The #Malaysian government is encouraging investors from China to tap into the estimated USD3 trillion global demand for halal products by exploring business opportunities in Tanjung Manis Halal Hub (TMHH) in Bintulu, Sarawak. According to Second Minister of Resource Planning and Environment Datuk Amar Awang Tengah Ali Hassan, Malaysia is a pioneer in halal certification ensuring the integrity of halal products and services through strict compliance with Syariah requirements. Awang Tengah added that the Sarawak Government had established the TMHH which covers an area of 124,517 hectares making it the largest among all the other halal hubs in the region. Among the investment potentials in TMHH he revealed is the cultivation of food crops, aquaculture, poultry and livestock, food processing, cosmetics, and health products. On another note, Awang Tengah revealed that China has remained an important trading partner as well as a major source of Foreign Direct Investment (FDI) for Sarawak.
According to AllianceDBS Research, a new wave of merger and acquisition (M&A) activities in the Islamic banking space is plausible, although the timing remains the key risk. Potential M&A candidates include the Malaysia Building Society (MBSB), and Bank Muamalat Malaysia (Muamalat). The research house added domestic Islamic financing growth was expected to continue outpacing conventional loans growth, driven by regulatory push for internationalisation of Islamic finance. This was mainly underpinned by a growing push by banks to fulfil Bank Negara Malaysia’s target of 40% proportion of Islamic financing. AllianceDBS predicts the big game-changer will be product innovation. The research house named the main Islamic banking proxy, the BIMB Holdings (BIMB) as the largest Shariah compliant financial institution with strong potential to lead product innovation.
According to Moody’s Investor Services, there is stable flow of sovereign sukuk issuance this year, which is set to touch US$28 billion (US$1 = RM4.15) in Southeast Asia. Among the Southeast Asia countries, Malaysia and Indonesia continue to regularly issue long-term sovereign sukuk while Gulf countries favour conventional debt structure to finance their deficit. Moody’s Vice President Gabriel Torres said the governments of Cote d’Ivoire, Senegal and Sharjah returned to the sovereign sukuk market in 2016, but issuance volumes are primarily supported by more regular issuers, such as Indonesia, Malaysia and Turkey. Sub-Saharan African sovereign sukuk issuance is likely to remain active as governments set up regulatory frameworks for a retail Islamic banking sector and test market appetite.
Maybank Islamic Bhd is focused on ensuring a healthy capital and liquidity buffer in the face of the current economic challenges. Chief executive officer Datuk Muzaffar Hisham said Islamic banking and financial institutions as such, need strong, effective and sustainable risk management strategies. He also said the risk management helps to evaluate risks and formulate mitigating action. In terms of assets and financing outlook, Muzaffar said Maybank Islamic expects to see between nine and 10 per cent growth this year as compared with about 18-19 per cent year-on-year in 2015. For the financial year ended Dec 31, 2015, Maybank Islamic’s total assets exceeded US$36 billion, while gross financing reached RM131.1 billion, with deposits at RM123.4 billion.
The government uses effective approach and adopts efficient and integrated structure to develop Malaysia as an international Islamic financial centre, said Deputy Finance Minister, Datuk Chua Tee Yong. He said the approach was due to the strong cooperation among various ministries, agencies, private sector and other stakeholders via the Malaysia International Islamic Financial Committee (MIFC) committee chaired by Bank Negara Malaysia governor. Asyraf Wajdi wanted to know whether the Finance Ministry has plans to develop the Islamic financial system in Malaysia by establishing ‘local centres’ as in Qatar, Bahrain, UK and Singapore. Chua said the plan and strategic issues would be discussed by MIFC exco to facilitate the administration and smooth implementation of the MIFC initiative.
Maybank Investment Bank, Public Islamic Bank and RHB Islamic Bank have entered into an agreement with Impian Bebas Sdn Bhd to provide a 15-year, RM1.08 billion syndicated Islamic term financing. Maybank IB was appointed as the coordinating bank and joint lead arranger (JLA) for the Islamic term financing together with Public Islamic and RHB Islamic. Impian Bebas, a joint venture company between KLCC (Holdings) Sdn Bhd and Sapura Resources Bhd, is developing a commercial land known as Lot 91 at Kuala Lumpur City Centre (KLCC) into a mixed commercial development comprising of office tower, convention centre and retail podium.
According to a report by the General Insurance Association of Malaysia (PIAM), the general insurance sector is set to record a 5.5 to 6 per cent increase in gross written premiums in 2015. The weaker local currency should help boost domestic consumption, despite global economic headwinds as revenues from oil and other commodities plummet. The government’s plans to maintain development spending should also promote growth, which in turn will see an increase in demand for insurance products. The new goods and services tax (GST) – to be introduced in April – is not expected to have a lasting impact on the sector, though it could slow growth over the next few months.
