Gatehouse Bank eyeing universal banking licence in Malaysia

KUALA LUMPUR (May 29, 2013): London-based Kuwaiti-owned Gatehouse Bank Plc, a syariah-compliant investment bank, is looking to secure principal banking licences in Malaysia after opening a representative office here yesterday, said its senior executive.

The bank is exploring licences in universal banking, investment banking and wealth management.

Its chief representative in Malaysia, Richard Thomas, said the bank will work closely with the local regulators to see what would be the most appropriate licence(s) for the bank here.

"The representative office is very much a first step and it's our intention to develop the bank here," he told reporters at the opening ceremony yesterday, adding that the bank aims to expand its operations here over the next two years.

He said the bank also intends to use its Malaysian office as springboard into other Asian markets such as Singapore and Brunei.

On its targets for the Malaysian market this year, Thomas said it is in the midst of building its key performance indicators.

"Our core strength is in real estate but we are also looking at the sukuk market and Malaysia is of course the largest global sukuk market.

"Cross border reach between London and Kuala Lumpur for developing capital markets is also important for us and wealth management services as well," he added.

He noted that Gatehouse Bank has been approached by two or three parties, but the bank has yet to profile their risk appetites.

He said the Malaysian office would also help global investors understand the Asian market better, especially its global clients who are interested in investing here.

Meanwhile, Gatehouse Bank chairman and interim CEO Fahed Boodai said Malaysia will be a hub for the bank to diversify its client base that are mostly from the Gulf region.

"Our international clients are looking for investment opportunities that promote wealth preservation in mature and stable markets, and responding to their needs on an on going basis remains a core priority for the bank.

"Expanding our global footprint so that the bank can act as a gateway between the Islamic finance markets in Europe, the Gulf Cooperation Council and now Asia is fundamental to achieving this objective and establishing a new base in Malaysia is not only an exciting development for the bank but one that will help to deliver significant longer term value on behalf of our clients," he added.

Fahed also said there is a strong trend among Malaysian investors actively buying in the UK including both institutional and private investors.

The bank expects to make two billion pounds worth of real estate acquisitions in the US and UK markets this year.

Gatehouse Bank specialises in originating, structuring and funding investments in a syariah-compliant manner driven by a real estate strategy. Since its inception in 2008, the bank has established a global portfolio worth in excess of US$1.5 billion spread across real estate assets, capital investments and term deposits.

(The Sun Daily Mail / 29 May 2013)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Takaful Malaysia sets 15pc no claim rebate

SHAH ALAM: Syarikat Takaful Malaysia Bhd will maintain its 15 per cent 'no claim rebate' and increase its value added service delivery amidst tougher competition. 

Takaful Malaysia is the first and sole Takaful company in the country to offer an additional 15 per cent no claim rebate to all its participants in the general and selected family takaful products. 

"Demand for Takaful products is good, the growth rate is 20 per cent and their value proposition is the 15 per cent no claim rebate," Group managing director Datuk Mohamed Hassan Kamil told Bernama. 

It was reported that Takaful Malaysia is confident of disbursing about RM35 million in no claim rebate this year to its customers given the positive growth in its General Takaful portfolio. 

Mohamed Hassan said Takaful Malaysia has sufficient surplus to sustain its 15 per cent no claim rebate in the future. 

"The projection is made due to the company's prudent underwriting policy, efficient claim management and the investments which the company undertakes," he said. 

Mohamed Hassan said last year, Takaful Malaysia paid out a record RM31 million in no claim rebate to its customers, adding it is optimistic on capturing a more than 50 per cent market share from the current 40 per cent.

(Business Times / 24 May 2013)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Malaysia: RM1.6b sukuk proposal by for gas-fired power plant in Penang

KUALA LUMPUR: Tenaga Nasional Bhd's (TNB) wholly owned subsidiary TNB Northern Energy Bhd (TNB NE) has proposed to issue RM1.625bil in nominal value sukuk based on the syariah principles of ijarah and wakalah.

In a filing with Bursa Malaysia yesterday, TNB said the proposed sukuk TNB NE will be issued in one lump sum and will consist of 39 series with tenors ranging from four years to 23 years from the date of issuance.

The proposed sukuk TNB NE will be issued on May 29.

