Islamic Finance Malaysia

Wednesday, 31 October 2012

Malaysia: TH Plantations, pilgrim's fund set up 1 billion ringgit sukuk programme

TH Plantations said in statement on Tuesday that Hong Leong Islamic Bank and RHB Investment Bank were appointed as the joint principal advisers, joint lead arrangers and joint lead Managers for this sukuk murabahah programme.
The sukuk will be issued to the pilgrim's fund or Lembaga Tabung, making it non tradable and non transferable, TH Plantations said.
TH Plantations issued a first tranche of 200 million ringgit under the programme on Tuesday, which has a tenure of 15 years and will mature on October 2027. The bonds have a profit rate of 6.6 percent yearly, paid every six months.

(Reuters / 30 Oct 2012)

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Saturday, 27 October 2012

Islamic banking provides better value propositions to consumers – KFH Malaysia

KUCHING: Kuwait Finance House (Malaysia) Bhd (KFH Malaysia), a pioneering bank that was incorporated in 1975 in accordance with Islamic principles of syariah, is calling for better awareness among customers that Islamic banking is not only an alternative financial approach but also in some aspects provides better value propositions to the consumers.

In an exclusive interview with The Borneo Post, the bank’s chief executive officer (CEO) Datuk Jamelah Jamaluddin pointed out that Malaysia’s Islamic finance industry had been in existence for over 30 years.

“The enactment of the Islamic Banking Act 1983 enabled the country’s first Islamic bank to be established and thereafter, with the liberalisation of the Islamic financial system, more Islamic financial institutions have been established.

“There are over 300 Islamic financial institutions worldwide across 75 countries. According to the Asian Banker Research Group, the world’s 100 largest Islamic banks have set an annual asset growth rate of 26.7 per cent and the global Islamic finance industry is experiencing average growth of 15 to 20 per cent annually.

“Rapid liberalisation in the Islamic finance industry and facilitative business environment has encouraged foreign financial institutions to make Malaysia their destination of choice to conduct Islamic banking business.

“This has created a diverse and growing community of local and international financial institutions. Full-fledged Islamic banks are given permission to conduct both ringgit and non-ringgit businesses,” Jamelah said.

When asked about the growth of clientele base in the country, she said that so far, the growth in Islamic banking had come from customers switching to Islamic banking from the conventional banking space.

Muslims as well as non-Muslims were starting to see the benefits of Islamic banking and explore syariah-compliant products and services, she remarked.

On the key principle differences between conventional or traditional banking and Islamic banking, the CEO pointed out that Islamic banking differed from conventional banking as it emphasised partnership while prohibiting ‘riba’ or interest.
“Islamic banking aims to create business activities that generate fair and equitable profit from transactions that are backed by real assets.

“It also serves the community at large by promoting ethical investment and by being responsible with a customer’s money right from its source to where it is channeled,” she elaborated.

Nonetheless, the Islamic banking sector was not without challenges as she noted, “Despite the growth, there still is a lack of understanding on the concept, potential customers and benefits of Islamic banking.

“There is also a lack of uniformity between syariah views due to the divergences of opinions between the different schools of law and methodologies that may be called upon when elaborating on the law.

“Syariah interpretation also has to consider business practicability/financing commercial viability,” she emphasised.
Jamelah highlighted that in terms of infrastructure financing, KFH Malaysia had became the main financier in the development project of Islamic religious schools in the state of Johor July 2011.

“The Islamic financing, through a Murabahah Tawarruq facility of up to RM160 million, has been provided to MysysNet Development Sdn Bhd, the company appointed by the Johor state government to undertake the project.
“KFH Malaysia financing will be utilised towards the construction of 97 Islamic religious schools from Phase One to Phase Four,” she stated.

With regards to the attractiveness of KFH’s banking products, the CEO cited an example in saying an increasing number of customers had been interested in KFH Gold Account-i, Muslims and non-Muslims alike.

“Since KFH Account-i was introduced in February 2010, close to10,000 account holders have been recorded. Approximately 30 per cent of KFH Malaysia’s customers are Gold account holders.

