Malaysia

Bank Islam continues to focus on affordable housing segment

Bank Islam Malaysia expects its home financing business model will continue to help the bank to grow and boost its assets. Malaysia’s oldest Islamic lender has been growing organically over the years, despite the crowded market. Bank Islam CEO Mohd Muazzam Mohamed said the bank is already adopting the right model to support this affordable segment. He added that the Islamic bank will continue with its current business model which is in line with the governments’ directive. Bank Islam has already allocated RM300 million to be utilised until 2021 as part of its digitalisation directive. Mohd Muazzam said the bank aims to increase its financing for small and medium enterprises (SMEs) by RM200 million in 2019. The bank also plans to increase its investment fund to RM800 million under its Al-Awfar product, which has been refreshed since its establishment in 2009.

PM: Islamic banking players must invest in technologies

Malaysian Prime Minister Tun Dr Mahathir Mohamad said Islamic banking and finance players must be intensely invested in technologies. He said the application of smart technology has positively disrupted the industry, however, the potential disruptions to traditional Islamic finance should not be underestimated. The disruptions can swing both ways. Dr Mahathir delivered his speech at the 15th Kuala Lumpur Islamic Finance Forum 2019. He said that Malaysia had spearheaded a number of innovative developments in Islamic finance, such as the issuance of the first Sustainable and Responsible Investment Sukuk and Green Sukuk, as well as the launch of the Investment Account Platform. He believes that Islamic finance can be a catalyst for the growth of green developments globally.

BIMB sets aside RM300m for digital roadmap

BIMB Holdings, the parent company of Bank Islam Malaysia, has allocated RM300 million for investment under its three-year (2018-2020) digital roadmap. Bank Islam CEO Mohd Muazzam Mohamed said digital investment was the group's future focus and it already had a few products in the pipeline. He added that the bank's digital journey includes improving customer service touch points and business efficiency through upgrading back-end processes. Mohamed also said the bank currently had 500,000 Internet banking users, which had been doubling annually, supported by the bank's mobile application. BIMB Holdings was incorporated in Malaysia on March 20, 1997 and was listed on the Bursa Malaysia Securities Main Market on Sept 16 in the same year.

World’s first ESG #sukuk #fund another step forward for #Malaysia’s responsible finance

Malaysia’s Shariah-compliant BIMB Investment Management launched the world’s first environmental, social and governance (ESG) sukuk fund on August 1. BIMB’s ESG Sukuk Fund is the company’s fifth ESG-focused fund as a result of its partnership since 2015 with London-based Arabesque Asset Management. BIMB Investment CEO Najmuddin Mohd Lutfi said the company plans to launch more ESG that incorporates fintech like artificial intelligence, machine learning, big data, data analytics. The next investment focus could be in U.S. equity and multi-asset funds.

Creating footsteps in Kuwait’s Islamic banking sector

Kuwait Finance House (KFH) has embarked on a digital transformation journey. Kuwait and Bahrain have each launched their respective digital banking platforms and soon, Malaysia will have its own. By the end of 2018, a seamless digital customer experience is expected to be publicly available. In Malaysia the KFH is active in the infrastructure financing front, supporting the third light rail transport system (LRT 3) and the second Mass Rapid Transit (MRT 2) projects through the provision of Islamic financing facilities. The project is expected to benefit the local communities through the promotion of real estate developments around the proposed train stations. Furthermore, the project is expected to generate more than 2,000 jobs during the construction phase.

Cagamas issues RM825m 1-year bond and #sukuk

The National Mortgage Corp of Malaysia (Cagamas) has issued a RM825 million 1-year bond and sukuk comprising RM800 million Conventional Medium Term Notes (CMTN) and RM25 million Islamic Medium Term Notes (IMTN). Proceeds will be used to fund the purchase of mortgage and Islamic home loans. With this move the aggregate primary issuance by Cagamas has reached RM9.3 billion for 2018, marking a 24% increase in the company's primary supply as compared to 2017's year-to-date total of RM7.5 billion. Cagamas CEO Datuk Chung Chee Leong said the CMTN issue was concluded via reopening of an existing bond tranche which marked the company's second reopening exercise for the year.

