Asia

Advancing financial #inclusion for #Indonesian #women

Commonwealth Bank and Mastercard announced a collaboration to better financial inclusion for Indonesian women. This collaboration will have three key pillars: enhancing formal networks by knowledge exchange among women-owned businesses, innovating through new digital learning tools and investing in research. Early in 2017, Indonesia’s Financial Services Authority (OJK) released a research showing that Indonesia’s financial literacy and inclusion indices stood at 29.66% and 67.82%. OJK called upon the industry to implement inclusion programmes to achieve their target of 75% for the financial inclusion index by 2019. Commonwealth Bank and Mastercard will help drive the growth of women-owned businesses by educating them about customer and market trends. Additionally, both will invest in research to continue the conversation about financial inclusion.

DFSA pens Hong Kong #fintech innovation deal

The Dubai Financial Services Authority (DFSA) and Hong Kong’s Securities and Futures Commission (SFC) have signed an agreement to cooperate on Fintech innovation. The two public entities said the agreement will further strengthen the efforts of both authorities to develop an innovation-friendly ecosystem and regulatory environment. This continues a trend by both countries to ink bilateral relationships to boost emerging technology within the financial sector. The agreement was signed in Hong Kong by DFSA chief executive Ian Johnston and Ashley Alder, chief executive of the SFC. This step follows the introduction of regulations formalising a tailored regime for loan and investment crowdfunding platforms earlier this month. It also follows the launch of the FinTech Hive at DIFC and its Innovation Testing Licence (ITL).

BNM to measure VBI adoption in Islamic FIs

Bank Negara #Malaysia is developing a scorecard with Islamic banking players that will measure the adoption of value-based intermediation (VBI) initiative. According to deputy governor Abdul Rasheed Abdul Ghaffour, the VBI marks the next step to realise the full potential of Islamic finance. The VBI Community of Practictioners (COP) includes nine Islamic banking institutions, Bank Islam, Bank Muamalat, CIMB Islamic, Agrobank, HSBC Amanah, Maybank Islamic, AmBank Islamic, Alliance Islamic and Standard Chartered Saadiq. While VBI shares similarities with ethical finance, ESG (environmental, social and corporate governance) and SRI (sustainable, responsible, impact investing), the distinguishing factor is the Syariah aspect. Business propositions from new sectors such as small and medium-sized enterprises (SMEs) would benefit from financial applications based on potential value creation and not just their credit scores.

Digitisation of #Indonesian Banks

Consulting firm Solidiance launched its new report entitled Digital Evolution in Indonesia's Banking Industry. In this report millennials are projected to account for around 58% of Indonesia's total population by 2027. Indonesia has a population of more than 260 million people and only 36% of the population are connected to financial institutions, leaving in the region 150 million citizens unbanked. The report also noted that digitalization helps provide greater opportunities for banks to seize the market share. The market will be soon occupied with digital-native millenials who prefer to use the new channels available them. The Solidiance report estimated the number of Internet users in Indonesia is expected to explode in the coming years from as low as 35% of the population in 2015 to an estimated 68% in 2020.

Islamic finance, a big chance to back SDGs

The #Indonesian National Alms Agency (BAZNAS) agreed to support the widening of electricity access to the poor in Jambi province in July. This marked the first official disbursement of the Islamic zakat fund to support the sustainable development goals (SDGs) in Indonesia.

Talent deficit in Islamic finance affects quality #sukuk issuance

The shortage of high-quality sukuk in the Islamic finance market is a result of the deficit in virtuous talent, according to Datuk Mohammad Faiz Azmi, Former Malaysian Institute of Accountants (MIA) president. He also said there was a lack of safe assets at present, leaving issuances by the government always oversubscribed. He added that the opportunity now existed for sukuk issuance from Indonesia, which has a lot of infrastructure plans such as to build more roads, have trains, ports, better airports and others. In a recent Bank Negara strategic paper, the central bank revealed that the annual growth rate of the Islamic finance industry had slowed from 24.2% in 2011 to 8.2% last year. Mohammad Faiz said MIA has launched the Mini Pupillage Programme to create a pool of knowledgeable and specialised talents in the area of Islamic finance.