“This contributed to around 1.5 tonnes of gold sold. KFH Malaysia also recently launched the first Islamic Junior Gold Account-i for customers below 18 years old. The initial deposit can be as low as five grammes. 

(Berneo Post Online / 27 Oct 2012)
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Monday, 22 October 2012

Malaysia: Bank Negara Malaysia (BNM) issues Shariah standards on Mudarabah

KUALA LUMPUR: Bank Negara Malaysia (BNM) has issued the Shariah standards on Mudarabah to all Islamic financial institutions under its purview.
BNM said on Monday the issuance of the Shariah standards on Mudarabah was an important milestone and was part of its continuous efforts to strengthen the Shariah and regulatory framework in Malaysia.
"The standards would serve as guidelines for the Islamic financial institutions in developing Islamic financial products and services based on Mudarabah," it said.
The central bank pointed out the Shariah standards on Mudarabah was to provide a standard on the features of mudarabah contracts applicable in Islamic financial transactions.
"The Shariah standards on Mudarabah also outlines the mandatory and the optional features applicable to the mudarabah contract in which the Islamic financial institution would be required to observe such requirements in developing Islamic financial products and services," said BNM.
(The Star Online / 22 Oct 2012)

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Malaysia: OSKIB aims to unlock value in Islamic finance segment

KUCHING: OSK Investment Bank Bhd’s (OSKIB) Islamic banking division is taking measures to unlock value in the Islamic finance realm, in tandem with its measures in addressing the challenges currently faced in the segment.
The World Bank has valued the global Islamic finance asset size at about US$1.3 trillion currently and expects it to reach US$1.6 trillion by year-end. In Malaysia, the Islamic banking segment represented 18 per cent of the overall banking sector’s RM1.78 trillion total assets as at end-2011.

OSKIB’s Islamic banking division director and head Yazit Yusuff recently told The Borneo Post that the measures included shifting of focus on business development into more Islamic capital market activities.
“The bank has identified various initiatives including the setting up of a full-fledged Islamic fund management company. There are also projects in the pipeline including establishing an Islamic stock broking window and introducing syariah-compliant equity derivative products.”

In addition, he mentioned “continuous sourcing for financing mandates especially on opportunities to participate in syndicated Islamic financing arrangements with other Islamic banks to finance capital market activities.”
With regards to collaboration and consolidation, he also noted the bank’s greater potential via “benefitting from a bigger and stronger balance sheet through the proposed merger initiative with RHB Investment Bank.”

“The new developments include establishing an Islamic stock broking window to offer a full range of syariah-compliant equity businesses from a selection of syariah-compliant stocks to provision of Islamic Share Margin Financing.”

In terms of new products, OSKIB had identified more new syariah-compliant products such as syariah-compliant equity derivative products including warrants, options and dual-currency investments as well as retail deposits in the form of syariah-compliant negotiable instruments of deposits.

The fund management business would be looking at market expansion in which syariah-compliant funds will be issued and marketed out of the regional offices like Singapore and Hong Kong, he said.

“Kuala Lumpur is the hub for our Islamic fund management activities and all products offered will take into account screening methodology used by other jurisdictions to ensure global acceptance.

“In the current changing market, there is a wide range of Islamic banking products offered by many financial institutions to meet the demands and needs of investors in the Islamic capital market.

“OSKIB is dedicated to expand its current Islamic based products into a full-fledged Islamic capital market offering through growing its capabilities in product structuring, asset management, project financing, stock broking and capital services that would be made available to current and future investors.

(Berneo Post Online / 22 Oct 2012)

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Saturday, 20 October 2012

European sukuk sellers tapping Malaysia as crisis curbs lending

Malaysian tax breaks on sukuk are luring companies from Germany, France and Turkey to tap the world’s biggest Islamic bond market as Europe’s debt crisis curbs lending.

CIMB Group Holdings and AmInvestment Bank, among the top three sukuk arrangers in Malaysia this year, said they are seeing increased interest after the government extended tax exemptions for foreign issuers to 2014 in the September budget.