Shariah investments continue growth spurt in SE Asia

According to the latest Cerulli Associates research, Shariah-compliant investments are gaining further ground in Asia. Growth continues to be concentrated in South-East Asia, with Malaysia remaining at the forefront with $28.4bn in Shariah mutual fund assets under management (AUM) in 2017. Last year, Malaysia’s Securities Commission launched a five-year blueprint to grow the sector. Indonesia grew its Shariah mutual fund market by 90% to nearly $2bn in AUM in 2017. Besides allowing Shariah funds to fully invest overseas, market regulator Otoritas Jasa Keuangan (OJK) recently introduced a framework requiring fund managers to carve out dedicated units to manage existing Shariah funds. The Cerulli survey shows that asset managers in the country expect demand for Shariah investments to come mostly from insurers and pensions over the next few years.

Dr M To Deliver Teleconference Address At Sarajevo Halal #Fair

Malaysian Prime Minister Tun Dr Mahathir Mohamad has agreed to deliver a keynote address, via teleconferencing, at the three-day Sarajevo Halal Fair. Bosna Bank International's CEO Amer Bukvic announced that the fair would begin on the 27. of September and he invited more Malaysian companies to set up business in Bosnia and Herzegovina. Bukvic added that the country aims to become Europe’s halal hub and they need help from Malaysia. The Sarajevo Halal Fair is jointly organised by Bosna Bank International, Saudi-based Islamic Development Bank and Islamic Development Bank Group Business Forum and supported by Malaysia’s Halal Industry Development Corporation.

BNM introduces Rahn policy document

Bank Negara Malaysia (BNM) has issued the Rahn policy document which is aimed at strengthening the practice among Islamic financial institutions to offer services that are end-to-end Shariah-compliant. BNM stated that the subject matter of the Rahn contract shall be collateral that is recognised by Shariah and Shariah-compliant liability or obligation owing to the pledgee. It added that the collateral must be owned either by the obligor, a third party, or the obligor and a third party. BNM said the collateral shall be immediately possessed by the pledgee upon entering into the Rahn contract unless a pledgee approves a delay in possession. A Rahn contract is applicable with contracts including qard, murabahah, tawarruq, baiinah, istisna, ijarah, kafalah, mudarabah, musyarakah, wakalah bi al-istithmar, and wad as well as takaful coverage.

#Malaysia's use of Islamic bonds to fund deficit credit positive: Moody's

According to Moody's Investor Service, the Malaysian government is increasingly using longer-term Islamic instruments to fund its deficit to lower liquidity risk. The shift toward Islamic financial instruments is seen as credit positive for the sovereign. The Malaysian government has a sizable debt burden currently at 50.8% of the country's gross domestic product (GDP). The Malaysian Government Investment Issues (MGII), local currency, Shariah-compliant debt instruments, accounted for 50% of total federal government financing in 2017, up from a 26.4% share in 2008. The country's active participation in Islamic finance is part of Malaysia's broader vision to position itself as an international center for the instrument, and a recognized goal in the central bank's financial sector master plan.

BIMB Invest eyes RM100m for Shariah-ESG #fund within 1 year

BIMB Invest is expected to achieve a subscription of RM100 million of its BIMB-Arabesque ValueCAP Malaysia Shariah-ESG Equity Fund within a year. The fund was launched together with Arabesque Asset Management and ValueCAP and approved by the Securities Commission Malaysia. As the fund is mainly targeted at corporate and institutional investors, BIMB Invest is hoping to get the likes of pension funds, insurance and takaful firms on board. The fund will invest in about 100 local listed companies that are Shariah-compliant as well as in line with ESG practices. It will analyse the ESG factors of each company using Arabesque’s proprietary methodology, the Arabesque S-Ray, which daily assesses the performance of companies.

#Malaysia: BIMB Investment targets RM100m for Shariah equity fund

BIMB Investment is targeting RM100 million in subscription for its newly launched BIMB-Arabesque ValueCAP Malaysia Shariah-ESG Equity Fund. The fund will be invested in 100 local shariah compliant companies listed on Bursa Malaysia. BIMB Investment CEO Najmuddin Mohd Lutfi said the investments would be based on selected companies that have strong financial standing. He said companies who are interested to increase their social responsible investment (SRI) and Environmental, Social and Governance (ESG) portfolios should also tap into this fund.

Why #Malaysian bonds are set to attract investors despite emerging-market jitters

With the improving quality of issuances, Malaysia is set to attract more investments into its growing bond market, say panellists at The Asset Malaysia Issuers and Investors Leaders Dialogue in Kuala Lumpur.

