IslamicFinance.de

Malaysian central bank Governor Zeti Akhtar Aziz prepares to leave in April after three decades at the central bank. Whoever is chosen as her successor will have very big shoes to fill, said Wellian Wiranto, an economist at Oversea- Chinese Banking Corp. in Singapore. This is especially so since the global environment remains uncertain and Malaysia is deemed relatively vulnerable to swings in global investor sentiment -- in part due to domestic political rumblings. Zeti served as a deputy governor before she took the top job in 2000. The central bank declined to comment on whether any of the three current deputies are in the running this time.

Under the benefaction of AlHuda Center of Islamic Banking and Economics (AlHuda-CIBE) and Akhuwat, the 5th Global Islamic Microfinance forum (GIMF) was held in Kuala Lumpur, Malaysia. The forum had their focus on financial inclusion, outreach strategies of Islamic Microfinance, Innovation and sustainable operational strategies with emphasis on linkages, institutional support, cross boarder knowledge sharing with practical experiences and donor linkages for the development of the Industry. The Guest of Honor at the Forum, Dr. Azeema Adam, Governor, Maldives Monetary Authority (Central Bank), Maldives, gave detailed overview of Maldives Monetary Authority for the development of Islamic Microfinance and other Islamic Financial components.

Industrial packaging and property-based Scientex Bhd has proposed to set up a Sukuk Murabahah programme to issue up to RM500mil and it will have a tenure of up to 15 years. Its unit Scientex Quatari Sdn Bhd has lodged with the Securities Commission all the required information and relevant documents. The programme would enable Scientex Quatari the flexibility to raise funds via the issuance of Sukuk Murabahah from time to time which can be used to finance or to repay land and property investments. Other plans for the programme are to fund working capital requirements and to refinance existing bank borrowings. RHB Investment Bank Bhd is the principal adviser, lead arranger, lead manager and facility agent for the programme.

MAA Group Bhd, Solidarity Group Holdings BSC and Zurich Insurance Co Ltd (Zurich) has jointly submitted an application to Bank Negara Malaysia (BNM), for the sale of MAA Takaful Bhd stakes. In a filing with Bursa Malaysia, MAA Group said the application was for the Minister of Finance's approval, pursuant to the Islamic Financial Services Act 2013. The group did not reveal any detail of the divestment. MAA Takaful is a joint venture between MAA Group and Solidarity Company BSC (C) of Bahrain, of which MAA controlled a 75% equity stake, while the remaining 25% is controlled by Solidarity Group. BNM had on June 15 said it granted its greenlight for MAA Group to commence negotiations with Zurich for disposal of its 75% stake in its takaful insurance arm.

The world's second-largest asset manager by market value plans to attract some of the US$376 billion (S$528 billion) parked in Malaysian bank deposits by setting up global Islamic stock and bond funds next year.
Franklin Templeton Investments, which has more than US$801 billion in assets, will seek approval from the regulator to start at least two syariah-compliant funds to serve as offshoots from the three it has in Luxembourg, country head Sandeep Singh said in an interview in the Malaysian capital last week.
That would complement similar investment options available from CIMB- Principal Asset Management and RHB Islamic International Asset Management.
The new funds will widen choices for Malaysians looking to diversify after this year's 17 % plunge in the ringgit and a political scandal hurt confidence. A looming US interest rate increase has already prompted global investors to offload twice as many stocks in the South-east Asian nation as they did for all of last year as well as to cut bond holdings.

The Securities Commission Malaysia (SC) today released an updated list of Shariah-compliant securities approved by its Shariah Advisory Council (SAC). The updated list, which takes effect on 27 November 2015, features a total of 667 Shariah-compliant securities. These securities constitute 74 per cent of the total 901 listed securities on Bursa Malaysia.
The list includes thirty-five (35) newly classified Shariah-compliant securities and excludes thirty-nine (39) from the previous list issued in May 2015.
The full list, which is updated twice a year based on the companies’ latest annual audited financial statements, is now available on the SC website at www.sc.com.my. The next updated list will be made available in May 2016, based on the review of the audited financial statements released up to 31 March 2016.

