Event Summary (KLCIF2019) - KL Conference on Islamic Finance 2019

KL Conference on Islamic Finance 2019


Date    : 17-18 December 2019

Venue : Premiera Hotel, Kuala Lumpur - Malaysia

“An international gathering of practitioners, scholars and experts to discuss and share their knowledge, expertise and experience on the principles, instruments and issues related to Islamic finance, to be held at the world’s leading Islamic financial centre…Kuala Lumpur.”


Event site : www.islamic-finance-conference.net

KEY FOCUS/TOPICS:

- Product development and Implementation of Islamic financial products

- Ensuring Shariah compliance in Islamic financial instruments
- Fintech and Islamic finance

- Sukuk: development, issues and challenges
- Islamic gold account: a golden opportunity

- Islamic mutual funds (unit trusts): factors to consider in making an investment
- The rise of Islamic wealth management in Islamic finance industry
- Islamic financial planning: success in both worlds
- Takaful: innovation and solutions
- Enterprise risk management for Islamic banks
- Enterprise risk management for takaful operators
- Accounting and auditing
- Human capital development in Islamic finance industry
- Legal issues and challenges in Islamic finance
- Dispute settlement in Islamic finance: issue and solutions
- Islamic ethics in financial services industry
- Sustainable Development Goals and Islamic finance
- Corporate governance for Islamic finance industry

SPEAKERS:

Speakers are selected from Islamic banks, takaful operators, academicians, legal practitioners, consultants, regulatory bodies.

Among the speakers are:

WHO SHOULD  ATTEND:

- Islamic bankers/bankers
- Takaful/insurance operators
- Regulators
- Head of governmental departments
- Financial planners/wealth advisors

- Financial consultants

- Legal practitioners (lawyers)

- Academicians (lecturers)

- Entrepreneurs (businessmen/importers/exporters etc)

- Other professionals 

REGISTRATION:

Early Bird Fee: 

Registration with payment by 19 November 2019

Malaysian   :  RM1,700

International  :  USD700

Normal Fee:

Registration with payment after 19 November 2019

Malaysian  :  RM2,000

International  :  USD800

Special fee for Malaysian university lecturers :  RM1,200 (group discount not applicable)

Fee is inclusive of lunch, refreshments and seminar package only.

Group Discount:

Enjoy 10% discount for 3 or more delegates registered from the same organisation and the same billing source.

DOWNLOAD BROCHURE
(will be uploaded soon...for now you may request for tentative program or you will be given a tentative program when register online)

REGISTER ONLINE

ORGANISER

VENUE

Grand Seasons Hotel, Kuala Lumpur - Malaysia

MEDIA PARTNERS

Kuala Lumpur

Event site : www.islamic-finance-conference.blogspot.my

Malaysia: Ekovest to issue RM3.64b Sukuk for expressway

KUALA LUMPUR: Ekovest Bhd is set to issue the largest ringgit-denominated Sukuk wakalah of RM3.64bil to fund its Setiawangsa-Pantai Expressway (SPE) project.

The toll road project,formerly known as the DUKE phase 3, will cost RM3.9bil with a 53 year concession period with the government.

"The issuance of Sukuk wakalah for the SPE will be among the largest issuance for a new highway construction project as well as among the highest rates AA-sukuk so far in 2016.

"The project will also be the first public private partnership project to use the government's reimbursement interest assistance (RIA) as part of the financing structure," said Minister of Finance II, Datuk Johari Abdul Ghani at the signing ceremony of the Sukuk wakalah for the SPE project.

Part of the funding of the SPE project would come from a RM560mil interest free government RIA and RM850mil equity by Ekovest. 

"Securing the financing for the SPE was the last piece of the puzzle for project. This would be the largest project that Ekovest group will undertake to date," said Ekovest managing director Datuk Seri KC Lim on Tuesday.

AmInvestment Bank Bhd is the principal advisor and lead arranger for the sukuk. The joint lead managers and joint bookrunners are AmInvestment Bank Bhd, CIMB Investment Bank Bhd, Maybank Investment Bank Bhd and RHB Investment Bank Bhd.

(The Star Online / 16 August 2016)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Maldives spearheads growth of Islamic finance in South Asia

Many identify the Maldives as an idyllic tropical island holiday destination, but little is known about the fact that the country is making plenty of waves in developing its Islamic finance industry towards an investment hub for South Asia and centre for the halal industry in the region. 

