Maybank Islamic Still Sees Strong And Robust Growth

SHAH ALAM, March 19 (Bernama) -- Maybank Islamic Bhd is still experiencing strong and robust growth in its operations due to an increasing acceptance in the use of Islamic financial services in this country, said its Chief Executive Officer, Ibrahim Hassan.
"Islamic banking is growing at robust rate. In the eight months of the financial year ending June 30, 2010, Maybank Islamic posted an annualised financial growth of 36 per cent and annualised deposit growth of 32 per cent," he told a press conference after handing over RM300,000 to the Lembaga Zakat Selangor (LZS) here on Friday.
The money is for its financial year 2009 zakat payment.
According to Ibrahim, with such an expansion and growth in business, the company expects to pay more zakat for its financial year ending June 2010.
He said in the financial year ended June 30, 2009, the company allocated RM5 million for zakat payment, a RM1.4 million increase from 2008.
Such an increase, he added, is in line with the growth of Maybank Islamic's business in terms of financing and deposits.
Ibrahim handed over the zakat payment to LZS General Manager, Ahmad Shahir Makhtar, witnessed by Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim and Maybank Group President and Chief Executive Officer, Datuk Seri Abdul Wahid Omar. -- BERNAMA

Amanie plans expansion into Australia, Europe

By Habhajan Singh

A local Islamic finance consulting company anchored by prominent Shariah scholar Dr Mohd Daud Bakar is looking to expand its presence in Australia and Europe to tap the growing business opportunities in those regions, attempting to tap into changes in regulation to accommodate Islamic finance and also the growing need to structure Shariah-compliant products.

Amanie Business Solutions is looking at opening up offices or partnerships in Australia, while the choice for Europe is between London and Luxembourg.

"There are concrete proposals to the [Australian] Government to amend some laws to accommodate Islamic finance. These are some of the areas of interest," Dr Daud Bakar told The Malaysian Reserve.
He was referring to the Australia financial centre report presented to the Australian Parliament and made public in mid-January which had recommended on withholding tax on offshore borrowings and on Islamic finance, to improve its ‘access to offshore pools of savings at competitive rates, so as to provide more diversified and cheaper funding for Australia’s investment needs’.
Commonly known as the Johnson Report, it was commissioned by the Government in September 2008 as part of its commitment to secure Australia’s future as a leading financial service centre.

The move would make Amanie a Shariah consultancy with one of the widest global presence. Most Shariah consultants tend to concentrate in either London or Dubai, while Malaysia is populated more by individual Shariah scholars who work mostly with Islamic banks and takaful operators who require their services.
The developments coming out of Australia would have been the impetus for legal firm Zaid Ibrahim’s to open offices in Sydney and Melbourne in the December 2009.
One of the largest local legal firms in Malaysia, Zaid Ibrahim had stated that its primary focus would be to promote Shariah-compliant business. Zaid Ibrahim, with offices in Singapore, Thailand, Indonesia, Vietnam and Dubai, had set up in 2008 an Islamic finance advisory firm called ZI Shariah Advisory Sdn Bhd.

Dr Daud Bakar, who also chairs the influential Bank Negara Malaysia’s Shariah Advisory Council (SAC), is no stranger to the Islamic finance scene in Australia. Amanie has advised a number of deals originating from there, including LM Investment Management Ltd’s (LM) Islamic property fund and Crescent Investments Australasia Pty Ltd’s equity fund, both being the first of their kind in that part of the world.
"LM came to see us in Dubai. In fact, they were our first clients in Dubai," he said. The Dubai-based vehicle, Amanie Islamic Finance Consultancy and Education LLC chaired by Dr Mohamed Ali Elgari, signed off the fatwa for Crescent’s fund. The other signatories on that document, displayed on the company’s website, are Dr Daud Bakar, Dr Muhamad Amin Ali Al-Qattan and Dr Osama Al-Dereai.
LM, which described itself as privately owned specialist Australian income funds manager, floated the LM Australian Alif Fund. It said that it is a 'Shariah compliant fund, with fatwa confirming the Shariah compliant status' of the funds and its investments, suitable for investors seeking 'Australian assets delivering profit in a Shariah compliant manner, and is available for investment in a range of major international currencies'.

As for the European move, industry observer note that European cities like London, Dublin and Luxembourg are vying to be international hubs for Islamic finance.
Luxembourg, for example, is key domicile of funds in Europe and have amended a number of taxation laws to accommodate Islamic finance funds. "Here, they would be interested in originating and listing of funds," said one observer.
Dr Daud Bakar said that Amanie sees 'potential business expansion' in Luxembourg. "We have some experience endorsing few Islamic funds licensed from Luxembourg using UCIT 3 and SICAV structure," he said.
UCITS3 is an European Union initiative. Funds go through a stringent regulatory process which then allows it to be floated in the EU jurisdictions without much further local clearance. SICAVs, a vehicle much like an umbrella for funds, are increasingly being cross-border marketed in the EU under the UCITS directive.

