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Saturday, 20 June 2015

Malaysia: Maxis to raise RM5bil from 30-year sukuk

PETALING JAYA: The country’s largest mobile phone operator, Maxis Bhd, is planning to raise as much as RM5bil from a 30-year sukuk for its capital expenditure (capex) and debt refinancing.
The company said in a stock exchange filing that the unrated sukuk murabahah programme would be available 30 years from the date of the first issuance, which should be made within two years of approval. The issue price of the Islamic bond will also be fixed prior to each issuance.
It added that the Islamic medium-term notes might be with or without periodic profit payments. The coupon rate and yield to maturity would also be fixed prior to each issuance of the sukuk.
Maxis, which has a market capitalisation of RM48.8bil, said the notes would be used to finance its capex, working capital and general corporate purposes.
It would also be used to refinance its debt and other maturing unrated sukuk.
For the financial year ended Dec 31, 2014 (FY14), the company had allocated RM1.1bil for its capex. The money would be used to complete its network modernisation, drive 4G long-term evolution expansion and further improve its capacity and quality.
The company has short-term borrowings of RM931mil and long-term debts of RM8.13bil.
It signed an RM2.5bil sukuk in FY14 that has a 10-year tenure from its first utilisation.
The telco had drawn down RM2.15bil of the facility amount, of which RM500mil and RM420.75mil were used to repay an RM500mil revolving credit facility and the initial instalment of the US$750mil syndicated term loan.
Guarantors of the proposed Islamic notes would be Maxis Broadband Sdn Bhd and Maxis Mobile Services Sdn Bhd. An unconditional and irrevocable corporate guarantee would be given to assure the payment of the deferred sale price due in the programme.
“The corporate guarantees shall be issued by the guarantors respectively on a one-off basis,” it added.
CIMB Investment Bank Bhd is the sole principal adviser and the sole lead arranger for the programme.
The lender is also the sole lead manager for the first sukuk issuance.
Meanwhile, CIMB Islamic Bank Bhd is the syariah adviser for this deal.
Maxis’ transformation programme has shown results, as its first quarter ended March 31 saw its subscriber base growing amid intense competition in the sector.
Its service revenue for the period climbed 4.4% to RM2.13bil, mainly driven by the prepaid revenue that increased 8.6% to RM1.05bil, marking a turnaround for the prepaid segment.
It has nine million mobile Internet users and its blended smart-phone penetration rate stood at 57% this quarter.
The prepaid segment saw four consecutive quarters of growth in revenue and subscribers.
Revenue generating subscriptions increased by 328,000 to 12 million during the quarter. Compared with the previous quarter ended Dec 31, 2014, revenue was up by 1% from RM2.12bil, while net profit jumped 20.9% from RM339mil.
(The Star Online / 18 June 2015)
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Enhanced Islamic banking framework benefits Malaysia

Kuala Lumpur: The sustained effort to enhance the regulatory and legislative framework to support Islamic financial transactions will continue to place Malaysia as the biggest player in the global Islamic banking industry, says CIMB Islamic Bank Bhd.
Chief Executive Officer Badlisyah Abdul Ghani said despite the growing competition from other markets, such as Indonesia and Saudi Arabia, Malaysia's better and firm framework would be a value added.
"You will see a lot more jurisdictions getting bigger and bigger in Islamic banking in their respective financial markets.
"But Malaysia will continue to be significant because we are leading in terms of the infrastructure being put in place," he said on the sidelines of the just ended 19th Malaysian Banking Summit here.
Badlisyah was a speaker at a panel discussion on "The Future of Islamic Banking: Where Do We Go From Here?" Malaysia already has over 60 per cent market share of sukuk and nearly 25 per cent of the world's Islamic banking assets.
Muslim countries, which have a combined 76 per cent share of the global Islamic banking market, include Qatar, Saudi Arabia, the United Arab Emirates, Malaysia, Pakistan and Indonesia.
Nevertheless, Badlisyah said due to the aggressive external environment, Malaysia should always come out with compelling, commercially driven products, to clearly distinguish itself from competitors.
Another speaker, Hong Leong Islamic Bank Bhd Managing Director/Chief Executive Officer Raja Teh Maimunah Raja Abdul Aziz said the future lies in the digitalisation of Islamic banks, as banking is set to evolve towards technology-based, service-driven value propositions.
"In terms of digitalisation, there are some pockets of development already in Malaysia, as all banks are offeringinternet banking and mobile banking," she said.
Hong Leong Bank earlier this year rolled out a mobile-to-mobile payment system which facilitates cashless and cardless transactions and lowers the cost of doing business particularly for merchants.
"That said, we have to take mobile banking a little further than just payments and transactions and allow people to even borrow money," Raja Teh Maimunah said.
Another development discussed by the panel was the role and future of crowdfunding, and how it could be the next driver of Islamic financing.
Raja Teh Maimunah said the crowdfunding financing platform will support local capital projects and allows entrepreneurs to rise and encourages innovation.
The laws pertaining to crowdfunding have just been introduced by the Securities Commission Malaysia, which awarded six licences to local firms to start their operations by year-end. 
(Daily Express / 20 June 2015)
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Islamic finance needs good talent to help it develop

