KUALA LUMPUR: Indonesian Islamic banks like Bank Mandiri have offered strategic partnerships with foreign investors in its plantation projects, saying this would strengthen the Islamic banking platform.
“Foreign companies can join us in loan syndication to (jointly) finance the medium and large scale projects,”said Bank Syariah Mandiri CEO Yuslam Fauzi during one of the GIFF industry specific dialogues held yesterday.
Such cooperation would not only increase the efficiency and better manage risk but it would also strengthen Islamic banking.
Indonesian banks have a great appetite for the rosy palm oil industry what with Indonesia having a 43 per cent market share of the global production plus a 7.8 per cent annual growth.
Other crops which are enjoying strong growths in Indonesia are rubber with the strong demand from its automotive sector and cocoa.
In the case of Malaysia, financing for downstream activities are limited as SMEs have less access to finance especially those in the timber sector. This was unlike the upstream side where the government extends financial assistance to smallholders in replanting and mechanisation
Mohamed Sanuri Shahid from the Plantation Industries and Commodities ministry said financing opportunities are plentiful in large estates, forest plantations, agarwood as well as export credit financing.
Meanwhile Bursa Malaysia Bhd head of Islamic and Alternative market Jamaluddin Nor Mohamad said the world's first end-to-end Syariah-compliant commodity trading platform, Bursa Suq Al-Sila' is working on expanding the number to attract higher transactions.
The platform now has crude palm oil, plastic resin and RBD palm olein.
After a successful joint sukuk issuance for TH Plantation Bhd, Hong Leong Islamic Bank is on an aggressive drive to have more such issues by the end of next year.
Hong Leong Islamic Bank head of Islamic Institutions and corporates Syamsul Azuan Ahmad Fauzi said these are benchmark issues valued at between RM500 million and RM1billion.
Other plantation companies which have issued Islamic bonds to raise funds for capital expenditure are Kuala Lumpur Kepong Bhd which sold RM1 billion of 10-year Islamic bonds while Sime Darby Bhd is also planning its first multi-currency sukuk programme of as much as US$1.5 billion.
In the case of the construction sector, large infrastructure players like UEM have been heavily dependent on sukuk to finance their projects.
UEM Group Bhd group managing director Datuk Izzaddin Idris said the company is likely to tap the sukuk market when it embarks on a hospital project in Kuala Lumpur.
UEM is still eyeing projects in the Middle East as long as there are infrastructure construction opportunities such as World Cup 2020 in Qatar or affordable housing project in Saudi Arabia.
UEM and WCT and Gamuda are among the top Malaysian players in the region.
(Business Times / 20 Sep 2012)
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com