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Vice President Ma’ruf can ‘do more’ to develop sharia economy

As a respected elder figure among the Muslim grassroots, Indonesian Vice President Ma’ruf Amin was initially expected to play a significant role in enacting policies that could benefit the country’s majority-Muslim population. But analysts have suggested that Ma’ruf could still do more to promote the sharia economy and finance. The government launched a masterplan for the sharia economy last year, which provides a five-year development roadmap. The plan hopes to transform Indonesia into a net producer of halal goods and services, instead of merely being a big market for them. According to analysts, Ma’ruf should encourage the state to focus more on developing the sharia economy, particularly in providing stimulus programs among sharia-based businesses and strengthening sharia institutions.

Responsible Investing: Combining ESG and shariah principles in a fund

Sustainable investing is increasing in popularity as more investors and companies prioritise the need to act responsibly in order to create a positive lasting impact on the community and the environment. Shariah-compliant investing shares many similarities and goals with sustainable investing. Governments, institutions and the younger generation are more concerned about environmental issues such as climate change. As such, they demand more independent governance structures and want corporations to fulfil social responsibilities. Maybank Asset Management recently launched the Maybank Global Sustainable Equity-i Fund, its first actively managed shariah-compliant ESG fund that invests in both shariah-compliant and sustainable companies in the global markets. A minimum of 80% of the fund will be in shariah-compliant equities and shariah-compliant related securities. The rest of the fund will be invested in Islamic liquid assets.

International Islamic Trade Finance Corporation and Mizuho Bank Malaysia sign $100 mln trade financing deal

The International Islamic Trade Finance Corporation (ITFC) signed a US$100 million Murabaha-structured line of trade finance with Mizuho Bank Malaysia, a subsidiary of Mizuho Bank Japan. This financing will help ITFC extend its support to the member countries under its COVID-19 Response Plan. The financing is ITFC’s first partnership with a Japanese bank, signalling an expansion of its partners around the world. The virtual signing ceremony took place between Eng. Hani Salem Sonbol, CEO ITFC and Mr. Shojiro Mizoguchi, the Managing Director & CEO, Mizuho Bank (Malaysia) and witnessed by Mr. Hidekatsu Take, the Managing Executive Officer of Mizuho Bank.

Asia Pacific Investment Bank to launch new Islamic digital finance fund

Asia Pacific Investment Bank (APIB) will be launching an Islamic digital finance fund in Malaysia to invest in shariah-compliant financial technology (fintech) start-ups. The fund will be launched in collaboration with OUD Asset Management, a boutique fund management company. APIB director Datuk Foo Yong Hooi said the bank also collaborates with Ripple to explore ways to facilitate cross-border transactions more efficiently. According to Foo, the collaboration with OUD is very important now as the financial industry is adopting digital transformation at a pace faster than ever before, and this fund would be able to support the digital economy transformation of Malaysia.

With building blocks in place, #Malaysia says it’s ready to welcome Islamic fintech investors

The Islamic fintech space is growing in Malaysia, with recent entrants and an expanding consumer base. Government support and related initiatives are helping to drive the sector’s development. There are currently some 26 Islamic fintechs operating out of the country. While Malaysians have the possibility to bank in a Shariah-compliant manner, Islamic fintech has not yet reflected the same range of services that conventional fintech has offered, particularly in North America, Europe and China. Such gaps in the market have yet to be tapped, but there is a ready market for such services. A new digital bank could drive sectoral development, with Bank Negara Malaysia granting five licenses, with one potentially an Islamic provider.

Cover Story: Sustaining the performance of shariah funds

Shariah-compliant investments are resilient and even tend to perform better than their conventional peers in troubled times. This was proven during the first half of the year, when the average returns of global and Malaysian equity shariah funds were higher than those of their conventional counterparts. Ismitz Matthew De Alwis, executive director and CEO of Kenanga Investors, notes that shariah funds in general have outperformed due to their lack of exposure to the banking sector and a higher weighting in defensive sectors such as healthcare and telecommunications. Despite signs of improving economic data, De Alwis expects the equity market to remain volatile. As the market grapples with the risk of surging Covid-19 infections, governments could be forced to reimpose restrictions on business activities.

Indonesian personal finance portal Finansialku eyeing more investors with new Islamic feature

Indonesian personal finance assistant PT Solusi Finansialku plans to launch a dedicated Islamic feature to capture a broader base of investors. Finansialku currently has more than six certified financial planners focused on Shariah-compliant investing but lacks a dedicated Islamic section on its app and platform. Its app has been downloaded 203,000 times since April 2017 and it is targeting 4 million downloads by 2022. Finansialku started in 2013 and only digitalised in 2016, moving its services online and to an app. Its advisors are CFPs certified by the national authority the Financial Planning Standards Board (FPSB).

