Malaysia’s pledge to minimise its greenhouse gas emissions by 2030 is facing challenges in terms of a mismatch in demand and supply of fundings. Bank Negara Malaysia (BNM) assistant governor Fraziali Ismail said that considerable funding gaps remain in sustainable projects, despite the roll out of green financing schemes. Fraziali emphasised that there is a need to find a way to bridge the language and information gap between scientists, government and financiers. He also emphasised the role of the financial sector, particularly that of the capital market, in driving Malaysia’s sustainable development through the sukuk market.
Malaysian borrowers who wish to continue with the six-month moratorium need to inform their respective banks of their consent via the banks’ designated platforms. Although the moratorium is automatic starting April 1, the borrowers’ consent is still legally required. Bank Negara Malaysia (BNM) said starting from May 1, bank customers with hire-purchase loans and fixed rate Islamic financing will receive a notification on the steps they must take to complete the deferment process under the six-month moratorium on loan and financing payments. Customers will be notified via SMS, email or registered mail from their banking institutions.
According to Malaysian Deputy Prime Minister Datuk Seri Dr Wan Azizah Wan Ismail, action needs to be taken to make Islamic finance part of the halal ecosystem. She said it was reported that there seemed to be a disconnection between the halal industry and Islamic finance. Based on Bank Negara Malaysia (BNM)’s Financial Stability and Payment Systems Report 2017, Dr Wan Azizah said Islamic business financing continued to exhibit a strong growth of 12.5%. However, she pointed out that there was insufficient access to Islamic financing for the growth of small and medium enterprises (SMEs) in the halal sector. She said Malaysia could serve as a focal point for halal product trade intelligence by being the premier destination for halal trade exhibitions and commerce.
According to Fitch Ratings, Malaysia remains the main sukuk issuer this year besides countries from the Gulf Cooperation Council (GCC) region. The increase in Malaysia’s sukuk market is largely driven by Bank Negara Malaysia (BNM) and contributed by local currency corporate issuance. Notable corporate deals included energy service firm Serba Dinamik’s US$300 million (RM1.25 bilion) sukuk, the first dollar high-yield sukuk offering in the Asia-Pacific region. The Malaysian market shows how as the Shariah-compliant investor base grows, the cost of sukuk issuance becomes more competitive relative to conventional bonds. Fitch believes that global volumes normalised rather than declined last year after hitting record levels in 2017. Moving forward, Fitch believes macro-economic and geopolitical conditions will affect sukuk issuance. GCC debt markets are relatively developing but individual sovereign funding decisions can profoundly affect total supply.
Bank Negara Malaysia (BNM) has issued the Rahn policy document which is aimed at strengthening the practice among Islamic financial institutions to offer services that are end-to-end Shariah-compliant. BNM stated that the subject matter of the Rahn contract shall be collateral that is recognised by Shariah and Shariah-compliant liability or obligation owing to the pledgee. It added that the collateral must be owned either by the obligor, a third party, or the obligor and a third party. BNM said the collateral shall be immediately possessed by the pledgee upon entering into the Rahn contract unless a pledgee approves a delay in possession. A Rahn contract is applicable with contracts including qard, murabahah, tawarruq, baiinah, istisna, ijarah, kafalah, mudarabah, musyarakah, wakalah bi al-istithmar, and wad as well as takaful coverage.
Bank Negara Malaysia (BNM) plans to revise its takaful operational framework. Governor Tan Sri Muhammad Ibrahim said the revised framework would be published for consultation before the middle of the year. He said it would strengthen the governance of takaful operators, including how takaful funds are managed, to further safeguard the interest of takaful participants. On the objective of 25% family takaful penetration by 2020, he said it was ambitious, but achievable. Muhammad noted that the industry was lagging in terms of migration to e-payments. He added that another area that is wide open for innovation was the integration of takaful with elements of waqf, sadaqah and zakat.
#Malaysia is second only to Saudi Arabia in terms of Islamic banking in the world. Of the US$71 billion Syariah-compliant asset funds managed, 33% are in Malaysia. The country’s central bank, Bank Negara Malaysia (BNM) continues to raise awareness of Malaysia as an international Islamic financial centre. According to BNM assistant governor Marzunisham Omar, the next area of focus is quality growth. The 16 Islamic banks and 11 takaful operators are seeing value-returns by embarking on initiatives through Value-Based Intermediation (VBI). VBI is a business strategy by Islamic financial institutions, driven by a desire to create value rather than focus on short-term objectives. VBI is a business strategy of the institution to drive growth and sustain growth. It is a collaborative effort by the central bank together with Islamic banking institutions. Today nine Islamic banks are already involved and the central bank is working to develop a value-based scorecard to measure the success of banking institutions.
Bank Negara #Malaysia is developing a scorecard with Islamic banking players that will measure the adoption of value-based intermediation (VBI) initiative. According to deputy governor Abdul Rasheed Abdul Ghaffour, the VBI marks the next step to realise the full potential of Islamic finance. The VBI Community of Practictioners (COP) includes nine Islamic banking institutions, Bank Islam, Bank Muamalat, CIMB Islamic, Agrobank, HSBC Amanah, Maybank Islamic, AmBank Islamic, Alliance Islamic and Standard Chartered Saadiq. While VBI shares similarities with ethical finance, ESG (environmental, social and corporate governance) and SRI (sustainable, responsible, impact investing), the distinguishing factor is the Syariah aspect. Business propositions from new sectors such as small and medium-sized enterprises (SMEs) would benefit from financial applications based on potential value creation and not just their credit scores.
