Malaysia

MARC affirms ‘AAA’ rating for Aman Sukuk’s RM10b IMTN

The Malaysian Rating Corp Bhd (MARC) has affirmed its ‘AAA’ rating on special purpose vehicle Aman Sukuk Bhd’s (Aman) Islamic medium-term notes (IMTN) programme of up to RM10 billion with a stable outlook. MARC said the rating reflects the credit strength of the government as the sole paymaster of the sublease rental payments that are sufficient to meet the principal and profit payments under the IMTN programme.
In the statement the rating agency added the stable outlook reflects its expectations that the sublease rental stream backing the transaction will continue to be supported by timely receipt of payments from the government.
Aman is a wholly owned funding vehicle of Pembinaan BLT Sdn Bhd (PBLT), the developer of 74 projects comprising quarters and facilities for the Polis DiRaja Malaysia. The projects, which are located throughout the country, were developed under a build, lease and transfer (BLT) project model. As at end of August 2016, PBLT has fully completed the construction of the 74 projects with a value of RM7.5 billion, of which 73 projects have been awarded with certificates of completion and compliance (CCC).

Interview with Mr. Khairul Kamarudin, Deputy CEO of Bank Islam

In this interview deputy CEO of Bank Islam in Malaysia, Khairul Kamarudin, talks about the challenges Bank Islam had to face during the years. The bank had heavy losses in 2005 and 2006 and had to manage the misconceptions of the public as well. Today, Bank Islam’s customers have grown to more than 5 million. The bank was one of the four founding Islamic banks to form a consortium that launched the Investment Account Platform (IAP) in 2015. The IAP platform facilitates direct investment by investors into viable ventures of their choice. Bank Islam is involved in several social projects and foundations, like the Projek Bantuan Rumah (Housing Aid Project) and Promoting Intelligence, Nurturing Talent and Advocating Responsibility (PINTAR) Foundation.

Islamic Finance: Demand for more shariah-compliant products

While the number of Islamic products in #Malaysia has grown in the last 10 years, there still aren’t enough to cater for the needs of local investors. According to Rohani Mohd Shahir, president of the Association for Islamic Financial and Wealth Management Malaysia (AIFiWM) the growing demand is due to a greater awareness of compliance for religious purposes. There is a lack of Islamic real estate investment trusts (REITs) and fewer shariah-compliant stocks in Malaysia today due to the tightening of regulatory requirements. To increase the number of listings available, AIFiWM is championing a move to restore the shariah-compliant status of companies that were once deemed compliant.

Mohammad Faiz new Islamic Finance Consultative Group Chairman

The International Accounting Standards Board (IASB) has appointed Datuk Mohammad Faiz Azmi as chairman of the Islamic Finance Consultative Group. Commenting on his appointment, Mohammad Faiz said he hoped to be able to continue the good work of the IASB in the area of global finance. He appreciates IASB's commitment in helping the emerging markets adopt their International Financial Reporting Standards (IFRS). IASB Chairman Hans Hoogervorst said Mohammad Faiz had always been a valued member of the IFRS community and is renowned for his expertise in Islamic Finance.

KFH #Malaysia appoints David Power as its CEO

Kuwait Finance House (KFH Malaysia) has appointed David Power as its new chief executive officer (CEO). Power, who has been Kuwait Finance House (KFHK) group chief retail and private banking officer since 2014, is now replacing Ahmed S. Al Kharji. KFH Malaysia had also appointed Nor Azzam Abdul Jalil as its deputy CEO and chief (consumer banking) effective June 1, and David Wee Kim Peng as chief operating officer, effective April 1. KFH Malaysia was established on Aug 8, 2005.

Khazanah Said to Weigh $500 Million Exchangeable #Sukuk Sale

Khazanah Nasional, the Malaysian sovereign fund, is considering selling as much as $500 million of exchangeable sukuk. The state-owned firm is currently choosing banks for the potential offering. Khazanah has been reducing stakes in listed Malaysian companies through Islamic debt offerings that can be converted into shares. The fund last sold $500 million sukuk that can be exchanged into shares of Tenaga Nasional, the country’s biggest power producer, in 2014. It is also the largest shareholder of IHH Healthcare, Asia’s biggest hospital operator. Sales of Islamic bonds in Malaysia surged 60% this year to 45.8 billion ringgit ($11.4 billion), while offerings of global sukuk climbed 19% to $28.1 billion.

