Malaysia

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.

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.

#Dana #Gas said to see creditors turn debtors as #showdown deepens

The standoff between Dana Gas PJSC and its bondholders carries on after the company that’s trying to void $700 million of its own debt was said to believe investors may even have to pay the company.
Dana Gas says a court battle with holders of the Islamic securities, or sukuk, may see it having to return less than 10 % of the amount it borrowed. In a second scenario, it believes creditors may have to pay it as much as $150 million, and that the case may last more than 10 years. The Gas company had announced plans to restructure the debt in May, this week retracted an offer to replace the bonds and is pursuing a resolution in court. It said in June the debt was no longer Sharia-compliant. Investors questioned the validity of the claim since neither sukuk regulations nor UAE laws governing the matter have changed since they were issued in 2013.

#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.

New #Efforts to #Boost #Sharia #Banking in #Indonesia

Although between 85 and 90 % of the Indonesian population is Muslim, Islamic banking, also known as sharia banking, remains underdeveloped in the country. In 2016 sharia banking assets only accounted for 5.3 % of total assets in Indonesia's banking sector. But at the same time in countries like Saudi Arabia and Malaysia these figures are much higher at 51.1 % and 23.8 %, respectively.
In order to boost Islamic banking in his country, President Joko Widodo formed the National Committee for Sharia Finance. This institution was installed to investigate and tackle the challenges surrounding sharia banking in Indonesia. Together with the Indonesian Islamic Economy Expert Association, KNKS is tasked to unite the vision and strategy of all stakeholders in this industry and turn the country into a global center for Islamic banking.
General Chairman of the IAEI Bambang Brodjonegoro said, the challenges in Indonesia's Islamic banking industry involve both the supply and demand side. The lack of business sectors that are based on Islamic banking makes it tough for the industry to develop, he added.

#Khazanah raises RM100m from SRI #sukuk

The strategic investment fund Khazanah Nasional Bhd has gathered RM 100 million from the second tranche oft he Sustainable and Responsible Investment sukuk. Khazanah said in a statement today that the proceeds will be used to fund a rollout of a Trust Schools Programme to more schools in Malaysia.
"Khazanah has successfully raised RM100 million via a second tranche of the seven-year SRI sukuk, issued by a Malaysian-incorporated independent Special Purpose Vehicle, Ihsan Sukuk Bhd. The settlement date of this Sukuk will be on August 8th, this year. Ihsan issued the first tranche of RM 100 million in 2015, under its RM 1.0 bn Sukuk Programme," Khazanah said in a statement. It explained that proceeds from this second tranche will fund the rollout of Yayasan AMIR’s Trust Schools Programme, reaching as many as 20 schools.

#Malaysia’s First #Green #Sukuk Under Securities Commission Malaysia’s Sustainable Responsible Investment Sukuk

Securities Commission Malaysia (SC) announced the issuance of Malaysia’s first green sukuk under its Sustainable & Responsible Investment (SRI) Sukuk framework. To complement SRI Sukuk framework, several incentives are in place to attract green issuers. They include tax deduction until year of assessment 2020 on issuance costs; tax incentives for green technology activities in energy, transportation, building, waste management and supporting services; financing incentives under the Green Technology Financing Scheme (GTFS) with total funds allocation of RM5 billion until 2022. To be eligible for tax deductions, issuers must ensure that proceeds are used to fund SRI projects in the natural resources, renewable energy and/or energy efficiency sectors. The framework underlying this first green sukuk is the result of collaboration between SC, Bank Negara Malaysia and the World Bank Group to introduce innovative financial instruments to tackle global infrastructure needs and green financing.

More Chinese companies to raise funds via #sukuk?

As a China state-owned enterprise (SOE) issued its first ringgit sukuk in the domestic bond market, many are wondering if other China companies would be doing the same. Beijing Enterprises Water Group (BEWG) issued RM400mil worth of medium-term notes on July 19 to finance its water treatment project in Kemaman, Terengganu. The sukuk issuance also marks the first ringgit-denominated sukuk by a China state-owned company for water infrastructure funding in Malaysia. According to analysts, China-based entities do not prefer to tap into the domestic sukuk market, as they are backed by strong financing sources from their home country. BEWG chief executive officer Datuk Vence Ong Kian Min noted that this was BEWG’s first-ever debt capital market instrument and the issuance has enabled the group to diversify its funding sources. The RM687mil project is expected to be completed in 2018.

