IslamicFinance.de

Prime Minister Datuk Seri Najib Razak credited the 2008 global economic crisis, reportedly the worst since the Great Depression, for paving the way towards the growth of Islamic finance. He said the 2008 financial crisis, which was triggered by the bursting of a housing bubble in the United States and later contributed to the European sovereign-debt crisis, made alternative financial systems more sought after.
“Ever since the global economic crisis in 2007, 2008, I think there’s been a sharp demand for alternative economic and business models, specifically financial models that reduces the level of speculation. “Conventional model has that inherent weakness and more to kind of a genuine partnership, you share the risk and you share the profit. So Islamic finance has gained a lot of traction,” he said during a press conference at the 11th World Islamic Economic Forum in Kuala Lumpur here.

ax incentives under the 2016 Budget to promote Sustainable and Responsible Investment (SRI) Sukuk are timely as interest in these instruments are on the rise. The budget proposes that tax deduction be given for five years on issuance costs of SRI Sukuk. Maybank Islamic Bhd CEO Datuk Muzaffar Hisham noted that SRI Sukuk can also be the avenue for financial inclusion which has been strongly championed by the Islamic finance industry as a whole. RHB Islamic Bhd CEO and managing director Ibrahim Hassan said any project has to first be attractive to investors. The next stage will then be to choose the best funding option, and this is where the incentives for SRI Sukuk could make it a cost-effective option.

Crowdfunding is the latest buzzword to hit the financial industry. It is a form of alternative financing that has emerged outside the realm of the traditional financial system. To illustrate the rapid growth of the crowdfunding industry, such platforms raised US$89 million (RM369.6 million) in 2010, US$1.47 billion in 2011 and US$2.66 billion in 2012. Fast forward to 2014, and the total amount raised from crowdfunding had risen to US$15 billion. The amount is forecast to reach a massive US$34 billion this year. Crowdfunding will go a long way in helping the Islamic finance industry achieve one of its major goals, which is financial inclusion for all.

Bank Indonesia (BI) has acknowledged a new challenge for the national economy – the rise of global small and medium enterprises (SME) and their increased penetration of the local domestic market. According to BI, in order to compete, local SMEs need to be strengthened through massive financing, including through Islamic banking. The challenge is getting more serious as the economy opens up with developments like the Asean Economic Community (AEC) agreement, which will come into effect soon, leading to massive corporate foreign investments that will bring foreign SMEs to Indonesia, BI deputy governor Perry Warjiyo said.

Guidance Investments has announced the first closure of its Logistics Real Estate Investment Fund, South East Asia's first Fund focused on the logistics and industrial sectors, at USD 100 million. The first close puts the Fund in a strong position to hit its target of USD 400 million with a number of additional closings planned over the next 18 months. A Malaysian financial organization is the anchor investor of the landmark Fund. Other investors include pension funds, a supra-national institution, endowment funds and family offices from the GCC and the Middle East. The Fund has secured 3 transactions to-date, with a steady pipeline in active negotiations.

Malaysia's Royal Award for Islamic Finance commenced a global search to honour an exceptional individual in the field of Islamic finance. The Royal Award, which was inaugurated in 2010 as a biennial award, is spearheaded by Bank Negara Malaysia and the Securities Commission Malaysia in support of Malaysia as an Islamic finance marketplace. The Royal Award recognises Islamic finance visionaries who contribute significantly to the growth of the global economy and social progress of communities around the world. The closing date for nomination is 14 December 2015, and interested persons and parties can submit their nomination online via the website www.theroyalaward.com.

State investment fund Khazanah Nasional Bhd is expected to dispose off its entire 30 per cent interest in Bank Muamalat to major shareholder DRB-Hicom Bhd ahead of the proposed merger between Bank Muamalat and Malaysia Building Society Bhd (MBSB) materialises. There is no point holding on to the stake since its holdings would diminish in the merged entity. Moreover, it would not be a problem for DRB-Hicom which already owns 70 per cent interest in Bank Muamalat to purchase Khazanah’s interest. Khazanah managing director Azman Mokhtar had told reporters that it would wait for the outcome of the merger talks before deciding what to do with its stake.

The Malaysian government announced new incentives for "ethical" Islamic bonds and home loans in the 2016 budget which was delivered in parliament on Friday, as Prime Minister Najib Razak doled out populist incentives to shore up support. Najib said Malaysia would cut taxes on issuance costs of SRI sukuk, and also that sharia-compliant loan instruments would be given a 20 percent stamp duty exemption when they were used to finance home purchases. Other initiatives for the Islamic finance sector will be announced later, Najib said without elaborating. Attracting private sector firms has become more important this year because the central bank has shifted away from selling its own sukuk.

The Malaysian government announced the new incentives for "ethical" Islamic bonds in the 2016 budget which was delivered by Prime Minister Najib Razak. The government originally introduced the concept of "ethical" sukuk to finance "sustainable and responsible investment" (SRI) in 2013. Sovereign wealth fund Khazanah sold 100 million ringgit ($23.7 million) of SRI sukuk in May this year but so far there have been no other issues. In Friday's budget, Najib said Malaysia would cut taxes on issuance costs of SRI sukuk, and also that sharia-compliant loan instruments would be given a 20 percent stamp duty exemption in certain cases.

Al-Arafah Islami Bank Ltd has donated a fund worth Tk 2.0 million for development of research on constructing crop cold storages at affordable costs. Professor Dr M Monjur Hossain of Rajshahi University received the fund from the bank under its CSR activities. Chairman of Al-Arafah Islami Bank Ltd Badiur Rahman and the bank’s managing director Mohammad Habibur Rahman were present in a ceremony arranged on the occasion, according to a statement.