Malaysian Rating Corporation Bhd (MARC) has assigned a final rating ofAAAIS to the sukuk TNB NE.

“The proceeds to be raised from the proposed sukuk will be utilised for the construction and delivery and working capital requirement for the 1071.43 MW combined cycle gas-fired power plant in Prai, Pulau Pinang,” TNB said.

Upon issuance of the proposed sukuk TNB NE, TNB's consolidated borrowings will increase by RM1.625bil.

Based on TNB's audited consolidated balance sheet for the financial year ended Aug 31, 2012, TNB's consolidated gearing would then increase from 0.39 times to 0.40 times.

The proposed sukuk TNB NE will not have any impact on the earnings and earnings per share and net assets per share of TNB for the current financial year.

HSBC Amanah Malaysia Bhd and KAF Investment Bank Bhd are the joint lead arrangers and the joint lead managers for the sukuk issue.

HSBC Amanah also acted as the Shariah Adviser for the sukuk Issue while HSBC Bank Malaysia Bhd acted as the financial adviser for the project financing.

(The Star Online / 21 May 2013)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Malaysia: Zeti gives advice on Islamic financial innovations

KUALA LUMPUR: Innovations in Islamic financial solutions will need to take into account the higher regulatory expectations for more transparency, as well as the effective management of risks and capital, said Bank Negara govenorTan Sri Dr Zeti Akhtar Aziz.

She also noted that while Islamic finance had benefited from a well developed, more competitive and well-regulated eco-system, it needed to build on and reinforce the “solid foundations that have been achieved in this decade”.

“As the industry transitions into a new era of growth and development, the competitive financial landscape is being redrawn by the evolving international regulatory reforms, changing operating models, rising consumer expectations and increased competition,” she said.

“In this more challenging environment, the success of sustaining the momentum of Islamic finance as a transformative agent for the economy, will hinge on the ability to keep raising the bar in the pursuit of an effective functioning and sound financial system,” she told an international audience at the Islamic Financial Services Board (IFSB) Summit 2013, The Future of the Islamic Financial Services Industry: Resilience, Stability and Inclusive Growth, yesterday.

The event was also held in conjunction with the IFSB's 10th anniversary.

The summit sessions allowed industry players to network and discuss market prospects for Islamic finance, identify measures needed to connect Islamic financial institutions and market segments.

Zeti also spoke on the severe damage caused by the global financial crisis and the ensuing economic downturns, and how enduring recovery would “demand a global policy response that would bring about a new economic plan”.

She alluded to the need for more responsible financial practices from the financial sector, which included the commitment to achieve socio-economic goals.

“Much has been achieved, both in terms of the role and contribution of the IFSB, and the advancement made by Islamic finance in this recent decade.

“Our commitment and strategies to keep raising the bar on Islamic finance will enhance its prospect to contribute to achieving our shared vision of inclusive growth in an environment of financial stability,” she added.

Qatar Central Bank govenor and chairman of the IFSB 2013 Sheikh Abdulla Saoud Al-Thani said the Islamic finance industry grew an estimated 15% annually.

“The IFSB remained firm in ensuring that challenges arising out of this sharp growth did not cause problems and that the development of Islamic finance before the involvement of IFSB was mainly prevented by the fact that Islamic financial concepts may have been unfamiliar to regulators and the business community,” he said.

Zeti also spoke on the severe damage caused by the global financial crisis and the ensuing economic downturns, and how enduring recovery would “demand a global policy response that would bring about a new economic plan”.

(The Star Online / 17 May 2013)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Malaysia: Islamic finance moving towards greater convergence, says Zeti

KUALA LUMPUR: Islamic Finance is moving towards greater convergence with issues on harmonisation of Syariah interpretation and coordination of international policy and the governance process among industry players’ main discussion topics.

Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz said greater dialogue among scholars and greater awareness would contribute towards harmonisation in Islamic principles.

“There is already convergence of 80 per cent of the issues in the Islamic finance industry and 20 per cent of the fundamental issues are still outstanding.

“But the move is towards greater convergence,” she said at the 10th Islamic Financial Services Board (IFSB) Summit at the panel discussion on “Lessons Drawn: Prospects for the Future.”