Funding for infrastructure projects will be the driver for sukuk issuances this year, says CIMB Islamic Bank chief executive officer, Badlisyah Abdul Ghani. He said the sukuk issuance in 2015 could emulate the peak of 2012, if all planned infrastructure projects such as My Rapid Transit, the Pan-Borneo highway and Kuala Lumpur-Singapore high speed train venture come on stream. Badlisyah said for the market to be sustainable, more mid size offerings of between RM1 billion and RM2 billion are needed, as compared to a single mega size issuance of RM20 billion. Meanwhile, on CIMB Islamic,Badlisyah said the bank is currently working on a few sovereign deals which are expected to come on stream in the middle of this year.
Maybank Islamic Bhd, the Islamic banking arm of the Maybank Group, has introduced its latest offering – Maybank Islamic Custody Services, both domestic and abroad. Maybank Islamic will be targeting prospective clients such as the Government-linked Companies (GLCs) in Malaysia, fund management companies, institutional investors and sovereign wealth funds, which in total would have an estimated asset under management of about RM1.4 trillion. Maybank Islamic Custody Services also has the capability of monitoring non-syariah compliant securities should clients accidentally purchase them or should the syariah compliant securities subsequently deemed non-syariah compliant.
The Islamic Research & Training Institute (IRTI) of the Islamic Development Bank (IDB) Group, and CIMB Islamic Bank Bhd of Malaysia signed a memorandum of understanding towards developing Islamic Finance Country Reports (IFCR) on Malaysia and Indonesia. The IFCR is expected to provide in-depth information, and independent due diligence to facilitate the growth and development of the Islamic finance industry in IDB Group member countries and encourage investment by enhancing transparency. Through this combined initiative, the two institutions aim to facilitate access to information that is currently not available to stakeholders.
The Securities Commission Malaysia (SC) and the Oxford Centre for Islamic Studies (OCIS) co-hosted the 5th annual Roundtable on Islamic Finance in Kuala Lumpur on March 22 and 23. The roundtable, themed ’Harnessing Waqf Into a Bankable Social Financing and Investment Asset Class’ discussed the development of waqf and how it can contribute towards broadening the Islamic finance industry globally. Industry practitioners and scholars from around the world gathered to discuss challenges and potential of waqf in the philanthropic spheres, including issues of legislation, governance and professionalism, and capital. The global effort to harness Waqf into a bankable social financing and investment asset class is also in line with the SC’s strategy to identify new growth segments to further internationalise Malaysia.
Bank Negara Malaysia’s (BNM) recently announced concept paper on life insurance and family takaful (LI and FT) may be the insurance sector’s re-rating catalyst. The proposals made in the paper focus on ensuring sustainable operating costs, enhancing disclosure and improving policyholders’ value proposition, which should collectively boost penetration, especially in the mass market. Key measures in the recent proposals include the introduction of the minimum allocation rate to replace commission/operating cost limits on investment-linked products, promoting distribution channels and encouraging greater product transparency with enhanced disclosure requirements and web aggregators. The outcome is considered a win-win for customers and insurers.
RHB Islamic Bank has agreed to offer Lembaga Pengarah Amanah Kebajikan Masjid Negeri Sarawak with a RM300 million Istisna’/Ijarah Term Financing Facility. RHB said the facility, with a financing tenure of 10 years, is intended for the construction of Baitul Makmur II, an 18-storey office/commercial building located in Kuching, Sarawak. Upon completion, Baitul Makmur II will house several Sarawak state ministries. This deal would represent one of RHB Islamic Bank’s single largest financing loans to Sarawak state-related group of companies.
Great Eastern Takaful Sdn Bhd (Great Eastern Takaful) has appointed Zafri Abdul Halim as the CEO, effective from March 1, 2013. Before, he was the company’s chief financial officer. Zafri holds a Master of Science in Project Management from George Washington University and a Bachelors Degree in Accountancy in addition to being a member of Malaysian Institute of Accountant and a certified Chartered Accountant. He said, Great Eastern Takaful will pursue its main strategies in penetrating the local market with its dual agency approach and direct agency under Great Eastern Takaful Own Agency (GOA).
Differences seen in interpretation of syariah compliance among various Islamic finance markets are disappearing as there has been inter-market convergence of respective interpretations on a global scale moving forward. According to the chief executive officer of Standard Chartered Saadiq Bhd (Saadiq) Wasim Saifi, convergence between Middle East interpretation of syariah compliance and the interpretation seen in Islamic finance institutions in Malaysia is happening. Many transactions are being structured using Islamic structures which have strong Middle Eastern acceptability. Furthermore, convergence is also happening regarding the syariah-compliant filters announced by the Securities Commission for equities.
Standard Chartered Saadiq Bhd (Saadiq), a wholly-owned Islamic bank subsidiary of Standard Chartered Bank Malaysia, launched its first branch in the state Sarawak. Saadiq chief executive officer (CEO) Wasim Saifi opened the branch located in Kuching, which was witnessed by Standard Chartered Malaysia consumer banking country head Sonia Wedrychowicz and government officials as well as the bank’s customers, partners and staff. Saadiq stated that the new branch opened seven days a week, extending its operations to weekends in order to improve customer access to the bank’s facilities and services.