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According to Moody's Investors Service, the growth of shariah-compliant investment accounts at Malaysian banks will remain strong over the next three to five years. Moody's Vice President, Simon Chen, said Malaysian banks have strong incentives to promote the growth of such investment accounts because they provide capital benefits. He added that concerns also exist over the untested state of loss-sharing mechanisms in the accounts. The robust growth of shariah-compliant investment accounts in Malaysia began in July 2015 following the implementation of the Islamic Financial Services Act 2013. By February 2017, these accounts had grown to RM74.2 billion, or 13%, of total banking system liabilities. On the question of risk, Moody's said that a significant loss event to test the resilience of this regime has yet to occur.

Mizuho Bank #Malaysia opened a $300 million credit facility to the Islamic Corporation for the Development of the Private Sector (ICD). The two-year deal will finance projects in the member countries of ICD. According to ICD Chief Executive Khaled Al Aboodi, the $300 million accounts for 24% of funding programs earmarked by ICD in 2017. He added that funds could be disbursed for hospitals in Gambia, manufacturing facilities in Tajikistan or trade finance in Maldives. For Mizuho Bank Malaysia, the deal marks its first cross-border bilateral Islamic facility based on the concept of Murabahah. The bank's deputy CEO, Shinichi Nishiyama, said lending to ICD will expose Mizuho Bank Malaysia indirectly to the markets in Islamic countries and they are looking forward to a long-term partnership with ICD.

Maybank Islamic is turning to its home markets for growth, in particularly Indonesia where it manages $2 billion worth of assets and is aiming to compete with domestic Islamic banks. According to CEO Mohamed Rafique Merican, the bank could grow beyond its core markets of Malaysia, Singapore and Indonesia, but expansion in other markets would be opportunistic. Indonesia remains a key market for the bank, after Malaysia which accounts for 90% of the bank's business. As part of the ASEAN banking integration framework (ABIF), Indonesia and Malaysia have agreed in August to give their banks greater access to each other's markets. The move would give Malaysia's Islamic banks a potential lead to tap into the world's biggest Muslim-majority country, and one that continues to restrict to foreign lenders.

Shahid Hossain joined Social Islami Bank (SIBL) as chief executive officer. The bank also promoted Tarik Morshed as its additional managing director. Prior to joining SIBL, Hossain had been serving Southeast Bank as managing director. He started his banking career as a probationary officer with National Bank in 1983. He completed his MSS in political science from Dhaka University in 1980. Prior to the promotion, Tarik Morshed had been serving SIBL as deputy managing director. He has been with SIBL since its inception in 1995 and holds a master's degree in management from Rajshahi University.

Islamic financial products have evolved from simple and straightforward structures to highly sophisticated instruments. Tawarruq, popularly known as commodity murabahah, has become a new phenomenon in the Malaysian Islamic banking system. This is particularly after the issuance of a 2012 Bank Negara Malaysia circular on bay’ inah (sale and buy-back), which substantially tightens the syariah requirements. Since then, the Malaysian Islamic banking system has started to actively use tawarruq as an alternative to bay’ inah. Nevertheless, its extensive use has raised several questions. The International Islamic Fiqh Academy held in the United Arab Emirates in 2009 resolved that the modern practice of tawarruq is impermissible. As such, the Malaysian regulators and syariah committees have to put certain parameters and limitations in the use of tawarruq.

A #Kenyan college yesterday signed a three-year memorandum of Understanding (MoU) with Malaysian training university to develop curriculum on Islamic Finance. Coast International College (CIC) also signed a letter of collaboration with the Inceif, the global University for Islamic Finance owned by the Central Bank of Malaysia. The MoU was signed by college principal Loise Gichuki, Inceif president and chief executive Daud Vicary Abdullah. The programme will offer Diploma in Islamic finance. The Malaysia University will provide curriculum, course materials and lectures related to Islamic jurisprudence, Islamic Law of contract, financial accounting and fundamentals of Islamic Banking.

