IslamicFinance.de

There will always be a need for takaful, however, takaful operators must work together to aggressively promote the product to the public, said Hong Leong MSIG Takaful Bhd. Chief Executive Officer Wan Mohd Fadzullah Wan Abdullah said it was imperative to educate the public that takaful was an all-weather financial planning tool. While the growth of takaful has been at a faster rate compared to conventional insurance, Wan Mohd Fadzullah said the volume was still low. Sri Lanka-based Amana Takaful Life Chief Executive Officer, Reyaz Jeffrey said one effective way of promoting takaful awareness, was through agency channels.

CIMB Islamic Bank Bhd. plans to start offering microloans in Malaysia as it seeks new growth avenues after delaying plans to create a Shariah-compliant megabank. The Malaysian lender will offer a wide range of products including microsavings, microinsurance and advisory services. While acknowledging the risks, CIMB will put in place a framework to manage defaults. The lender’s microfinance business will develop in stages starting at the higher end. Keeping in mind that prospects for growth are good, the bank is looking to launch something subject to relevant approvals by this year.

Sabana Shariah Compliant REIT (SGX: M1GU) has released its full-year earnings for 2014 recently. The REIT focuses on industrial properties scattered around Singapore which are collectively worth around S$1.26 billion as at 31 December 2014. Despite seeing gross revenue for the whole of 2014 grow by 12.1% to S$100.3 million from a year ago, the trust’s net property income (NPI) actually declined by 9.2% to S$72.95 million. The decline was partly due to a huge 200% increase in property expenses for the trust. Income available for distribution to Sabana REIT’s unitholders followed suit with a 16.4% drop to S$51.6 million.

Malaysia-based International Islamic Liquidity Management Corp (IILM) has reissued $860 million worth of three-month Islamic bonds. The auction drew 11 bids worth $1.065 billion, with the sukuk priced at a profit rate of 0.553 percent. The IILM last went to the market in November when it increased its outstanding sukuk programme, rated A-1 by Standard and Poor's, to $1.85 billion from $1.65 billion. IILM sukuk are designed to meet a shortage of highly liquid, investment-grade financial instruments which Islamic banks can trade to manage their short-term funding needs.

The planned amalgamation of CIMB Group Holdings Bhd., RHB Capital Bhd. and Malaysia Building Society Bhd. has stalled as tumbling oil prices wreak havoc on the economy. The merger would have been the nation’s largest ever M&A transaction. Central bank Governor Zeti Akhtar Aziz first raised the idea of an Islamic finance megabank more than five years ago. A license slated to be awarded in 2011 for a multinational lender to be formed between Asia and the Middle East didn’t materialize, depriving the $1.7 trillion global industry of a growth engine. Nevertheless, RHB said in a statement that the parties were still in discussions.

The first sukuk auction this year, held on Tuesday, attracted incoming bids of Rp 13.7 trillion (US$1.1 billion), representing a more than sixfold oversubscription, with the government having set an issuance target of Rp 2 trillion. In comparison, incoming bids in the previous sukuk auction on Oct. 21 barely reached Rp 3.5 trillion. In response to the high demand, the Finance Ministry then decided to upsize the issuance, selling Rp 6.8 trillion of sukuk bonds. Nevertheless, the government will first assess upcoming auction results before deciding to raise more financing from sukuk this year. The high demand could be a seasonal phenomenon due to the market’s long closure for the year-end holiday.

Universiti Islam Malaysia (UIM) and CIMB Islamic have put in place agreements for their cooperation in promoting the development of higher education through a special endowment grant to establish the Chair for Waqf and Islamic Finance Management Studies as well as the establishment of CIMB Islamic Primary Resources for Islamic Finance Special Library. UIM President, Tan Sri Prof. Dr. Mohd. Yusof Noor and Chief Executive Officer of CIMB Islamic, Badlisyah Abdul Ghani signed two documents of Memorandum of Understanding (MoU). Both initiatives aim to enhance knowledge and capacity in the field of Islamic Finance and Waqf management.

The Weekly Number's analysis of a new Pew Research Center report - a study based on methodology developed by Brian J. Grim - finds that the 12 countries identified in the study as having very high religious diversity each outpaced the world's economic growth between 2008 and 2012.

Full Report: http://www.pewforum.org/2014/04/04/global-religious-diversity/

According to a report from the Oxford Business Group Brunei's financial system is in transition to one in which Islamic banking and takaful are the dominant forms of banking and insurance. The publication of the Report says that in 2014, Brunei two Islamic banks, Perbadanan Tabung Amanah Islam Brunei and Bank Islam Brunei Darussalam had a total combined assets of $7.9 billion at the end of 2013. Takaful is also dominant in the general insurance sector with a 68 per cent share of the general insurance and takaful assets. Insurance Islam TAIB and Takaful Brunei compete in Brunei’s insurance market.

Russian lenders would like to tap Islamic finance just as the international sanctions and a low oil price brings their country to the brink of a recession. The Vnesheconombank is currently seeking advice from Middle East lenders on how to sell Islamic bonds. Banks and companies are seeking Shariah financing after the Russian currency recently weakened to an all-time low.