As an Islamic country – the 1997 Constitution of the Maldives designates Islam as the official state religion – the Maldives was quick in building up an Islamic finance industry at a fast pace with the long-term objective to become an offshore finance centre for Shariah-compliant investments, mainly in order to diversify its industry away from dominating tourism. To that end, President Yameen Abdul Gayyoom’s government has developed a roadmap to expand Islamic financial services throughout the archipelago and base it on official regulations by the Maldives Monetary Authority. 

According to Aishath Muneeza, Deputy Minister in the Maldives Ministry of Finance and Treasury and chairwoman of the Shariah Advisory Committee of the Capital Market Development Authority Maldives, the share of Shariah-compliant financial assets were already at around 5% of total assets by the end of last year, and increasing.

“The growth of Islamic finance is happening at a very fast pace,” she said, adding that “I hope that we will be able to create an Islamic finance centre and act as the leader for Islamic finance and the halal industry in the South Asia region.”

The advent of Islamic finance in the Maldives dates back to 2003 when the country saw the establishment of its first Islamic finance institution, Amana Takaful Maldives, a fully-fledged Islamic insurance company. But due to little knowledge among the population about the characteristics of Islamic finance at that point of time, it took until 2011 for the first Islamic bank to open, Maldives Islamic Bank, with registered capital of $12mn and the assistance of Saudi-based Islamic Corp for the Development of the Private Sector, or ICD, a unit of the Islamic Development Bank.

But from then onwards, the growth of Islamic finance in the country happened at an impressive speed as awareness among the population about Shariah-compliant banking and investment grew and banks and other financial institutions widened their product offerings and services for both retail and corporate customers.

In 2012, the first Islamic window of a non-banking financial institution, HDFC Amna, a unit of the Maldivian housing finance Corp HDFC, was introduced to offer musharakah-based home financing instruments. 

Other financial institutions followed, namely Alia Investment, a private firm offering financing based on ijarah contracts. Later on, an Islamic finance-based Haj pilgrim fund, Maldives Haj Corp, was launched, and the largest bank and the largest insurer of the country, Bank of Maldives and Allied Insurance Maldives, respectively, opened Islamic finance windows.

To cope with demand for Islamic finance experts, the government asked the International Centre for Education in Islamic Finance, or INCEIF, to start offering Islamic finance courses in the Maldives to expand skills of conventional banking staff, and later on launched the Maldives Centre for Islamic Finance, designed to strengthen the Maldives’ footprint as a hub for Islamic finance and the halal industry in South Asia. Furthermore, halal certification was introduced in 2014 and a halal logo for aquaculture and fishery products created.

Last year, the Ministry of Economic Development started offering Islamic microfinancing through the Bank of Maldives, and earlier in 2016, the government launched Hazana Maldives, a special-purpose vehicle for the further development of Islamic finance. It also created a Shariah advisory board and laid the regulatory framework for sukuk investment, an important move in the economic diversification drive of the tourism-dependent island nation as Islamic bonds normally entice larger funds.

In a first focus, the Maldivian government plans to tap Islamic finance from India via debt sales and deposits. India has a huge Muslim population of 166mn, but so far no Islamic finance industry because of opposition from Hindu lawmakers. Incentives for Indian Muslims to use Islamic finance vehicles in the Maldives instead of Pakistan, Bangladesh or Sri Lanka are that the industry – although having a solid regulation framework – is not as much regulated as those of its bigger rivals in the region and thus is more likely to attract bigger players in the industry.


(Gulf Times / 16 August 2016)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Pak-Qatar Family Takaful opens new branch

Karachi—Pak-Qatar Family Takaful Limited (PQFTL) has inaugurated a new branch in Gulshan-e-Iqbal area of Karachi. This new branch will create great convenience and provide a wide range of Takaful services to a vast number of consumers, living in Gulshan-e-Iqbal and surrounding areas. The inauguration ceremony was graced by senior management officials and prominent professionals.

The Zonal Head of TDT (Individual) Haq Nawaz said that the opening of this new branch is a significant milestone in the progressive journey of the company, as it reflects the company’s customer-centric approach, by enhancing the outreach and ‘accessibility’ for our valuable customers. The opportunity to continue the company’s high quality customer service is very exciting for me, as we continue to expand to new locations all over the country.

