Asia

#Workshop on enhancing poor’s capability, financial #inclusion begins

An international workshop on "Enhancing the poor’s capability and financial inclusion from Islamic perspective" took place in Islamabad, Pakistan. On the first day, experts discussed the role of Islamic micro-finance in socio-economic development and economic empowerment of women. President of the International Islamic University Islamabad (IIUI), Dr Ahmed Yousif said Islamic financial institutions would have to play their role as objectives of value orientation. He called upon the Muslim world to stay united and include Islamic teachings in the economic system. Dr Atiq-uz-Zafar, director general of the International Institute of Islamic Economics of the IIUI, said that the session of the workshop would also include detailed research papers of the experts. The workshop will conclude today at Faisal Mosque campus.

Muslim countries should tap into #green #sukuk market, says CIMB Islamic

According to CIMB Islamic Bank CEO Rafe Haneef, Muslim countries and customers with such affinity should tap into the green sukuk market, given the estimated US$45 trillion demand for such assets. He added that green sukuk, was very much part and parcel of shariah compliance, which should be halal and sustainable. In the context of global sukuk, the total size per year is about US$45 billion to US$50 billion, so green bonds are already five times the size of sukuk. RAM Rating Services deputy CEO Promod Dass said there was US$3 trillion worth of green investment needs in Asean from 2015 to 2030. Maybank Group global banking head Datuk Muzaffar Hisham opined Malaysia was in the right direction of participating in the green sukuk sector. He added that appetite for green investment was growing, the only question remaining was how to accelerate it.

Bursa #Malaysia launches Islamic Securities Selling and Buying Negotiated Transaction

Bursa Malaysia launched the first Shariah-compliant alternative to the Securities Borrowing and Lending Negotiated Transaction (SBLNT) framework, called Islamic Securities Selling and Buying Negotiated Transaction (ISSBNT). The new ISSBNT framework is based on the SBLNT model and is expected to provide a more facilitative trading environment for securities. Bursa Malaysia CEO Datuk Seri Tajuddin Atan said market participants would now have an alternative avenue which is compliant with Shariah principles. The model was chosen because it is more widely used by the market due to its flexibility. Tajuddin noted that ISSBNT is expected to bring an uplift of around 5 to 10% growth in funds transaction in the next 12 months.

#Indonesia Hampers #Fintech in Using #Cryptocurrencies

From January 1, Indonesia is introducing a ban on crypto coins as payment options. The Indonesian government wants to ban forms of payment processing and make payment processing available only by owning a banking license. Such moves show how governments could crack down on crypto coins, while being generally accepting of fintech payment systems, even going as far as licensing them. Indonesia recognizes fintech firms as those providing payment systems, market support, investment management or risk management, P2P lending, financing providers and other financial services. All new fintech products in Indonesia would be tested in a sandbox environment before receiving a license.

The new #sukuk way for efficient construction financing

#Malaysian real estate developer SkyWorld is raising some RM50mil under tranche one of the RM600mil sukuk musharakah programme for its SkyAwani Residence development in Kuala Lumpur. The novel sukuk transaction is the first securitisation of progress billings combined with affordable housing. RAM Ratings Services has assigned a preliminary AA3/stable rating for the sukuk, while Danajamin Nasional is guaranteeing the support facilities. Developed, arranged and advised by NewParadigm Capital Markets, the project has achieved 100% sales. According to NewParadigm executive director Danny Kwan, the primary objective of this financial programme is to monetise the unbilled sales upfront rather than later. It provides for more efficient cashflow management for the residential developer.

US Dollar #Sukuk Market’s New Chinese Entrant

Chinese state-owned bank the Industrial and Commercial Bank of China (ICBC) has become the first Chinese bank to help arrange a dollar based sukuk. ICBC helped arrange Pakistan’s recent $1 billion 5 year Sukuk. Pakistan raised over $8 billion for its dual issuance of sukuk and a conventional Eurobond of $1.5 billion. China is building stronger trade ties with Asian countries under its "One Belt, One Road" strategy to rebuild Silk Road trade links with Asia and Europe. Additionally, the China–Pakistan Economic Corridor (CPEC) is a collection of infrastructure projects that are currently under construction throughout Pakistan. The value of CPEC projects is worth $62 billion and provides China with a vital route to the Arabian Sea for trade routes to the Middle East, Africa and Europe.

Reviving 'waqf' institutions in #Indonesia

Waqf have played an important role in the social and economic development of Muslim societies. However, many waqf properties in Indonesia suffer from abuse and neglect. Chairman of the Indonesian Waqf Board (BWI) Mohammad Nuh urged the transformation of the great potential of waqf into a real force to support the national economy. Current development of waqf is hindered by five core issues: misperception, legislation, governance, professionalism and the availability of funding. Important issues such as the provisions of a survey or census on waqf and tax incentives are lacking in the current legislation. A survey on waqf is crucial in mapping the current problems and status of waqf assets. In Indonesia waqf institutions are largely not bankable and hardly have a channel to financial institutions in financing the development of their properties. The newly appointed Indonesian waqf board may revive waqf institutions by identifying priorities, careful implementation and better administration.

