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Malaysia has great potential to broaden its market share and strengthen its leadership in Islamic finance. According to the latest report by the Malaysia International Islamic Financial Centre, Asia’s Islamic financial assets amounted to US$528.7 billion (RM2.05 trillion), or 26% of the world’s Shariah-compliant financial assets as at end-2017. Malaysia continued to be the main driver for both sukuk outstanding and issuance for the year, with a market share of 51% and 36.2% respectively as at end-2017. The country also led in the Islamic wealth management industry with US$28.3 billion (36.5% global share). It also ranked first in terms of number of funds with a total of 394 funds and 27.9% global share, followed by Pakistan with 147 funds and Indonesia with 143. In the banking sector, Malaysia ranked third globally after Iran and Saudi Arabia with a total Islamic banking assets of US$204.4 billion as at end-2017.

Agrobank has appointed Syed Alwi Mohamed Sultan as its new president and CEO. The appointment has received approval from Bank Negara Malaysia and the Ministry of Finance. Previously, he had held several senior management positions with various banks such as Bank Muamalat Malaysia, BNP Paribas, Standard Chartered Saadiq, The Islamic Bank of Asia and HL Bank Singapore. Syed Alwi has a bachelor’s degree in Accounting and a first-class master of business administration in Islamic finance from the International Islamic University of Malaysia. Agrobank became a full-fledged Islamic bank in 2015. It provides Shariah-compliant banking products and funding to cater for the halal food industry and agriculture-related activities.

Public Mutual has on Tuesday launched an e-series fund called Public e-Islamic Flexi Allocation Fund (PeIFAF). The fund's objective is to achieve capital growth over the medium to long-term by investing up to 98% of its net asset value in Shariah-compliant equities or sukuk. Public Mutual CEO Yeoh Kim Hong said PeIFAF has a flexible fund mandate that enables the fund managers to capitalise on investment opportunities. The minimum initial and additional investment amount is only RM100 and the sales charge is up to 3.75%. The initial issue price for PeIFAF is 25 sen per unit during the 21-day initial offer period from Tuesday to April 23. To coincide with the launch of this fund, it is holding a campaign during the initial offer period. The campaign offers 203 prizes. The grand prize is RM3,000 of money market fund units.

Malaysia Building Society Bhd (MBSB) has rebranded its recently acquired Asian Finance Bank Bhd (AFB) as MBSB Bank. MBSB Bank's CEO Datuk Seri Ahmad Zaini Othman said the bank would provide Shariah-compliant products and services, such as consumer banking, business banking and trade financing. He added that the bank would also focus on developing its financial technology capabilities to attract more customers. The lender has already embarked on several digitisation initiatives, including big data projects started in June 2017. MBSB Bank plans to launch its fintech capabilities for wealth management and trade facilities by the third quarter of this year, and to have Internet banking facilities ready by end-2018. MBSB finalised its acquisition of AFB in February for RM644.95 million with the latter becoming a wholly owned subsidiary of MBSB. With the transfer of all MBSB’s Shariah-compliant assets and liabilities to AFB, MBSB Bank is the second-largest full-fledged Islamic bank in the country.

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Purpose of this call is to invite private and public sector to share their good practices on
•Islamic finance funded impact investments and dedicated vehicles
•impact investment vehicles in the OIC region
•Islamic social finance vehicles

for the mapping study that is being carried out under the Global Islamic Finance and Impact Investing Platform (GIFIIP). The selected cases will be analysed by the research team managed by IICPSD and IRTI. Subsequently the good practices, information on vehicles and further findings will be published as part of the study.

Investment Focus

Bank Negara Malaysia (BNM) plans to revise its takaful operational framework. Governor Tan Sri Muhammad Ibrahim said the revised framework would be published for consultation before the middle of the year. He said it would strengthen the governance of takaful operators, including how takaful funds are managed, to further safeguard the interest of takaful participants. On the objective of 25% family takaful penetration by 2020, he said it was ambitious, but achievable. Muhammad noted that the industry was lagging in terms of migration to e-payments. He added that another area that is wide open for innovation was the integration of takaful with elements of waqf, sadaqah and zakat.

Indonesia issued a 5-year US$1.25 billion green Wakala Sukuk as the first issuance under its recently established Green Bond and Green Sukuk Framework. Norton Rose Fulbright has advised Abu Dhabi Islamic Bank, Citigroup, CIMB, Dubai Islamic Bank and HSBC, acting as joint lead managers and joint bookrunners. The Republic intends to use the proceeds exclusively to finance green projects, including renewable energy, sustainable transport, waste management, climate-related projects and green buildings. Alongside the 5-year green Sukuk, Norton Rose Fulbright also acted for the joint lead managers and joint bookrunners in the Republic’s 10-year US$1.75 billion Wakala Sukuk issuance.

