IslamicFinance.de

Waqf have played an important role in the social and economic development of Muslim societies. However, many waqf properties in Indonesia suffer from abuse and neglect. Chairman of the Indonesian Waqf Board (BWI) Mohammad Nuh urged the transformation of the great potential of waqf into a real force to support the national economy. Current development of waqf is hindered by five core issues: misperception, legislation, governance, professionalism and the availability of funding. Important issues such as the provisions of a survey or census on waqf and tax incentives are lacking in the current legislation. A survey on waqf is crucial in mapping the current problems and status of waqf assets. In Indonesia waqf institutions are largely not bankable and hardly have a channel to financial institutions in financing the development of their properties. The newly appointed Indonesian waqf board may revive waqf institutions by identifying priorities, careful implementation and better administration.

Islamic institutions in Bahrain and Malaysia are developing a ratings scheme for Islamic endowments, or awqaf. The Bahrain-based Islamic International Rating Agency and the Malaysia-based International Institute of Islamic Waqf (IIIW) hope that greater accountability in the management of awqaf can help integrate them into Islamic financial markets. This could mobilize idle assets which are estimated to be valued between $100 billion and $1 trillion across the globe. Awqaf operate social projects such as hospitals, mosques and schools with donations received from Muslims. Most Awqaf do not disclose financial figures, but their underperformance is believed to be considerable since they have traditionally been run by administrators rather than investment managers.

Affin Hwang Asset Management (Affin Hwang AM) has launched its first Shariah-compliant exchange traded fund (ETF) with investment results that closely track the performance of gold prices. The new TradePlus Shariah Gold Tracker will invest a minimum of 95% of its net asset value in physical gold bars purchased from the London Bullion Market Association (LBMA). The remaining balance is invested in Islamic money market instruments and Islamic deposits for liquidity purposes. Affin Hwang AM managing director Teng Chee Wai said the fund provides an efficient entry point to gain exposure to gold by tracking the LBMA Gold Price AM index. Certified by advisory firm Amanie Advisors, each unit of the fund is physically-backed in a secure vault. Investors are provided with an option for physical redemption, for a minimum redemption unit block of 500,000 units, which is equivalent to an estimated 5kg of gold.

#Malaysia is introducing value-based intermediation (VBI) to take its Islamic finance industry to the next level of growth. As a first step, Maybank Islamic initiated the pilot launch of its rent-to-own (RTO) home scheme, called HouzKEY, targeted at properties priced under RM1 million. For now, the product is limited to the bank’s employees but should become available to the public early next year. The bank is aiming for a portfolio size of RM1 billion within the first year. According to experts, this is just the beginning of more RTO schemes to come as several other Islamic banks are expected to launch their own versions. BIMB Holdings group CEO Malkit Singh Maan says the bank is hoping to launch its RTO product for affordable homes in the first quarter of next year. Other VBI products that banks may offer in the future are green technology financing and green sukuk.

Syarikat Takaful Malaysia said it has formed a partnership with AmBank Islamic and will market its general takaful products across the country. The takaful operator said that general takaful products for motor, fire/house and personal accident will be distributed across Ambank Islamic's distribution channels. The two companies will also promote new general takaful solutions tailored to Ambank Islamic's customers. Takaful Malaysia group CEO Datuk Sri Mohamed Hassan Kamil said he was delighted to bring the group's general takaful solutions to serve the evolving needs of AmBank Islamic customers.

#Pakistan's Central Directorate of National Savings (CDNS) will set up an Islamic window Rafa National Savings to handle the transactions of sharia-compliant saving products. The government has appointed the Dubai-based sharia advisory firm Dar Al Sharia to replicate Islamic financial model for the conventional national savings certificates. Currently, the state-owned CDNS is finalising rules and governance structure for sharia-compliant products. However, the country’s savings-to-GDP ratio of 13.1% is still lowest in the region and attractive financial solutions are needed to foster savings.

Fintech is fast gaining traction in the financial services industry, as both start-ups and traditional companies proactively incorporate methods to stay in the lead. In Malaysia, the national bank itself supports the role of fintech in Malaysia’s overall finance industry. According to Bank Negara Malaysia assistant governor Marzunisham Omar, the next growth phase of Islamic finance requires the industry to ride the fintech wave. AmInvestment Bank CEO Raja Teh Maimunah Raja Abdul Aziz said Islamic banks do not have an option not to adopt fintech. The only way that Islamic banks or Islamic funds or Islamic crowdfunding can reach out is to adopt mobile technology. She revealed that AmInvestment Bank is currently experimenting with its clients to use Distributed ledger technology (DLT) for the issuances of bank guarantee.

