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Wednesday, 26 March 2014

Dubai aims to import Islamic finance courses from Malaysia

Dubai is hoping to attract academic courses in Islamic finance from Malaysia as it aims to become the global hub for the Islamic economy.

Tecom Investments has sent a delegation from Dubai’s Knowledge Village and Dubai International Academic City to meet representatives from Islamic finance academic institutions in Malaysia in an effort to bring some them to the emirate.
Sharia-compliant banking skills are in high demand as the Islamic finance sector expands, a study by the consulting company Deloitte has shown.
The study revealed that there is a particular need for entry-level jobs and financial risk management positions.
Dubai is also planning to start its first Sharia-compliant export-import bank.
During its visit this month, the delegation examined different Islamic economics courses related to Sharia-compliant funds, sukuk, murabaha and the regulatory frameworks related to Islamic finance.
“Our trip to Malaysia represents our continuous strive to attract relevant academic institutions that can provide quality education across all levels, covering graduate, undergraduate, and vocational training courses,” said Ayoub Kazim, the managing director of Dubai Knowledge Village and Dubai International Academic City.
“Our decision to go to Malaysia was based on its leading reputation and expertise in the Islamic finance sector,” he said.
Dubai aims to bring two renowned Islamic finance universities to the city – the International Islamic University Malaysia and The Global University of Islamic Finance – which the delegation encountered during its visit.
It is also keen to bring in governmental professional development centres in the Islamic finance sphere such as the Islamic Banking and Finance Institute Malaysia. The delegation also visited the Labuan International Business and Finance Centre, which has a research focus on Islamic wealth management.
Dubai’s ambitions in Islamic industries include setting up a Sharia council to oversee standards in Islamic finance, an arbitration centre to resolve disputes in Islamic contracts, and a drive to boost production of halal food within Dubai. The ratings agency Standard & Poor’s said it expected the Islamic finance industry to more than double globally to about US$2.6 trillion by 2015.

(The National / 24 March 2014)
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Malaysia: PMB to go into Islamic financing

KUALA LUMPUR: Pelaburan Mara Bhd (PMB) will go into a joint venture with Saudi Arabian-based Islamic Development Bank and inject RM100mil into just-acquiredKFH Ijarah House (M) Sdn Bhd to conduct syariah-compliant financial services, targeting the commercial sector.
KFH Ijarah House will be renamed PMB Tijari Bhd and will be 80:20 owned by PMB and Islamic Development Bank.
“The Islamic finance house would manage PMB’s financial services activities,” PMB group CEO Nazim Rahman said at a press conference.
Nazim said PMB Tijari would specialise in commercial leasing and musharakah and mudarabah services. (Musharakah and mudarabah services include short, medium and long-term project financing, import financing, export financing and working-capital financing.)
In the area of commercial leasing, PMB Tijari would focus on equipment financing, particularly in the oil and gas sector as well as government-related contracts.
“There is a huge market for commercial leasing in Malaysia,” PMB chief executive officer for financing business Tengku Ahmad Badli Shah Raja Hussin said, adding that PMB Tijari already had a good track record in the business.
PMB would continue to explore opportunities to invest in other financial institutions.
“It is a natural progression for us, but we cannot reveal the details due to regulatory sensitivity,” Nazim said.
PMB currently has about RM700mil worth of assets under its management. It expected the value of its assets under management to expand to RM1.5bil by the second quarter of this year.
“We will introduce new funds including a corporate education fund to achieve that goal,” Nazim said.
PMB, the investment and asset management arm of Majlis Amanah Rakyat (Mara), has completed the takeover of KFH Ijarah House for “slightly over RM1mil” since the middle of this month.
The completion of the acquisition of KFH Ijarah House – a subsidiary of Malaysia KFH Capital Ltd – in mid-March 2014 is part of PMB’s agenda to transform itself into a leading investment and fund management institution in the country, PMB group CEO Nazim Rahman said.
Nazim revealed that PMB had acquired KFH Ijarah House at “slightly over RM1mil” on a cash-free, debt-free basis. The price PMB paid represented a slight premium of the net tangible assets of the latter, which stood at around RM1mil.
(The Star Online / 26 March 2014)
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Malaysia: AIBIM Expects New Products Under Islamic Deposits, Investment Accounts

KUALA LUMPUR, March 25 (Bernama) -- Association of Islamic Banking Institutions Malaysia (AIBIM) expects to see new products under the investment accounts by end of this year or early next year.