During last six months, the Government of the Republic of Tatarstan and the Malaysian-Russian consortium comprising UNIRAZAK, IBFIM and IBFD Fund have been working up on the possibility of preparing the feasibility study on launching Islamic banks or Islamic banking windows on the territory of the Republic of Tatarstan as a pilot region for the introduction of Islamic banking and finance in the Russian Federation. The Feasibility study includes main principles and philosophies of Islamic finance, strategies and approaches of Islamic banking and takaful implementation, market study on the potential Islamic finance consumers, considerations and prerequisite of successful implementation.

Khazanah Nasional Bhd plans to divest its entire 30% stake in Bank Muamalat Malaysia Bhd in the proposed merger between the lender and Malaysia Building Society Bhd (MBSB), sources say. That it plans to sell the entire 30% stake isn’t exactly surprising considering that Khazanah has long made it known that it considers the stake a “non-core holding”, which meant that it was open to letting it go at the right price. Another reason for the planned divestment is that Bank Negara Malaysia is not keen on the government investment arm owning major stakes in more than one bank. It already owns 29.34% in CIMB Group Holdings Bhd.

Huge outflow of foreign currency during Hajj and Eid-ul-Azha has created a crisis of cash US dollar in Bangladesh, according to market players and the regulator. The crisis has now forced the central bank to request the National Board of Revenue to withdraw tax on import of US dollar notes by local banks. Hajj and the increase in the quota for cash when travelling outside the country have drained out the cash dollar reserves this year, said Nazneen Sultana, deputy governor of Bangladesh Bank. Generally, the demand for cash dollar rises ahead of Hajj every year. Spending for Puja and rising medical tourism have created further strain on the cash dollar reserves.

The Philippines first sukuk issuance may have to wait a while despite recent pronouncements from both the private and the public sectors of plans to tap Muslim investors. Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said rules did not exist yet to allow firms or government agencies to issue debt instruments that comply with Islamic shariah laws. Last month, state-run National Home Mortgage Finance Corp. (NHMFC) said it planned to issue P2 billion in Islamic bonds in behalf of a Mindanao-based firm. NHMFC would tap government banks Land Bank of the Philippines and Development Bank of the Philippines as underwriters for the debt issuance.

R&A Telecommunication Group Bhd's major subsidiary, R&A Telecommunication Sdn Bhd (RASB), has been served a writ and a statement of claim by Maybank Islamic Bhd for defaulting a loan payment of RM30.54 million. R&A said it plans to address the issue via a regularisation plan. The filing of the writ and statement of claim is a result of the outstanding amount for various Islamic financing facilities granted by the plaintiff including murabahah cashlines and Islamic tradeliness facilities, R&A said. The financial of operational impact of the writ and statement of claim on the group will be severe, it said, adding that it will severely impact the group's cash position.

Malaysia's RHB Islamic Bank Bhd is set to launch a window in Singapore by year-end, New Straits Times reported on Monday, citing managing director and chief executive officer Ibrahim Hassan. Right now the bank is keen on Singapore and Indonesia mostly, Ibrahim was quoted as saying. Singapore because it is one of the world's most vibrant financial hubs, thus allowing RHB to tap further into capital markets and eventually Indonesia, which has the biggest Muslim population.

OCBC Al-Amin Bank Bhd has opened its first Islamic Premier Banking Centre at the newly opened branch, the 11th, at Kota Kemuning in Shah Alam. The move will cater to high net worth individuals seeking sophisticated Islamic banking products and services. With the opening of the first Islamic Premier Banking centre here in Kota Kemuning, the bank hopes to raise the bar in Islamic banking products and services for the high net worth segment. The bank's inaugural Premier Banking Centre includes a private customer discussion area, parking, safe deposit boxes and full-time premier banking tellers. Previously, the only available premier banking centres for Islamic banking were those shared with conventional banking entities.

The Islamic banks wanted for long some sort of bonds from the Bangladesh Bank (BB) to invest in to the fulfilment of the statutory liquidity ratio (SLR), as required by the regulator. But only in 2014, did the BB come out with an offer of interest-free bonds to the Islamic banks, which now control one-fourth of the deposit market. If the Islamic branches of the interest-based commercial banks are included, then the deposit share will go up. Though the Islamic banks were permitted in the middle of the 1980s, the regulatory framework to oversee this activity and the conditions they were to fulfil with respect to compliance with the regulations were not there.

Dubai Islamic Bank is exploring an entry into India as it seeks to benefit from the funding needs of one of the world’s fastest-growing economies. India presents huge opportunities as an emerging economy because of infrastructure development and growing trade with the Middle East, Chief Executive Officer Adnan Chilwan said. Indians make up nearly a quarter of the U.A.E.’s population, and India is its biggest trading partner, with combined exports and imports of $63.7 billion in 2014. The two countries plan to create a $75 billion fund to invest in Indian infrastructure, according to a joint statement at the end of Prime Minister Narendra Modi’s visit to the U.A.E. in August.

Property giant Ayala Land Inc. is looking at debuting at the Islamic financing market by issuing sukuk securities, to boost its fledgling venture into Malaysia’s property industry. ALI in April acquired 9.16 percent of Malaysian company GW Plastics Holdings Bhd. through a private placement amounting to $43 million or P1.9 billion. The Malaysian firm was later renamed MCT Bhd. ALI subsequently entered into a call option agreement with the two founders of the Malaysian firm, allowing it to increase its shares in MCT up to a maximum of 32.95 percent. To fund the entire investment, which needs to be accomplished in a month’s time, Ysmael said ALI is looking at the cheapest options available.