Asia

The 1st IFSB Innovation Forum: Revitalising creativity and sustaining competitive value

The Islamic Financial Services Board (IFSB) Innovation Forum was inaugurated in Jakarta to showcase innovative Islamic finance products and services with a strong impact on financial inclusion, economic growth and sustainable development. The forum took place on 12 November 2019 along with the 14th IFSB Summit at the Jakarta Convention Center, Jakarta, Indonesia. The IFSB Innovation Forum is a new biennial event to enhance knowledge about latest technological developments. It provides a platform for regulators, policy makers, Islamic Financial Institutions, start-ups and FinTechs, academic and research institutions, financial services providers, legal practitioners, Shariah advisors and other stakeholders to cultivate innovative thinking and dialogue.

IILM reissues $600mln #sukuk; GCC banks act as primary dealers

Malaysia-based International Islamic Liquidity Management Corporation (IILM) has reissued A-1 short term sukuk worth $600 million in two series. The reissuance came in the form of $300 million with 1-month tenor at a profit rate of 1.85% and $300 million with 3-month tenor at a profit rate of 1.91%. Primary dealers include Abu Dhabi Islamic Bank, First Abu Dhabi Bank, Barwa Bank, Boubyan Bank, Kuwait Finance House and Qatar Islamic Bank. The non-GCC banks that participated in the reissuance include Maybank Islamic, Standard Chartered Bank, Al Baraka Turk and CIMB Bank. The demand for the 1-month and 3-month Sukuk series reached a bid-to-cover ratio of 208%, and 255%, respectively.

#Philippines plans to allow banks to set up Islamic banking units

Bangko Sentral ng Pilipinas (BSP) is leaning toward allowing local lenders to set up Islamic banking subsidiaries, as it steps up efforts to promote Shariah-compliant finance in the country. According to the central bank's Deputy Governor Chuchi Fonacier, the BSP is pushing for an open approach where conventional banks can operate Islamic banking windows or to establish subsidiary Islamic banks. Operating fully fledged subsidiaries would allow lenders to offer a wider range of Shariah-compliant services than through a window, which remains part of the parent bank. Fonacier added that foreign Shariah-compliant banks would also be allowed to operate locally. The BSP wants to issue the implementing rules for the new law before the end of the year.

Algorand Foundation announces Sharia certification for Islamic financial markets inclusivity

The Algorand Foundation, the organization that oversees the Algorand blockchain platform, announced that the network is certified for Sharia compliant financing. The foundation enlisted the Shariya Review Bureau (SRB) as an independent Sharia Advisor to ensure the network complies with the critical procedures of Sharia compliant financing. Algorand’s ecosystem has been growing substantially since launching in June of 2019. With the Sharia certification, Algorand is open to Islamic institutions using the platform for economic exchange and beyond. The Algorand Foundation is providing the trusted infrastructure needed to support the growth of a borderless economy. With research led by Dr. Tal Rabin, the Algorand Foundation is incorporated in the Republic of Singapore.

#Malaysia remains key source of Islamic debt papers

According to Fitch Ratings, Malaysia remains the main sukuk issuer this year besides countries from the Gulf Cooperation Council (GCC) region. The increase in Malaysia’s sukuk market is largely driven by Bank Negara Malaysia (BNM) and contributed by local currency corporate issuance. Notable corporate deals included energy service firm Serba Dinamik’s US$300 million (RM1.25 bilion) sukuk, the first dollar high-yield sukuk offering in the Asia-Pacific region. The Malaysian market shows how as the Shariah-compliant investor base grows, the cost of sukuk issuance becomes more competitive relative to conventional bonds. Fitch believes that global volumes normalised rather than declined last year after hitting record levels in 2017. Moving forward, Fitch believes macro-economic and geopolitical conditions will affect sukuk issuance. GCC debt markets are relatively developing but individual sovereign funding decisions can profoundly affect total supply.

MICROCAPITAL BRIEF: The Philippines Passes Law to Encourage Islamic Finance

President Rodrigo Duterte of the Philippines recently signed a law mandating Bangko Sentral ng Pilipinas (BSP), the nation’s central bank, to provide for the regulation and supervision of Islamic banks. An Interagency Working Group on Islamic Banking and Finance will work to develop a regulatory framework, which is intended to expand the number of banks in the country that operate in accordance with Shariah principles.

BML opens new Islamic Banking headquarters

Bank of Maldives (BML) inaugurated the new headquarters of its Islamic Banking arm in the capital city of Male. The facility will provide counter services for transactions, with a range of financial services available for both individuals and businesses. BML Islamic offers a comprehensive range of completely Shari’ah compliant alternatives to the bank's conventional products. The bank assured that its services were developed in accordance with international standards and best practices for Islamic Banking. Customer deposits are maintained in a separate fund utilized exclusively for Shariah-compliant purposes. The process is overseen by the bank’s Shariah Advisory Committee, which includes internationally recognised experts.