At the 7th Global Islamic Microfinance Summit, FINTQ Managing Director Lito Villanueva noted that there is a need to push for an enabling framework for Islamic microfinance in the Philippines. In the Philippines around 5.6% of the population are practicing Islam, with a geographic concentration in the Autonomous Region in Muslim Mindanao (ARMM). Villanueva says despite its resource-rich landscape, ARMM remains largely underdeveloped with less than 70% of the adult population either unbanked or underserved. There are only 20 banks and 28 ATMs servicing almost 4 million ARMM residents. Not a single bank there is Shari'ah compliant. For its part FINTQ launched a national initiative called KasamaKA, which provides greater access to financial services, such as micro savings via agent banking, lending, micro insurance, remittances, micro investments and payments to every Filipino via a bottom-up approach.

Malayan Banking Bhd is Malaysia’s biggest lender by assets. It made higher profits for a 4th quarter in a row, which was driven by rising net interest income and growth at its Islamic banking operations.
Southeast Asia’s third-largest economy has recovered in 2017 after a challenging 2016, when growth slumped to its slowest pace since the global financial crisis in 2009. The turnaround has buoyed business for banks. Maybank posted a net profit of $496.70 million for the 3rd quarter ended September, up 13% a year ago. Its net interest income rose 8.6% while Islamic banking income increased by 24.3%. Revenue climbed 2.7%.
Earlier, CIMB Group Holdings, the number two lender of the country, reported a surprise rise in quarterly profit, helped by an improving domestic economy.
Malaysia‘s central bank has said the economy was on track to register growth of 5.2% to 5.7% this year, and may even exceed that estimate.

According to RAM Rating Services, the infrastructure growth in Sarawak is expected to be mainly funded by Malaysia's vibrant sukuk market. This year sukuk has been the preferred funding route for Sarawak-based entities, with majority from the power sector. Issuers from the port, construction, property, manufacturing, plantation, oil and gas support services, financial services and telecommunication sectors have tapped into the sukuk market as well. RAM Ratings deputy CEO Promod Dass said Malaysia's sukuk market will remain a key funding avenue for the infrastructure development in Sarawak. He applauded the Malaysian government and Securities Commission for building a solid foundation for the sukuk market.

The Financial Services Authority (OJK) recently licensed Indonesia’s first full-fledged Islamic fund management company, Paytren Asset Management (PAM). This newly established Islamic fund manager is another milestone in the development of the country’s Islamic capital market.

Over the last few years, Islamic finance has witnessed a remarkable growth at 15 to 20% Compounded Annual Growth Rate (CAGR). The industry's rapid growth undoubtedly creates a huge demand for new expertise. Like other countries, Malaysia also needs a significant boost of Islamic finance talents. Based on Bank Negara Malaysia’s Financial Sector Blueprint 2011-2020, the financial sector would require an additional 56,000 employees of whom 22,400 are specifically needed to support the Islamic sector by 2020. According to a survey by the Finance Accreditation Agency (FAA), 80% of the respondent countries believed that the available Islamic finance talents do not satisfy industry needs. Malaysia has taken the lead and established three training institutions. They are the Islamic Banking and Finance Institute Malaysia (IBFIM), the International Centre for Education in Islamic Finance (INCEIF) and the International Syariah Research Academy for Islamic Finance (ISRA).

Maybank Islamic has launched a rent-to-own (RTO) housing scheme. Named HouzKEY, the product is targeted at first-time house buyers and those who want to upgrade their homes. According to Maybank Islamic's CEO, Datuk Mohamed Rafique Merican, HouzKEY addresses the growing issue of concern for affordable home ownership. The new product will initially be made available to Maybank employees and is slated to be rolled out to the general public in early 2018. HouzKEY is the first such RTO product in the country fully enabled on a digital platform, with the application and submission of supporting documents being required to be made online. To be eligible, applicants should have a household income of at least RM5,000 and commit to a minimum rental tenure of five years. They will have the option to purchase the property after one year at a pre-agreed price.