Ireland’s state-owned power producer is the only European entity that’s so far revealed plans to sell ringgit-denominated securities complying with religious tenets.

Global sales of Islamic notes climbed 84% in 2012 to an all-time high of $39.1bn, while syndicated loans in Europe, the Middle East and Africa fell 40% to $545.5bn, according to data compiled by Bloomberg.
Shariah banking assets in Malaysia rose 20.6% to a record 469.5bn ringgit ($154bn) as of July from a year earlier, the Finance Ministry said on September 28.

“We are getting enquiries from these countries because the European crisis is making it difficult to source financing in their home nations,” Mohd Effendi Abdullah, the Kuala Lumpur-based head of Islamic markets at AmInvestment Bank, the nation’s third-biggest Shariah-compliant debt underwriter, said.
“Many issuers are beginning to see Malaysia as a good source to tap Islamic funds.”

European roadshows held by the Malaysian International Islamic Financial Center, a government body set up in 2006 to promote the country as a Shariah-compliant hub, are starting to bear fruit, Badlisyah Abdul Ghani, chief executive officer of CIMB Islamic Bank in Kuala Lumpur, said.

Badlisyah and Effendi declined to name the companies considering selling notes in the Southeast Asian nation.
The Electricity Supply Board of Ireland is seeking approval from regulators for a sukuk, Dublin-based Dermot O’Reilly, business development executive at IDA Ireland, the international development agency, said in an e-mail on September 19.

Sales of Shariah-compliant debt by overseas companies increased 93% to 2.7bn ringgit this year, led by issuers from the Arabian Gulf, Singapore, and Kazakhstan.

Abu Dhabi National Energy Co and Singapore-listed First Resources sold 650mn ringgit and 600mn ringgit, respectively, this year. Gulf International Bank BSC and Saudi-Arabia-based Al Bayan Holding Co announced Islamic bond programs totaling 4.5bn ringgit.

“The trend of foreign investors selling ringgit sukuk is more visible as there’s greater awareness of what is available in Malaysia,” said Badlisyah, whose firm is a unit of CIMB Group, the second-biggest underwriter. “The debt crisis in Europe is also a factor that’s making companies look for alternative financing.”
Average yields on global Islamic bonds dropped four basis points, or 0.04 percentage point, to an all-time low of 2.87% in the first four days of the week, according to the HSBC/Nasdaq Dubai US Dollar Sukuk Index.
The difference between the average and the London interbank offered rate, or Libor, narrowed 14 basis points to 181 basis points, the least since January 2008.

Islamic bonds sold to international investors returned 8.4% in 2012, according to the HSBC/Nasdaq index, while debt in developing markets climbed 16.6%, JP Morgan Chase’s EMBI Global Composite Index shows.
The Southeast Asian nation pioneered the development of the global Shariah bond market with the sale of the first sovereign Islamic debt worth $600mn in 2002, according to the Malaysian International Islamic Financial Center.

Foreign issuers are interested in selling sukuk in Malaysia because it’s a cost effective destination with a diversified pool of investors, central bank Governor Zeti Akhtar Aziz told reporters in Kuala Lumpur last month.
Borrowing costs for top-rated companies in Malaysia dropped 35 basis points to 4.31% this year, the lowest level since 2003, according to a central bank index. Corporate sales of sukuk rose 34% to 52.3bn ringgit in 2012, data compiled by Bloomberg show.

Issuance reached an all-time high of 75.6bn ringgit last year following the single-biggest offering from highways operator PLUS Bhd. in December of 30.7bn ringgit.