CEO of the Franco-American Alliance for Islamic Finance (FAAIF), Camille Paldi, explained that, while South Korea moved forward to entering the global Islamic finance market but its tax code still has to be amended to facilitate sukuk issuance. South Korea is one of the major exporters to Islamic nations and wants to become the hub of Islamic finance in East Asia.

Indonesia is ramping up financing for new President Joko Widodo’s US$439 billion (RM1.52 trillion) development programme, planning an almost fivefold increase in sales of project sukuk. The government is seeking to raise 7.14 trillion rupiah (RM196 billion) from notes that will fund construction ventures next year, compared with 1.5 trillion rupiah this year. That will help finance its estimated spending of about 5,519 trillion rupiah from next year to 2019 to build roads, railways and power plants. Indonesia is diversifying its sukuk to help boost syariah-compliant banking assets as a share of the total from 4.7 per cent, less than a fifth of Malaysia’s.

Tokio Marine Family Takaful’s newly appointed Managing Director Masaya Inagaki comes to Egypt with great expectations for the Egyptian insurance market. Inagaki said that providing a service with high quality at a reasonable price for customers is a core concept in Japanese culture, and that he is determined to apply that in Egypt. His goal is to make Tokio Marine Family Takaful the number one Takaful company in the country, he added. The company also intends to cooperate with banks in light of the new regulations issued lately by the Central Bank to activate banking insurance.

Dubai saw on Thursday the listing of the very first Islamic bond in its stock market by China's Hong Kong Special administrative region. The listing of the one-billion U.S. dollar sukuk marks Dubai as one of the top three listing venues in the world for sukuk, with a currently listed nominal value of 24.05 billion dollars. The Nasdaq Dubai competes with the sukuk hubs in Kuala Lumpur and in London. A total of 14.15 billion dollars of sukuks have been listed on Dubai's exchanges so far in 2014, up 107 percent from 6.85 billion dollars in 2013.

Despite the rapid economic and social development in countries across North Africa, the Middle East and South Asia, many companies may be wary of exploring new business opportunities in these jurisdictions due to the complexities with local laws governing foreign businesses and taxation. To respond to this, KPMG has launched a new guide – the Middle East, North Africa and South Asia (MENASA) Tax Guide 2014-15. The guide is available online, free of cost and provides a quick and easy summary of the main regulations affecting foreign companies in 19 countries across the region.

Malaysia is on track to become an international Islamic financial hub, Deputy Finance Minister Datuk Ahmad Maslan said. He said according to the Bank Negara Annual Report, Malaysia was ranked second after Saudi Arabia in Islamic banking with the total Islamic financial assets reaching RM599.5 billion, financing (RM408.1 billion) and deposits (RM472.1 billion). Ahmad said Malaysia was also ranked second after Saudi Arabia in takaful (Islamic insurance), while in the global sukuk market, Malaysia was ranked first with the United Arab Emirates trailing in the second place.

Hong Kong's government is trying to maintain the territory's momentum toward becoming an Islamic finance centre, as other potential sukuk issuers show little enthusiasm. In September, Hong Kong made the first U.S. dollar-denominated sukuk issue by an AAA-rated government, a $1 billion (£636.3 million) deal that put it on the map in the global competition among banking centres to attract Islamic finance business. Since then, however, there have been few if any signs of other sukuk issuers emerging in Hong Kong - demonstrating that however hard governments try, they may struggle to develop Islamic finance sectors if a strong economic rationale is absent.

Malaysian sukuk investors are designing strategies for 2015 that will profit as a new tax both pushes up inflation and forces central bank rate increases. Malaysian consumer-price increases will average 4 percent in 2015, the highest in seven years, as a new consumption tax starts in April. One-year interest-rate swaps climbed to a six-year high of 3.87 percent this week. Experts recommend buying Islamic bonds in the middle of the so-called yield curve, which are less exposed to losses from inflation and interest-rate moves. The government will implement a 6 percent goods and services tax as part of efforts to cut the fiscal deficit that included scrapping fuel subsidies.

The Islamic Social Finance Report 2014 is a thorough analysis of the current state of three institutions of Islamic philanthropy: zakah, sadaqah and awqaf, in seven countries of South and Southeast Asia - India, Pakistan, Bangladesh, Malaysia, Brunei, Indonesia and Singapore. The report is written by the Islamic Research and Training Institute (IRTI), an affiliate of the Islamic Development Bank Group, with research led by prominent economist Dr Mohammed Obaidullah.

Investors’ antennas had gone up in the investment markets when SBI Mutual Fund announced first official launch of a stock fund structured in line with Islamic rules (Shariah Equity Fund) in the first week of December. But this mutual fund arm of India’s largest bank, State Bank of India, took no time to defer the launch of SBI Shariah-compliant fund on the pretext of its ‘restructuring in a better and more attractive format’ is not digestible. This is a statement which makes even an ordinary mind to believe that the reason for deferring the offering could be political. Meanwhile, the two actively-managed Shariah mutual funds in the market have outperformed the Sensex recently.