Zeti said the IFSB, which is focusing on institution building, had established the Islamic Financial Stability Forum to allow greater engagement with the industry to share information and experience.

“The next level is the policy coordination, which comes from the international dimension and governance process,” she added.

Zeti said in Malaysia, Islamic finance has grown tremendously, with Islamic banking having grown to 23 per cent of banking system.

Meanwhile, speakers at the IFSB Summit highlighted the usefulness of Islamic finance in targetting the poor based on Islamic financial instruments that are based on risk-sharing principles.

However, there need to be more human capital development efforts to support awareness of the benefits of Islamic finance, they said.

Director-General of Islamic Research & Training Institute (IRTI), Islamic Development Bank Group, Prof. Dr Azmi Omar, said one such instrument is Islamic microfinance.

“The use of Islamic microfinance is still not substantial.

“What we need is to provide the required training and capacity building for Islamic microfinance to support small businesses,” he said.

(Berneo Post Online / 18 May 2013)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Malaysia: CIMB Islamic upbeat on financial sector

KUALA LUMPUR: The financial market, whether Islamic or conventional, will always grow with a strong government and will not be affected by the ongoing protest by the opposition over the 13th general election results, said CIMB Islamic Bank Bhd executive director/chief executive director Badlisyah Abdul Ghani.

“The election result has shown that we have a strong government in the country, and we definitely will see Islamic finance grow more and more,” he told Bernama on the sidelines of the 10th Islamic Financial Services Board (IFSB) Summit themed “The Future of the Islamic Finance Services Industry: Resilience, Stability, and Inclusive Growth” here yesterday.

He said Islamic finance had been growing significantly over the last few years, and this trend was expected to continue this year.

“We will continue to see growth. In terms of activities, the banking sector will continue to deepen and Islamic finance will continue to dominate the market.

“In general, the asset management industry will also be healthy, both the equities and debt markets,” he said adding that there would be several more Islamic initial public offerings this year.

At the same event, the IFSB released the Islamic Financial Services Industry Stability Report 2013, which estimates the Islamic financial services industry’s assets at US$1.6 trillion as at the end of last year, representing 20.4% growth year-on-year since the end of 2011.

(The Star Online / 15 May 2013)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Malaysia-based IILM treads fine line in designing maiden sukuk

SYDNEY: International Islamic Liquidity Management Corp (IILM) faces a delicate task as it designs its maiden sukuk: it must make the issue attractive enough for investors to buy, but not so attractive that most of them buy to hold.

Whether it gets the balance right will affect the development of Islamic money market trading in the Gulf and South-East Asia over the coming year.

Malaysia-based IILM, backed by nine central banks and monetary agencies as well as the Jeddah-based Islamic Development Bank, has said it planned to issue up to US$500mil of dollar-denominated sukuk in the second quarter of this year, and eventually expand the programme to as much as US$3bil.

Its issues will be based on a very different premise than other sukuk. Other issuers design their sukuk merely to attract investors and raise money cheaply; IILM's mission is to create a highly liquid tool which Islamic banks will trade to manage their short-term funds.

To ensure trading of the sukuk around the world, IILM had signed agreements with eight primary dealer banks, said Ayhan Keser, executive vice president at Turkey's Albaraka Turk , one of the market-making banks.

“These primary dealers are given the right to purchase the issued sukuk in the primary market, have the responsibility to set the secondary market and actually buy and sell the bonds to form a market price,” Keser said.

Standard Chartered is another primary dealer, according to Standard and Poor's. The bank declined to comment on its role.

The participation of other banks in the primary dealer network appears less certain, however. Qatar Islamic Bank, the Gulf state's largest syariah-compliant lender by assets, is still considering whether to take part, according to its chief executive.

“We will probably be. It's still under discussion,” group chief executive Baseel Gamal said in Doha earlier this month.

Bank Islam Malaysia Bhd is awaiting internal approval from its syariah board, according to a source at the bank who declined to be named as he is not authorised to speak to the media.

A second Malaysian lender was also considering its participation, with the country's central bank pushing for decisions to be made soon, the source said.

Luxembourg, where the sukuk will be domiciled, has one confirmed primary dealer while another is still working on the paperwork, according to a banking source familiar with the discussions, who declined to be named because of the sensitive nature of the issue.

