Tag Archives: Islam

Malaysia launches Islamic exchange traded fund

Malaysia launches Islamic exchange traded fund

Malaysia launched on Monday Asia’s first Islamic exchange traded fund, as part of efforts to cut the state’s holding of listed equity and boost its bid to become a global Islamic financial hub.

The fund has 25 underlying stocks including plantations to energy group Sime Darby, mobile phone firm DiGi, shipper MISC, builder Gamuda and toll road operator PLUS Expressway, its manager i-VCAP Management Sdn Bhd said.

Second Finance Minister Nor Mohamed Yakcop said the fund would help boost the appeal of the Malaysian stock market.

“The National Exchange Traded Fund contributes on all these counts for the equity market i.e. depth, diversity and liquidity,” he said at the launch of the fund.

The fund has an authorised size of 10 billion units.

Malaysia’s holdings in state-linked firms make up nearly 40 percent of the $292 billion local market. Investors complain stocks are too tightly held and state investment arm Khazanah Nasional is reforming these firms to reduce state equity.

A more vibrant local market would help Malaysia to attract capital and enhance its bid to become a global Islamic finance centre.

Mostly Muslim Malaysia is in a race with Bahrain, Dubai and Singapore to become a global Islamic finance hub. Malaysia has an Islamic finance industry with about $38 billion of assets ranging from stocks and insurance to home loans and pawnbroking.

Islamic banking assets make up over 12 percent of total bank assets.

London top western centre for Islamic finance – report

London top western centre for Islamic finance – report

International Financial Services London (IFSL) Monday promoted the British capital as the best Western centre for Islamic finance.

“As the global market for Islamic financial services has grown three fold over the past decade to Dlrs 531 billion in 2006, so London is setting out its stall to be the key western centre for Islamic finance,” the IFSL said.

The cluster of 23 UK banks offering Islamic services outnumber more than four time those of any other country in western Europe, it said in a report, which listed only five in Switzerland and four each in France and Luxembourg as the nearest rivals.

Britain was also shown to be ahead of the rest of Western Europe in establishing fully Sharia compliant banks by three of the 23 that have been set up since 2004. Trading at the London Metal Exchange was said to be a key mechanism for asset and liability management.

“Evidence of London’s growing role in Islamic finance is shown in the UK being the only western country to feature prominently, 9th with Dlrs 10bn, in a global ranking of Sharia compliant assets by country,” said IFSL director of economics, Duncan McKenzie.

Trade and Investment Minister Lord Digby Jones also welcomed the report as confirming London’s position as the premier Western centre and partner of choice for Islamic finance, saying it was “a huge step in the right direction.”
But Digby Jones also warned that the UK must not be complacent and said the government trade and industry department was working hard in partnership with its delivery partners, to ensure the UK’s offering in this ever expanding sector continues.

The report also found that the UK educational institutions are taking the lead in positioning the UK as a leading centre of learning in Islamic finance.

IFSL, with more than 30 years experience, promotes the international activities of UK-based financial institutions and professional and business services, to help them develop commercial opportunities.

Noor Islamic Bank looks to tap into low-income market

Noor Islamic Bank looks to tap into low-income market

Over two million of the 4.4 million people living in the UAE are still not operating through the country’s banking system, according to a senior government.

In a bid to tap this segment, Noor Islamic Bank and Emirates Post Holding Group will launch a Shariah-compliant company that will target people earning about $250 (Dh1,110) a month.

The yet-to-be named company will have a capital of Dh500 million and will focus on launching debit cards, Islamic insurance, credit cards, micro-financing, salary payments, remittances and currency exchange.
The joint venture will leverage Noor Islamic Bank’s expertise in the Shariah-compliant financial services arena and Emirates Post’s country-wide reach to offer a comprehensive basket of financial services.
A Cabinet decision was taken last year making it mandatory for all private companies to pay salaries and wages through banks to ensure workers are paid regularly and on time. The move was aimed to counter employers’ withholding or failing to pay wages, especially in the construction sector, the biggest employer in the country.
“There is a relatively high cost attached to the operation of these low cost accounts. But we can offer that service on a broader scale and not just as a bank along with Emirates Post,” Hussain Al Qemzi, Group Chief Executive Officer, Noor Islamic Bank, said.
The company, which expects to launch its services by end of the year, will operate initially through selected Emirates Post offices. It has 82 post offices throughout the UAE.
The bank will be looking to create a “parallel” system for this low-income banking, said Dr Ahmed Aljanahi, Deputy Group CEO, Noor Islamic Bank.
“This is just one of the many new ventures envisioned by Emirates Post Holding Group as we continue to pursue our goal of becoming a major player in the field of financial services,” Daboos added.