World Bank sees massive potential in #green #sukuk

The #Malaysian company Tadau Energy became the first entity in the world to issue a green sukuk. Called Green SRI Sukuk Tadau, the RM250 million Sustainable Responsible Investment (SRI) syariah-compliant bond holds a tenure of up to 16 years. RAM Rating Services assigned it a long-term rating of "AA3". The framework underlying the green sukuk’s debut is the result of a collaboration between Bank Negara Malaysia, the Securities Commission (SC) and the World Bank. World Bank country manager Faris Hadad-Zervos called the issuance of the green sukuk a historic event, not just for Malaysia but for the whole world. Faris stressed the creation of the framework was key in making the world’s first SRI sukuk a reality. World Bank financial specialist Jose De Luna Martinez said the Tadau sukuk would potentially lead Malaysia to be a green sukuk hub of the Asean region.

Financial inclusion through Islamic #microfinance

According to statistics from the World Bank, an estimated two billion adults worldwide do not have access to basic financial services. Realising this fact, the World Bank has partnered with public and private sector institutions and established the Universal Financial Access by 2020 (UFA2020) initiative to promote financial inclusion. As the main aim of the microfinance industry is to alleviate poverty, Islamic microfinance is a branch of that with Islamic financial principles. In Cambodia the Islamic microfinance industry is still in the nascent stage. Recently, the Cambodian government has opened its doors to two Islamic microfinance institutions into Cambodia namely Amanah Ikhtiar Malaysia (AIM) and Yayasan Pembangunan Ekonomi Islam Malaysia (YAPEIM). AIM is currently setting up its branch office in Cambodia while YAPEIM is slated to come in by the first quarter of 2018.

Going For Listing: Ihsan #Sukuk for a good cause

Ihsan Sukuk is Malaysia's first sustainable and responsible investment (SRI) sukuk for retail investors and is now listed on Bursa Malaysia. The RM100 million issuance is the second Sukuk Ihsan programme, the first having been a RM100 million tranche issued in 2015 only for institutional investors. While the minimum investment is RM1,000, the sovereign wealth fund also provided room for small-scale investors to start from as low as RM10 via two crowdfunding platforms ATAPLUS and pitchIN. The proceeds will be channelled into the Yayasan AMIR Trust Schools Programme aimed at improving access to quality education at government schools. The sukuk’s tenure is seven years and both the retail and non-retail sukuk holders will receive annual payments. The principal adviser and lead arranger is CIMB Investment Bank Bhd, while the joint lead managers are Maybank Investment Bank and RHB Investment Bank.

PNB mulls introduction of Islamic shares for Maybank

Permodalan Nasional Bhd (PNB) is studying a potential issuance of Islamic shares (i-shares) by Malayan Banking (Maybank). PNB group chairman Tan Sri Abdul Wahid Omar said currently about 25% of the Maybank group’s earnings come from the syariah-compliant businesses, and proposed that 20% of the group’s shares can be designated as i-shares. The move to list i-shares would provide an extra boost to the Malaysian Islamic capital market, said Abdul Wahid. He added that there are currently only two listed syariah-compliant financial institutions in Malaysia, BIMB Holdings and Syarikat Takaful Malaysia. If the plan goes through, it will create RM20 billion worth of new syariah-compliant instruments, which is three times bigger than BIMB’s market capitalisation. Abdul Wahid added that the group is looking at three asset classes for further investments overseas, namely public equities, private equities and real estate.

