IslamicFinance.de

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.

Cagamas Bhd, the national mortgage corporation, will look at issuing up to RM2bil in new Islamic medium term notes, said chief executive officer Steven Choy.
A business daily reported recently that Cagamas was expected to issue another landmark sukuk after the success of its benchmark Sukuk Al-Amanah Li Al-Istithmar (Sukuk ALIm) in July.
During the panel discussionon Islamic Finance Developments and Expansions in Asia, Choy said Cagamas experienced its fair share of challenges in the secondary market for its mortgage loan deals.
Islam Bank of Thailand president Dheerasak Suwannayos added that political will was needed to back the acceptance of Islamic finance in a country.
Businesses among the Muslim community were predominantly family-owned, hence the hesitation in letting strangers into the businesses.