(Gulf Times , 20 Oct 2012)

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Malaysia: Syariah-compliant small cap index launched

KUALA LUMPUR: FTSE Group and Bursa Malaysia have launched the FTSE Bursa Malaysia Small Cap Shariah Index to complement the existing FTSE Bursa Malaysia syariah indices.
In a joint statement, it said the new syariah index was designed to provide investors with a precise benchmark for syariah-compliant investment in Malaysian small cap companies.
The FTSE Bursa Malaysia Small Cap Shariah Index was developed in response to the needs of market practitioners who noted the lack of a benchmark to track the performance of syariah-compliant small cap companies. Constituents are selected from the universe of the FTSE Bursa Malaysia Small Cap Index according to the Malaysian Securities Commission's Shariah Advisory Council screening methodology.
The index is based on FTSE's award winning methodology which includes free float adjustment and liquidity screens and is managed in accordance with a clear and transparent set of index rules governed by an independent index committee.
The new FTSE Bursa Malaysia Small Cap Shariah Index forms part of the FTSE Bursa Malaysia Emas syariah universe and will be calculated on an end-of-day basis. Subscribers to the FTSE Bursa Malaysia Index Series will receive the new index as part of their existing data package at no extra cost.

(The Star Online / 17 Oct 2012)

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Malaysia's Islamic banks ripe for consolidation-Bank Muamalat

KUALA LUMPUR (OCT 18, 2012) : Malaysia's Islamic banks are ready for consolidation as they seek ways to cope with rising operational costs, a top official with Bank Muamalat Malaysia Bhd said, signalling a greater acceptance in US$143.64 billion sector for M&As.
Islamic banks in the past have often been reluctant to merge, in part due to resistance from powerful shareholders who fear a loss of control while strains in global financial markets discourage risk-taking.
Islamic finance has grown in leaps and bounds to account for 23.7% of Malaysia's total banking assets although a major aspect is missing -- the development of megabanks that can issue ground-breaking products in the same way as conventional banks.
"I think consolidation is imminent and we will see a lot of Islamic banks getting together," Bank Muamalat CEO Redza Shah Abdul Wahid told Reuters.
"Costs have risen easily by 20% to 30% mainly due to the shortage of human capital and increased regulatory costs. Margins are falling and the only way to counteract this is to become bigger and more efficient," he added.
Bank Muamalat is now the target of a potential acquisition by financial group Affin Holdings Bhd, which may buy a stake from Khazanah Nasional Bhd and DRB-Hicom Bhd to create the country's fourth largest Islamic bank by assets.
DRB-Hicom holds 70% of Bank Muamalat, while the Khazanah holds the remainder. Affin, which received the greenlight from the Malaysia's central bank to begin negotiations, said the matter will conclude by end-2012.
The combined entity of Affin and Bank Muamalat would elevate both banks to a stronger market position. Affin would grow to the fourth largest Islamic bank by assets from ninth currently, the bank said last month.
"(With consolidation) we would be able to take in all these costs and do bigger deals, I think this is the way forward," Redza said.
DRB-Hicom, controlled by reclusive tycoon Syed Mokhtar Al-Bukhary, purchased a controlling stake in Bank Muamalat in 2008 with a mandate to reduce its holding to 40%.
The company last attempted to divest to Bank Islam Malaysia Bhd and Bahrain-based Al Baraka Islamic Bank.
Bank Muamalat is one of the country's remaining domestic standalone Islamic banks next to Bank Islam Malaysia Bhd, which has retained its leading position in the market.
(The Sun Daily / 19 Oct 2012)

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Islamic finance body, IILM hires new CEO ahead of first sukuk issuance

Kuala Lumpur-headquartered IILM has delayed its first issuance of short-term sukuk, or Islamic bonds, twice since it began operations last year.
The company, which aims to help sharia-compliant banks manage liquidity and create a liquid cross-border market for Islamic instruments, said that Rifaat Ahmed Abdel Karim would take over as chief executive, replacing Mahmoud AbuShamma who was hired in February 2011 on a three-year tenure.
Rifaat was the first secretary general for the Islamic Financial Services Board and the Accounting and Auditing Organization for Islamic Financial Institutions, IILM said in a statement.
"Rifaat has an impressive career track record in Islamic finance and will certainly add value to the work of IILM," the chairman of IILM's governing board, Dr Mohamed Y. Al-Hashel, said in the statement.
IILM is set to launch its first sukuk of $300 million to $500 million within the next few months, AbuShamma told Reuters in an interview on Oct 2.
The company has faced a challenge to ensure it complies with laws in all of the 12 countries in which its members operate, AbuShamma said in the interview.
Eventually, IILM will issue sukuk totalling more than $2 billion a year, AbuShamma predicted.
IILM members include monetary authorities in Indonesia, Iran, Kuwait, Luxembourg, Malaysia, Mauritius, Nigeria, Qatar, Saudi Arabia, Sudan, Turkey and the United Arab Emirates as well as the Islamic Development Bank and the Islamic Corporation for the Development of the Private Sector.

