THAI: IBT to raise up to RM724m via Sukuk

BANGKOK • The Islamic Bank of Thailand (IBT) plans to raise between US$70 million to US$200 million (RM724.82 million) via Sukuk Islamic bonds in Malaysia and Middle East countries by this year.
Malaysia's second largest banking group CIMB, and its newly acquired BankThai, had approached the IBT to launch the Sukuk bond in Malaysia.
IBT chairman Professor Somchai Virunhapol said this would be the first time Thailand was issuing Sukuk bonds, adding that other targeted countries besides Malaysia were Kuwait, Bahrain and the United Arab Emirates (UAE).
"We have already held talks with CIMB on the scope of cooperation, but no figures have been discussed as yet. Similarly, we received very good response from the Middle East countries during our visit there a month ago," he said on the sidelines of the Third Thailand Islamic Finance Conference on Mar 26.
According to reports, in 2007 alone, CIMB arranged more than US$4.96 billion worth of Islamic bonds globally, equivalent to 16% of the world market, and of which US$4.67 billion was issued in Malaysia.
The global Islamic financing products are estimated at US$1 trillion (RM trillion), with annual growth of between 10% to 15%. Somchai said there was big potential for Sukuk bonds and other Shariah compliant financing products in the country.
The Thai government, he added, had estimated that about 20% of financing for a projected US$100 billion investment in mega projects over the next ten years, would come from such financing products.
About 50% of the investment is expected to go towards the transportation sector, namely for the construction of new railway tracks and trains, subway lines and airport, as well as 25% each for the energy and other sectors. According to Somchai, even though the world was experiencing an economic crisis which had affected the conventional financing system, the Islamic bond market remained strong, especially in the cash-rich Middle East countries.
He also said that the IBT planned to open three new branches this year from its current 26, adding that it currently has over 100,000 savings account holders.
"There are about eight million Muslims in Thailand and we are tapping a niche market with very big potential," he explained.
Somchai, however, said that the Thai Finance Ministry had to waive taxes such as the specific business tax and capital gains tax before Sukuk bonds could be issued.
The IBT was established in 2003 to offer financial services in compliance with Islamic law and to serve the country's Muslim population. The Thai Finance Ministry is the largest shareholder with a 48.54% stake in the bank. — Bernama (Mar 26, 2009)