No specific date has been given for the first or subsequent sukuk issues, and the IILM did not respond to Reuters questions.

Another key issue for the IILM sukuk, which are expected to have maturities of up to one year, will be their bid-ask spreads in the secondary market.

If the issues are too small relative to demand, many investors may end up buying and holding them rather than trading them, making price discovery difficult and resulting in wide bid-ask spreads that hurt their function as a store of value.

Other international sukuk often trade with bid-ask spreads ranging from 80-100 basis points (bps), so the IILM paper will need to demonstrate it is much tighter than that.

Spreads above 50 bps could affect the IILM's effectiveness and credibility, said the head of treasury at a Bahrain-based Islamic lender. “Below 50 is good a quarter (0.25 percentage point) would be great.

(The Star Online / 13 May 2013)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

First Saudi Sukuk issuance in Malaysia by Al Bayan Group

The landmark Sukuk was issued via Al Bayan’s special-purpose vehicle incorporated in Malaysia, ABHC Sukuk Berhad.  Proceeds from the issuance, with tenure of three years, will be used by the Group primarily for repayment of existing debt obligations and expanding the Group’s core businesses as well as working capital requirements.

Commenting on the successful issuance of the Sukuk offering, Dr. Abdulrahman Al Hammad, CEO of Al Bayan, said, "Al Bayan's inaugural sukuk issuance in Malaysia is a significant landmark in the Group's evolution and growth story. We are proud of this achievement and look forward to further capitalising on the opportunities for raising Islamic capital available globally. We thank the Joint Lead Managers and all other involved parties for their support in making this transaction a resounding success.”

The Sukuk programme is structured under the Shari’ah principle of Wakalah and Ijarah. Hong Leong Islamic Bank Berhad (HLISB) and HSBC Amanah Malaysia Berhad (HBMS) are the Joint Principal Advisers and Joint Lead Arrangers of the Sukuk Programme. They are also the Joint Lead Managers, together with Kenanga Investment Bank Berhad (KIBB) and Al Hilal Bank as the Manager in the UAE. Guidance Financial Group acted as the Financial Adviser to Al Bayan.

"The Sukuk issuance of Al Bayan here in Malaysia will be another milestone for the country as a premier Islamic finance hub and to further position our Islamic capital market's standing on the global map. The joint efforts between Hong Leong Islamic Bank and the other Joint Lead Managers have made this issuance a success,” said Raja Teh Maimunah, Chief Executive Officer/Managing Director of HLISB. “We are pleased to lead another landmark Sukuk issuance with this debut issuance from the Kingdom of Saudi Arabia tapping the MYR debt markets, following the successful issuance from the Republic of Kazakhstan last year. This issuance marks another key milestone in further enhancing Malaysia’s position as a global Islamic finance hub”, said Rafe Haneef, Chief Executive Officer of HBMS.

Chay Wai Leong, Managing Director of KIBB, said, “Al Bayan’s issuance of Sukuk in the local bond market further testifies to the growing interest from foreign issuers towards Malaysia’s mature Sukuk framework and financial environment. We can expect to see more contributions from foreign issuers to the growth and diversity of our Islamic capital markets. We will continue to work with our associate, AlWasatah Capital based in Saudi Arabia, in bringing Saudi-based issuers to Malaysia.”

The Sukuk Programme has been assigned a long-term rating of AA3(s) by RAM Rating Services Bhd. Under a kafalah agreement in favour of ABHC Sukuk Berhad, Al Bayan shall provide an irrevocable and unconditional guarantee to the holders of the Sukuk. As such, the rating is based on the credit profile of the Group.

Saudi Gazette report Abdullah Al Rasheed, Chief Executive Officer of Wasatah Capital, as saying, “We believe that the success of the Al Bayan’s Sukuk should encourage more Saudi companies to seriously consider this funding source. We also believe that the presence of Kenanga Investment Bank in Malaysia and Wasatah Capital in Saudi Arabia brings a unique value proposition to Saudi companies interested in attracting Malaysian investors.

(C.P.I Financial / 08 May 2013)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Malaysia: MBSB earnings up on Islamic banking ops, lower impairment losses

PETALING JAYA: Financial institution Malaysia Building Society Bhd (MBSB)made a net profit of RM166.14mil or 13.08 sen per share in the first quarter ended March 31 compared with RM79.41mil or 6.53 sen per share a year ago, underpinned by its Islamic banking operations and lower impairment losses.

