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Impact investing activity in Asia has grown quickly, but it will be a challenge to maintain the pace of scaling due to the complex and widely heterogeneous landscape of the region. Crowdfunding has been identified as a potential solution to match the demands and risk appetite of investors to the needs of operators. A case study on Music Securities is used to highlight the key benefits and risks of such an impact investing model. Formulating appropriate and efficient policies and increasing awareness among investors will also be crucial in promoting impact investing activity.

Etiqa is contributing RM1mil for the purchase of ventilators through Mercy Malaysia’s Pandemic Fund to support strategic preparedness and response plan to the Covid-19 virus. This initiative will also help ensure all communities are well prepared, especially those with the weakest health systems. With the number of people infected with Covid-19 increasing in Malaysia, the number of ventilators available at designated hospitals will be insufficient to deal with the number of critical cases. Etiqa Insurance & Takaful Group CEO Kamaludin Ahmad feels obligated to help the country battle Covid-19 and hopes that this contribution will mean that no patient will have to be denied lifesaving care due to ventilator shortage.

THE Covid-19 fund, launched by Malaysian Prime Minister Tan Sri Muhyiddin Yassin on March 11, received a RM5 million contribution yesterday. The donations came from Spanco Sdn (RM2 million), followed by DRB-Hicom, MMC Corp and YTL Corp who contributed RM1 million each. Property developer Titijaya Land has contributed 520,000 face masks for frontliners. With the above donations, the fund has amassed a total of RM8.13 million in contributions. The government has launched the Covid-19 fund to help affected Malaysians. Similarly, the Malaysian Department of Islamic Development has also launched another fund to help the Muslim communities affected by the outbreak. Separately, some Malaysians are criticising the setting up of funds and are calling on ministers to take pay cuts instead.

Sukuk issuance could potentially take a hit this year, dragged by subdued economic growth. In 2018, when Malaysia’s GDP growth slowed to 4.7%, sukuk issuances fell by 2.6%. In 2019, when real GDP growth moderated further to 4.3%, sukuk issuances slipped by 2.3%. However, the current low interest-rate environment will prevent sukuk issuances from falling too significantly this year. According to Malaysia Rating Corp (MARC) chief economist Nor Zahidi Alias, the downside risk remains especially if the Covid-19 outbreak continues to be unmanageable and lockdown periods across global economies continue. Policymakers globally are using fiscal and monetary tools to soften the impact of the Covid-19 outbreak. The US Federal Reserve’s move to lower its benchmark to a near-zero rate prompted central banks across many sukuk active markets to cut their interest rates.

Islamic fintech firms in the Southeast Asian region are providing digital services with wide appeal. The services—especially peer-to-peer financing and crowdfunding—can easily be used by the world’s 1.9 billion Muslims, and the tech-savvy firms are able to compete well with conventional Islamic banks. For example, Alami has a sharia-compliant P2P service to link funders with small and medium-sized businesses in Indonesia. So far, the company has steered P2P funding into over 30 businesses and is recruiting for expansion. Ethis operates a variety of sharia-compliant crowdfunding platforms. Its Indonesian housing venture has built over 8,000 low-cost homes with investments from 65 countries, and a new Ethis platform now provides crowdfunding for real estate projects in Dubai. Two other promising firms are Investree, a P2P marketplace for a range of business financing needs, and Ammana, with similar services.

Customers across the world are quickly taking to new mobile-based payment technologies; contactless and e-wallets taking the lead over cold, hard cash. But not every nation is moving quite as fast. In Indonesia there are some concerns about whether the adoption of digital payments and other fintech services are compliant with Islamic laws. Recently, the top Muslim clerical body in Indonesia has issued an edict deeming virtual money acceptable, as long as it meets specific conditions. GoPay has already partnered with the Indonesian Mosque Council to enable digital donations, including the practice of almsgiving, zakat. Islamic fintech is a good example of the business benefits of fostering inclusivity and acceptance among local markets. Inclusivity is not only the right thing to do, but it makes good business sense as well. Out of Indonesia’s 270 million population, half lack bank accounts but have mobile phones. As cash continues to become obsolete, Islamic fintech members will surely profit.