Moody's - Structural features underpin Malaysian Islamic banks' resilience against coronavirus fallout

According to Moody’s Investors Service, concentration on retail financing and other structural features will help Islamic banks safeguard against a deterioration in asset quality and profitability. Islamic banks have sufficient loss buffers against financial stress, with their funding and liquidity remaining stable. The seven largest Islamic banks in Malaysia, five of which are subsidiaries of domestic banking groups with conventional operations, have a heavy concentration on retail financing, which is less vulnerable to an economic downturn. In addition, Malaysian banks generally have prudent underwriting practices for retail financing, which adds to their asset quality.

Government to raise $343m from retail sukuk SR013

Indonesia's government launched retail sukuk SR013 to raise Rp 5 trillion (US$343 million) to fund the state budget in the face of the COVID-19 pandemic. The tradable debt papers, set to mature on Sept. 10, 2023, offer a fixed annual yield at 6.05%. Investors can buy the bonds for Rp 1 million to Rp 3 billion from Aug. 28 and Sept. 23 at 31 partnering distributors, which include conventional and sharia-compliant banks, as well as online investment platforms. As of Aug. 6, the government has issued Rp 236.82 trillion in domestic sukuk, which nearly topped last year’s issuance of Rp 258.28 trillion. The government raised in July Rp 18.33 trillion from government retail bond issuance ORI-017, the highest proceeds ever recorded in an online bond offering by the country.

Bitcoin Association sponsors Islamic Fintech Week 2020

Bitcoin Association has joined the inaugural Islamic Fintech Week 2020 as a sponsor and ecosystem partner. The three-day event will bring together stakeholders, regulators and innovators to chart the future of financial technology in the Islamic world. This year’s IFW2020 will be hosted in Malaysia from September 7-10. It will feature a themed series of panel debates, roundtable sessions and masterclasses. Topics on the agenda for the virtual event will include the role of Shariah in Islamic fintech, how Malaysia can become a global finance hub, fintech’s role in the recovery from the COVID-19 pandemic and the social impact of Muslim women in finance. Digital currencies and blockchain will also feature heavily in the event, with various guests set to address how they can be integrated into the Islamic finance industry.

Kenanga Cap Islamic partners Bay for digitised factoring solution

Kenanga Capital Islamic (KCI) has collaborated with a financing company Bay Group Holdings to enhance digitisation in the local factoring market. The collaboration will introduce a maiden local solution to the local factoring market through merging private and public sectors under a platform to tap into an underserved market, which is expected to grow fivefold from its current RM20 billion value. The partnership with Bay is expected to advance KCI’s position in the factoring market, reduce its overall operational costs as well as improve its efficiencies. Registered and regulated by the Securities Commission of Malaysia in 2016, Bay provides innovative digital solutions through its supply chain management platform and Bay P2P financing platform.

#Malaysia launches #Sukuk Prihatin, maiden digital Islamic bond

The Malaysian government has launched the RM500 million Sukuk Prihatin which aims to raise funds from the public and corporates who wish to help contribute towards the Covid-19 Fund. Prime Minister Tan Sri Muhyiddin Yassin said the fund would be used to modernise telecommunications network in the rural area to help students get access to education through digital channels. It is also to provide further assistance to the micro, small and medium enterprises, as well as the healthcare sector's research on infectious diseases. The minimum subscription for the first investment is RM500 with an interest of 2% per annum for a tenure of two years. After the tenure ends, subscribers or investors can opt to fully donate the interest to Covid-19 Fund and will be given a tax relief depending on the size of the donation.

APIB aims to cooperate with domestic financial institutions to promote Islamic finance industry

Asia Pacific Investment Bank (APIB) aims to cooperate with domestic financial institutions to promote the internationalisation of the Islamic finance industry. APIB CEO Chris Wang is confident that APIB could be the bridge that connects Malaysia and China. In light of the US-China trade war and the Covid-19 pandemic, the government is facing a critical challenge in leveraging the country’s position. Wang said APIB could help the government achieve the goal by making the country’s Islamic finance industry more dynamic. APIB is an offshore Islamic investment bank, established in January 2015 with the approval of the Labuan Financial Services Authority, headquartered in Labuan and its main operating office based in Kuala Lumpur, with representative offices in Shanghai and Nanjing, China.

