maznah called on the Cooperative Commission of Malaysia to study the situation in the right perspective as this had presented a disadvantage to the local cooperatives due to competitive pricing and product offers from outside the state, including commercial banks.

In view of this, she said Kopeks must involve itself only in investments and ventures that have good potential of returns.

“We must place our trust in the government to handle the economic crisis by way of stimulus packages. Kopeks needs to seize business opportunities and be positioned to meet the current challenges through joint ventures and smart partnership.”

“Kopeks aims to become a one-stop financial centre for all its members. Its management must practise good governance which is transparent, efficient and be fully accountable for its actions,” she added.

Maznah spelt out the action plan of Kopeks for the period 2009-2013. It planned to improve and provide more diversified financial services for its members and had set aside RM150 million as loans for the first three years.

Last year, Kopeks recorded a nett profit of RM1.3 million and declared 5 per cent dividends to its members. This was its highest profit over ten years. Through its credit activities, it achieved loans growth of more than 100 per cent for the financial year 2008.