Maybank Islamic is turning to its home markets for growth, in particularly Indonesia where it manages $2 billion worth of assets and is aiming to compete with domestic Islamic banks. According to CEO Mohamed Rafique Merican, the bank could grow beyond its core markets of Malaysia, Singapore and Indonesia, but expansion in other markets would be opportunistic. Indonesia remains a key market for the bank, after Malaysia which accounts for 90% of the bank's business. As part of the ASEAN banking integration framework (ABIF), Indonesia and Malaysia have agreed in August to give their banks greater access to each other's markets. The move would give Malaysia's Islamic banks a potential lead to tap into the world's biggest Muslim-majority country, and one that continues to restrict to foreign lenders.

According to panellists speaking at the Finnovasia 2017 Conference, Shariah contracts' greater regulatory complexity can be eased by fintech solutions. Raja Teh Maimunah, CEO of Aminvestment Bank in Kuala Lumpur, stressed that the complex nature of Sharia instruments requires bankers take a different approach. Raja and her bank had wanted to digitise their banking transaction processes by introducing a new type of contract for current and savings accounts. It was eventually addressed with a fintech solution developed by one of her staff. Dato’ Yasmin Mahmood, CEO of Malaysia Digital Economy Corporation, pointed out that the growth of Malaysia’s digital economy currently stands at 17.8% of the country’s total GDP of $296.3 billion, and is expected to meet or exceed the 18.2% target set by the government for 2020.

Maybank Islamic hopes to attract RM2 billion (USD453 million) in deposits – within a year – by launching two new financial products. The products are Foreign Currency Mudharabah-i (FCM-i) and the Profit Now Account-i (PNA-i). FCM-i is a short-term Islamic foreign currency term deposit account based on the principle of Mudharabah. Dividends on FCM-i are based on an agreed profit-sharing ratio which is agreed up-front. The actual dividend will then be calculated on this ratio and the amount payable will be known upon maturity of the investment. The minimum deposit for individual customer is equivalent to USD5,000; tenures range from one to 12 months.

Takaful Ikhlas aims to introduce its online platform for basic term life insurance to encourage youths to obtain insurance coverage. Senior Vice-President, Wan Rosli Shaharuddin Wan Yaacob is optimistic the online platform will attract youths as they will be able to compare the products' features, policies, as well as pricing via the platform. He said Malaysians below 35 years old currently constituted the largest group in the country who have yet to be covered by any insurance company. According to Bank Negara Malaysia (BNM) Financial Stability and Payments Report 2016, Malaysia's overall insurance penetration remained flat, within the range of 54% to 56% over the last five years. The central bank had earlier set the penetration rate target at 75% by 2020. It specifies that standalone protection products must be available through direct channels from Jan 1, 2017, followed by critical illness and medical and health insurance/takaful products by Jan 1, 2018.

Maybank Islamic launched a new account for its Islamic private wealth clientele. The new feature will provide high net worth (HNW) clients with comprehensive private banking services. The bank explained that the enhanced platform will allow HNW clients to view and monitor their various Islamic investment portfolios holistically, in one single statement. The recent Asia Pacific Wealth Report by Capgemini indicates that the greatest enthusiasm for putting portfolios to work for social gain comes from high net worth individuals in the emerging markets of Indonesia, followed closely by Malaysia. Maybank's Group Head of Community Financial Services, Datuk Lim Hong Tat, said that Maybank Islamic provides an avenue for HNW individuals to earn returns in a more socially-responsible manner.

Indonesia's finance minister Sri Mulyani Indrawati announced the government plans to issue a global sukuk this week. Indrawati did not give further details on the planned issuance. An official has previously said the government will issue global sukuk in the first half of 2017. According to Thomson Reuters, Indonesia has given initial yield guidance of 3.75% for a five-year tranche of the U.S.-dollar sukuk and 4.5% for 10-year tranche.

Asian Finance Bank (AFB) has appointed Khalid Mahmood Bhaimia as its new chief executive officer effective from March 21, 2017. Bhaimia has over 20 years of experience in the global Islamic banking industry. He previously served as the CEO of Unicorn International Islamic Bank and RHB Islamic Bank as well as Hong Leong Islamic Bank’s managing director. AFP is a full-fledged Islamic bank and is backed by a consortium of shareholders comprising Middle Eastern financial institutions.