Bank Rakyat has recently launched its second edition of the Islamic Banker Programme which aims to produce future leaders for the banking industry. The programme recently received recognition from the 26th World HRD Congress 2018 by winning three top awards: Innovation in Recruitment, Best Apprenticeship and Usage of Digital Media in Recruitment. Throughout the training period, each trainee will be assigned to a mentor from the senior management team. Initially, each trainee will go through a two-month training program before they undergo job rotation across the key business units within the Bank for 10 months. Then, they will be placed in a particular sector based on their respective strengths and interests for a year. At the end, their performance will be assessed before being offered permanent placement at Bank Rakyat. At the end of the two year internship, participants will also be awarded with the Chartered Professional in Islamic Finance (CPIF) certificate from the Chartered Institute of Islamic Finance Professionals (CIIF).

The Indonesian government sold 8.44 trillion rupiah ($613.19 million) of sukuk bonds to local retail investors. The sales were slightly higher than the initially-allotted 8.11 trillion rupiah. The tradeable sukuk carry a fixed annual rate of 5.9%, similar to the average rate offered by Islamic banks for 12-month and longer time deposits. The sukuk was sold to a total of 17,922 Indonesians this year. Since the retail sukuk was first launched in 2009, the government has sold a total of 144.78 trillion rupiah of the debt to nearly 250,000 people.

Religion-based philanthropy entails sharing and assistance activities conducted without discrimination between ethnicity, religion or race. In Indonesia it is increasingly common for philanthropic agencies to collaborate and develop interfaith partnerships to carry out humanitarian missions in conflict and disaster areas. For example, The Tzu Chi Buddhist Foundation assists the community of pesantren and builds housing for Muara Angke residents, who are predominantly Muslim. The catholic Karina Foundation develops emergency response and disaster risk reduction programs. Islamic Philanthropy Institutions such as Dompet Dhuafa, Lazismu, Rumah Zakat, PKPU, Aksi Cepat Tanggap, Wahid Institute, also work together and readily help non-Muslim communities. Interfaith philanthropy is especially important in the current environment in which the unity of Indonesia is under attack by religious separatists. Many institutions collaborate on running programs. Through collaboration, suspicion can be minimized and the programs can be run optimally.

ICB Islamic Bank has sought restructuring of the repayment package for depositors of its predecessor Oriental Bank on grounds of a liquidity crunch. The bank still has to return Tk 444.34 crore of now-defunct Oriental Bank's clients, which it was supposed to do by November 2021. ICB Islamic was supposed to refund all clients that had deposits of up to Tk 20 lakh with the Oriental Bank within the next three years. Once returning those clients' funds, ICB Islamic would have to move to refunding those who had deposits of up to Tk 50 lakh. Their claims will have to be settled over the next one and a half years. ICB Islamic has so far repaid Tk 1,521 crore of its predecessor's deposits of Tk 1,946 crore.

Muamalat Venture, a wholly owned subsidiary of Bank Muamalat Malaysia had a second listing on Malaysia's Investment Account Platform. The investment book was oversubscribed by more than 1.05 times on the first day of its listing. Project Ar-Rahn 2 is an investment in a share of aggregate capital contribution of Muamalat Venture under the musharakah joint venture with Permodalan Kelantan, in selected branches of Islamic pawn broking (Ar-Rahn) business activities. The investment of RM20 million in Project Ar-Rahn 2 is for a tenure of one year and expected to generate a return of 7% per annum for investors.

A Memorandum of Understanding (MoU) was signed by Malaysia’s Applied Research and Development Centre MIMOS and the International Centre for Education in Islamic Finance (INCEIF), to develop a blueprint for an Islamic finance-based investment technology platform. The MOU was signed by INCEIF President Dato' Dr Azmi Omar and MIMOS President Ahmad Rizan Ibrahim. Under the MOU, the two institutions will collaborate in research and development, in particular the areas of Big Data Analytics, Deep Learning and Fintech. Further, INCEIF and MIMOS may also cooperate in field-testing, technology transfer and commercialisation of technological products.