Bangladesh Bank Survey: Minimum balance, low income, high cost major barriers to access to finance

According to a Bangladesh Bank survey, the major barriers to accessing finance in the country are minimum balance requirement, low income, staff attitudes, lack of physical access and high cost of products. Other factors like inadequate financial literacy, lack of proper documentation, lack of initiatives of banks and financial institutions, low level of technological infrastructure, lack of suitable product structure of banks, opportunity cost and high cost of products are also acting as hindrances to access to finance. In Bangladesh a large number of the adult population still remains financially excluded. The major barrier is geographical or physical access measuring the average distance from households to bank branches. Bangladesh has less than seven branches (or ATM) per 100,000 population and about 67 branches (or ATM) per 1,000 square kilometre.

Duterte signs law regulating Islamic banks in #Philippines

President Rodrigo Duterte has signed Republic Act (RA) 11439 that allows the establishment of Islamic banks in the Philippines. Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said R.A. No. 11439 would unlock the full potential of Islamic financing in fostering inclusive economic growth. RA 11439 mandates the Bangko Sentral ng Pilipinas (BSP) to exercise regulatory powers and supervision over the operations of Islamic banks. The Trade department earlier said that several banks have expressed interest to open their branches in the Philippines, once a law on Islamic banking is signed. The banks were identified as CIMB, Islamic Development Bank, Qatar Bank, Credit Investment Bank of Malaysia and a Saudi bank.

Islamic banking law to unlock financing potential, foster inclusive growth —BSP

The Bangko Sentral ng Pilipinas (BSP) welcomes the enactment of a law putting Islamic banks under its regulation and supervision. Republic Act No. 11439 or "Act Providing for the Regulation and Organization of Islamic Banks" was signed by President Rodrigo Duterte on August 22. In the Philippines, the potential market for Islamic banking products mainly comprises the Muslims which account for about 10% of the population. The BSP noted that Islamic banking can also be attractive to non-Muslims, particularly investors who may be looking for new asset classes, instruments and products to diversify their portfolios. An Interagency Working Group on Islamic Banking and Finance has been constituted to develop a regulatory framework for Islamic banking.

Noor Bank collaborates with Unionpay international to launch EMVCo QR-based mobile payment solution

Noor Bank has partnered with UnionPay International to inaugurate the bank’s EMVCo QR-based mobile payment service that allows consumers in the UAE to make instant and secure payments on the go. Customers and merchants across the country can now leverage UnionPay QR code scanning for all their payments. The launch ceremony was attended by Han Wang, General Manager-Middle East of UnionPay International, and John Iossifidis, CEO of Noor Bank. In the UAE, UnionPay is accepted nationwide both on POS terminals and ATM machines, acceptance rate is 100% and more than 60% on POS terminals for the UnionPay card and QuickPass. The new solution is expected to create wider acceptance and increase the number of current QR-code-enabled merchants in the country by end-2019.

Beijing’s Belt and Road plans could boost the Islamic banking sector

China’s Belt and Road Initiative is expected to spur further development in Islamic finance around the world. Many of the countries along the infrastructure belt are home to predominantly Muslim populations, including Central Asian countries such as Kazakhstan and Uzbekistan. The China-headquartered Asian Infrastructure Investment Bank had already signed a memorandum of understanding with the Islamic Development Bank to collaborate on various areas including Islamic finance development. Sukuk issuance had grown strongly in 2017, but Chinese issuers have actually pulled away since then. That’s been attributed to the complexities involved, particularly as standards differ across regulatory regimes with varying interpretations of Sharia compliance. Still, financial links between China and the Middle East continue to grow. The relationships have increasingly moved from just trade partnerships to joint ventures.

#Indonesia raises 8 trln rupiah from Islamic bonds auction, matches target

Indonesia raised 8 trillion rupiah ($561.01 million) in a biweekly Islamic bond auction on Tuesday. According to the financing and risk management office at the finance ministry, the sukuk issuance matched the indicative target. The weighted average yields of project-based sukuk sold on Tuesday were lower compared with yields of comparable sukuk at the previous auction on Aug. 6. Total incoming bids were 21.4 trillion rupiah. ($1 = 14,260.0000 rupiah)

McKinsey Issues Warning Shot Over ‘Ominous’ Signs of an Asian Debt Crisis

Global consulting firm McKinsey is warning that signs of an Asian debt crisis are "ominous". Increased indebtedness, stresses in repaying borrowing, lender vulnerabilities and shadow banking practices are some of the concerns. McKinsey examined the balance sheets of more than 23,000 companies across eleven Asia-Pacific countries, and found firms in most of Asia face "significant stress" in servicing debt obligations. In countries such as China and India, those pressures have risen since 2007, while falling sharply in the U.S. and U.K. during the same period. Since 1997, financial regulators have put in place safeguards to prohibit a repeat of the crisis that engulfed Asian nations. Potential triggers of a crisis that need to be monitored include defaults in repayment of debt, liquidity mismatches, and large fluctuations in exchange rates, according to McKinsey.