The increase was partially set off by higher operating expenses resulting from improved business volume.

MBSB's pre-tax profit surged 114.6% to RM237.11mil from RM110.47mil while revenue rose 48.4% to RM562.47mil from RM378.88mil.

In a statement, president and chief executive officer Datuk Ahmad Zaini Othman said despite the challenging environment in the retail market, the firm maintained its capability to sustain business growth that had resulted in enhanced revenue and profit levels.

The efforts undertaken to ensure improved asset quality have also borne fruit, with the group's net non-performing loan standing at 3.4% as at March.

(The Star Online / 04 May 2013)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Malaysia: Post-election hope for future of Islamic finance in the nation

Today, as Malaysians welcome their newly elected and returned Members of Parliament as well as state assemblymen, I would like to share with you about my hope for the future of Islamic finance in Malaysia.

Islamic finance, as I have often said time and time again, has come a long way in Malaysia.

It dominates the primary and secondary debt capital market with 70%-80% market share. It also dominates the equity capital market with close to 90% of the listed stock on Bursa Malaysia being Syariah-compliant stocks.

It is increasingly becoming a force in the banking sector with a 30% market share. Many other components of the Islamic financial market such as takaful, asset management, wealth management, private equity, etc, are also growing by leaps and bounds with increasing market share.

The following are my hopes for the future of the market in Malaysia:

1. I would like to see better recognition and acceptance on the part of everyone involved in the market on the difference between Islamic banking activities, Islamic debt capital activities, Islamic equity capital activities, Islamic asset management activities, Islamic private equity activities and Islamic operating lease activities.

Of course, this is not an exhaustive list of the activities done in the market and people need to learn all of them to have better appreciation of them.

2. I would like to see people having a greater understanding of the difference between a licensed bank, a licensed investment bank, a non-bank financial institution, a licensed fund management company, a private equity firm, a licensed investment company, non-profit organisation undertaking, etc, that are undertaking the myriad existing Islamic financial activities in the market.

Financial solutions

3. I would like for people to stop accusing Islamic financial institutions in general of merely emulating and replicating the products and services of conventional financial institutions.

They need to learn that an Islamic bank’s offerings are not dependent on what a conventional bank offers.

In my experience, when it comes to developing and innovating products for the Islamic financial market, I, just like many other bankers in Islamic financial institutions, am only interested in providing financial solutions that are desired and needed by consumers in a manner that is consistent (thaty is, not in contradiction) with Syariah.

If a product turns out to have the same feature or deliver the same economic effect as a conventional financial product, then it is a mere coincidence, considering that both Islamic and conventional banks try to meet the same consumer demands.

4. I would like for people to stop trying to find a distinction between an Islamic bank and a conventional bank undertaking banking activities.

A bank, irrespective of whether it is an Islamic or a conventional bank, exists to intermediate between the haves and have-nots by meeting the differing financial needs of the various customer segments (for example, mass market, mass affluent, HNWIs, corporate, institutional investors, etc).

The only difference or distinction between an Islamic and a conventional bank or any type of operating entity doing other Islamic or conventional activities would be the fact that an Islamic bank or institution undertakes its activities purely in a manner consistent with Syariah, while the conventional institutions are not Syariah-compliant.

5. I would like to see the proliferation and inclusion of wakaf in the Islamic financial market. Wakaf is the missing component in the market now.

Economic dealings

6. I would like to see the education on the prohibition of riba or usury to be done starting from pre-school up to pre-university in the country’s education syllabus.

Most of us are taught about what is halal and haram in terms of food consumption from the time we were born (just to exaggerate), so it should not be difficult for the same to be done for our financial and economic dealings.

7. I would like to see our Islamic financial institutions become more international in its operation – more Islamic banks to obtain international rating; more of them having the capacity to do cross border financial activities to facilitate intra-trade in a Syariah-compliant manner.

8. I would like to see more Malaysian bankers based in Malaysia, either still serving or retired, being recognised by Malaysians as the global market leaders that they are or were.