Kamran Saleem CFO of PQFTL, while congratulating the team for this successful endeavour said, “With these new branches, we’re not simply expanding our business, but making a commitment towards promoting Takaful among the masses. Our primary aim is to transform the financial industry in Pakistan by offering our highly competitive products and services, while realigning it with Islamic principles.”

The Country-Head of Sales and Deputy Chief Executive Officer of PQFTL Menhas expressed his delight about this wonderful team-effort and said that the key to successfully serving a community and higher cultural values, along with the company’s brand, is to find and nurture the most talented, like-minded Takaful professionals in the region. 

The team has shown remarkable diligence for maintaining the company’s stature as a pioneer and a leading innovator of Takaful in Pakistan. Nasir Ali Syed CEO, Waqas Ahmad Chief Operating Officer, Saqib Zeeshan Head of TDT Corporate and several other senior executives were also present during the grand inaugural ceremony.

(Pakistan Observer / 12 August 2016)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Under the Radar: Sukuk bonds boom in West Africa

Long under-serviced by Islamic finance, sub-Saharan Africa, and West Africa in particular is seeing a boom in sukuk bonds. West Africa is set to benefit from more intra-regional investment and increased interest from foreign Islamic investors.

The growth of Islamic finance in recent years has seen a rapid increase in the value of ‘Islamic Economy’ – with the global shari’a-approved financial sector projected to be worth $3 trillion by 2018. While Middle Eastern and Asian countries are leading this trend, one region—Sub-Saharan Africa—remains under-serviced.

The growth of sukuk in Africa

Indeed, with over 250 million Muslims, the region is home to a quarter of world’s Muslim population, yet commands a disproportionately small fraction of Islamic financial activity. However, this is changing as sub-Saharan Africa—West Africa in particular—is seeing a marked uptick in Islamic finance, especially in the issuing of Islamic bonds, or sukuk.

Increased GDP growth rates in West Africa have led to higher demand, as nations in this region seek to diversify their lending and borrowing options. Sukuk is increasingly being used to finance development projects, as well as to increase domestic capital reserves and financial inclusion; thus aiding local small and medium-sized businesses.

Furthermore, since speculation is prohibited, and all financial activity must concern real economic activity (with all loans backed by concrete assets), sukuk in theory offers greater stability. Sukuk’s asset-backed investments and risk sharing can offer African nations more forgiving terms and insulate them from the volatility of the wider global economy.

Sukuk issuance boom in 2016

Global sukuk issuance decreased from $101.8 billion in 2014, to $66 billion in 2015. While global uncertainty played a part, the main reason was the cessation of short-term sukuk issuance by Bank Malaysia Negara, the largest issuer, with 50% global market share. This decrease was also due to saturated or unstable traditional markets (Syria, Iraq, Turkey, Libya). Despite these concerns, forecasts for 2016 see an increase to $70 billion, with West Africa playing a significant role.

Significant sukuk use is only now beginning in sub-Saharan Africa. While states such as Sudan and Gambia have issued sukuk in the past, it was in 2014 that Senegal authorized the region’s largest sukuk issuance ($200 million). 2016 has seen a host of new sukuk issuances in West Africa. On August 10th, Togo’s initial CFA 150 billion ($263 million) sukuk offering closed. This comes after Senegal launched its second $263 million round at the end of June.

The trend is likely to continue. Looking ahead, Côte d’Ivoire is planning the second phase of its CFA 300 billion ($526 million) sukuk program. Similarly, Nigeria has convened multi-agency meetings to organize its maiden sovereign sukuk issuance, expected by the end of the year. Furthermore, Kenya and South Africa are planning issuances for 2017.

Islamic investment in West Africa

As a result of sukuk’s unique traits, the IMF is promoting the regional adoption and inclusion of sukuk into African government debt strategies. The region’s Muslim population and development efforts are attracting Islamic financiers from further afield.

Interestingly, in 2014, South Africa became only the third non-Muslim country to issue sukuk; issuing Africa’s first dollar denominated sukuk ($500 million). Pretoria is targeting sukuk’s growing regional influence and is attempting to tap into investment markets in the Middle East and Asia. Specifically, South Africa’s issuance in U.S. dollars was aimed at enticing foreign investors, and is part of its attempt to position itself as a hub for the import of halal products and financial services.

