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Hi everyone. Once again, we bring you a roundup of news in the world of Islamic finance for the month of July and first week of August. We hope you will enjoy reading this issue as much as the last one. Let us know if you have any feedback and ideas.

The MIFC Team

 
Malaysia leads global sukuk issuances in the first half 2018
Global sukuk issuances stood at USD50.3 billion as at end-June 2018, slipped 5.2% as compared to the same period last year. This was largely due to lower sukuk issuances from Qatar, Saudi Arabia, and Turkey. Malaysia and several other countries such as Bahrain, Kuwait, Indonesia and the UAE, however, recorded strong growth and collectively contributed to 72% of total global sukuk issuances. Overall, RAM Ratings maintains its 2018 projected global sukuk issuance at the range of USD75 billion to USD85 billion. Read more

Malaysia leads the way with sukuk issuances of USD19.4 billion (1H17: USD18.6 billion), which contributes to 38.7% of global sukuk issuance. The bulk of Malaysia’s sukuk issuances come from the corporate sector, representing 72% of total Malaysian sukuk issuances. To know more about Malaysia’s bond and sukuk market, Bond + Sukuk Information Exchange (BIX) platform provides a comprehensive and up-to-date insights and information on bond and sukuk market. Explore more


 

Overview of Islamic Banking and Finance in Asia
The Asian Development Bank Institute (ADBI) recently issued a working paper entitled “An Overview of Islamic Banking and Finance in Asia”. The paper reveals growing number of Muslim populations coupled with improving living standards in many Asian countries may raise the popularity of Islamic finance as preferred financing options. The outlook for Islamic finance in Asia is positive given that the Muslim populations is growing rapidly especially in the Southeast Asia and active roles playing by the governments and financial authorities in promoting Islamic finance.
 
The report also mentioned Islamic banking assets and financial products are higher in Asia than Europe and North America. Amongst Asian countries, Malaysia contributed 10% share of global Islamic banking assets. Download working paper


 

Issues Arising from Changes in Takaful Capital Requirements
The Islamic Financial Services Board (IFSB) has recently published a working paper on takaful entitled "Issues Arising from Changes in Takaful Capital Requirement". The paper aims to assess potential issues in relation to solvency requirements of takaful, such as surplus, capital instruments, and qard. The finding reveals the differences and gaps in the development of capital requirements regulation across jurisdictions. The paper also acknowledges that most jurisdictions still lack of appropriate guidelines specific to the takaful industry. Find out more

 

Islamic crowdfunding platform: Building inclusive growth
EthisCrowd, the world’s first real estate Islamic crowdfunding platform has launched its inaugural Ethis Islamic Crowdfunding report which provides insights into their crowdfunding activities. The report highlights the importance of Islamic crowdfunding platform in mobilising and channelling funds to promote inclusive growth, particularly in the case of building several affordable houses in Indonesia. This initiative is also an effort to support the Indonesian government’s ‘1 million homes’ a year programme launched in 2015 that aims to address huge shortage of houses, especially for its large and growing lower and lower-middle segment of society. Read more

In Malaysia, Islamic crowdfunding has emerged as one of the platforms to raise fund to grow small and medium (SME) and start-up businesses to enhance the country’s inclusive growth. The Securities Commission Malaysia issued Islamic equity crowdfunding and Peer-to-Peer (P2P) financing frameworks in 2015 and 2016 respectively to facilitate the growth of this sector. One of the platforms is Investment Account Platform (IAP), a multi-bank platform dedicates to raise funds from investors and to be channeled to socially economic ventures. Learn more

 
 
New guide to assess environmental and social risks under Value-Based Intermediation (VBI)
Following the launch of the strategy paper on Value-Based Intermediation (VBI), Bank Negara Malaysia in collaboration with the International Centre for Education in Islamic Finance (INCEIF) and the World Bank have formed a taskforce to formulate an Environmental and Social Impact Assessment Framework (ESIAF), which serves as a guide for Islamic banks to consider the environmental and social risks and also the impact of their financing decisions. The taskforce had its first meeting on June 2018 and targets to issue an exposure draft during the Global Islamic Finance Forum (GIFF) 2018 in early October. The entire framework is expected to be fully developed by 2020. Read more

INCEIF is a postgraduate university uniquely dedicated to Islamic finance, to know more about INCEIF, come and join INCEIF Open Day 2018 on 11 August 2018 at INCEIF Campus, Kuala Lumpur. Register here if you wish to join the event.

 

New methodology to facilitate growing demand of green instruments
The Malaysian Rating Corporation Berhad (MARC) has published a new methodology to assess impact bonds (also referred as social, sustainability and green bonds) including for sukuk issued under the Malaysia’s SRI sukuk framework. MARC’s Impact Bond Assessment (IBA) consists of three components – impact significance analysis; evaluation of compliance with principles; and sustainability performance assessment – and provides insights to the sustainability credentials of impact bonds. MARC has taken the approach of integrating environment and social dimensions into this single framework to accommodate future issuances of social, sustainability and green sukuk. Download IBA

MARC’s IBA is in line with other global green bond assessment frameworks such as Moody’s Green Bond Assessment, International Capital Market Association (ICMA)’s Green Bond Principles (GBS), and the ASEAN Green Bond Standards (AGBS), and aims to facilitate more impact bond and sukuk issuances globally. Learn more


 
New Shariah-compliant SRI fund
BIMB Invest recently launched BIMB - Arabesque ValueCAP Malaysia Shariah - ESG Equity Fund, Malaysia’s Shariah equity fund that complies with the Securities Commission Malaysia’s SRI Funds Guidelines introduced in December 2017. The fund will be invested up to 98% in Shariah-compliant equities listed in Malaysia, while the remaining will be invested in Shariah-compliant liquid assets. Arabesque, the BIMB Invest’s strategic partner adopts its S-Ray analysis methodology to assess and evaluate the performance of the companies. Learn more

With Islamic funds being recognised as part of the Sustainable and Responsible Investment (SRI) universe, Malaysia in 2017 has the largest SRI fund market in Asia after Japan. Malaysia is also the world’s second largest Islamic funds market, with 29% share of the USD56 billion global assets under management (AUM).

 
Shariah Policy Document on Rahn
Bank Negara Malaysia has recently issued a policy document on Rahn that aims to strengthen Islamic financial institution’s (IFIs) practice with respect to end-to-end Shariah-compliant. The policy document set out Shariah and operational requirements in relation to operationalisation of Rahn contract. The Shariah requirements highlight the salient features and optional practices of a valid Shariah contract to facilitate sound understanding of a particular contract by the IFIs. Meanwhile, the operational requirements outline the regulatory expectations with respect to the governance and oversight; structuring; risk management; business and market conduct; and financial disclosures.
Download Rahn Policy Document


 
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