The Shariah Advisory Board (SAB) of the Securities and Exchange Commission of Pakistan (SECP) has reviewed the proposal of Shariah-compliant trading counter. The main feature of the proposal is to convert the T+2 settlement into T+0 settlement mechanism in the Shariah-compliant securities listed on the Pakistan Stock Exchange (PSX). The Shariah Advisory Board has granted approval of the proposed trading counter. The board also reviewed and granted approval of three AAOIFI standards: Shariah Standard No 17 - Investment Sukuk, Shariah Standard No 18- Possession and Shariah Standard No 23 - Agency and the Act of an un-commissioned agent.

Standard and Poor’s (S&P) assigned a preliminary ‘B’ long-term rating to the proposed dollar-denominated sukuk issuance by Pakistan. A similar rating was assigned to the proposed benchmark sized US dollar-denominated senior unsecured sukuk, which will be issued by The Third Pakistan International Sukuk Company. The government may raise the amount with pricing in the range of 5.5 to 7% for 5 to 10 years. This is expected to provide the much needed support to Pakistan’s foreign exchange reserves. In October last year, Pakistan raised one billion dollars through issuance of 5-year sukuk at a historic low rate of 5.5%. The country floated a 10-year Eurobond of $500 million at 8.25% in 2015. These bonds had S&P rating of B-.

Pakistan is all set to generate up to $3 billion by issuing euro and sukuk bonds in the international debt market. Road shows for introducing bonds will soon start in the United Arab Emirates (UAE), Europe and United States. The government’s plans to raise loans from the international market by issuing bonds would support the foreign exchange reserves, which are under pressure due to widening trade deficit. The deficit surged by 100% to $5.013 billion in the first four months of the current fiscal year as compared to $2.259 billion of a year ago. Both Sukuk and Eurobond are expected to be offered with tenures ranging from 5 to 30 years. The S&P earlier has assigned preliminary B rating to Pakistan’s proposed dollar bond issue.

Malaysia Building Society Bhd (MBSB) is expected to start off its new banking entity in the second quarter of next year with RM42 billion in Islamic assets. The company has recently secured an Islamic banking licence by acquiring Asian Finance Bank (AFB) in a RM644.95 million deal. MBSB’s banking subsidiary will be the country’s second largest standalone Islamic lender after Bank Islam Malaysia, which had assets of RM54.25 billion as at June 30. After the merger MBSB will continue to be the listed holding entity, while AFB will be the wholly-owned subsidiary that runs the banking business. According to MBSB's CEO, Datuk Seri Ahmad Zaini Othman, the banking entity will have a similar composition, with 70% in retail banking and 30% in corporate banking. Also, it will solidify its presence in the property, housing and infrastructure segments.

The world’s financial landscape has changed fundamentally over the last few years. Islamic equity funds experienced strong growth during the second half of the 1990s. In 1996, there were 29 Islamic funds, valued at US$800 million. Nowadays, Indonesia plans to become a leading Islamic finance hub. The Jakarta Islamic Index has 30 sharia shares accounting for Rp 2.1 quadrillion with 32.7% of market capitalization.

Global sukuk issuance will likely reach US$85 billion-US$90 billion (RM356-377 billion) in 2017, driven by stronger issuance from Saudi Arabia, Malaysia, Qatar, Bahrain and Oman. RAM Rating Services said Saudi Arabia and its GCC neighbours had raised sukuk worth US$42 billion at end-October, which was a 215.3% increase from a year ago. Malaysia recorded RM138.7 billion worth of sukuk issuance as at end-October, which exceeded RAM’s full-year projection. Bank Negara Malaysia’s decision to maintain overnight policy rate at 3.0% could spur more sukuk issuance before the end of the year after hinting that monetary policy might be tightened next year.

Brunei set up the National Financial Literacy Council for creating a prudent and saving-oriented culture. A study made in 2015 revealed that in Brunei 34% of the household respondents do not have a household budget, as for individual respondents 49% do not actively save, while 24% need credit to finance their everyday needs. The National Financial Literacy Council was established with the aim of ensuring that all Bruneians have access to well-suited financial products, independent and credible information and advice. Crown Prince Haji Al-Muhtadee Billah said the establishment of this council was timely and helpful in raising the quality of life of the people, specifically in terms of financial well-being.