Malaysian Affin Hwang Investment Bank expects gold prices to average higher in 2020, helped by sustained accommodative monetary policies among major central banks. Using the TradePlus Shariah Gold Tracker exchange-traded fund (ETF) as an avenue to invest in the precious metal, Affin Hwang believes the ETF’s fair value is RM2.30. In 2019, the price of gold surged by 18.9% year-on-year (YoY) to US$1,523.1/oz compared to a decline of 2.1% in 2018 to US$1,309.3/oz. In the near term, Affin Hwang Capital believes concerns over the recent Covid-19 outbreak will likely continue to drive safe-haven flows into gold. Due to geopolitical concerns and low-interest rates, the World Gold Council noted that holdings in gold-backed ETFs hit an all-time high of 2,885.5 tonnes in 4Q19 compared to 2,858.8 tonnes in 3Q19 mainly from North American and European-listed funds.

Winning over conservative Muslims is both a challenge and multi-billion dollar opportunity for fintech firms in Indonesia. Questions about compliance with Islamic law are a significant hurdle for the adoption of digital payments and other fintech services. Indonesia's top Muslim clerical body has issued an edict deeming virtual money acceptable, as long it met specific conditions. To showcase the compliance of their services with Islam, fintech firms are organising forums with Islamic scholars and sponsoring religious festivals. GoPay has partnered with the Indonesian Mosque Council to enable digital donations, including zakat, or compulsory alms giving, in its 800,000 mosques. Some of the startups say they are finding their appeal extends beyond Muslims. One of them is peer-to-peer lender Alami, which has disbursed over $7.5 million in sharia-compliant financing to small and medium enterprises since May.

Malaysia has firmly established itself as an Islamic hub in the world through leadership and innovative product offerings. As such, the creation of an Islamic finance-enabling ecosystem is the key driver of the Malaysian takaful industry’s growth. The takaful sector continues to enjoy faster growth than the conventional insurance sector. Family and general takaful premiums rose by 29.6% and 16.4% respectively in the first half of 2019 (1H19), compared to 12.2% in conventional life and -1.3% in general insurance. However, surverys show that almost half of the Malaysian population does not have protection due to a lack of awareness. According to Fitch Ratings, takaful operators should rethink the way these products are positioned to entice a larger crowd looking for general protection through the use of digital applications.

Standard Chartered is bullish about the fortunes of its Islamic banking business in Bangladesh, Saadiq. The global lender introduced Islamic banking in Bangladesh 15 years ago and has been a trendsetter since. It was the first to introduce Islamic credit card in Bangladesh in 2007 and arrange Sukuk transaction in 2019. The bank has introduced a product, Saadiq Hajj Savers, to provide its customers a one-stop solution for Hajj and Umrah. This account will enable customers to deposit a fixed amount every month and earn profit on their monthly average balance at an attractive rate. Saadiq has another savings product in the works: the Saadiq Graduate account targeting fresh university leavers.

The central bank of Bangladesh approved applications from two domestic banks, Standard Bank and NRB Global Bank, to become fully Islamic banks. The two banks so far only operated Islamic windows but sought to convert to fully-fledged Shariah-compliant banks to enlarge their scope of product offerings. NRB Global Bank said it plans to change its name to Global Islami Bank to underscore its new role. The move brings the number of fully-fledged Islamic banks in Bangladesh to ten, with the others being Al-Arafah Islami Bank, Islami Bank Bangladesh, Exim Bank, Social Islami Bank, Shahjalal Islami Bank, Union Bank, First Security Islami Bank and ICB Islamic Bank. Analysts note that the industry has still high potential for further expansion as Bangladesh enjoys a vibrant economy with GDP per capita having more than tripled over the past decade.

Maybank Islamic has officially opened its first overseas branch in Dubai International Financial Centre (DIFC). It offers wholesale banking services and facilities, with emphasis in corporate financing, treasury, and capital market and trade finance. According to Maybank Islamic’s CEO Datuk Mohamad Rafique Marican, the DIFC branch was a significant milestone for Maybank Islamic, as it not only marks its first overseas branch but also Malaysia’s first Islamic bank to have a presence outside local shores. The regional office is headed by its country manager Nik Joharris Nik Ahmad, who has over 20 years experience having worked in Kuwait, Bahrain and Saudi Arabia. Maybank Islamic offers a range of Islamic financial products and services across 354 Maybank touch points in Malaysia, as well as international operations in Indonesia, Singapore, Hong Kong, London, Labuan, and Dubai.