Sharia industry needs supports, association says

Sharia industry needs supports, association says

Although Indonesia has experienced rapid growth in its sharia-based banking and financing industry, its overall market share remains fairly low.

From October last year, the total asset of sharia banks in Indonesia was 1.77 percent, or Rp 33 trillion (US$3.51 billion), of the country’s total banking assets.

This was despite a rapidly increasing number of sharia bank offices, which grew by 14.3 percent throughout the year — higher than conventional bank offices, which grew by 9.5 percent, said the Indonesian Sharia Banks Association (Asbisindo).

Speaking over the weekend at a finance event, Asbisindo chairman A. Riawan Amin said the growth was expected to further increase, eventually achieving a 5 percent market share by the end of this year, in line with the government’s target.

“The sharia banking industry is still quite small, but all stakeholders, especially the central bank, have committed to give continuous support to boost it,” Riawan said.

He was speaking at a five-day sharia economic festival, which included seminars, workshops and bazaars at the Jakarta Convention Center, Central Jakarta, which ended Sunday.

The central bank organized the event which was aimed to help speed up the growth of the industry.

Another move taken by the central bank to help develop the industry is called office channeling, Riawan said, which allows a sharia bank to be owned by a conventional bank.

For example, Bank Mandiri, the country’s largest bank by assets, owns Bank Syariah Mandiri, which in November 2007 had a 36.06 percent market share in sharia banking assets.

Bank Indonesia deputy governor Siti Ch Fadjrijah said while still holding a less-than-significant market share, sharia banking had developed rapidly.

The growth would be faster still if the country managed to lure cash-abundant Middle East investors, who are now looking to invest in countries where a sharia banking and financing system has been put in place, she said.

But for this to be realized, Siti said the country needed a sharia banking law, a draft of which was scheduled to be submitted to the House of Representatives this week.

Some House members said they would deliberate the draft together with the sukuk bill, which has now been with the House for discussion for some two years.

The sukuk bill originally aimed to provide a legal basis for the issuance of sharia bonds.

Anis Baridwan, head of the accounting and openness bureau at the Financial Institutions and Capital Market Supervisory Agency (Bapepam-LK), said through the sharia banking and sukuk laws, the country could become an Islamic finance hub in Asia, attracting investors from Europe, Middle East and the United States.

The central bank has said it would push the amendment of some related laws later this year to help accelerate the growth of sharia banking system in the country.

HSBC to capitalise on Islamic banking

HSBC to capitalise on Islamic banking

HSBC Bank Malaysia Bhd, which has been in the country for more than 120 years, has joined the fray when it comes to expanding its market.

Deputy chairman and chief executive officer Irene M. Dorner said the bank would continue to capitalise on its lead position across the Islamic and investment banking services segments.

“With the upcoming establishment of the Islamic banking subsidiary, we plan to introduce new and innovative products to our clients with a view to be a one-stop financial supermarket,” she said.

Dorner added that after-sales services were still a crucial factor and this would be another facet that would be addressed in the bank’s strategy.

For Kuwait Finance House (M) Bhd, which was only established two years ago, the decline of the traditional bank has led to new opportunities and challenges.

Group chief economist and global research head Baljeet Grewal said that with the blurring of distinctions between retail, merchant and investment banks due to deregulation, innovation and sound industry knowledge were important, especially in the bank’s area of expertise – Islamic banking and financial services, particularly for the real estate sector.

“This means a focus on human capital and the enhancement of product knowledge, risk management, distribution channels and new products to ensure that clients receive a commensurate degree of syariah-based expertise,” she said, adding that the bank would aggressively roll out more real estate projects locally and in the region.

Baljeet said the bank’s strategy for the retail segment would also come to fruition this year, in conjunction with other investment banking products.

For Middle Eastern banks that have opened branches here, the strength may well lie in their network at home, which these banks use as leverage.

Al Rajhi Banking & Investment Corp (M) Bhd corporate and investment banking head Asim Basharullah said the strength of the bank lay in its ability to play a prominent role in cross-border trade and investment flows between the Middle East and the South-East Asian region.

“We’ll continue to strengthen our position in this area and we also intend to follow our Malaysian clients wherever they go for business in the region because we believe there’re ample opportunities for all financial institutions to play a role,” Asim said.