Asked what prompted the move to expand further, Dr Daud Bakar said: "Looking at global financial movements, we’ve seen some strong interest in some jurisdictions like South Korea, Australia, Luxembourg, Kazakhstan. We like Kazakhstan, where we have partners who take care of our interest.
"We are a global Shariah firm, originating from Malaysia. We then expanded to DIFC [Dubai International Financial Centre] in 2008. Now we are seriously considering to position Amanie in other new potential markets and jurisdictions. Islamic finance is a global industry. We need to be close to out clients, be in the same time zone. We’re proud to fly the Malaysian flag in other countries."

(This story appeared in The Malaysian Reserve on 19 March 2010. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

Putrajaya, we have some serious issues

COMMENT: By Habhajan Singh

TWO years after the general elections, the dust has yet to settle on both sides of the political divide. The ruling coalition, Barisan Nasional (BN) and the opposition Pakatan Rakyat are still grappling with issues that are testing their leadership.
At the last general elections, the nation was rocked by a political tsunami caused by the strong showing of the Opposition political parties.
The three parties, stitched together with "glue" called Datuk Seri Anwar Ibrahim, managed to deny the BN its traditional two-thirds majority in Parliament. This margin allows a ruling party to amend the Federal Constitution, the all important legal document for Malaysians. For example, you need that margin to redelineate Parliamentary constituencies.

It has certainly not been smooth-sailing for the BN. The latest debacle involving its second largest component party, the Malaysian Chinese Association (MCA), shows that all is not well within the coalition. The MCA's president Datuk Seri Ong Tee Keat seems to be caught in a bizzare battle, with most of his central committee members resigning just before the party's annual general meeting held yesterday.
On Saturday, Prime Minister Datuk Seri Mohd Najib Razak announced that he will not attend the meeting. One would reasonably expect Mohd Najib, as the coalition's chairman, to attend such an important event.
"The MCA should be given the opportunity to resolve its internal problems. It is hoped that the party will be able to resolve the issue and enable the MCA's leadership to obtain a fresh mandate from party members," the PM's office said in a statement.
The BN's smaller member, the People's Progressive Party (PPP), is also mired in a leadership tussle. Datuk M Kayveas is battling it out with Deputy Minister in the Prime Minister's Department Datuk T Murugiah for the presidency. On May 24 last year, the junior minister had actually manouvered to declare himself as party president in an extraordinary general meeting (EGM) in Putrajaya.

Across the divide, Anwar and company are also under siege. Losing Perak was certainly the biggest blow to them. After many rounds in the courts, the nation's highest court decided in the BN's favour, allowing Datuk Seri Dr Zambry Abd Kadir to keep the position of Mentri Besar.
Datuk Seri Mohammad Nizar Jamaluddin from PAS was left out in the cold. With the law on their side, the BN now has a chance to recoup some of their losses in this northern state.
For a while however, it seemed as if Mohammad Nizar and his compatriots from the DAP and Parti Keadilan Rakyat (PKR) were able to demonstrate some level of active partnership. They are now trying to maintain a semblance of working together.
However, it must surely be so much tougher now that the dynamics of the situation have changed. The latest headache for Anwar comes from the spate of resignations within his own team.
So far, three PKR MPs have left the party, with specualation rife that more may follow. On March 3, Member of Parliament (MP) for Bagan Serai, Mohsin Fadzli Samsuri, became the third member to leave. His resignation comes right after Bayan Baru MP Datuk Seri Zahrain Mohamed Hashim and the MP for Nibong Tebal Tan Tee Beng left the party.
With MPs leaving left, right and centre, PKR on Saturday sacked Kulim-Bandar Bharu MP Zulkifli Noordin, urging the controversial lawmaker to vacate the Parliamentary seat he had won under its ticket.
While trying to get a handle on matters political, there is also Anwar's sodomy trial playing out in the background. PKR leaders are certainly worried and they should be.

Will the "glue" that binds them together now still hold fast when the nation next goes to the polls? All said and done, it has been a roller-coaster ride for everyone on both sides of the political divide, as well as the rakyat.