#Malaysia to retain position as world's premier #sukuk issuer

Malaysia will remain the market leader in global sukuk issuance despite recent delays and cancellations of mega projects. CIMB Islamic Bank CEO Rafe Haneef said the delays of some mega projects would have some impact sukuk deals, but it is still business as usual for Malaysia. Last year, Malaysia had issuances of over US$50 billion. According to Moody’s Investor Services, Malaysia continues to remain the world’s largest sukuk with an estimated 44% of total sovereign sukuk outstanding in 2017. Issuance grew 17% in 2017 to some US$100 billion. CIMB Investment Bank topped Bloomberg’s Underwriter League Table for ringgit bonds for 12 years running. Going forward, Rafe expects issuances will come from both the infrastructure and corporate space.

ESG podcast: Securities Commission #Malaysia outlines plans for green Islamic finance (part 2)

In this podcast Zainal Izlan Zainal Abidin of Securities Commission Malaysia speaks about the country's strategy for socially responsible and sharia-compliant investing. He talks about the challenges in making Malaysia a global Islamic finance centre. He sees great potential for Malaysia as it rolls out new products, such as a sukuk ETF. Zainal believes the gradual harmonizing of Sharia definitions will fuel more cross-border transactions between Malaysia and the Middle East.

Ali Allawala appointed CEO of #Malaysia’s Standard Chartered Bank Islamic unit

Pakistani banker Ali Allawala has been appointed as the chief executive officer of the Islamic Unit of Standard Chartered Bank Malaysia. Ali Allawala possesses over 22 years of experience in retail banking, both within conventional and Islamic banking. He joined Standard Chartered Bank Pakistan in 2012 and had previously worked for Citibank and Samba Financial Group. He was named "Best Islamic Consumer Banker in Pakistan 2015" by the Islamic Finance Awards. Mr. Allawala has extensive multi-product experience in business development, product management, distribution, digital banking and marketing.

Matrix Concepts, #Indonesian consortium to jointly develop Islamic financial district in Jakarta

Malaysian property developer Matrix Concepts is teaming up with an Indonesian consortium to jointly develop an Islamic financial district in Jakarta. Matrix entered into a memorandum of understanding (MoU) with Bangun Kosambi Sukses (BKS) and Nikko Sekuritas Indonesia (NSI) for the joint development dubbed PIK 2 Sedayu Indo City. Matrix said the proposed development was initiated by the Indonesian government in its quest to position itself as an Islamic financial hub. PIK 2 Sedayu Indo City will encompass 1,000ha of land complete with residential houses, apartments, shopping centres, a light rail transit system, and a stadium.

Green #sukuk creates ripples on prominent environmental concerns

According to Securities Commission Malaysia (SC) deputy CEO Datuk Zainal Izlan Zainal Abidin, the world will need up to US$90 trillion (RM360 trillion) worth of investments for infrastructure by 2030. This presents a significant opportunity for green finance and green sukuk to be part of the mainstream investment for the financing solutions. In July 2017, SC, Bank Negara Malaysia and the World Bank Group established the country’s first green sukuk. Green sukuk has become the trend that has received support from investors and regulators on a global scale. NewParadigm Capital Markets Managing Director Charanjeev Singh says more green sukuk issuances are expected to take up the Islamic finance space as Malaysia continues to be the catalyst for Islamic bonds. So far, the focus has been big government-owned companies. The next level of development would be to facilitate the middle- market or the mid-sized companies, and not necessarily the government- owned or government-linked, but the A or AA ratings.

#Malaysia should look beyond ringgit to draw Chinese to #sukuk market

Malaysia is one of the largest markets for Islamic finance. According to Mohieddine Kronfol, chief investment officer at Franklin Templeton Investments, Malaysia's sukuk market could attract Chinese companies if there were more foreign currency-denominated issues. He said Malaysia has attracted foreign companies to issue sukuk, but they were predominantly in ringgit and largely domestically bought.Mohieddine said there should be more transactions in international currencies like the U.S. dollar, and a currency regime or some central bank support that facilitates that. Franklin Templeton Investments projects global sukuk growth at 15-20% this year on the back of stable oil prices, better growth outlook in markets that issue sukuks and sustained demand for Islamic finance.

Islamic Equity Class Should Explore Solutions To Stay Competitive - Sultan Nazrin

According to the Sultan of Perak, Sultan Nazrin Shah, the Islamic equity asset class needs to explore solutions and achieve critical mass volume in order to remain competitive. He delivered his keynote speech at the Franklin Templeton Investments 2018 Islamic Forum in Kuala Lumpur. He believes that Islamic finance must embrace the era of disruptive innovation, with a continued strong focus on product innovation. The global asset management landscape had been pushed to embrace new online investment platforms and failure to keep up with these changing structural dynamics could put the industry at an even greater disadvantage than at present. He said that Islamic investors could also capitalise on the emerging "green" or environmentally-friendly finance.

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