IslamicFinance.de

A group of six Malaysian Islamic banks has launched a sharia-compliant investment platform that could shift the role of Islamic lenders to investment intermediaries from credit providers currently. The Investment Account Platform (IAP) will serve as a central marketplace to finance small and medium-sized businesses, with the Malaysian government backing the scheme with an initial RM150 million in funds. Chief executive Mohamed Izam Mohamed Yusof said they were looking at raising between RM200 million and RM300 million (US$47.53 million to US$71.29 million) through the IAP over the next two to three years. Its maiden project could be listed as early as next month, with future plans including listings in other currencies, he added.

Unsatisfied with 1Malaysia Development Berhad's (1MDB) explanation, PKR lawmaker Rafizi Ramli today challenged the company to disclose details on how it used the sukuk funds. He said 1MDB last night failed to address his main query, which was what had happened to the RM1.6 billion from the RM2.4 billion sukuk issued through Bandar Malaysia Sdn Bhd in 2014. 1MDB yesterday denied Rafizi's remarks and insisted the RM2.4 billion sukuk had been utilised in accordance with its agreement. 1MDB reportedly said the sukuk had been used to partly finance the relocation of the air force base at Sungai Besi, pre-fund the fees and expenses of the sukuk programme, fund the requisite financing reserve accounts, and fund the working capital requirements of 1MDB Real Estate Sdn Bhd (now known as TRX City Sdn Bhd).

Khazanah Nasional Berhad has mandated Barclays, CIMB, Morgan Stanley and UBS to arrange a series of investor meetings for a US dollar sukuk offering. The roadshow will take place in Dubai on Sunday, Hong Kong on Monday, Singapore on Tuesday and London on Wednesday. The Reg S offering will be unrated and issued off the Multi-currency Islamic Securities Issuance Programme established by Danga Capital Berhad. Danga Capital is a special purpose financing vehicle initiated by Khazanah, the sovereign wealth fund of the government of Malaysia.

About RM1.6 million of the RM2.4 billion sukuk 1Malaysia Development Bhd (1MDB)? issued through Bandar Malaysia Sdn Bhd in 2014 remains unaccounted for, says PKR's Rafizi Ramli. The RM2.4 billion sukuk was issued to pay for the relocation of the army base on Bandar Malaysia land, said Rafizi. Yet the state investment arm announced that the consortium purchasing 60% equity in Bandar Malaysia Sdn Bhd may assume 60% of the remaining RM1.9 billion cost of relocation of the Pangkalan Udara Kuala Lumpur (PUKL) relocation?. The total relocation cost of PUKL had actually been RM2.7 billion, so only RM800 million of the sukuk had been used so far to pay for PUKL's relocation costs, said Rafizi.

Malaysian companies building railways and power plants under Prime Minister Datuk Seri Najib Razak’s US$444 billion (RM2 trillion) development programme will help revive sukuk sales from the slowest quarter since 2010. Corporate issuance could rise to as much as RM60 billion for the full year, said Mohd Effendi Abdullah, head of Islamic markets at Kuala Lumpur-based AmInvestment Bank. More Shariah-compliant bond sales are likely to be announced once the United States goes ahead with an expected interest-rate increase, removing an uncertainty that’s stifled issuance, said Effendi.

SapuraKencana Petroleum Bhd's share price rose this morning following its plan to launch a US$200 million (RM848.18 million) sukuk next week. The company's share gained two sen to RM1.79, as at 10.27 am, with 3.27 million shares changing hands. The first tranche of the sukuk, structured based on the Shariah principle of Commodity Murabahah, is scheduled to be launched on September 8, 2015. This is the first sukuk under the new Securities Commission's guidelines on Unlisted Capital Market Products under the lodge and launch framework effective from June 15, 2015.

Dollar sukuk returns are turning into losses in Asia’s biggest Islamic finance markets as confidence in government leaders sours amid a regional sell off. In Indonesia, President Joko Widodo reshuffled his Cabinet last week as he looks set to miss his 2014 election pledge to boost annual growth to 7% and as infrastructure spending falls short. Malaysian Prime Minister Datuk Seri Najib Razak is embroiled in controversy after a probe revealed he received RM2.6 billion in donations from the Middle East. He denied taking money for personal gain and has also reshuffled the Cabinet, including removing his deputy.