President Datuk Mohd Redza Shah Abdul Wahid said currently the Islamic institutions were doing housekeeping on the deposits products and would transit immediately over the next few months.

It was reported that Islamic financial institutions would embark on an exercise to reclassify Islamic deposits as defined under the Islamic Financial Services Act 2013 (IFSA 2013).

The Act has introduced two major classifications of products for the acceptance of money from customers by Islamic banking institutions -- Islamic deposits and investment accounts.

Mohd Redza said the Act has given Islamic institutions the ability to offer new products to the public.

"Customers will be given sufficient information and time to make their decisions.

"During the transition period, the affected Islamic deposits or accounts will remain at status quo and will continue to be covered by the Malaysia Deposit Insurance Corporation (PIDM)," he told a media conference Tuesday.

Islamic financial institutions would ensure that the transition process was seamless and would not be inconvenient to customers, said Mohd Redza, who is also Chief Executive Officer of Bank Muamalat Malaysia Bhd.

He said Islamic financial institutions would from time to time be in communication to inform their customers of the latest developments, adding that the exercise would be completed by June 30, 2015.

Customers can call the call centre or visit branches of their respective Islamic financial institutions or Bank Negara Malaysia for queries.

(National News Agency Of Malaysia / 25 March 2014)
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Saudi Electricity Company (SEC) names banks for sukuk

Saudi Electricity Company (SEC) has appointed three international banks for potential sukuk offering and roadshows in the US.
Mubasher Trade said on Tuesday that Saudi Electricity will conduct a series of meetings with fixed-income investors in the US and Europe, starting today (March 25). An offering of Sukuk may follow the investor meetings, subject to market conditions and required regulatory approvals.
Meanwhile, SEC has mandated Deutsche Bank, HSBC, and JP Morgan in connection with the potential offering.
Earlier today, Fitch assigned Saudi Electricity Global Sukuk Company 3's upcoming international Sukuk issue a 'AA-(EXP)' expected rating. Mubasher and Fitch didn’t disclose size of the SEC sukuk.
Fitch said SEC has obtained an additional 49.5 billion riyal loan from the Saudi government this month.
“SEC is drawing down SAR51bn ($14 billion; Dh51.38 billion) of interest free loans from the government to partially finance its capital projects. The government also provided an additional SAR49.5bn loan to SEC in March 2014. Since its inception in 1999, SEC has not paid for fuel provided by Saudi Aramco. SEC transferred a total of SAR57bn in 2007, 2011 and in 2012 of Aramco payables to the Ministry of Finance, converting them to long-term government payables. The government has deferred all dividend payments from SEC since inception, with the latest 10-year deferral running through till 2020,” the ratings agency said.
Fitch said liquidity at SEC is adequate with approximately SAR23.8bn in total liquidity at end-December 2013, including SAR4bn in cash, with the remainder mostly comprising available committed government facility, export credit agency (ECA) and commercial facilities. In addition, SEC issued SAR4.5bn sukuk notes in January 2014. This compares with around SAR8.8bn of maturities due in 2014, and significantly negative free cash flow expectations until 2016 financial year.
The company remains dominant in the Kingdom's electricity generation sector despite the emergence of independent power producers (IPPs), which held 80% of the Kingdom's of total generation capacity at FYE12. SEC retains up to 50% equity positions in five IPPs, sources fuel on their behalf and purchases all electricity produced. Utilising generating capacity at IPPs ahead of its own plants is expected to result in some Ebitda margin compression in coming years, particularly in light of seasonal swings in electricity demand in the Kingdom.
SEC is instrumental in meeting the country's growing electricity demand and executing the state policy on providing subsidised electricity within Saudi Arabia, along with developing a robust, reliable, and stable electricity infrastructure. SEC's current capital spending plan of about SAR157bn ($42bn) over the next three years (2014-2016) includes investment in electricity generation capacity, transmission infrastructure, and distribution assets.
Historically, the maximum annual capital investment by SEC has been around SAR41bn. Delivery of an even larger capex programme than the one executed previously, on time and on budget, while simultaneously managing other construction-related risks could be challenging, Fitch said.
(Emirates Business / 25 March 2014)
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