Standard Chartered has appointed Rehan Shaikh as chief executive of its global Islamic banking business, it said in a statement on Wednesday.
Shaikh moves to Standard Chartered Saadiq from Dubai Islamic Bank, where he was senior vice president and business head, private sector and transaction banking. He previously worked for StanChart in Pakistan from 1998 to 2007, the statement said.
He takes over from Sohail Akbar, who was interim chief executive of the Islamic banking operation after the departure of Afaq Khan earlier this year.
StanChart remains committed to the business despite a period of hiatus across other parts of the bank as global chief executive Bill Winters moves to restore profitability. It announced plans this month to reduce costs by $2.9 billion by 2018 and cut 15,000 jobs.
"Islamic finance is an integral part of the business at Standard Chartered and we continue to see growing demand from clients in many of our markets," said Sunil Kaushal, the bank's regional chief executive for Africa and the Middle East.

The merger negotiations between Bank Muamalat and Malaysia Building Society Bhd (MBSB) is going on very well and smoothly, says Bank Muamalat Chairman Tan Sri Dr Munir Majid. He said there was no conclusion yet but the progress, thus far, was good. "We will still have to report to Bank Negara on what we have achieved by year-end, after which we will proceed to the next stage," he said at a 'Charity Free Market - Back to School' programme, organised by the bank.

Bank Negara Malaysia gave its approval to Bank Muamalat and MBSB to begin merger talks on Sept 30, a move that could pave the way for the creation of the countrys biggest standalone Islamic bank.
The central bank required the merger negotiations to be finalised within three months from the date of the approval. It was reported earlier that assuming the merger talks go through, the combined asset size of the two lenders is estimated to be over RM60 billion, higher than the RM54 billion asset size of BIMB Holdings Bhd, the holding company of Bank Islam Malaysia Bhd, Malaysias largest full-fledged Islamic bank.

The Kuala Lumpur-based Islamic Financial Services Board (IFSB) plans to develop guiding principles for capital markets and insurance, seeking to encourage regulatory consistency across new and established markets, its secretary general said.
The new guidelines from the 188-member IFSB, one of the main standard-setting bodies for Islamic finance, will complement existing ones which cover commercial banking.
A wider set of standards could assist the International Monetary Fund which plans to include Islamic finance in its surveillance work, known as the Financial Sector Assessment Program (FSAP).
"Before the FSAP there has to be a set of core principles and that really is the instrument that we feel is going to point the way and facilitate consistency across borders," IFSB secretary-general Jaseem Ahmed told Reuters.
The standards on capital markets and Islamic insurance (takaful) would complement regulatory guidance from the International Organization of Securities Commissions (IOSCO) and the International Association of Insurance Supervisors (IAIS).

The Islamic Financial Services Board (IFSB) and International Shari’ah Research Academy for Islamic Finance (ISRA) have successfully organised a Shari’ah Roundtable themed, ‘Financial Safety Nets: Striking a Balance between Shari’ah Requirements and the Soundness of the Islamic Financial System’. The Roundtable was held on 5 November 2015 in Kuala Lumpur, Malaysia.
The Roundtable aimed to provide a platform to Shari’ah scholars, legal practitioners, regulators and market players for having in-depth deliberations on key aspects of financial safety nets such as Lender of the Last Resort (LOLR) and Deposit Insurance Schemes from the Shari’ah perspective.
Over 70 delegates from nine jurisdictions among the IFSB members and non-member organisations – representatives from market players, regulatory bodies, and international agencies – Shari’ah scholars as well as academia attended this Roundtable.

SINGAPORE's nascent Islamic finance industry is finding it tough going amid volatile financial markets and depressed oil revenues.
So far this year, there has been only one sukuk, or Islamic bond, deal in a fairly brisk fixed-income market which saw 136 bond deals worth S$17.7 billion sold in the first nine months of 2015 - Malaysia's mortgage lender Cagamas Bhd sold a S$163 million sukuk in September. The lack of a natural pool of Islamic funds in secular Singapore is a major barrier to sukuk launches, according to Clifford Lee, DBS Bank head of fixed income.
"And so you try to sell in other markets which need education (leading to) higher costs; if you're a strong issuer, the conventional bond market is more than ready to meet your needs," explained Mr Lee.
Islamic finance bans interest, products with excessive uncertainty, gambling, short sales and the financing of prohibited activities considered harmful to society. The strongest indicator that it's not smooth sailing for Islamic finance players here came in September when DBS Group Holdings said it will be winding down its Islamic banking unit, which it said has been unable to achieve the necessary economies of scale.