The resignation of Badlisyah Abdul Ghani, the chief executive officer of CIMB Group Holdings Bhd’s Islamic unit, added to clouds over Malaysia’s sukuk market, amid a probe into a state investment company and a renewed global commodity rout. He said that he resigned “to explore new opportunities”, declining to comment on speculation the decision was related to the investigation of 1Malaysia Development Bhd. CIMB, Malaysia’s lead Islamic bond underwriter for the past eight years, will now have to find and groom a replacement just as sukuk sales in the world’s biggest market dropped 36% in 2015 to a five-year low. Political uncertainty caused by the probes, falling commodity prices and a looming US interest-rate increase may deter issuers.

A special task force comprising the Attorney-General's Chambers, police, anti-corruption authorities and Bank Negara is now probing the claim made by The Wall Street Journal (WSJ) on July 2. WSJ has posted documents on the money flow into Najib's accounts on the Internet to support its report. WSJ's report centres on some US$700 million (RM2.67 billion) funnelled into two of Najib's accounts at AmBank in Kuala Lumpur. The money was transferred in five separate deposits from two originating points. According to WSJ, the largest portion of the money – US$681 million – was transferred to Najib's accounts in March 2013, ahead of the May general election (GE13). Najib has denied taking funds for personal gain.

Islamic finance has reached only 38 million out of two billion million Muslims (Ernst & Young) in 40 years, and it’s more about the bankable and those with collateral. In taking a step back and looking at the landscape, there was a light-bulb moment few years ago that something was missing in action (MIA). The original vision of the founders of Islamic banking was about financial inclusion of the non-bankable. So, the question becomes, what has Islamic banking and finance done for the poor versus the bankable, and what has it done for young entrepreneurs? The vision of Zilzar is about being a benefit-driven corporation, and not a for-profit only or non-profit only.

1Malaysia Development Bhd (1MDB) today rebutted claims by former prime minister Tun Dr Mahathir Mohamad saying that a cabinet paper was presented and approved for the issuance of a government guarantee RM5 billion sukuk by Terengganu Investment Authority (TIA). TIA was renamed 1MDB in 2009 after the federal government took over. In a statement today, 1MDB also said that the guarantee was not off-budget, and that Putrajaya was fully liable for the amount it had guaranteed. 1MDB also denied Dr Mahathir's claim that the RM2 billion loan it obtained from Ananda Krishnan was used to pay interest on its loans. It also questioned the "motivation" behind Dr Mahathir's allegations, which it said had numbers and figures changing every time.

Bank Islam Malaysia Bhd expects a moderate and slower performance in 2015 with assets to grow at 10% and financing at 15% due to the current economic challenges. The consumer market sector has been noticeably slowed down, especially with the guidelines of the introduction of responsible financing by Bank Negara (Malaysia), Managing Director Datuk Seri Zukri Samat said. Bank Islam, which currently has 142 branches nationwide, will open eight more branches, including in the rural areas by year-end, he added after presenting RM12.74 million in business tithe to Minister in the Prime Minister's Department Datuk Seri Jamil Khir Baharom in Kuala Lumpur. At the same event, Bank Islam introduced 'Mudah Zakat', a multi-channel tithe payment system to improve tithe management efficiency.

Volatile currency markets could hamper Malaysian mortgage lender Cagamas Bhd's plans for its first foreign currency sukuk, the state-backed firm's chief executive Chung Chee Leong said. In November, Cagamas set up a US$2.5 billion (RM9.2 billion) programme to issue multi-currency sukuk in an effort to broaden its investor base. Chung said that at this moment, dollar was just not attractive, adding that US dollar issue was still the most likely option. He hopes the issue could still come this year. Asked about expansion plans, Chung said Cagamas was not working on opening subsidiaries in other countries, but would rather aim to take on loans that Malaysian lenders made outside the country through their Malaysian offices.