(This story appeared in The Malaysian Reserve on 8 March 2010. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

Takaful Ikhlas eyes rental, property investments

By Alfean Hardy Takaful Ikhlas Sdn Bhd, which has invested RM97 million on two tower blocks in Bangsar South, Kuala Lumpur, is targeting similar investments going forward given the long-term sustainability of rental income for revenue generation, its president and chief executive officer Datuk Syed Moheeb Syed Kamarulzaman said.
The Islamic insurance firm used RM87 million of its policy holders’ funds to buy the commercial property and another RM10 million was invested in renovating both towers. The company has more than a million individual and group policy holders to date.

The unit of main boardlisted MNRB Holdings Bhd moved into all of Ikhlas Point Tower 11A and three floors of Ikhlas Point Tower 11 on Feb 1, 2010. Covering a built-up area of 99,286 sq ft in total, some 32,000 plus sq ft in one of the towers have been earmarked for rental/future expansion.
Speaking at a media briefing in Kuala Lumpur last Thursday, Syed Moheeb said, essentially, the buildings were not Takaful Ikhlas’s.
"These buildings were paid by policy holders’ funds coming from our risk fund. So, inevitably, the policy holders are the owners of the buildings, we’re merely renting it from them.
"We chose this strategy because we wanted to ensure rental income to policy holders and, over the last few years, one of the better revenue generating strategies is rental income, which is more sustainable over the long-term," he said.

Going forward, he said Takaful Ikhlas would make use of either shareholders’ funds or policy holders’ funds to purchase buildings and then rent them out to generate rental income.
"By doing this, we will slowly acquire property. Eventually, we also want to house all our branches in our own buildings. We’re not sure yet whether we will use funds from our shareholders or from our policy holders (when we buy these buildings)," he said, adding that Takaful Point was the firm’s first property investment.
Syed Moheeb said Takaful Ikhlas could have ventured into property investment earlier, but he felt that the firm needed to ensure that, whatever it bought, would have made an impact to investment income.
"The fact that (the two towers) have a capital appreciation of more than 20% indicates that this was a good decision.
"Among some of the things that we’re looking at will be rentable office premises and it won’t be anything else at this point in time. Our investment policy has been very cautious and has been more towards capital preservation and, in any thing that we do, we have to make sure that we don’t have to answer to any bad decisions later on," he said.
Syed Moheeb said Takaful Ikhlas was currently looking at housing two new branches in Klang, Selangor, and Kuala Terengganu, Terengganu, by middle of the year in new properties.
"At this point in time we haven’t identified yet any properties yet (for these two new branches). If you look at the 10 branches that we have currently, these are the areas that we would be looking to make investment opportunities," he said.
The Islamic insurer currently has branches in Kota Baru, Johor Baru, Sungai Petani, Ipoh, Kuching and Kota Kinabalu in Kelantan, Johor, Kedah, Perak, Sarawak and Sabah respectively. Asked on how much would be set aside for Takaful Ikhlas’s property buy war chest going forward, Syed Moheeb said the company’s investment strategy was set by the board, which decides how much went into equities, governmentbacked securities and others.
"Where property is concerned, we’re looking at not more than 20%. In the shorter term at least, until our financial year ending Mar 31, 2011, we will cap this at 20%," he said.

(This story appeared in The Malaysian Reserve on 1 March 2010. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

Westpac dips into Islamic finance

Westpac is set to offer a commodity-trading facility aimed at overseas investors that operates under the principles of Islamic law, reports The Sydney Morning Herald (Feb 12, 2010).
The move by Westpac, which targets Islamic institutions, coincides with a federal government attempt to promote involvement in Islamic financing.
The Trade Minister, Simon Crean, will launch a study today outlining opportunities for the financial services sector to tap into sharia-compliant investment and banking markets. It follows the recommendation last month by a government-backed finance taskforce to overhaul tax rules to ensure Islamic financing products receive equal treatment, the report said.
The Australian Financial Centre Forum, which released a broader report into the nation's finance sector, highlighted Islamic financing as a potential funding source for the nation's banks, the report added. "Accessing this market could increase the diversity of the sources of capital available to Australian businesses and consumers," the Australian Financial Centre Forum said in its report.
Mr Crean said Islamic financing was a plank in the government's strategy to make Australia a financial hub in the Asia-Pacific region. ''Continued growth in major Asian economies will create a need for resources-related services and infrastructure, which are ideal assets for forms of Islamic financing," he said.

India’s L&T looking at property development JV

By Habhajan Singh
Larsen & Toubro Ltd (L&T), India’s largest engineering company which has invested more than US$225 million (RM771.75 million) in Malaysia over the last three years, is looking at striking a partnership in the area of property development with a local corporation this year.
L&T chairman and managing director A M Naik said it is now in talks with a Malaysian company to jointly develop property projects in India.
Naik, who is in Malaysia on an official visit, declined to name the company as the talks are in an early stage. At the same time, he said L&T’s joint venture with SapuraCrest Petroleum Bhd had just received a barge for an oil and gas (O&G) project.