Do more to boost Islamic #trade finance

As the World Trade Organisation (WTO) reaffirmed commitment to its Aid for Trade initiative, the outlook for global trade over the next two years is indeed mixed. WTO is forecasting that global trade will expand by 2.4% this year and between 2.1 to 4% next year, reflecting the continued uncertainty of the global economy. In Malaysia, Bank Negara Malaysia (BNM) Governor Muhammed Ibrahim wants Malaysia’s Islamic finance industry to boost trade finance to increase largely untapped business opportunities using technological capture. BNM is keen for Syariah-compliant trade financing to support 10% of total trade in the next three years. Malaysia’s Islamic finance industry has assets under management totalling RM742 billion. BNM wants the industry to leverage this pole position and to account for 40% of total financing in Malaysia by 2020.

#Fintech: First robo-adviser in Asia to offer shariah-compliant #investments

Robo-advisers are seen as a more transparent, convenient and low-cost alternative to human financial advisers. However, these platforms have limited options when it comes to shariah-compliant investments. To solve this problem, Malaysian Farringdon Group has recently launched its new robo-adviser called Algebra. According to CEO Stuart Yeomans, the company’s Virtual Mutual Fund Technology (VMFT) allows robo-advisory services for shariah-compliant investments to be offered at a lower price. Algebra can offer a wider range of investments and asset classes than other robo-advisory platforms. It adopts a smart beta strategy, which uses algorithms to derive its active equity portfolio before blending with fixed-income ETFs or sukuk funds. The shariah-compliant strategy used by the platform has been approved by Kuala Lumpur-based shariah advisory firm Amanie Advisors.

#Malaysia's Lead in Shariah #Funds

Malaysia remains a frontrunner in Southeast Asia's Shariah fund market, with $24 billion in Islamic mutual fund assets under management for the year ending May 2017. Global analytics firm Cerulli believes that Malaysia will preserve its pole position in Southeast Asia, while Indonesia will take a longer time to catch up, given the bias toward domestic investments. Malaysia's lead is largely due to its government's support of expertise in regional and Shariah investments. In January 2017, the Malaysian Securities Commission unveiled a five-year Islamic and wealth management blueprint to become an international Islamic finance center. Global firms have been encouraged to set up Islamic units in Malaysia through tax incentives and signing mutual recognition agreements with Dubai, Hong Kong, Ireland, and Luxembourg. The country is also embracing financial technology with new initiatives and regulatory support. Kuala Lumpur-based Farringdon Group recently launched a Robo-adviser service which follows Shariah investment guidelines.

Hong Leong Islamic Bank appoints Jasani Abdullah as CEO

Hong Leong Islamic Bank (HLISB) has appointed Jasani Abdullah as chief executive office. HLISB said Jasani has been acting CEO since December 2016. He has been in the financial industry for more than 30 years and his contribution towards the Islamic banking sector is very much valued. Jasani has been with HLISB since 2007 when he first joined as the head of shariah and product development. Jasani graduated with a Diploma in Public Administration from MARA Institute of Technology Malaysia, Bachelor in Business Administration from Ohio University, USA and has a Post Graduate Diploma in Islamic Banking and Finance from International Islamic University Malaysia.

#Kazakhstan, #Malaysia plant seeds for green Islamic finance

Astana International Financial Center (AIFC) has gained the support of technology financier Malaysia Debt Ventures (MDV) to develop both green and Islamic finance in Kazakhstan. Under a newly agreed MoU, AIFC and MDV will work closely with each other to share best practices, expertise and knowledge in these two areas. Apart from sharing knowledge, both parties will also explore financing green projects using Islamic financing tools. While not fully operational yet, AIFC is keeping busy by setting the groundwork. Green finance received a huge boost earlier in January when the European Bank for Reconstruction and Development agreed to launch the Green Financial System for Kazakhstan project, financed by Finland. With eyes on a comprehensive green financial system, engaging MDV could culminate in a variety of Islamic financial products for sustainable eco-friendly projects including green Sukuk.

Yeow joins Alkhair International Islamic Bank as CEO

Alkhair International Islamic Bank (AKIIB) has appointed Yeow Tiang Hui as its chief executive officer effective Aug 1.
AKIIB said in a statement that he succeeded Datuk Adissadikin Ali, who left the bank last year to head RHB Islamic Bank. Yeow has worked at several multinational banks, including managing the multinational portfolio at Deutsche Bank and being vice-president of Citibank/Citicorp’s venture capital outfit and its head of commercial banking. From 2007 to 2016 he served as head of corporate banking at Kuwait Finance House in Malaysia.

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