When the Islamic economy first emerged in a big way after the global financial crisis of 2008, hopes were sharply heightened towards the world moving into a new era of growth and prosperity.
More significantly, these hopes were fuelled by the potential of Islamic finance to restore market stability through ethical practices.
Encouraged by the double-digit year-on-year growth of Islamic finance over the past decade, experts have projected a crucial need for developing industry-specific skills and talent to accelerate the dynamism of the Islamic finance industry.
Although Islamic finance still accounts for less than 1 per cent of the global financial sector, various academic institutions across the world have already started designing curriculums in Islamic finance and are committed to talent development for this unique industry.
However, despite such efforts, industry experts say more needs to be done for the simple reason that a lack of qualified Islamic finance graduates with the required talent could impede the growth of the Islamic finance sector and the wider Islamic economy.
In other words, the message out there is clear – a mismatch between the academic qualifications of fresh graduates and the skills required by the industry could prove costly for the emerging Islamic economy sector. The observation is based on the fact that higher education institutions most often equip students with skills that are theoretical rather than practical. This means a disconnect between the competencies the graduates bring to the table and the real-time needs of the banking and finance industry.
The more sceptical of these experts have pointed out that the real Islamic finance industry is not more than a replica of conventional finance with a Sharia board assuring its compliance to Islamic standards. These experts believe that the distinction between the two forms of finance – conventional and Islamic – is not immediately apparent and therefore experience in conventional banking and finance is adequate enough for professionals looking for a career fit in Islamic finance.
Regardless of the debate, what we need today is to establish a more comprehensive approach to Islamic finance and drive closer collaboration between the industry and the academia. More investments need to be allocated for raising awareness and developing knowledge on the nature of Islamic finance.
Additionally, new systems and technologies that help to establish the foundation for the Islamic finance sector to become more competitive and efficient should also be a key focus.
Yet another challenge with the maturing of the sector is the lack of an international accreditation body for Islamic finance. Accreditation is a significant achievement that articulates the maturity and growth of Islamic finance – both to establish the quality of products offered and to evaluate the performance of employees.
There are no specific accreditation standards for industry-based learning programmes in Islamic finance that show that training programmes lead to the development of competencies required in the marketplace.
In any emerging sector, we need to carefully review the diversity of cross-border regulations and operations before we can identify global best practices and solutions. This is particularly so in the Islamic finance industry, where understanding of Sharia-based systems and procedures sharply varies among practitioners and countries.
The Islamic finance sector is today quickly shaping up as a demand-driven sector with a scarce talent supply. This should compel the industry to act. If the issue of honing suitable talent to fit the market needs remains unresolved, it would not be an exaggeration to say that the growth of Islamic finance could be short-lived.
I call upon each one of us as stakeholders in the Islamic economy to commit ourselves today to implement the right steps for a better future and to developing a competent new generation that will drive the growth of this important sector.
Abdulla Mohammed Al Awar is chief executive of the Dubai Islamic Economy Development Centre.
(The National Business / 18 June 2015)
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