Too long have we awarded and recognised foreigners over Malaysians when in fact the architects of the Islamic banking industry, the debt capital market or sukuk market (both local and global), the takaful industry, the Islamic equity capital market, the Islamic asset management and many more are all Malaysians! We should stop being shy of our talent and capacity.

9. I would like to see less confusion on how Islamic finance is governed under Syariah. We should fully embrace the basic principle of Syariah that everything is allowed unless clearly and expressly stipulated as disallowed in the Quran and legitimate Hadith.

The onus is to prove that something is disallowed instead of trying to prove that something is allowed. We need to put our energy in the right place so that the dynamism, robustness and integrity of our market is not lost.

10. I would like to see more Malaysian bankers having Syariah degrees. More Syariah degree holders should aspire to become bankers instead of just religious teachers.

If banks can hire English, agriculture, engineering, law or accountancy graduates, we can definitely hire Syariah graduates as bankers but they must be willing to slug it out just like everybody else.

There are many more things that I hope to see happening in the Malaysian Islamic financial market, but suffice for me to stop at a list of 10. I hope the new parliamentarians and state assemblymen will share some of the hopes that I have listed here.

Legislators play a significant role in creating the right platform for a more inclusive Islamic financial market and we have not communicated enough on their roles in making Islamic finance in Malaysia the best in the world all these years.

I wish all of them the best in their new five-year term and look forward to their continuing support of Islamic finance.

(F.M.T News / 06 May 2013)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Malaysia: RM34.77 billion under Islamic unit trust management

KUALA LUMPUR: The Securities Commission (SC) said Malaysian unit trust managers have nearly RM353.7 billion under their management as of Jan 31.

This amount represents a 24.86% in net asset value of the market capitalisation of Bursa Malaysia Bhd.

The amount under management by fund managers was RM53.5 billion and as at Jan 31, there were 40 approved fund managers.

The number of approved funds were 192, which included funds that were approved but not yet launched, with 142 of these funds conventional while the others were Islamic-based.

The amount managed by fund managers in December 2012 was RM52.5 billion and the latest figures released by the SC represents an increase of 1.9% on a monthly basis.

The total wholesale funds as at Jan 31 net asset value was 3.76% of the market capitalisation of Bursa Malaysia.

The 41 approved unit trust management companies (UTMC) managed a total of RM300.19 billion as at Jan 31, 2013. There were 607 approved funds where 433 were conventional and 174 were Islamic-based.

The amount managed by conventional unit trusts was RM265.42 billion while another RM34.77 billion was managed by Islamic unit trusts.

The total amount managed by UTMC represented 21.1% of the market capitalisation of Bursa Malaysia. The amount managed by UTMC in December 2012 was RM294.8 billion and the January 2013 figures show an increase of 2.04%.

“The wholesale funds and the amounts managed by UTMC especially the Islamic funds are relatively small and have further upside growth. The authorities should do more to educate the investors about these funds.

The high domestic savings rate of around 34% shows that the investing public may have been choosing alternative investments to invest their monies,” said a local fund manager.

(F.M.T News / 12 March 2013)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Petronas Gas planning Malaysia’s biggest sukuk offering this year

KUALA LUMPUR: Petronas Gas Bhd is planning Malaysia's biggest sukuk offering this year, at a time when top-rated corporate bond yields are at a nine-month high.

The unit Petroliam Nasional Bhd (Petronas) invited pitches from banks to arrange as much as RM5bil of Islamic debt, three people with knowledge of the matter said on March 28, asking not to be named as the details are private.

The yield on Malaysia's three-year AAA-rated notes climbed three basis points in 2013 to 3.56%, the highest since June 29, a central bank index shows.

Petronas Gas plans to use the funds from the sukuk for two regasification plants, part of a US$444bil (RM1.37 trillion) spending programme started by Prime Minister Datur Seri Najib Razak that aims to propel Malaysia to developed-nation status by 2020.

The company sold its first syariah-compliant notes in August via unit Kimanis Power Sdn Bhd. The 5.05% securities due 2023 last yielded 4.23%, data compiled by Bloomberg show.

“The company is planning the sukuk because it's confident that the present government will win the elections,” said Mohamed Azahari Kamil, chief executive officer at Asian Finance Bank Bhd. the Malaysian unit of Qatar Islamic Bank SAQ.

