Total Sukuk issuance in December reached $8 billion with a 61 per cent increase compared to last year.
The report stated that Malaysia and the ringgit continue to dominate the market of sovereign Sukuk issuance, where governmental and sovereign issuances were more by 70 per cent in December ($5.7 billion). The top countries in Sukuk issuance are as follows: Malaysia, Saudi Arabia, UAE, and Indonesia. One of the issuance was made by Saudi French Bank worth $506 million; in addition to the Sukuk of FWU Group, which is the largest European issuance for Islamic Sukuk at all for companies, and is the first Sukuk issuance made by a German company for $55 million.
Sukuk issuances continued at decent levels in December as we close off another tremendous year for the Islamic capital markets. A total of USD8.1bln was issued during the month, 61.7 per cent higher than the same period of 2011. This means total issuances for 2012 round up to $131.2 billion representing a y-o-y increase of 54.2 per cent.
Malaysia dominated the month in terms of amount issued, accounting for a 90.2 per cent market share, while there were a distinct absence of Sukuk from Indonesia and the UAE. Malaysia was domicile to 74.0 per cent of all primary market issuances in 2012, followed by Saudi Arabia (8.0 per cent), the UAE (4.7 per cent) and Indonesia (4.6 per cent). Governments remained the largest issuer type, representing 70.1 per cent during December while there were a number of significant issuances also issued in the financial services sector. Both sectors have represented 61.8 per cent an 11.4 per cent of the primary market respectively in 2012 while the transport sector represents 13 per cent.
Notable issuances during the month include the SAR1.9bln (USD506.6mln) Sukuk issued by Banque Saudi Fransi and structured using Murabahah and Mudharabah principles. The Sukuk has a seven year tenure that pays three months SIBOR + 110bps on a quarterly basis. Similarly, FWU Group issued the first Sukuk by a German corporate and the largest Sukuk from a European corporate, worth $55 million.
Sovereign issuers made up 70.1 per cent of the primary market in December while government related entities accounted for 6.8 per cent and corporates took the remaining 23.2 per cent. Malaysian ringgit accounted for 91.8 per cent of issuances during the month as compared to 74.0 per cent over the year.
A total of 55 Sukuk were issued in December vs. 55 Sukuk in November and 72 in October. Among these, 31 were issued by the corporate sector totalling $1.9 billion (November: $2.7bln, -29.6 per cent), 19 by sovereigns totalling $5.7 billion (November: $5.7 billion, +0.0 per cent) and five by government related entities worth $548.8 million (November: $1.1 billion, -50.1 per cent).
A study has rated Malaysia as the world’s top Muslim-friendly holiday destination.
The survey released yesterday listed Egypt, Turkey, United Arab Emirates, Saudi Arabia and Singapore as runners-up.
The study by Singapore-based Muslim travel consultancy Crescentrating ranked countries on how well they catered to the growing number of Muslim holidaymakers seeking halal — or Islam-compliant — food and services.
It used criteria including the level of safety in a country, the ease of access to halal food and prayer facilities, and whether hotels catered to the needs of Muslim guests. On a scale of one to 10, in which 10 is the best score, Malaysia came out number one with a grade of 8.3 among 50 nations surveyed.
Egypt was in second place with 6.7, followed by the United Arab Emirates and Turkey, both with 6.6. Saudi Arabia was in fourth place with a score of 6.4 and Singapore was fifth with 6.3. Indonesia, Morocco and Jordan scored 6.1 to tie in sixth place, trailed by seventh-placed Brunei, Qatar, Tunisia and Oman, all with a score of 6.0.
Crescentrating chief executive Fazal Bahardeen said the survey was taken from the point of view of travellers, meaning that it measured the ease of access by Muslim tourists, not locals, to halal food and facilities.
"Malaysia is one of the few countries where you can find a prayer place in almost every location, be it a mall or the airport."
He said that while Malaysian authorities had been focusing on the market for several years, Indonesia -- the world's most populous Muslim nation -- had not done as well.
"The main problem for Indonesia is that it's not straightforward for a Muslim visitor to find halal food availability. For locals, it's probably not an issue."
Saudi Arabia figured as a holiday destination for the first time since the survey started in 2011 because more Muslims used their holidays to go there to perform the umrah, a minor pilgrimage, Fazal said.
