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Sunday, 6 December 2015

Malaysia, Bahrain and UAE lead growth in Islamic finance

Among the GCC countries, Bahrain maintained its second position globally, while the UAE switched positions with Oman to come third, with the latter dropping to fourth. Saudi Arabia, which is the world's second biggest jurisdiction in terms of Islamic finance assets, jumped to sixth from ninth overall, said the report released by Thomson Reuters and Islamic Corporation for the Development of the Private Sector.
The report, which was released for the third consecutive year, examines the key statistics and trends across five indicators that are deemed to be significant for measuring the development of the $1.8 trillion Islamic finance industry. These include Quantitative Development, Knowledge, Governance, Corporate Social Responsibility and Awareness. These indicators are tracked across 108 countries, which had contributions in all or some of these indicators.
Pakistan, Jordan, Hong Kong, India, Botswana and Ivory Coast are some of the countries that have demonstrated positive movements in the IFDI 2015 ranking.
"As the leading Islamic finance institution supporting private sector development across the Islamic world, we recognise that the industry requires effective holistic measures to focus our efforts to facilitate and ensure inclusive financial sector development," said Khaled Al Aboodi, CEO of ICD.
In 2014, global Islamic finance assets climbed to $1.814 trillion, representing a 9.4 per cent rise from $1.66 trillion in 2013.  This increase was driven by strong growth in all sectors - Islamic banking, takaful, sukuk and Islamic funds. The value of assets in the Islamic finance sector is expected to increase by 10 per cent per annum over the next five years, reaching $3.24 trillion by 2020.
"The Islamic finance industry has demonstrated tremendous growth over the last few years. We have seen the industry develop a conducive eco-system that made it possible for many countries to enter this space. Currently, there are more than 1,000 Islamic financial institutions most of which are located in the GCC and Southeast Asia and we expect this  number to increase significantly in the next decade," said Nadim Najjar, Managing Director, Middle East & North Africa, Thomson Reuters
The number of Islamic finance degrees and courses as well as research papers increased in 2014, with 2013 leaders Malaysia, Bahrain, and Jordan retaining their leadership positions on the Knowledge Indicator for 2014.
Some 378 institutions offered Islamic finance education in 2014. Malaysia and UK lead 36 countries that offer Islamic finance degrees, with 141 institutions offering Islamic finance courses.
Bahrain and Malaysia maintained their respective first and second positions on the overall Governance indicator, which considers three factors: Regulations, Corporate Governance, and Shariah Governance. There remains a huge gap between the two leaders and the rest of the countries.

Bahrain, Malaysia, Pakistan, Nigeria, and Indonesia are the jurisdictions with the most complete set of Islamic finance regulations. These are the jurisdictions providing best practice models for Islamic finance governance, and which are considered as models by new markets such as France, Germany, Ghana, and Russia.

(Khaleej Times / 04 December 2015)
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Tabung Haji To Gain RM579.2m From Bandar Malaysia Sukuk

Lembaga Tabung Haji (LTH) is expected to gain RM579.2 million from its RM920.8 million investment in 1Malaysia Development Bhd’s (1MDB) Bandar Malaysia sukuk issuance in February 2014, said Prime Minister Datuk Seri Mohd Najib Razak.
“To date, the fund had received RM7.85 million in returns according to schedule without any delay,” Najib, who is also the finance minister, said in a written reply in Parliament yesterday.
He was answering queries from Kota Tinggi MP Datuk Noor Ehsanuddin Mohd Harun Narrashid who wanted details on Tabung Haji’s investment in the Bandar Malaysia sukuk.
“The pilgrims’ fund invested in the Bandar Malaysia sukuk in two tranches and is expected to gain returns of 5.85% and 6.05% per annum for the period of seven and 10 years respectively,” said the premier.
1MDB sold RM2.4 billion worth of Islamic bonds to finance the construction of replacement facilities for the existing Sungai Besi Air Force Base to pave way for the proposed Bandar Malaysia development.
AmInvestment Bank Bhd had advised on the sale of the sukuk and was not rated by credit-rating firms.
LTH defended the investment as it was secured against parcels of land in Bandar Malaysia with security cover of at least 1.67 times.
Meanwhile, Najib said from January-September this year, the government has used RM18.6 billion for coupon payments to bond and sukuk holders.
Of the total, some RM400 million was paid for local issuance of bonds and sukuk while the balance was paid for offshore issuance.
Throughout last year, some RM22.6 billion was paid as coupon payments for bonds and sukuk, of which RM22.1 million was paid for local issuance, said Najib.

In May, LTH said at the end of the investment in Bandar Malaysia, it will receive a total proceeds of RM1.55 billion, resulting in a RM626.5 million profit.

(The Malaysian Reserve / 02 December 2015)
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