"In the first week of March, we are taking over the new vessel for offshore installation," he told reporters in a press conference in Klang yesterday.

Naik said Petronas has given a contract worth US$35 million annually for the next five years to the JV, adding that it will be for an initial three years.
"We will be very busy for the next five years with this initial investment of US$175 million between the two sides," he said.
In April 2007, offshore O&G gas services provider Sapura-Crest had announced that it had formalised plans with L&T to form a JV company in India with L&T to build, own and operate a heavy lift cum pipe laying vessel.
The JV was part of the long term strategy for SapuraCrest that had in the earlier two years prior to the announcement been on an aggressive regional expansion drive, it added.
Last month, Naik told reporters in Mumbai that the L&T and SapuraCrest JV had bagged orders worth US$500 million to undertake installation of platforms and pipelines in offshore.

On the operations of the barge, Naik said it would spend 60% of its time in Indian waters and 35% in Malaysian waters, and the remainder time transiting between the two countries.
He said the barge would be deployed on the Petronas project from March 15 onwards, adding that "this season it will work with Petronas, the next season it will move to India".
When Prime Minister Datuk Seri Mohd Najib Razak visited India recently, Naik said he had a one-onone meeting with Najib for some 45 minutes, after which L&T had handed over to its JV with SapuraCrest a US$75 million contract "as a starting job" for the new barge.

Naik also outlined the company’s aggressive expansion plans for Tamco Switchgear (Malaysia) Sdn Bhd, a switchgear gear manufacturer which is its largest investment in Malaysia to date.
In October 2007, L&T signed an agreement to pay US$108 million to acquire the company in auction in what was billed as L&T’s first big cross-border acquisition, which was completed by April 2008. Naik expects the switchmakers revenue to rise US$300 million by 2013, from a revenue of around US$105 million when it took over the company.

(This story appeared in The Malaysian Reserve on 10 Feb 2010. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

Danajamin to launch first wrapped issue

by Bhupinder SinghDanajamin Nasional Bhd says its first credit enhanced debt issue is imminent. The financial guarantee institution is now undergoing the final phase of documentation and expect to close the transaction by the end of this month, without revealing any name or underlying value of issue.
The market was expecting the wholly government owned company to announce its first deal last year when companies were more in need of financing and had submitted with the necessary ratings to support, but nothing has yet came to pass.
"The delay was due to negotiations with the customer as well as the finalisation of certain issues, including those relating to Shariah compliance. Some proposals had to be declined as they do not meet our underwriting criteria or were not sufficiently structured to address the respective risks.
Danajamin will only wrap companies that fulfil our credit criteria. We need to ensure that our product and the deal is well structured to sufficiently protect Danajamin’s interests," the company said in a written reply.

While investment bankers tell The Malaysian Reserve they have had discussions with Danajamin and made submissions on behalf of clients, they are still unclear on issues like how the coupon rate to be paid by the company for a successful Danajamin guaranteed issue will be calculated and paid.
In an interview last year Danajamin chief executive officer Ahmad Zulqarnian Onn said the successful companies would be required to pay the coupon total upfront for the entire tenure but bankers say this may be taxing on the debt issuer.
"Our guarantee fees are determined based on risk and will naturally vary from company to company based on our assessment. Our normal process entails providing indicative fees to companies once sufficient information such as cashflow projections and security arrangements is made available to us," Danajamin said.

Danajamin on its part said it had made clear on certain principles — that its underwriting work if not being subordinated to other creditors, not guaranteeing bonds where there is not specific utilisation and not guaranteeing equity financing – all of which have been a reason for it to decline a number of applications.
Hence, the pioneer Danajamin wrapped issue this month is eagerly awaited by the market as it will give a benchmark to investors, companies, investment bankers and rating agencies on Danajamin’s fee structure and underwriting criteria.
Since the wrapped issue will carry a AAA rating and investor money guaranteed by Danajamin, many expect selling the debt paper will not be a problem. Danajamin’s maximum underwriting limits to is currently set at RM500 million for secured issuance and RM300 million for unsecured issuance.
With most of the two economic stimulus package money already utilised to support economic recovery, the slow starter Danajamin, which was set up last May with a paid up capital of RM1 billion, need to move faster to strike a balance between to need to be prudent with the role of supporting the relatively immature bond market where investors had become averse to risky debt paper rated A and below.

(This story appeared in The Malaysian Reserve on 8 Feb 2010. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)