Malaysian telecoms giant Axiata Group on November 13 issued a US$500 million Wakala Sukuk, or Islamic bond, to fund its investment into a Myanmar towers business. This is the largest-ever corporate bond issued with proceeds to be invested into a Myanmar towers business, demonstrating considerable investor confidence in the frontier market. Telecoms towers companies have led the way in terms of innovative cross-border financing into Myanmar – last year Pan Asia Majestic Eagle completed the first cross-border, non-recourse financing arrangement in the country.
A spokesperson for Axiata told The Myanmar Times yesterday that around $125 million of the bond’s proceeds will be used to fund the acquisition of a majority share in Myanmar Tower Company (MTC) under Axiata’s wholly owned subsidiary Edotco Group.
The remaining funds will be used for “general corporate purposes,” she said, though did not disclose whether or not this would include capex for MTC’s Myanmar rollout. In the bond’s prospectus the use of proceeds is listed as “general corporate purpose/other”.

There is no misappropriation of funds by the Malaysian Islamic Economic Development Foundation as the organisation is self-funded.

Deputy Minister in the Prime Minister's Department Datuk Dr Asyraf Wajdi Dusuki said the foundation "is an independent organisation and does not receive any grants from the Government" and tied to its trust deed. "Even the minister has no power in their matters", he said in his ministry's winding up speech for the 2016 Budget.
Asyraf said the foundation was not only formed to do charity work but to uplift the economic status of Muslims. He said the charity work was funded by its own systems such as ar-rahnu, which has generated an income of up to RM83mil to date. Asyraf said the foundation's total income to date was RM1.034bil.
Stressing that the funds are managed by the board of trustees, Asyraf said it has the liberty to decide as it an independent organisation. "If YaPEIM wants to invite a minister and pay for his cost, then that is its right. "The amount spent by YaPEIM for Minister in the Prime Minister's Department Datuk Seri Jamil Khir Baharom is merely 0.0063 % of their annual income," he added.

Prime Minister Najib Razak’s plan to revive Malaysia’s faltering economy is getting no help from the country’s Islamic bond market.
Yields on government 10-year sukuk, used by companies to gauge the cost of Shariah-compliant financing, are at their highest level in 18 months relative to two-year securities, according to data compiled by Bloomberg. And with the slide in Brent crude prices sapping Malaysia’s oil-export revenue against a backdrop of looming U.S. interest-rate increases, investors say longer-term borrowing won’t be getting cheaper anytime soon.
“With the U.S. expected to raise interest rates soon, Malaysia’s yield curve will remain steep next year,” said Elsie Tham, a senior fund manager at Kuala Lumpur-based Manulife Asset Management Services Bhd who oversees more than US$1 billion. “Companies will find it challenging to raise funds because of slower economic growth.”

The launch of MyETF-AGRI, the firm’s second Islamic ETF issued this year, brings the number of Shari’ah compliant ETFs in Malaysia to four and 18 in total in the world.
The global ETF market has closed in on the $3 trillion mark with Shari’ah-compliant ETFs only registering about $320 million of that total. In Malaysia, Shari’ah-compliant ETFs make up of over 30 % of the ETF market.
Malaysia does lead the pack, however, with the most Shari’ah-compliant ETF products in the world. Malaysia’s four Shari’ah-compliant ETFs account for some $75 million or 23 % of the global Shari’ah-Compliant ETF segment.
The launch of this landmark Fund represents many firsts for the industry including being the first agricultural-related Islamic ETF globally and the first sectoral Islamic ETF in the region while reinforcing Malaysia’s position as the global hub for Islamic finance and investment products.
MyETF-AGRI will look to invest in the 30 constituent companies that make up the Thomson Reuters Asia Pacific ex-Japan Islamic Agribusiness Index and in substantially the same weightings as they appear on the benchmark index.