#Malaysian insurers to target Europe in Islamic finance push

Malaysia’s Islamic insurers are considering a move into Europe by targeting the continent’s growing Muslim population. Amat Taap Manshor, chief of the Financial Accreditation Agency (FAA), said it may not happen right away but a lot of Islamic insurers are looking to target the Muslim middle classes in the UK, Germany and France. Manshor made the comments during the signing of a memorandum of collaboration between the FAA and the British accreditation council (BAC). The partnership hopes to offer financial services globally accredited courses in Islamic finance.

'MBSB's Islamic banking strategy will spur growth'

#Malaysia Building Society's (MBSB) move to strengthen its presence in Islamic banking is in line with majority shareholder Employees Provident Fund’s (EPF) endeavour. MBSB president Datuk Ahmad Zaini Othman said being a prominent Islamic player would help the firm’s growth plan. MBSB aspires to graduate from a non-lender into a full-fledged Islamic bank to increase its competitiveness. For the first six months ended June, MBSB’s net profit dropped 53.4% to RM97.8 million, despite an 11.6% jump in revenue to RM1.6 billion. The first-half results were below estimates, with operating income declining 1.8% as management continued to focus on corporate loans portfolio in place of the higher-yielding personal financing portfolio.

Islamic finance body IILM auctions first four-month #sukuk

#Malaysia-based International Islamic Liquidity Management Corp (IILM) has lengthened maturities in its Islamic bond programme by auctioning $500 million of four-month sukuk. Previously, the IILM has issued three-month and six-month papers, which were introduced to manage short-term funding needs. The IILM sold the four-month sukuk at a profit rate of 1.37389%, attracting 17 bids worth a combined $1.3 billion. It also sold $840 million of three-month sukuk at a profit rate of 1.24411%, attracting orders of $1.6 billion via 14 bids. The issues were bought by 11 primary dealer banks.

Re-energising Islamic finance talent

The central bank of #Malaysia plans to undertake an in-depth review of important organisations to re-energise the Islamic finance talent development landscape. Bank Negara Malaysia (BNM) Governor Datuk Muhammad Ibrahim said over the years, the central bank had established specialised institutions to enrich the talent ecosystem. These include the International Centre for Education in Islamic Finance, International Shari’ah Research Academy (ISRA), Islamic Banking and Finance Institute Malaysia (IBFIM), the Chartered Institute of Islamic Finance Professionals and the Association of Shariah Advisors in Islamic Finance Malaysia. Ibrahim noted that the new Educator’s Manual on Shariah Standards on Murabahah has several benefits for universities and stakeholders. One benefit is strategising talent deployment, while another area is the reconfiguration of academic programme to nurture talent with enhanced employability.

Bank Negara governor: Islamic finance key segment in financial system

In #Malaysia Bank Negara governor Datuk Muhammad Ibrahim said Islamic banking assets made up 27% of the total banking system, surpassing Bank Negara’s Financial Sector Masterplan. He said that there were 27 takaful players offering more than 100 financial products now compared with fewer than four Islamic banks and takaful players before year 2000. He added that the penetration rate for takaful now stood at 14.8% of the population, indicating growing acceptance of takaful products. On the launch of the Educator’s Manual on Shariah Standard Murabahah, Muhammad said that the manual was aimed to act as a comprehensive teaching guide to enhance the Islamic finance syllabus. It was jointly developed by Bank Negara in collaboration with the International Shari’ah Research Academy for Islamic Finance and IBFIM.

RHB Bank, Bank Mandiri plan Islamic funds

The race to tap an US$11.5 trillion pool of wealth held by Muslim individuals, institutions and governments is intensifying. The asset management units of Malaysia's RHB Bank and Indonesia's PT Bank Mandiri plan new Islamic funds. RHB Group Asset, which oversees 54 billion ringgit ($13.5 billion), will offer new Islamic funds in Malaysia and may make some of them available in Brunei, Indonesia, Singapore and the Middle East. The Indonesian Mandiri Manajemen’s plan for more Shariah investment vehicles comes after the company’s global Islamic stock fund drew $10 million from institutional investors when it was set up on Aug. 4. According to Malaysia International Islamic Financial Centre, the global Islamic asset management industry is forecast to grow to $77 billion by 2019 from $58 billion at the end of 2015.

Bank Negara Launches Educator's Manual On Shariah Standards

Bank Negara Malaysia (BNM) launched the Educator's Manual on Shariah standards and operational requirements in accordance with the Murabahah principle. BNM Governor Datuk Muhammad Ibrahim said the manual serves as an important material towards enhancing the quality of Islamic finance education. The manual was developed by BNM together with the International Shari'ah Research Academy for lslamic Finance (ISRA) and the Islamic Banking and Finance Institute Malaysia (IBFIM). A panel of 20 experts in various fields contributed to its content.