Indonesian Islamic peer-to-peer lender Ammana Fintek Syariah is keen on entering international markets and is starting its expansion with neighbouring Malaysia. Ammana is also eyeing Brunei and Dubai as part of its international expansion. The Shariah-compliant fintech is in the process of applying to become a member of the international Islamic finance standards body the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). Ammana Fintek Syariah was established in July 2017 and disbursed 17.6 billion rupiah ($1.29 million) in financing in 2019.

The central bank of the Phillipines has issued regulations to kickstart the implementation of Islamic banking in the country. Special emphasis is on bringing banking services to the underserved areas of Muslim Mindanao.
The Bangko Sentral ng Pilipinas (BSP) adopted the regulations with supplementary requirements relevant to Islamic banking operations and Shari’ah compliance. The law was signed into law on August 22, 2019 and became effective on September 15, 2019. It provides the BSP with the legal authority to issue a broader set of rules and regulations on Islamic banking.

President Joko Widodo (Jokowi) drew attention to Indonesia's financial inclusion index (FII) having risen from 67.8% to 76.19% in 2019. However, the index is yet below that recorded of neighboring countries in the ASEAN, with Singapore standing at 98%; Malaysia at 85%; and Thailand at 82%. Jokowi has highlighted the importance of prioritizing easy access to formal financial services for all people. He has called to develop internet-based digital financial services, as internet users in Indonesia had reached 170 million, or some 64.8% of its total population. He also called to expand access to formal financial services through non-banking services, such as insurance, stock market, and pension fund, to support funding from domestic investors.

Dubai-based Fajr Capital has completed its divestment from Bank Islam Brunei Darussalam (BIBD) to Brunei Investment Agency. Fajr Capital stated that this transaction marks another successful exit for the firm, following several recent high-profile divestments. The bank’s transformation journey resulted in enhanced customer experience through the introduction of internet banking and new digital platforms, international expansion and improved financial performance with the bank’s net income more than doubling.

CIMB Islamic Bank has committed RM1 million per year, renewable annually for up to 3 years for the conservation efforts of Setiu Wetlands, Terengganu. The three-year project with a total potential commitment of RM3 million, is in collaboration with World Wide Fund for Nature Malaysia (WWF-Malaysia). The project contributes towards safeguarding Setiu Wetlands’ healthy and functioning ecosystem by establishing a critical knowledge base to guide sustainable development. This is CIMB’s third collaboration with WWF-Malaysia on strategic conservation projects, subsequent to the project in Ulu Muda, Kedah, and in Ba’ Kelalan and Long Semadoh in Sarawak.

Despite having the world’s largest Muslim population and despite forming a dynamic emerging economy, Indonesia plays a small role only in the global Islamic banking industry. Islamic banking apparently has a hard time taking off in Southeast Asia’s largest economy. Despite the low penetration of Islamic finance in Indonesia, the country now ranks first in the Islamic Finance Country Index. The country has recently launched the Masterplan of Sharia Economy 2019-2024, with ambitious plans for the future.

With the approval of a new Islamic banking law in the Philippines doors are now open for domestic and foreign banks to open an Islamic banking window or to establish a subsidiary Islamic bank in the country. The law states that it is the responsibility of an Islamic bank, or window, to ensure its compliance with Shariah principles. Like in other Muslim nations without a central regulatory Shariah board, Islamic banks in the Philippines will have to constitute their own Shariah advisory council. Under the law, Islamic banks in the Philippines can offer current accounts, savings accounts, investment accounts and foreign currency deposits, among other financial products. They can also issue Shariah-compliant funding instruments, including sukuk, upon approval by the central bank’s monetary board.

Bangko Sentral Ng Pilipinas has approved preliminary regulations for Islamic banks and Islamic banking units. The preliminary policy initiatives of the central bank came after the Islamic banking law was signed by President Duterte on August 22 and became effective on September 15. The preliminary regulations are to jumpstart the implementation of the law. Banks must establish their own Shariah advisory boards to ensure Shariah compliance for their institutions. The Philippines has been accelerating the growth of its Islamic economy sectors in the last couple of years to attract foreign investments and to provide its approximately 10 million domestic Muslim population with an Islamic banking option.