Why is #Singapore so far behind #Malaysia on responsible investing?

On numerous fronts, Singapore outcompetes its regional rival Malaysia. But in terms of the sustainability of their capital markets, Malaysia trumps Singapore in responsible investing. Malaysian asset managers are more confident than their Singaporean counterparts that responsible investments will outperform regular investments. A recent Bloomberg study shows that 67% of Malaysia’s investment community believes that portfolios underpinned by environmental, social and governance (ESG) factors will perform as well as or better than regular investments. In Singapore it is 58%. The survey also found that a quarter of asset managers in Malaysia had developed their own internal ESG scoring models, compared with just 13% in Singapore. Large Malaysian asset owners are signatories to the UN Principles for Responsible Investment, whereas Singapore’s big investors are not.

#Takaful Ikhlas, CIMB Islamic target RM168m contribution from tie-up

Takaful Ikhlas and CIMB Islamic Bank are targeting to achieve RM168 million in gross contribution from their newly forged strategic bancatakaful partnership. The two groups expect the partnership to grow by 11% every year for the next five years. The partnership is aimed at providing general takaful solutions to the bank’s customers across retail, small and medium enterprises, as well as commercial segments. CIMB Islamic will leverage on Takaful Ikhlas' offerings, which, in turn, will leverage on CIMB Islamic’s distribution channels comprising the bank’s 250 branches nationwide, online platforms and call centres. Takaful Ikhlas CEO Eddy Azly Abidin said the demand for takaful products was growing and both organisations should work closer together to capitalise on this market’s potential.

#Indonesia plans to relax bank #merger rule in efficiency push

Indonesia is planning further steps to make it easier for foreign banks to invest in local lenders as well as encourage domestic mergers. The Financial Services Authority, known as OJK, expects to amend the so-called single presence policy. The revised rule would relax the requirement that the acquiring banks have to merge all their local operations into one entity. Removing the single presence rule could make it easier for Standard Chartered to hang on to its 45% stake in PT Bank Permata. A large bank acquiring a smaller rival would be allowed to retain it as a separate entity without specifying the threshold for a merger requirement. However, even as the single presence rule is relaxed, foreign banks looking to acquire Indonesian lenders should still appoint Indonesian residents as president director and president commissioner.

Islamic Finance Expert: ‘Halal Coin’ a Matter of Time and Awareness

According to Amanie Advisors CEO Suhaida Mahpot, the existing skepticism towards crypto in Islamic countries is not a pure rejection, but rather a consequence of uncertainty. Mahpot compared the existing situation of cryptocurrencies with Malaysia’s controversial types of investment known as Amanah Saham Bumiputera (ASB) and Amanah Saham Nasional (ASN). The perception of ASB has transformed over the years and it was decided to consider it as "harus" in 2012, which means that it is neither prohibited nor encouraged by the teachings of the faith. Both ASB and ASN investments were finally declared permissible for Muslims by the Selangor Fatwa Committee, the same regulatory authority that previously prohibited them. Mahpot argues that the same goes for digital currencies and financial institutions and scholars need more education about cryptocurrencies and their benefits.

Maldives Islamic Bank launches IPO

The Maldives Islamic Bank (MIB) has launched its Initial Public Offering on the Maldives Stock Exchange with the aim of raising MVR244 million (US$15.8 million), offering a 31% stake for public ownership. MIB is offering 6,975,000 shares at a price of MVR35 per share, including 4.5 million ordinary shares offered for subscription and 2.4 million offered for sale. According to the bank, buyers must subscribe to a minimum of 20 shares, which is equivalent to MVR700. Subscriptions exceeding the minimum amount must be in multiples of 10 shares. The expected date of listing of the shares or commencement of trading is November 12.

Ant Financial-backed startup Dana rides #Indonesian #fintech wave

Fintech startup Dana is looking for another strategic investor. Currently backed by Ant Financial, Dana offers services such as QR-code based transfers and online credit-card transactions for individuals as well as merchants. Dana is considering expanding its footprint in Indonesia by offering other financial services such as insurance. The startup is wary of becoming labelled a shadow bank operating outside of regulatory jurisdictions. Indonesia’s internet economy, the largest and the fastest growing in the region, reached $27 billion in 2018 and is poised to grow to $100 billion by 2025, according to a report by Google and Temasek Holdings Pte.

Syndicate content