Rapid growth in Islamic finance in recent years is pushing up demand for more experts in the field, with the Financial Accreditation Agency (FAA) identifying five key areas in which specialists are urgently needed.
However, programmes offered by local universities now are too generic and provide only a broad-based education on Islamic finance, noted FAA chief executive Dr Amat Taap Mashor in an interview with The Edge Financial Daily.
The industry and its future growth, at the very least, require experts that are specialised in compliance, risk management, governance, audit and the syariah principles guiding all these areas of expertise, he said.
“What is needed now are specialised areas of studies. Currently, if someone wants to specialise in risk management for Islamic finance, the [local] universities might offer only one class on risk management. How is the student supposed to develop the depth of knowledge needed [in] Islamic finance?
“Without a depth of knowledge in syariah principles, how can you design a syariah-compliant product?” asked Amat.

The idea of having a common currency and a global Islamic mega bank among the Muslim countries is quite remote at the moment and the focus should be on increasing intra-trade, said Prime Minister Datuk Seri Mohd Najib Razak.
Najib said while talks of having a mega global Islamic bank have been on the table for some time, the idea has not materialised.
“There have been some attempts to establish a global Islamic mega bank, but it has not materialised yet. I think there are some challenges to be put together, in a serious fashion, for a mega Islamic bank. Effort should continue,” he said at a press conference at the World Islamic Economic Forum (WIEF) in Kuala Lumpur yesterday.
Najib cited the example of the European Union’s (EU) challenges in adopting a common currency as a reason why the idea of a common currency among Muslim countries is remote.
“I think it is quite remote to have a common currency among the Muslim world. I don’t think we should imply to go down the path as EU was also at the point of breaking up at one time. It is not a feasible option but what we can do is increase the intra-trade among Muslim countries.

More than one-third of small and medium enterprises in the Middle East and North Africa are out of the purview of banking sector and there exists a funding gap of up to $13bn for SME Islamic financing in the region.
Moreover sukuk, or Islamic bonds, have gained real momentum with many non-Muslim countries raising funds through these instruments, said Malaysian Premier Dato Sri Mohamad Najib bin Tun Haji Abdul Razak at the 11th World Islamic Economic Forum (WIEF), which got underway here yesterday and attended by more than 3,000 delegates from 98 countries.
“35% of SMEs in the Mena are excluded from the formal banking sector. Indeed, there is a financing gap of up to $13bn for SME Islamic financing in this region,” Razak said, quoting a study by International Finance Corp (IFC).

A team lead by Ashurst finance partner Jamie Ng has completed the first Shari’ah compliant murabaha in Australia.

The structured financing arrangement funded by ANZ enabled a commodity transaction to finance an interest in a Melbourne property at 747 Collins St, by one of Malaysia’s largest pension funds, Tabung Haji. Ashurst acted for investment manager CIMB-TrustCapital, as well as Tabung Haji on the deal.

“Shari'ah compliant financings can be complex and involve parallel consideration of various Shari'ah structuring, legal and taxation issues to produce an outcome that is not only viable, but which is commercially and legally robust,” Ng told Australasian Lawyer.

The demand for Shari’ah compliant financing, particularly in the real estate sector, is a growing trend driven by both Australian and off shore investors, according to Ng.

“We are seeing a considerable degree of interest in Shari'ah compliant on-shore financing products, and we have fielded an influx of enquiries from offshore investment vehicles out of the Middle East and Asia wanting to know more about the structures available in Australia,” he said.

Malaysia’s Islamic finance industry will continue to grow strongly despite the withdrawal of some Islamic finance-related incentives in Budget 2016.
Chartered Institute of Islamic Finance Professionals (CIIF) president Badlisyah Abdul Ghani said the country’s Islamic financing market has grown positively over the years, attributed to the tax incentives provided for Islamic financing in previous budgets.
“(But now) the Islamic finance no longer requires that assistance to penetrate the market. (Previously) the incentives were there to create the momentum to build nderstanding and acceptance of Islamic finance,” he told a press conference after the launch of CIIF last Friday.
Badlisyah said the CIIF, a professional body for qualified practitioners in the Islamic finance industry, was established following the increasing need for a global reference point for professional talent in the industry, as it expands internationally.