#Indonesia’s #sukuk issuance to rise to $27b to finance COVID-19 battle: Moody’s

Credit rating agency Moody’s Investors Service expects Indonesia’s sukuk issuance to increase to US$27 billion this year from $16 billion last year. Lead analyst Thaddeus Best said on Tuesday that he expected Indonesia’s sukuk issuance to increase by about 68.75% as the government unveiled a Rp 695.2 trillion (US$47.3 billion) stimulus package to fight the pandemic. To help fund the package, the government is planning to raise Rp 900.4 trillion in the second half of this year to cover for a widening budget deficit of 6.34% of gross domestic product (GDP) this year. The option-adjusted spread of Indonesia’s US dollar-denominated government sukuk had fallen to almost 150 basis points (bps) as of July compared to its highest spread of 400 bps in March.

Corporate #sukuk to grow slow in 2020

According to Malaysian Rating Corp (MARC) chief ratings officer Rajan Paramesran, domestic corporate sukuk are in a better position than during the global financial crisis or the Asian financial crisis. Going into the current crisis, corporate sukuk had relatively stable cashflow metrics. He added that government-supported transport projects, state-backed water infrastructure projects and solar power plant projects have recently been and will be key sources for sukuk issuances. Rajan said the catalyst for the growth in the Islamic debt market continues to be government incentive on susuk issuances such as tax reduction. Based on MARC’s data, corporate sukuk issuance by the end of July 2020 amounted to RM34.3 billion, which is the lowest to date over the last 10 years and dampened by the Covid-19 pandemic. In a separate report, Moody’s said Malaysian Islamic banks are expected to remain resilient amid the Covid-19 outbreak, underpinned by heavy concentration on retail financing.

VP seeks greater digital literacy among Islamic economic actors

Vice President Ma'ruf Amin has appealed to Islamic economic and financial actors to hone their digital literacy skills to survive amid the changes arising from the COVID-19 pandemic. He gave a speach at the virtual opening of the 2020 Sharia Economic Festival and Indonesia Sharia Economic Festival (ISEF) in Jakarta. Amin affirmed that digitalization was conducted in the wake of the changes in the current life order, including shopping for basic necessities online or through social media with the use of the internet. Amin noted that in terms of products, health and hygiene aspects were of absolute importance and offered enormous opportunities for the halal product industry. Not only for sharia economic players, but this year's ISEF was also held virtually to adjust to the current conditions to thwart the transmission of COVID-19.

Mideast Islamic banks, investors urged to expand operations to #Philippine market

Islamic banks and investors from the Middle East have been urged to expand their operations into the Philippines which is currently seeing a growing halal industry. Speaking at the webinar ‘Islamic Finance as Vehicle to Economic Recovery’, Philippine Central Bank Managing Director Atty Arifa Ala highlighted the potential of the Islamic finance industry in her country. She also invited foreign Islamic banks and investors, especially from the Middle East to expand their operations in the Philippines. Ala highlighted the new law Republic Act No.11439 or ‘An Act Providing for the Regulation and Organization of Islamic Banks’. She reiterated that the new law was created as an expanded Islamic banking system that involves tax neutrality, stronger risk management, ethical financial stability, further establishment of Islamic banks and other Islamic financial activities.

Islamic fintech industry sets strategic priorities to drive financial inclusion

The stakeholders of the Islamic fintech space have determined nine strategic priority areas that will further reinforce and enhance financial inclusion in Malaysia. These include the setting-up of a national Islamic fintech taskforce; the renewed focus of enhancing digital and Islamic financial literacy, especially within B40 segment; developing smart partnerships among ecosystem players; and ensuring there was greater readiness among Islamic institutions to embrace digitalisation. The priority areas were drafted during the Islamic Fintech Dialogue 2020: Driving Financial Inclusion through Islamic Fintech held virtually in May. Malaysia Digital Economy Corporation (MDEC) CEO Surina Shukri said the end-goal was to empower the B40 group and the micro, small and medium enterprises.

CIMB hunts for marcomms and CSR lead for group Islamic banking

CIMB Bank is looking for a director, Islamic marketing, communications and CSR, group Islamic banking (GIB). The appointed individual will develop and enhance the CIMB Islamic brand platform in line with business aspirations. The individual will also offer strategic marketing and communications support to GIB consumer banking, commercial banking, transaction banking, wholesale banking and asset management. The individual is expected to have at least 10 years of experience of relevant banking background in established banks or financial institutions, in-depth knowledge of Islamic marketing, communications and corporate responsibility, and working knowledge of Shariah and governance.

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