Ratings scheme planned for #Islamic #endowments

Islamic institutions in Bahrain and Malaysia are developing a ratings scheme for Islamic endowments, or awqaf. The Bahrain-based Islamic International Rating Agency and the Malaysia-based International Institute of Islamic Waqf (IIIW) hope that greater accountability in the management of awqaf can help integrate them into Islamic financial markets. This could mobilize idle assets which are estimated to be valued between $100 billion and $1 trillion across the globe. Awqaf operate social projects such as hospitals, mosques and schools with donations received from Muslims. Most Awqaf do not disclose financial figures, but their underperformance is believed to be considerable since they have traditionally been run by administrators rather than investment managers.

First Shariah-compliant commodity ETF launched by Affin Hwang AM

Affin Hwang Asset Management (Affin Hwang AM) has launched its first Shariah-compliant exchange traded fund (ETF) with investment results that closely track the performance of gold prices. The new TradePlus Shariah Gold Tracker will invest a minimum of 95% of its net asset value in physical gold bars purchased from the London Bullion Market Association (LBMA). The remaining balance is invested in Islamic money market instruments and Islamic deposits for liquidity purposes. Affin Hwang AM managing director Teng Chee Wai said the fund provides an efficient entry point to gain exposure to gold by tracking the LBMA Gold Price AM index. Certified by advisory firm Amanie Advisors, each unit of the fund is physically-backed in a secure vault. Investors are provided with an option for physical redemption, for a minimum redemption unit block of 500,000 units, which is equivalent to an estimated 5kg of gold.

VBI to take Islamic finance to next level of growth

#Malaysia is introducing value-based intermediation (VBI) to take its Islamic finance industry to the next level of growth. As a first step, Maybank Islamic initiated the pilot launch of its rent-to-own (RTO) home scheme, called HouzKEY, targeted at properties priced under RM1 million. For now, the product is limited to the bank’s employees but should become available to the public early next year. The bank is aiming for a portfolio size of RM1 billion within the first year. According to experts, this is just the beginning of more RTO schemes to come as several other Islamic banks are expected to launch their own versions. BIMB Holdings group CEO Malkit Singh Maan says the bank is hoping to launch its RTO product for affordable homes in the first quarter of next year. Other VBI products that banks may offer in the future are green technology financing and green sukuk.

#Takaful #Malaysia forms partnership with Ambank Islamic

Syarikat Takaful Malaysia said it has formed a partnership with AmBank Islamic and will market its general takaful products across the country. The takaful operator said that general takaful products for motor, fire/house and personal accident will be distributed across Ambank Islamic's distribution channels. The two companies will also promote new general takaful solutions tailored to Ambank Islamic's customers. Takaful Malaysia group CEO Datuk Sri Mohamed Hassan Kamil said he was delighted to bring the group's general takaful solutions to serve the evolving needs of AmBank Islamic customers.

CDNS to set up Islamic window for savings products

#Pakistan's Central Directorate of National Savings (CDNS) will set up an Islamic window Rafa National Savings to handle the transactions of sharia-compliant saving products. The government has appointed the Dubai-based sharia advisory firm Dar Al Sharia to replicate Islamic financial model for the conventional national savings certificates. Currently, the state-owned CDNS is finalising rules and governance structure for sharia-compliant products. However, the country’s savings-to-GDP ratio of 13.1% is still lowest in the region and attractive financial solutions are needed to foster savings.

The disruptive impact of #Islamic #fintech

Fintech is fast gaining traction in the financial services industry, as both start-ups and traditional companies proactively incorporate methods to stay in the lead. In Malaysia, the national bank itself supports the role of fintech in Malaysia’s overall finance industry. According to Bank Negara Malaysia assistant governor Marzunisham Omar, the next growth phase of Islamic finance requires the industry to ride the fintech wave. AmInvestment Bank CEO Raja Teh Maimunah Raja Abdul Aziz said Islamic banks do not have an option not to adopt fintech. The only way that Islamic banks or Islamic funds or Islamic crowdfunding can reach out is to adopt mobile technology. She revealed that AmInvestment Bank is currently experimenting with its clients to use Distributed ledger technology (DLT) for the issuances of bank guarantee.