Alongside newcomers to the sector, established players such as Saudi Arabia’s Islamic Corporation for Development of the Private Sector (ICD) are eyeing West Africa as a profitable frontier market. ICD is seeking to expand its business in Africa and has positioned itself as a facilitator of sukuk deals in the region: ICD was the lead arranger for both Togo and Côte d’Ivoire’s sukuk launches.

By 2017 West Africa could be the latest arena for Saudi-Iranian competition, as Iran restarts its sukuk industry following the end of sanctions. Iran has an advantage in the sukuk market in that its entire financial sector is sharia compliant. This is due to the Law for Usury Free Banking Operations, passed in 1983, which in turn makes Iranian Islamic finance compliance a legal requirement, rather than regulatory issue.

That being said, Iran is currently at a severe disadvantage versus Saudi Arabia, in that Iranian law for bids sukuk trading in foreign currencies. This is a major problem if Iran wants to compete in the international sukuk market, which is dominated by dollar transactions. This requirement has effectively shut Iran out of global markets, and its domestic demand is insufficient to raise enough capital for Tehran’s development goals.

Iran’s refusal to use foreign currencies is a two-sided issue with regards to West Africa. Firstly, as noted above, many West African issuers are issuing bonds in West African francs (CFA). This is because issuers such as Senegal are seeking to gain regional market share by promoting intra-regional trading. This is aided by the fact that the CFA is used by eight West African countries, and is guaranteed by the French treasury. The CFA also has a fixed exchange rate pegged at 655.957 CFA to the Euro.

Consequently, Iran’s refusal locks it out of a sizeable regional bloc of more than 105 million potential customers. However, industry experts are optimistic that Iran will change its stance on foreign currency denominated bond trading. Even a partial repeal of the law (say allowing some currencies such as the CFA, but not the dollar), would allow Iran to access the West African market. The widespread use of CFA makes this easier, which could see Iran becoming key partner in promoting CFA issued bonds to circumvent Iran’s own reluctance towards (and Saudi Arabia’s reliance on) dollar denominated bonds in the region.

Increased attention from international investors and growing domestic demand place West Africa in a favourable position heading into 2017. The region is likely to benefit from increased intra-regional investment, as well as better deals as competition between GCC, Iranian and Asian Islamic investors heats up.

Under the Radar uncovers political risk events around the world overlooked by mainstream media. By detecting hidden risks, we keep you ahead of the pack and ready for new opportunities.

(Global Risk Insights / 12 August 2016)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Malaysia's $25 bln pension offshoot set to boost Islamic finance

KUALA LUMPUR, Aug 12 (Reuters) - Malaysia's Islamic finance market is set for a much-needed boost when the country's largest pension fund launches a 100 billion ringgit ($24.9 billion) Islamic fund in January, offering a potential boon for asset managers.

The Employees Provident Fund's (EPF) sharia-compliant pension plan opened to acclaim this week with Malaysians lining outside its offices to invest.

The allocation represents about 15 percent of the EPF's total investments of 681.7 billion ringgit as of March.

Having a standalone pension fund of that size is a rarity in Islamic finance, even for majority-Muslim Malaysia, and it is expected to draw interest from foreign asset management firms with homegrown players also upbeat about the prospects.

"The benefits are multifold, to us and to the industry," said Mohamad Safri Shahul Hamid, CIMB Islamic senior managing director and deputy chief executive officer.

"As EPF allocates more into the sharia fund, surely they would want to progressively deploy more of their funds into sharia-compliant investments."

This would include the market for Islamic bonds, or sukuk, with demand gradually increasing as the EPF hires external firms to manage its bespoke funds, Safri said.

Ancillary businesses such as Islamic securities services would also benefit, as well as Islamic money markets, he said.

The EPF plans to allocate an additional 20 billion to 30 billion ringgit in 2018 to its Islamic fund, depending on the availability of sharia-compliant investments.

The new fund would attract foreign competitors into Malaysia but also widen the opportunities for incumbents, said Mohammad Hasif Murad, investment manager at Aberdeen Islamic Asset Management Sdn Bhd.

"This announcement might be a good value proposition for foreign players to jump on the bandwagon. We expect EPF to continually assess the response from the market and gradually increase the allocation for Islamic in the medium term."

Islamic fund managers screen their portfolios according to religious guidelines such as bans on alcohol and gambling, similar to socially responsible funds in Western countries.

Close to a fifth of total assets under management in Malaysia are now managed this way.