(Reuters / 19 Oct 2012)

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Monday, 15 October 2012

Malaysia: Islamic banks urged to be sympathetic to house buyers

KUALA LUMPUR: Islamic banking players have been urged to be sympathetic to house buyers of abandoned projects and not burden them with debt as it may lead to bankruptcy.

Malaysian Muslim Consumers Association (PPIM) financial services monitoring bureau chief, Sheikh Abdul Kareem Said Khadaied said many house buyers face legal action filed by Islamic banking players demanding high payment for uncompleted houses.

Sheikh Abdul Kareem, who was the third panel member, said as an Islamic entity, banks should think of problems faced by Muslim consumers and the officers should discretion to help the house buyers.

PPIM activist Shirazdeen Adam Shah served as forum moderator with Bank Islam Malaysia Bhd sharia division head, Ustaz Mohd Nadzri Chik as second panel member and Bank Muamalat Malaysia Bhd former chief executive officer, Datuk Abdul Manap Abdul Wahab as fourth panel member.

First panel member was Dr Nuarrual Hilal Md Dahlan, director of Institute for Governance and Innovation Study, Universiti Utara Malaysia (UUM)
Nurrual said Bank Negara should improve Islamic banking to benefit consumers, especially buyers of houses in abandoned projects.

The government should compel all private developers to complete the houses and sell them by including warranty insurance to avoid problems.

He also urged consumers to buy from government developers like Syarikat Perumahan Nasional Berhad (SPNB) to avoid the risk of bankruptcy.

(Borneo Post Online / 15 Oct 2012)
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Sunday, 7 October 2012

Malaysia: Islamic banking expands in Sabah

The positive assessment of recent progress at Sabah’s state banks underlines the confidence in the potential of its financial services sector, particularly in the area of Islamic finance.

In July, Malaysia-based RAM Ratings reaffirmed the Sabah Credit Corporation’s (SCC’s) ‘AA1’ and ‘P1’ issue ratings, stating that the state financial institution had a stable outlook.

In the previous month, RAM Ratings also assigned long- and short-term issue ratings of ‘AA1’ and ‘P1’ to the Sabah Development Bank (SDB), noting the ‘strategic role’ the financial institution played in supporting the state’s goals.

The positive rating for the SCC came just weeks after it issued three tranches of sukuk, with tenures of five, seven and 10 years, amounting to RM200 million (US$65.38 million).

In August, the SDB also issued three tranches of five, seven and 10-year bonds, with a total size of RM500 million (US$163.44 million).

In May, Vincent Pung, the chief executive officer (CEO) of the SCC, told local media that the first issuance of the corporation’s sukuk programme in December 2011 had strengthened the bank’s funding base, supporting the growth of its sharia-compliant business.

“The SCC’s profitability is an indicator of its success, recording a surplus before tax of RM51.7 million (US$16.89 million) for the financial year 2011.

This was an increase of RM9.3 million (US$3.04 million), or 22 per cent, from the audited surplus before tax of RM42.4 million (US$13.86 million) for the previous financial year,” Pung told The Borneo Post.

The confidence in Sabah’s financial services potential is not limited to state institutions, as a number of major foreign banks are now also moving into the market.

Citing its confidence in the ‘rapid economic growth potential of the state’, Standard Chartered Bank opened its first shariah compliant branch in Sabah in February under the name Standard Chartered Saadiq.

