KUALA LUMPUR, Oct 23 (Bernama) -- Al Rajhi Bank Malaysia and Islamic Research and Training Institute (IRTI), a member of Jeddah-based Islamic Development Bank (IDB), see great potential in sukuk issuance and capital market activities in IDB member countries.
Al Rajhi Bank Malaysia Chief Executive Officer Datuk Azrulnizam Abd Aziz said bonds and sukuk had become an important long-term financing instrument in funding infrastructure development as tighter liquidity conditions and regulations under Basel 3 were constraining traditional long-term lending by banks.
"Major investment in infrastructure is still needed in developing emerging economies, to facilitate growth and reduce poverty.
"In Asia alone, it is estimated that US$8 trillion of investments are needed in transport, communication and infrastructure up to 2020," he said at the signing of a memorandum of understanding (MoU) between Al Rajhi Bank Malaysia and IRTI here on Wednesday.
Malaysia remained the forerunner in global sukuk issuance, most of which are for funding infrastructure development, he added.
The strategic collaboration is to provide support for sukuk issuance and Islamic capital market activities for IDB member countries and their corporations.
Under the MoU, IRTI has been tasked to identify the member countries that are interested to develop sukuk and Islamic capital market and provide them with advisory services while Al Rajhi Bank will lend technical support to develop and structure the instruments.
The MoU, Azrulnizam said, would represent a framework of collaboration and coorporation between the two institutions for sukuk solution and platform of exchange to discuss Shariah standard and issues.
Meanwhile, Prof Datuk Dr Mohamed Azmi Omar, Director General of IRTI, said their focus was on the government sector namely the regulators.
"Being a development bank, our clients are the government and not private sector...We provide advice to the government in the implementation of Islamic finance," he added.
Mohamed Azmi said African countries were now seen as the new emerging markets and new growth areas for Islamic financing and sukuk, looking at the birth of significant interests.
He said the growth of sukuk globally would continue to increase as we saw continuous demand for sukuk moving to this part of the world.
"These countries needed a lot of infrastructure development and sukuk is very much suitable to finance the development as it is project-based," he added.
(National News Agency Of Malaysia / 23 Oct 2013)
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com
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