Bank Negara Malaysia said it would finalise operating standards for all major Islamic finance contracts by the end of this year, creating the first comprehensive set of practical guidance for the industry.The set of 11 standards will complement existing shariah guidelines issued by Bank Negara, as the regulator aims to address inconsistencies in the use of Islamic contracts. The regulator has sought wide industry feedback and is expected to update the new standards regularly to keep up with changing market practices. Malaysia's current shariah standards are enforceable and have been in place for years, but they are technical rather than practical and still open to interpretation.

Al-Rajhi Bank (Malaysia) provided RM325,000 in funding today to two education centres under the management of Yayasan Salam. The centres are the Taska Baitul Amal and Pusat Jagaan Baitul Amal, and the funding was under the bank's corporate social responsibility (CSR) Baitul Amal Children's Programme which provides for 70 children from the ages of two months to six years. Roseta Mohd Jaafar, Al-Rajhi Bank's vice-president and head of corporate communications said the programme was geared towards helping underprivileged children in the Jalan Chow Kit area. Registered under the Social Welfare Department, the Taska Baitul Amal was officially launched on July 19, 2010 and the Pusat Jagaan Baitul Amal on January 2, 2012.

Malaysia's successful pricing of the US$1.5 billion (RM5.4 billion) global sukuk has strengthened the country's position as an international centre for Islamic finance, says Prime Minister Datuk Seri Najib Razak. Najib, who is also finance minister, said the 30-year tranche was the government's inaugural sukuk issuance, which is also the longest tenured sukuk. The issuance comprises US$1 billion of 10-year and US$500 million of 30-year benchmark Trust Certificates (Sukuk) for a total size of US$1.5 billion. Najib said the deal was oversubscribed, attracting an aggregate interest of US$9 billion from a combined investor base of more than 450 accounts.

Syarikat Takaful Malaysia Berhad has revealed that it bought a RM85 million Islamic bond from 1Malaysia Development Berhad (1MDB) in 2009, but the Islamic insurance company assured that the investment was low-risk. Takaful Malaysia group managing director Datuk Seri Mohamed Hassan Md Kamil said the bond was purchased from Terengganu Investment Authority (TIA), which was 1MDB's previous incarnation. It was purchased at a coupon rate of 5.25% and will mature in 2039. The bond iis guaranteed by the government. Hassan said the sukuk only represented about 2% to 3% of its total asset base of RM7.1 billion. He said 1MDB had yet to redeem the bond.

There are close to an estimated 500 million Muslim youth under 30, and they are social media-savvy, faith-inspired, connected to the Internet via their phones, and they are the middle class in the wait. Social media provide “access” to leaders, and leaders to constituents, where followers can favourite, share or comment; hence the companies, via their social media team, have an immediate or real time pulse on the sentiments of the people beyond traditional offline media sources on laws/regulations, developments, accomplishments etc. Social media is here to stay, grow and develop, and the young customers will be your best brand ambassador or your worst nightmare.

Khazanah Nasional is set to issue Malaysia's first social-impact sukuk. Local agency Ram Ratings said the RM1 billion (US$282 million) Sukuk Ihsan programme, to which it assigned a AAA rating last week, was the first social-impact bond to be rated globally. Proceeds will go towards educational projects. Investors and market observers are eagerly expecting the first issuance off the programme as early as next month, although marketing preparations are still being finalised. Socially responsible investment is catching on slowly in Asia, but issuers in South Korea, India and Taiwan have sold so-called Green bonds and interest from investors is growing.

Japan is the latest global financial hub to start making inroads into Islamic finance, a move that could help strengthen regional economic ties and give its lenders an edge in winning business in markets whose growth prospects far outpace their home turf. A regulatory effort is expected to facilitate development of the sector, and could even help Japan counter any loss of regional influence ahead of the launch of the China-led Asian Infrastructure Investment Bank. Japan's Financial Services Agency (FSA) is considering allowing banks to provide Islamic products in the domestic market for the first time.