As of December, fund management companies in Malaysia held 132.4 billion ringgit worth of Islamic assets, up 19.7 percent from a year earlier, according to Securities Commission data.

While the benefits of a standalone Islamic retirement fund trickle down to fund managers, the outlook for Malaysia's sukuk market is also improving.

A healthy supply of sukuk is expected for the rest of 2016, on track to exceed the $34.5 billion of sukuk issued in Malaysia last year, CIMB's Safri said.

"We expect an active second half, in terms of total size of the corporate sukuk market, which will grow to $40 billion at the minimum," he said.

Growth in the fixed income market would outpace equities, as investors seek more stable returns, he added.

(Mail Online Wires / 12 August 2016)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

RAM Ratings reaffirms ratings of Axis REIT Sukuk’s MYR 110.0 million first Sukuk

With the revision of RAM’s stressed refinancing rate to 8.5 per cent (from 10.0 per cent), the stressed debt-service coverage ratios (DSCRs) have increased substantially. Nevertheless, the ratings remain constrained by the loan-to-value (LTV) ratios, which are still consistent with our benchmarks for the relevant ratings.

The reaffirmation is premised on the overall stable net property income (NPI) of the portfolio, supported by the underlying properties’ strategic locations, longer-than-average lease maturities and healthy demand for the portfolio’s assets due to the shortage of comparable properties. ARSB is a special-purpose vehicle set up by Axis REIT as a funding conduit for its perpetual Islamic MTN Programme of up to MYR 3.0 billion (the Sukuk Programme). The First Sukuk – the first issuance under the Sukuk Programme – is backed by a portfolio of three industrial and industrial-office mixed properties and one retail property, i.e. Axis Steel Centre (ASC), Axis Vista (AV), Bukit Raja Distribution Centre and Tesco Bukit Indah.

The portfolio NPI of MYR 20.5 million in 2015 remained in line with our assumed NPI of MYR 20.0 million. Despite the present void at AV due to the recent departure of one of the portfolio’s six tenants (which accounted for 3.5 per cent of the portfolio’s NLA and 5.3 per cent of its revenue in 2015), we expect the portfolio’s stabilised annual NPI to remain in line with our initial assumptions. The average rental rates of the assets are still aligned with market rates while the portfolio’s adjusted capital value shows a discount of 31 per cent to its market value. Correspondingly, the cumulative LTV ratios of 43.7 per cent, 46.0 per cent, 48.3 per cent and 50.6 per cent coupled with the revised DSCRs of 2.5 times, 2.4 times, 2.2 times and 2.1 times (from 2.1, 2.0, 1.9 and 1.8 times) correspond to the respective AAA, AA1, AA2 and AA3 ratings of the Class A to Class D Sukuk.

We note overdue rentals of up to three and five months from two tenants in 2015 and 1Q 2016. However, these issues have been largely resolved – one tenant has caught up on its payments while the security deposit and auction proceeds have been used to offset the overdue rentals from the other tenant at AV. A replacement is currently being sought for the vacant space at AV. Our sensitivity analysis incorporates these factors as the basis for our reaffirmation. We have not accorded any benefit to the new lease agreement pertaining to ASC, which is currently in an advanced stage of negotiations.

The ratings are, however, moderated by limited asset diversity and significant tenant-concentration risk, as the portfolio only contains industrial-related properties, and three of the four Secured Properties are single-tenanted. These factors expose the transaction to the cyclicality of the industrial property segment and the risk of significant income loss should any of the tenants’ relocation result in protracted vacancies. Nonetheless, the fixed long-term tenancies are expected to provide cashflow visibility over the medium term. In fiscal 2015, the collective NPI of the two Secured Properties with fixed long-term tenancies amounted to almost 2.50 times of the transaction's profit obligations, and contributed close to 60 per cent of the portfolio’s rental revenue.

The ratings are also underpinned by structural features that enhance the liquidity and security of the transactions, e.g. minimum finance service coverage ratio (FSCR) requirements at the levels of both the Issuer and the sponsor, as well as other trigger mechanisms to accelerate recovery via proceeds from the disposal of the underlying portfolio. We note that the respective FSCRs of the Issuer vis-a-vis the First Sukuk and Axis REIT remained healthy at 4.04 times and 3.37 times (after adjusting for deposits related to acquisitions) as at end-2015.

(C P I Financial / 12 August 2016)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com