ADGM and KPMG launch #FinTech Abu Dhabi Innovation Challenge

Abu Dhabi Global Market (ADGM) and KPMG have come together to launch the first FinTech Abu Dhabi Innovation Challenge on Oct. 22. The Innovation Challenge includes an intensive five-week program for innovative and mature start-ups to conceptualize and present market-ready solutions that address real business challenges in the Middle East, Africa and South Asia (MEASA) region. During the program, 10 finalist teams will work divided into six focus areas: Financial and Investment Management, Financial Inclusion, RegTech, Trade Finance, InsurTech and Private Capital Markets.The finalists will showcase their solutions at the FinTech Demo Day in Abu Dhabi to a panel of industry experts. Each finalist will benefit from mentoring sessions and fast-tracked consideration for admission to ADGM’s Regulatory Laboratory (RegLab) program. They will also win a $15,000 cash stipend to cover any costs associated with travel matters and accommodation.

Shariah-compliant 1% interest on #studyloans ‘can’t be abolished’

Shamsul Anuar Nasarah, chairman of the National Higher Education Fund (PTPTN), says the 1% interest charged on study loans is not to make a profit, therefore it is not right to abolish it. In his view, the cost is minimum and is used to cover the staffing and administrative costs of those who are managing the accounts. Borrowers are charged between 1% and 3% interest, and additionally, their loan amount will increase if they fail to pay their instalments. After the agency's establishment, administrative costs had amounted to 4% a year. It was gradually reduced to 3% a year since January 1, 2004. Now, the interest is only 1% a year, beginning June 1, 2008. In 2017 PTPTN is expected to collect RM4 billion by the end of the year. Higher Education Minister Idris Jusoh said the target was achievable as the agency had collected RM3.4 billion last year, when its target was only RM2 billion.

Islamic finance sharpens its profile in Southeast Asia

#Malaysia’s eastern region Sarawak will host this year’s World Islamic Economic Forum (WIEF) from November 21 to 23. According to Sarawak’s Deputy Chief Minister Awang Tengah Ali Hasan, the state will use the forum as a platform to promote Islamic investment opportunities in various industries. He added that Sarawak was currently also undergoing a rural transformation programme and had designated 77,000 hectares of land for the development of a halal hub. The deputy minister said the WIEF will also focus on strengthening the partnership between Muslim and non-Muslim communities. The conference is expected to attract about 2,000 potential participants and representatives of various sectors. In another development, Islamic finance will soon make its foray into Cambodia, which is home to an estimated 300,000 Muslims. Two Malaysia-based Islamic financial institutions are expected to open their first branches by the end of the year and in 2018. Another recent highlight for Islamic finance was the Brunei Darussalam Islamic Investment Summit 2017 held on August 2 and 3.

Khazanah announces RM5 million #sukuk IPO

Khazanah Nasional has announced its initial public offering of a seven-year wakalah sukuk by special purpose vehicle Ihsan Sukuk. The size of the sukuk is RM5 million, has a profit rate of 4.6% per year, and is rated AAA by RAM Rating Services. It is the third tranche of issuance under Khazanah’s RM1 billion Sustainable and Responsible Investment Sukuk programme. The two earlier tranches were used by Khazanah’s not-for-profit foundation, Yayasan Amir, to fund the rollout of its Trust Schools Programme in at least 20 schools. As of June 2017, the foundation’s Trust Schools Programme had been rolled out to 83 schools across 10 states.

Islamic #cooperatives can help alleviate poverty

According to the Central Statistics Agency, Indonesia’s poverty rate is at 10.70% as of the second half of 2016. The rapid growth of Islamic finance presents an opportunity to address the social and economic gap. However, behind the success of Islamic finance is the reality that this development is diverting from the fundamental goal of Islamic law. Mehmet Asutay, a professor in Islamic finance at Durham University, argues that the development of Islamic financial institutions have neglected Islamic social goals. The Baitul Maal wat Tamwil (BMT) can be one solution in empowering the poor. As a microfinance institution, the BMT may provide better outreach as it is more accessible to the poorest people. The small amount of credit may encourage them to engage in financing activity. BMT lacks formalization and supervision, the government is expected to strengthen Islamic microfinance by linking BMT to robust capital injectors.