#Malaysia hosted a conference in which experts considered the relevance of waqf and how it could be engaged to alleviate poverty. In his keynote address, Sultan of Perak Sultan Nazrin Muizzuddin Shah explained that the concept of waqf preceded trusts and endowments. A donor endows a waqf with an asset and the waqf institution then spends its revenue in perpetuity on the fulfilment of public needs. The law governing waqf was borrowed by the English following the Crusades in the Holy Land. For example, Merton College at Oxford University was established with a financial endowment in 1264. This endowment has facilitated centuries of scholarship, learning and teaching. Sultan Nazrin highlighted the need for a better system for the governance of waqf. He believes that digital connectivity will open up new opportunities for innovative business models, as well as research and development-related investments, to unlock the full potential of waqf assets.

#Indonesia became the first Asian sovereign to sell green sukuk, raising $1.25 billion via a five-year deal, alongside a $1.75 billion 10-year sukuk. Proceeds will be used on eligible projects, ranging from renewable energy to waste management. Indonesia’s sukuk was based on an agency contract known as wakala and also incorporated a green framework assessed by the Centre for International Climate and Environmental Research (CICERO). Such a convergence of investment principles could widen the appeal of sukuk beyond Asia and the Middle East to include ethical investors in Western countries. More transactions might be needed to fully test the appetite of green investors for sukuk, as Indonesia’s green sukuk saw stronger takeup from regional investors.

Indonesian P2P firm Investree expects to close a Series B funding round in two to three months to finance the company’s marketing activities and expansion. Investree chairman Adrian Gunadi said that the investment would not only boost the company’s core business but also its new sharia product and online government securities business. The firm is hoping to capitalize on its large lender base, made up predominantly of the country’s millennials aged 21-35. Since its inception in 2016, Investree facilitated Rp 623 billion in loans. From the Rp 623 billion, around Rp 500 billion has been disbursed and Rp 367 billion has been paid back. So there’s around Rp 120 billion in outstanding loans. Investree plans to offer a new asset class on its platform, that of retail online government securities. The initiative will start either in April or May, they are currently waiting for confirmation from the Finance Ministry.

Indonesia raised $1.25bn as the world’s first sovereign green sukuk. The country's latest sukuk was priced at a yield of 3.75% and has a tenure of 5 years. Non-Sovereign Malaysian organisations have previously issued green sukuk, most recently with two issuances in 2017. Indonesia also raised US$1.75 billion via a 10-year sukuk sold at the same time as the green issuance. The non-green sukuk was sold at a coupon rate of 4.4%. Globally, $155.5 billion of green bonds were sold last year, according to the London-based Climate Bonds Initiative.

Indonesia, the world's largest exporter of coal, has become the first country in the world to sell a sovereign green sukuk bond. The country has borrowed $1.25bn with the issuance of a five-year sukuk. Luky Alfirman, head of the Budget Financing at Indonesia's Finance Ministry said the proceeds would be used to finance projects such as renewable energy, green tourism and waste management. The government also said it would take up more projects to address climate change mitigation and adaptation, which requires alternative financing. CIMB, Citigroup, Dubai Islamic Bank PJSC , HSBC and Abu Dhabi Islamic Bank were bookrunners on the deal.

Pioneering blockchain-based Islamic bank HADA DBank announced that its Hada coin will be listed on cryptocurrency trading platform F1Cryptos, following their token sale. F1Cryptos will be the first exchange to list the Hada Coin token. According to F1Cryptos partner Michael Buchbinder, HADA DBank's business model brings value and just interaction with the customer. The bank plans on engaging the age demographic between 20-30 that seems to be embracing blockchain and cryptocurrencies. After Discovering HADA DBank it was clear to the F1Cryptos team that the two companies shared the same vision. With F1Cryptos previous history as an FX brokerage, they are experienced to access the potential of HADA DBank. Hada DBank determines to fuse blockchain technology with Islamic Banking Module. The Pre-ICO is currently live, with an ongoing flash sale for the first one million tokens going up for sale at 1ETH = 4,000 HADACoin.

#Malaysia-based HADA Dbank is set to bring Islamic banking principles to the blockchain ecosystem. Hada DBank follows Islamic Financial Laws prohibiting risky ventures, having a maximum Liability to Asset ratio of 1:3. The bank allows users to have access to a full-feature personal banking service. This includes a free encrypted account and e-Wallet, a zero-fee charge on cryptocurrency exchanges and access to the financial advisor robot HUDA. Hada DBank will soon host a token generation event to raise funds for the full development of products and services. The native HADACoin will be a digital asset based on the Ethereum platform. HADACoin will be sold during the pre-sale at an increased rate adjusting to supply, starting at a rate of 1 ETH = 2000 for the first 10 million tokens, gradually reducing every 10 million tokens. Once the Hada DBank platform launches, HADACoin will be trading on the F1Cryptos exchange the first of many exchange platform partnerships in the pipeline.