As the World Trade Organisation (WTO) reaffirmed commitment to its Aid for Trade initiative, the outlook for global trade over the next two years is indeed mixed. WTO is forecasting that global trade will expand by 2.4% this year and between 2.1 to 4% next year, reflecting the continued uncertainty of the global economy. In Malaysia, Bank Negara Malaysia (BNM) Governor Muhammed Ibrahim wants Malaysia’s Islamic finance industry to boost trade finance to increase largely untapped business opportunities using technological capture. BNM is keen for Syariah-compliant trade financing to support 10% of total trade in the next three years. Malaysia’s Islamic finance industry has assets under management totalling RM742 billion. BNM wants the industry to leverage this pole position and to account for 40% of total financing in Malaysia by 2020.
Takaful Ikhlas aims to introduce its online platform for basic term life insurance to encourage youths to obtain insurance coverage. Senior Vice-President, Wan Rosli Shaharuddin Wan Yaacob is optimistic the online platform will attract youths as they will be able to compare the products' features, policies, as well as pricing via the platform. He said Malaysians below 35 years old currently constituted the largest group in the country who have yet to be covered by any insurance company. According to Bank Negara Malaysia (BNM) Financial Stability and Payments Report 2016, Malaysia's overall insurance penetration remained flat, within the range of 54% to 56% over the last five years. The central bank had earlier set the penetration rate target at 75% by 2020. It specifies that standalone protection products must be available through direct channels from Jan 1, 2017, followed by critical illness and medical and health insurance/takaful products by Jan 1, 2018.
Allianz Malaysia has received the green light to begin stalks to acquire HSBC Amanah Takaful (Malaysia). According to Allianz, Bank Negara Malaysia (BNM) has no objection in principle for Allianz to commence negotiations with HSBC Insurance (Asia Pacific) Holdings, JAB Capital and the Employees Provident Fund Board on the proposed acquisition. This is subject to all parties concluding the negotiations within six months from BNM's written approval. Pursuant to the Islamic Financial Services Act 2013, parties concerned are required to obtain the prior written approval from BNM or the Minister of Finance on the recommendation of BNM, before entering into any agreement to effect the proposed acquisition.
The central bank of #Malaysia plans to undertake an in-depth review of important organisations to re-energise the Islamic finance talent development landscape. Bank Negara Malaysia (BNM) Governor Datuk Muhammad Ibrahim said over the years, the central bank had established specialised institutions to enrich the talent ecosystem. These include the International Centre for Education in Islamic Finance, International Shari’ah Research Academy (ISRA), Islamic Banking and Finance Institute Malaysia (IBFIM), the Chartered Institute of Islamic Finance Professionals and the Association of Shariah Advisors in Islamic Finance Malaysia. Ibrahim noted that the new Educator’s Manual on Shariah Standards on Murabahah has several benefits for universities and stakeholders. One benefit is strategising talent deployment, while another area is the reconfiguration of academic programme to nurture talent with enhanced employability.
Bank Negara Malaysia (BNM) launched the Educator's Manual on Shariah standards and operational requirements in accordance with the Murabahah principle. BNM Governor Datuk Muhammad Ibrahim said the manual serves as an important material towards enhancing the quality of Islamic finance education. The manual was developed by BNM together with the International Shari'ah Research Academy for lslamic Finance (ISRA) and the Islamic Banking and Finance Institute Malaysia (IBFIM). A panel of 20 experts in various fields contributed to its content.
Malaysia’s central bank, Bank Negara Malaysia (BNM), announced it has closed its investigations into 1MDB after the investment firm paid a fine for non-compliance with local financial regulations. The Finance Ministry insisted that there was no misappropriation but only administrative weakness in the firm. However, 1MDB will be barred from borrowing public funds. Malaysia’s Deputy Finance Minister, Johari Abdul Ghani, said 1MDB will be dissolved once it pays off its debts. The firm currently has debts totalling RM50 billion ($16 billion) as of January, as opposed to assets of RM53 billion.
AmFamily Takaful Berhad is determined to contribute towards the growth and development of the Islamic finance industry. AmTakaful is registered as a takaful operator by Bank Negara Malaysia (BNM) to continue family takaful business beginning with 9 January 2012.
Combining the expertise of its shareholders and Shariah principles and values, AmTakaful will be presenting a wide range of family takaful solutions to meet the evolving lifestyle needs of all Malaysians.
The International Islamic Liquidity Management Corporation (IILM) is assumed to launch its first sukuk in the next six months, as it will contribute to better liquidity management. The statement was given by Bank Negara Malaysia (BNM) Governor Tan Sri Zeti akhtar Aziz.
IILM has the purpose to enhance the availability of liquid Shariah-based Islamic financial market instruments. This is a crucial step in promoting more efficient cross-border liquidity management for Islamic financial institutions to sustain increased cross-border flows.
Daud Vicary Abdullah is the ew president and chief executive officer of the International Center for Education in Islamic Finance (INCEIF), the Islamic finance education arm of Bank Negara Malaysia (BNM). He requested a much closer alignment between the global Islamic finance industry and the providers of human capital development.
Vicary added that he is worried about global standards in Islamic finance and strongly believes that the development of standards in many areas, are vital to the continuing growth of the industry.
Bank Negara Malaysia's (BNM) plan to issue up to two mega Islamic bank licences is still on progress. The right investors must be found.
Datuk Mohd Razif Abdul Kadir, the deputy governor, said BNM hoped to issue the licences this year.
Bank Negara Malaysia (BNM) published last week the draft of its latest Shariah consultation on Islamic financial products, the "Concept Paper of Shariah Parameter Reference 5: Istisna Contract (SPR5)". SPR5 is aimed at becoming the true source of reference on the nature and features of the Istisna contract for the Islamic financial services industry and to facilitate the consistent implementation of the contract in the Malaysian financial market.