#Indonesia aims to have world largest #haj #fund in 10 years

In Indonesia the newly established Haj Fund Management Agency (BPKH) has pledged to match the performance of its Malaysian counterpart Tabung Haji. The BPKH will manage Rp 99.3 trillion in haj funds, gathered from 3.4 million people who have paid deposits to go on the haj, by investing in sharia-compliant instruments. BPKH chairman Yuslam Fauzi says the agency aims to be the world’s largest haj fund manager within 10 years through diversified investment with an 8 to 10% annual return. President Joko Widodo inaugurated the executive board of the BPKH, which is taking over management of the haj fund from the Ministry of Religious Affairs. Indonesia has sent more than 200,000 people to Mecca on the haj. The waiting list for the haj is 15 to 20 years.

#TNB issues RM2bil #Islamic #bonds

The Tenaga Nasional Bhd informed the stock exchange that it has issued RM2bil Islamic medium-term notes (sukuk wakalah). This is the first issuance under the sukuk programme of up to RM5bil in nominal value set up last month. The programme has a tenure of 50 years starting from the date of this first issue.
Tenaga Nasional Bhd told the Bursa Malaysia that based on its consolidated statement of financial position as at May 31, 2017, its consolidated gearing would then increase to 0.70 times from 0.66 times. Additionally the sukuk wakalah issuance would not have any impact on the earnings, earnings per share and net assets per share of the company for the current financial year.
Earlier this year, Tenaga Nasional Bhd had said the proceeds raised from the programme would be used to finance capital expenditure, investment, general corporate purposes, working capital requirements and/or refinance any existing financing facilities and to defray any fees and expenses of the sukuk programme.

#Public #Islamic to #raise up to #RM500mil via #sukuk

Public Islamic Bank Bhd is once more raising funds by tapping an Islamic medium term notes (sukuk murabahah) programme which was set up in 2014, issuing the second tranche of subordinated sukuk amounting to RM500mil after a gap of over three years. In a record with Bursa Malaysia, parent Public Bank Bhd said the takings would be used by Public Islamic Bank Bhd for its working capital, general banking and various other corporate purposes.
The first tranche was already issued in June 2014, also amounting to RM500mil with a tenure of 10 years. The coupon rate then was 4.75% p.a. The current tranche has a coupon rate of 4.65% per year, with maturity date of Aug 3, 2027.

#Bank #Islam plans to #grow mobile #banking space

Bank Islam Malaysia Bhd is aiming to grow its mobile banking customer base from currently 900,000 users to two million by the year 2019. This is part of the bank’s strategic collaboration with US-based global business and technology consulting company Cognizant to develop fintech products within the network of Bank Islam’s. The banks digital banking segment accounts for less than 5% of its non-fund based income and the bank plans to increase this figure to 10%.
Bank Islam chief executive officer Khairul Kamarudin said the bank expected to roll out at least one fintech product related to retail banking by the second quarter of 2018. The bank planned to develop fintech products targeted at the retail banking and small and medium enterprise segments. “Together with Cognizant, we shall identify suitable fintech products that allow better customer engagement, to be submitted to Bank Negara’s regulatory sandbox,” he said.

#Indonesia takes big step towards #boosting I#slamic #finance industry

Indonesia, that is so far a behind in developing a comprehensive Islamic finance industry, has taken a big leap towards the creation of a supportive framework for Shariah-compliant banking end of July. On that day, the country’s President Joko Widodo inaugurated the National Committee for Shariah Finance, as part of the government’s push to make Indonesia a global hub for the Islamic financial industry.
It has been tasked to accelerate, expand and develop Shariah-compliant financial services to support the country’s development, National Development Planning Minister Bambang Brodjonegoro said in a statement. The ministry is the one that introduced its master plan for the development of the country’s Islamic finance future last year.

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