Rise in Islamic banking assets

In #Malaysia islamic banking assets now stand at 27% of the total banking system, surpassing the targeted 20% under Bank Negara Malaysia’s financial sector master plan. Bank Negara governor Datuk Muhammad Ibrahim said there were now 27 players offering more than 100 financial products compared with fewer than four Islamic banks and takaful players before 2000. The Educator’s Manual on Shariah and Practical Operational Standards was launched on Tuesday to enhance the quality of education. Of the 14 syariah standards that are being developed by Bank Negara, Murabahah is the first series in the educator’s manual. The manual for other contracts will be developed gradually.

Bank Mandiri to Meet Capital Requirement to Open a Full Branch in #Malaysia

Bank Mandiri, Indonesia's biggest bank by assets, is set to meet the 300 million ringgit ($74 million) capital requirement to operate as a full banking branch in Malaysia. Financial authorities from Indonesia and Malaysia signed a bilateral agreement allowing greater access for lenders from both countries to fully operate in the respective jurisdictions. Bank Mandiri will open several new offices and a string of ATMs in the country, though it will not specifically target the retail banking market in Malaysia. Mandiri had already opened one subsidiary in Malaysia called Mandiri International Remittance whose service is limited to sending money to and from Indonesia. When it has a full branch in Malaysia, it will also be able to offer credit services.

World’s First Islamic Endowment #Crowdfunding Platform Launched

Tun Abdullah Badawi, the former Prime Minister of #Malaysia, has launched the Waqf (Islamic Endowment) crowdfunding platform or WaqfWorld. The new platform was announced at the 12th World Islamic Economic Foundation Forum (WIEF) held in Jakarta last week. The platform was developed in partnership with EthisVentures.com. Founding patron, Tun Abdullah Ahmad Badawi saw the potential of Waqf Crowdfunding to develop the whole community of Muslims. WaqfWorld.org does not charge beneficiaries or users any fees. The platform is completely free during the initial phase. Operational costs will be partially borne by voluntary contributions, and other resources provided by Ethis Ventures.

MDV plans to issue RM1bil #sukuk in Q4

Technology financier Malaysia Debt Ventures Bhd (MDV) plans to raise RM1bil via sukuk in the fourth quarter of this year. The planned issuance is aimed to increase MDV's lending ability including to start-ups. CEO Datuk Md Zubir Ansori Yahaya said the new sukuk issuance would likely have a government-guarantee status. Md Zubir said the funds from the new sukuk, which will likely have a 10-15 year tenure, could be rolled out and replenished until end-2017. To-date, MDV has approved a total of RM9.8bil in financing support to 700 innovation, technology and information technology-based companies including Iris Corp, Puncak Semangat and MOL Global Inc.

SE Asia #sukuk benefit as distressed investors keep looking for yield

Inflows in debt vehicles issued by Muslim Southeast Asian nations have increased in the recent past. Malaysia and Indonesia are greatly benefiting from their current monetary easing policies, relaxed tax policies and government infrastructure spending programs. The Pan-Borneo Highway project adds to other sukuk issuances, among them a $1.3bn-offer by Sarawak Hidro, the state-owned developer of Malaysia’s biggest hydropower project, also on Borneo Island. Other infrastructure sukuk in the queue are a $440mn-issuance for the bridge connecting Peninsular Malaysia with Penang island and a $892mn-issuance for a highway network. Indonesia’s government is also enlarging the scope of sukuk-backed investment in roads and railways. However, the state budget is only capable of contributing 30%, which means that a large number of future issuances can be expected, with its uptake spurred by generous tax incentives.

#Indonesia, #Malaysia mull to establish World Sharia stock market center

Executives of Indonesian and Malaysian stock markets signed on Tuesday a Memorandum of Understanding (MoU) on the establishment of a World Sharia Stock Market Center. Signing of the document was conducted by Indonesia Stock Exchange President Director Tito Sulistio and his Malaysian counterpart Tajuddin Bin Atan. The planned center aims to develop Sharia products and portfolios for stock markets, but also to train human resources to become competent, professional and skillful persons in the industry. Global Sharia financial market was estimated to expand to USD 3.24 trillion by 2020.

KAF launches Islamic property fund in #Malaysia

Australian Islamic investment company Crescent Wealth and KAF Investment Funds have jointly launched the KAF Australian Islamic Property Fund (KAIPF). Crescent Wealth corporate strategy director Omar Khan said the fund would achieve 9-10% annual return to investors, a target driven by the appetite of Malaysian investors for Australian property. The KAIPF is Malaysia’s first fund that provides non-institutional investors direct access to Australian commercial property. The launch of KAIPF brings the total number of funds under KAF to 18, with close to RM2.3 billion worth of assets under management.

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