“With the Petronas name, the company won't have any problem selling the debt,” he said in an interview.

The two regasification plants will be built in Johor and Sabah, according to Petronas Gas' latest annual report.

The company said in an e-mailed statement yesterday that it was unable to comment on whether it would sell sukuk. A separate facility that the company started building in 2010 will begin commercial operations this quarter, a Nov 23 stock exchange filing shows.

Petronas Gas is 60.7% owned by Petronas and has RM860mil of sukuk outstanding, according to data compiled by Bloomberg.

It will report net income of RM1.54bil for the year ending Dec 31, 2013, compared with RM1.4bil last year, according to the mean estimate of 13 analysts surveyed by Bloomberg News.

“Petronas Gas is a strong corporate issuer and could be rated AAA if it has the support of its parent,” Elsie Tham, senior manager at Manulife Asset Management Sdn, who oversees more than US$1bil (RM3.1bil), said in an interview yesterday.

“It's a name I will be interested in, regardless of elections. My decision to buy, however, will depend on the yields being offered.”

The yield on Malaysia's 3.928% government sukuk due 2015 fell one basis point to 1.34% yesterday and has risen six basis points this year, according to data compiled by Bloomberg.

The premium investors demand to hold Dubai's 6.396% securities due November 2014 over Malaysia's debt was steady at 106 and has widened 26 basis points in 2013.

Islamic bonds sold to international investors returned 0.5% in 2013, according to the HSBC/Nasdaq Dubai US Dollar Sukuk index, while developing-market debt declined 2.3%, JPMorgan Chase & Co's EMBI Global Composite Index shows.

The average yield on global sukuk climbed six basis points, or 0.06 percentage point, to 2.92% in March, the biggest monthly advance since May 2012, according to the HSBC/Nasdaq index.

The difference between the average yield and the London interbank offered rate, or Libor, widened four basis points over the period to 177 basis points, the gauge shows.

The Bloomberg-AIBIM Bursa Malaysia Corporate Index, a benchmark that tracks 57 local currency issues, gained 0.7% this year to 103.019 on March 29, while a similar gauge for sovereign notes rose 0.6% to 110.318.

Syarikat Prasarana Negara Bhd. plans to sell RM6bil of sukuk in two portions this year to build a light rail system in Kuala Lumpur, Azhar Ghazali, its media affairs manager said in a Jan 4 e-mail.

Tenaga Nasional Bhd will raise funds via sukuk and equity to build a RM2.47bil power plant, the company said in a stock exchange filing in November. - Bloomberg

Petronas Gas should be able to attract interest in its sukuk because it's a rare issuer and the result of the national elections won't affect the company's risk profile, according to MCIS Zurich Insurance Bhd.

“I'm comfortable with the Petronas' name,” said Michael Chang, who oversees US$1bil as head of bonds at MCIS Zurich Insurance in Kuala Lumpur, in an interview yesterday.

(The Star Online / 03 April 2013)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Malaysia: Filling a Niche for Islamic Banking

KUALA LUMPUR, Malaysia — When Fabiola Nava Carrera told her friends that she was going to pursue a master of business administration degree in Islamic finance at a Malaysian university, they were taken aback.

“I was very interested in going there to see what was going on, because I knew nothing about Asian and Islamic culture,” said Ms. Carrera, a 27-year-old Mexican who had previously worked in international trade. “But my friends in Mexico couldn’t believe that I wanted to go to Malaysia, because they thought that it would be too dangerous or that the culture would be too different.”

Ms. Carrera went anyway. Last year, she was one of four students, three of whom were non-Muslim, who graduated from the inaugural class of the Universiti Tun Abdul Razak’s Global Islamic Finance M.B.A. program in Kuala Lumpur.

Islamic finance differs from conventional banking systems in that usury and speculation are prohibited. Transactions have to comply with Shariah, the legal code of Islam based on the Koran, and are based on principles of risk and profit sharing.

Islamic finance is booming. According to figures from Hong Leong Islamic Bank, a financial institution in Kuala Lumpur, Islamic finance activity has been growing 14 percent per year, with Islamic finance assets exceeding $1.1 trillion in cumulative value in 2011.