It also launched a financial literacy programme called ‘Minda Wang’.

“Islamic banking has been growing twice as fast as conventional banking, owing to the rising customer demand, increasing sophistication of Islamic banking offerings and strong government support.

“The new branch, alongside the activation of Minda Wang, furthers our ongoing strategy to support this growth, while expanding our Islamic banking footprint in East Malaysia and throughout the nation,” said Osman Morad, the managing director and CEO at Standard Chartered Bank Malaysia, at the bank’s opening.

In October 2011, Saudi Arabia’s Al Rajhi Bank – the world’s largest Islamic bank – also opened a branch with an eye on the potential raised by the Sabah Development Corridor initiative, which was estimated to have seen some RM107 billion (US$34.98 billion) in investment since it started four years ago.

Like its state-run and private sector counterparts, Al Rajhi Bank had said it would take aim at providing a wider range of financial services for small and medium-sized enterprises (SMEs), which were expected to become a major engine of economic growth.

In May, SME Corporation Malaysia approved grants and loans totalling RM110.7 million (US$36.19 million) to help SMEs, while in August, talks were held in Sabah as part of an initiative to engage SMEs, business organisations and banks.

Officials told local media that the dialogue would introduce a spectrum of financing options available for SMEs under a nationwide SME masterplan.

The focus on encouraging a symbiotic relationship between small businesses and financial services firms to encourage growth was also apparent in the state’s establishment in February of an SME village.

Under plans for Malaysia to achieve high-income nation status, Sabah is projected to have a per-capita income of around RM32,400 (US$10,591) and achieve a gross national income of RM110 billion (US$35.96 billion) by 2020.

As part of the initiative, SMEs’ contribution to nationwide gross domestic product (GDP) is expected to grow from 33 per cent in 2011 to 40 per cent by 2020.

(Berneo Post Online / 07 Oct 2012)

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Thursday, 4 October 2012

Malaysia: International Islamic Liquidity Management (IILM) says first sukuk to debut within months

Kuala Lumpur-headquartered IILM, established last year, aims to issue short term sukuk, or Islamic bonds, to help sharia-compliant banks manage liquidity and create a liquid cross-border market for Islamic instruments.
Issuance of the first sukuk has been delayed. IILM has faced a big challenge to ensure it complies with laws in all of the 12 countries in which its members are, Chief Executive Officer Mahmoud AbuShamma told Reuters in an interview late Tuesday.
"It does not require an extreme amount of effort, but we're setting up a product that is ever-expanding and has many complexities," said AbuShamma, a former HSBC executive who launched Indonesia's first Islamic banking unit operated by a foreign bank.
He said that IILM is 85 percent prepared for the first issuance, and what remains to be worked out are "some highly technical issues."
"It's not our mandate to issue one sukuk and go off on a holiday, we should be manufacturing a continuous supply of it," he added.
Eventually, IILM will issue sukuk totaling more than $2 billion a year, AbuShamma predicted.
IILM members include monetary authorities in Indonesia, Iran, Kuwait, Luxembourg, Malaysia, Mauritius, Nigeria, Qatar, Saudi Arabia, Sudan, Turkey and the United Arab Emirates as well as the Islamic Development Bank ISDBA.UL and the Islamic Corporation for the Development of the Private Sector.
AbuShamma said IILM will initially focus on U.S. dollar-denominated sukuk, as central banks have already met the need for local-currency, short-term instruments.
"Because we are looking to issue at a regular pace, we first need to test the market. It's very critical to assess the engine itself, the capacity of the institution, the system and our processes to see if it is efficient and safe," he said.
The maiden sukuk will use an asset-backed leasing structure in line with an Islamic principle called al-Ijarah. It will aim to get high-quality ratings from international rating agencies, AbuShamma said.
"The pool of assets we're going to have will predominantly be sovereign assets from our member countries," said AbuShamma.
He added the sukuk will be distributed by a network of primary dealers, of which there will be up to two elected in each member's jurisdiction.
The first sukuk will be traded in a secondary market, which could pose fresh challenges as investors prefer to hold Islamic bonds until maturity instead of trading them.
"We have a lot of faith in the dealers, it will be their role to underwrite the issuance and create a secondary market," AbuShamma said.
(Reuters / 03 Oct 2012)