FINTQ to digitize Islamic #microfinance in Southern #Philippines

At the 7th Global Islamic Microfinance Summit, FINTQ Managing Director Lito Villanueva noted that there is a need to push for an enabling framework for Islamic microfinance in the Philippines. In the Philippines around 5.6% of the population are practicing Islam, with a geographic concentration in the Autonomous Region in Muslim Mindanao (ARMM). Villanueva says despite its resource-rich landscape, ARMM remains largely underdeveloped with less than 70% of the adult population either unbanked or underserved. There are only 20 banks and 28 ATMs servicing almost 4 million ARMM residents. Not a single bank there is Shari'ah compliant. For its part FINTQ launched a national initiative called KasamaKA, which provides greater access to financial services, such as micro savings via agent banking, lending, micro insurance, remittances, micro investments and payments to every Filipino via a bottom-up approach.

UPDATE 1-#Maybank posts 4th straight quarterly #profit gain on #Islamic #banking growth

Malayan Banking Bhd is Malaysia’s biggest lender by assets. It made higher profits for a 4th quarter in a row, which was driven by rising net interest income and growth at its Islamic banking operations.
Southeast Asia’s third-largest economy has recovered in 2017 after a challenging 2016, when growth slumped to its slowest pace since the global financial crisis in 2009. The turnaround has buoyed business for banks. Maybank posted a net profit of $496.70 million for the 3rd quarter ended September, up 13% a year ago. Its net interest income rose 8.6% while Islamic banking income increased by 24.3%. Revenue climbed 2.7%.
Earlier, CIMB Group Holdings, the number two lender of the country, reported a surprise rise in quarterly profit, helped by an improving domestic economy.
Malaysia‘s central bank has said the economy was on track to register growth of 5.2% to 5.7% this year, and may even exceed that estimate.

Islamic finance key to Sarawak's infrastructure growth, says RAM Ratings

According to RAM Rating Services, the infrastructure growth in Sarawak is expected to be mainly funded by Malaysia's vibrant sukuk market. This year sukuk has been the preferred funding route for Sarawak-based entities, with majority from the power sector. Issuers from the port, construction, property, manufacturing, plantation, oil and gas support services, financial services and telecommunication sectors have tapped into the sukuk market as well. RAM Ratings deputy CEO Promod Dass said Malaysia's sukuk market will remain a key funding avenue for the infrastructure development in Sarawak. He applauded the Malaysian government and Securities Commission for building a solid foundation for the sukuk market.

The rise of the Islamic capital market

The Financial Services Authority (OJK) recently licensed Indonesia’s first full-fledged Islamic fund management company, Paytren Asset Management (PAM). This newly established Islamic fund manager is another milestone in the development of the country’s Islamic capital market.

Islamic finance calls for more talents

Over the last few years, Islamic finance has witnessed a remarkable growth at 15 to 20% Compounded Annual Growth Rate (CAGR). The industry's rapid growth undoubtedly creates a huge demand for new expertise. Like other countries, Malaysia also needs a significant boost of Islamic finance talents. Based on Bank Negara Malaysia’s Financial Sector Blueprint 2011-2020, the financial sector would require an additional 56,000 employees of whom 22,400 are specifically needed to support the Islamic sector by 2020. According to a survey by the Finance Accreditation Agency (FAA), 80% of the respondent countries believed that the available Islamic finance talents do not satisfy industry needs. Malaysia has taken the lead and established three training institutions. They are the Islamic Banking and Finance Institute Malaysia (IBFIM), the International Centre for Education in Islamic Finance (INCEIF) and the International Syariah Research Academy for Islamic Finance (ISRA).

Maybank Islamic launches rent-to-own #housing #scheme

Maybank Islamic has launched a rent-to-own (RTO) housing scheme. Named HouzKEY, the product is targeted at first-time house buyers and those who want to upgrade their homes. According to Maybank Islamic's CEO, Datuk Mohamed Rafique Merican, HouzKEY addresses the growing issue of concern for affordable home ownership. The new product will initially be made available to Maybank employees and is slated to be rolled out to the general public in early 2018. HouzKEY is the first such RTO product in the country fully enabled on a digital platform, with the application and submission of supporting documents being required to be made online. To be eligible, applicants should have a household income of at least RM5,000 and commit to a minimum rental tenure of five years. They will have the option to purchase the property after one year at a pre-agreed price.

SECP okays Shariah-compliant trading counter at PSX

The Shariah Advisory Board (SAB) of the Securities and Exchange Commission of Pakistan (SECP) has reviewed the proposal of Shariah-compliant trading counter. The main feature of the proposal is to convert the T+2 settlement into T+0 settlement mechanism in the Shariah-compliant securities listed on the Pakistan Stock Exchange (PSX). The Shariah Advisory Board has granted approval of the proposed trading counter. The board also reviewed and granted approval of three AAOIFI standards: Shariah Standard No 17 - Investment Sukuk, Shariah Standard No 18- Possession and Shariah Standard No 23 - Agency and the Act of an un-commissioned agent.

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