Such growth has pushed more educational institutions into creating degree programs in Islamic finance. In 2005, the International Islamic University Malaysia created an Islamic banking institute that offers students Master of Science and doctoral degrees in the subject. In recent years, at least half a dozen business schools in Britain, including the University of East London and Bangor University in Wales, have set up M.B.A. programs in Islamic finance.

Ms. Carrera’s alma mater, also known as Unirazak, is a rare business school located in an Islamic banking hub — according to the school, about a quarter of financial activity in Malaysia is compliant with Islamic law and customs — and yet foreigner-friendly.

“Malaysia is the third largest Islamic market after Saudi Arabia and Iran,” said Geoffrey Alan Williams, Unirazak’s deputy vice chancellor, whose jacket lapel sported a pin of the E.U. flag intertwined with the Malaysian flag. “So if you want to be in Islamic banking, you have to come here, unless you want to be in Tehran.”

Unirazak’s participation in the International Business School Alliance, a network of seven schools, also helps. The alliance, which Unirazak joined in 2011, allows students in member institutions to spend time in two schools and graduate with two M.B.A.’s. After one year in school, two thirds of which were spent in Bremen University of Applied Sciences in Germany and a third at Unirazak, Ms. Carrera graduated with an M.B.A. in logistics and supply chain management from the European school and an M.B.A. in Islamic finance from the Malaysian institution.

The other universities in the alliance are the University of Valencia in Spain, the University of Hertfordshire in Britain, Novancia Business School in Paris, the Institute of Business Studies in Moscow and the University of North Carolina Wilmington.

Each alliance member specializes in a particular area of finance and only students enrolled in their university’s specialty program can attend classes at sister schools. While Unirazak also offers more conventional M.B.A. programs, students there do not have access to I.B.S.A. resources.

“Our partners were initially quite skeptical because they thought” an Islamic finance program would be risky, said Barjoyai Bardai, the program’s director. “But global Islamic finance is trendy and will make an impact. A year on, I think we all feel we made the right choice.”

Unirazak has had to engage a wide range of faculty members to teach the course, with a specialized lecturer for each module. Apart from trained accountants like Dr. Barjoyai, the school has brought in a Shariah scholar from Egypt.

Most students, even practicing Muslims, are unfamiliar with the basic concepts of Islamic finance.

So classes are especially vigorous, since the school needs to impart very specialized knowledge in a limited time.

For a typical module in Islamic products and services, for example, students will have 14 four-hour lectures. The classes are aimed at both familiarizing them with the history of Islamic banking products, and encouraging them to think about developing more contemporary services. Apart from lectures, students are also expected to work on their own project papers.

“It would have been easier to get an M.B.A. in something else,” said Azrina Muhammad Aznan, a 28-year-old Malaysian enrolled in the program. “Other students have time to go to parties, but I have to sit down and do work.”

“If you are trained in Islamic banking, you should also be able to do conventional banking,” said Raja Teh Maimunah, the chief executive officer at Hong Leong Islamic Bank, who recently gave a talk to Islamic finance students at Unirazak.

The global Islamic finance master’s degree at Unirazak costs students more than 61,460 Malaysian ringgit, or nearly $20,000. At 29,020 ringgit, the master’s degree in leadership that Unirazak also offers costs less than half as much.

Dr. Williams, the university administrator, said the reason for the discrepancy was the standardization of prices for all programs under the I.B.S.A. aegis.

Because Islamic finance master’s degree programs were developed quite recently, it is difficult to assess how successful their graduates are.

“It must be relatively new, because I don’t see many of them,” said Ms. Maimunah, the banker. “I can see the benefits of regular conventional bankers going through certification programs that help them understand Islamic jurisprudence. I don’t know whether someone with an Islamic M.B.A. can give me something different.”

She cited programs like those offered by the International Center for Education in Islamic Finance, or Inceif, an organization established by the Malaysian central bank, as ones that were particularly valued in the industry.

Noting that Unirazak collaborates regularly with Inceif, Dr. Williams insisted that such programs were complementary with his school’s degrees.

“The whole industry is exploding in size, so we’re not fighting with other people,” he said, adding that Unirazak was preparing to roll out graduate degrees in Islamic branding and halal management in 2014. “There is so much demand, we just need to find out the right type of courses.

(The New York Times / 26 March 2013)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com