Malaysia’s proximity in the ASEAN region and its mix of urban, suburban and rural population makes it a suitable environment for testing and launching FinTech solutions for the global Islamic Finance market. Datuk Yasmin Mohamood, CEO of Malaysia Digital Economy Corp (MDEC), has opened the country’s doors for FinTech startups and companies. Yasmin was speaking at the Finnovasia 2017 Conference in Kuala Lampur and claimed Malaysia as a viable test-bed for FinTech companies. He added that an organized FinTech ecosystem will be developed with the support of Bank Negara Malaysia and the country’s Securities Commission. In August last year, Bitspark partnered Malaysia’s Vitaxel to bring remittance solutions over the bitcoin blockchain. Later in December, Malaysian non-profit Blockchain Embassy Asia established a steering committee toward educating organizations about blockchain technology.

UEM Edgenta will issue Islamic commercial papers (ICP programme) and Islamic medium-term notes (IMTN) with a combined aggregate up to RM1bil in nominal value and a sub-limit of RM300mil.
UEM Edgenta said the proceeds raised from the sukuk programmes would be utilised for its syariah-compliant general corporate purposes. The ICP programme has been assigned a preliminary rating of MARC-1/S and the IMTN programme has been assigned a preliminary rating of AA-IS by Malaysian Rating Corp. The company added that it had lodged the required information and relevant documents relating to the proposed sukuk programmes to the Securities Commission.

Islamic Bank of Thailand plans to set up an asset management team to handle its Bt48 billion in non-performing loans. The bank also plans to invite 35 financial firms to invest in the bank to restructure its business and boost its new loans, which stand at Bt30 billion. Chairman Chaiwat Utaiwan said Islamic Bank aimed to sell its 74.5% stake in the bank, the remaining stake is owned by Finance Ministry. According to its restructure plan, the bank needs new capital of Bt20 billion in order to adhere to Bank of Thailand standards. The bank has outstanding loan worth Bt95 billion.

The #Malaysian Securities Commission (SC) released its SC 2016 Annual Report. The report states that the Malaysian capital market remains resilient and sustainable, growing in an orderly trajectory, attracting sound investor interest. According to SC chairman Tan Sri Ranjit Ajit Singh, the outlook for the Malaysian capital market in 2017 is positive. The SC is in capacity-boosting mode armed with several initiatives. These include launching the new Malaysian Code of Corporate Governance, the approval of RM5.95 million by the nascent Capital Market Development Fund aimed at encouraging new entrants into the industry, and the establishment of an Institute for Capital Market Research in 2017. This complements the initiatives by the SC in 2015 and last year, including the introduction of the first Equity Crowdfunding Framework in the region and a peer-to-peer financing framework.

Bank Indonesia (BI) announced recently its plan to issue waqf based bonds as a social welfare mechanism. The Indonesian Muslim Intellectual Association (ICMI) will also launch the very first waqf venture bank this June. Waqf may become the new trend in Islamic banking for several reasons. Waqf funds can be utilized for equity-based financing, a financial structure considered ideal for Islamic values, but undervalued in the current Islamic banking and finance architecture. The nature of longterm waqf funds for investment will make a good source of funding for venture capital and private equity. The amount of money potentially generated under a waqf system is indeed huge. The value of waqf land is estimated to reach Rp 300 trillion. This highlights the need for a professional and well-governed management to create a waqf bank that functions well and is successfully implemented.

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.

RHB Islamic Bank is expecting to disburse at least RM50 million this year to facilitate the development of entrepreneurs. The fund is part of the Teras Fund programme provided via the Bumiputera Agenda Steering Unit (Teraju). According to RHB Islamic Bank's CEO Datuk Adissadikin Ali, the collaboration with Teraju had so far disbursed RM200 million as of 2016 from the total fund raised of RM400 million. He said the original fund for the programme was RM80 million, but RHB Islamic managed to raise the fund by leveraging on resources to RM400 million.