In terms of cities as a shopping destination, Dubai pipped Kuala Lumpur for the No. 1 spot, according to the survey.
Istanbul, Jeddah, Singapore, Cairo, Abu Dhabi, New Delhi, London and Doha completed the top-10 shopping destinations.
Thailand's Suvarnabhumi Airport and Kuala Lumpur International Airport were rated among the friendliest to Muslim travellers.
Spending by Muslim tourists was growing faster than the global rate and is forecast to reach US$192 billion (RM580 billion) a year by 2020, up from US$126 billion in 2011, according to a study by Crescentrating and another company released last year.
WHILE Malaysia has become an internationally renowned centre for Islamic finance, the general public appear to have a very limited (if not flawed) understanding of it.
Most non-Muslims (and some Muslims) appear to be under the impression that there are only some terminology differences between the two, the main one being interest rate being termed as profit rate in Islamic finance.
Such a shallow understanding overlooks the fact that Islamic finance emphasises justice in financial transactions. Justice is a highly-regarded value in Islam.
The prohibition of interest in Islamic finance (IF) is due to it being viewed as an unjust practice. This is because, among others, the party providing the capital (financing) is able to enjoy a fixed return irrespective whether the venture financed fails or succeeds.
However, it must be highlighted that most financing done by Islamic financial institutions (IFIs) currently are not based on profit-sharing modes of financing but sales-based transactions. This is mainly because the risk involved in equity-based financing is deemed to be too high for the risk appetite of financial institutions.
A sale or trade-based transaction with the profit factor included may appear very similar to a conventional lending transaction. However, a trade involves an underlying asset and changing of ownership of the asset, and impacts the real economy.
The conventional finance system being motivated purely by profit, and also greed at times, allows finance to exist for its own sake and in isolation of real economic activity and can lead to situations like economic bubbles and related financial problems.
For the individual customer taking financing, while the cost (in terms of finance pricing) may be the same between IFIs and conventional banks, many features and practices of IFIs are fairer to the customer due to the underlying value of justice in Islamic finance.
For instance in IF, the penalty for late payment is about 1% compared with about 8% charged by conventional banks.
Further, because the penalty is only to deter customers from delaying payment and not to profit from the customer’s hardship, the penalty fees collected are used by the IFIs for charitable purposes.
There is also greater transparency when dealing with IFIs compared with conventional banks where, for instance, the selling price of a financial transaction states clearly how much the financing will cost to a customer during the tenure of the financing and enables the customer to make a more informed decision whether to take up the financing.
In a conventional transaction, customers are sometimes not fully aware of the terms and conditions.
I myself being formerly employed by a conventional bank have seen this happen.
Terms like minimum prescribed rate and penalty rate, clauses that were previously stated clearly in the Letter of Offer, were subsequently put under the attachment (which is in a smaller font than the Letter of Offer).
Often, this was done purely on advice of sales personnel so that they (the sales personnel) do not have to go through the difficult clauses with customers and therefore have a higher chance of closing the sale.
The customers are usually told that the terms and conditions in the attachment are standard clauses applied by all banks, and the customers are left to decipher the terms and conditions which are in fine print on their own.
Such practices are less likely to happen in IFIs because they are not purely motivated by profit but values of justice and transparency. Further, if you were to encounter any unfair terms, an IFI is more likely to consider removing the unjust term because the value of justice overrides the pursuit of profit.
In comparison, conventional banks are usually not willing to accommodate a legitimate request, until of course you report to Bank Negara or blow up the issue in the media.
There may be a fear among non- Muslims that practising Islamic banking means they become Muslims. Islamic banking is not about propagating the religion of Islam, but about providing an alternative form of banking which is based on the universal value of justice, and should thus be viewed positively.
Islamic banking can be likened to eating a halal burger, which may taste like a normal burger. However, if we know that it is more nutritional and better than a normal burger, aren’t we better off opting for the halal burger?
At the very least, our choice of opting for Islamic finance will result in conventional banks being forced to adopt fairer banking practices if they want to retain customers.
Alfalah Consultingis NOT providing any kind of loan to finance project etc and asking for a fee. If you've received any email claiming to be fromAlfalah Consulting, offering loan to you, please ignore it or inform us for further actions. Our official email is firstname.lastname@example.org. If you've received an email from email@example.com, that's NOT from us. Be cautious!