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Monday, 1 October 2012

Islamic finance & management events in Kuala Lumpur Malaysia in 2012

20-21 November 2012: 
KL Conference on Islamic Wealth Management & Financial Planning

11-12 December 2012: 
KL Conference on Islamic Finance

To register or reserve a seat online, please go to:

Organizer: Alfalah Consulting

Islamic banking data for Malaysia (as at 31 July 2012)

Islamic banking data for Malaysia (as at 31 July 2012).
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Malaysia: Ongoing efforts to cement lead in Islamic finance sector

CONTINUOUS efforts were taken to further position Malaysia as the leader in Islamic finance as Islamic finance continued to gain significant importance in the global financial market.

These included a recent review of laws relating to land, hire purchase and contract applicable to Islamic finance by the Law Harmonisation Committee to ensure their compatibility with Shariah and proposed amendments to the legislation to facilitate Islamic finance transactions. On the international front, global engagement and alliances in Islamic finance continued to be fostered in the first seven months of 2012.
The International Centre for Education in Islamic Finance has signed MoUs with the World Bank and the Islamic Financial Services Board in efforts to enhance collaboration on sharing of knowledge, undertaking research, development, training, and education in the Islamic financial services industry.
The Islamic capital market has contributed significantly to the development of the overall capital market and remains as important alternative source for raising capital. As at end-July 2012, 825 Shariah-compliant securities were listed on Bursa Malaysia, representing 89% of total listed securities with a market capitalisation of RM931bil or 65% or total market capitalisation.
In the first seven months of 2012, the trading volume of shariah-compliant securities increased to 148.4 billion units of the total 222.2 billion units traded.
Malaysia remains on the forefront of innovation and development of sukuk and continues to be the global leader in the sukuk market, accounting for 68% of total global sukuk outstanding as at July 31.
Malaysia retained its number one position for issuing sukuk, with a market share of 71% as at end-July. Bursa Malaysia remains the top sukuk listing destination, with 19 sukuk listed totalling RM99.6bil as at July 31.
During the first seven months of 2012, two Islamic fund management licences were approved, bringing the number of full-fledged Islamic fund management companies to 18. During the same period, an additional Islamic unit trust fund and four Islamic unit trust and four Islamic wholesale funds were launched.
As at end-July, the total net assets value (NAV) of Islamic unit trust funds stood at RM33bil and the Islamic wholesale funds at RM14bil.
Meanwhile, the number of Islamic REITs stood at three, with a market capitalisation of RM3.6bil as at end-July. Similarly, the Islamic ETF remained at one with total NAV of RM300mil.
Bursa Suq Al-Sila’ being the world’s first end-to-end Shariah-compliant commodity trading platform, has added Refined, Bleached and Deodorised palm olein as new commodity offering to meet greater demand from local and international players for commodity-based Islamic financing and investment.
Meanwhile, the Islamic banking business continued to expand in the first seven months of 2012.
Total assets grew 20.6% to RM469.5bil as at end July, representing 24.2% of the total banking system assets.
Total deposits rose 21.3% to RM362.7bil, or 26.1% as at end-July.
Total Islamic financing continued to grow 19.3% to RM294.2bil and accounted for 26.6% of total loans by the banking system.
Financing of the Islamic banking system was predominantly channeled to the household sector and accounted for 65%, or RM191.1bil as at end-July.
The takaful industry expanded further during the first seven months of 2012, with assets increasing to RM18.3bil and accounting for 9% of the total insurance and takaful industry assets as at end-July.
The bulk of takaful assets were concentrated in Islamic debt securities and Government Investment Issues, which amounted to 74.4% of total takaful assets.
(The Star Online / 28 Sep 2012)
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