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Posts Tagged ‘Malaysia

Facts about International Islamic Liquidity Management Corp (IILM)

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27 October 2010
 
What?
  • The International Islamic Liquidity Management Corp (IILM) is a collaborative effort by 11 central banks or monetary agencies, as well as two multilateral organisations to assist institutions offering Islamic financial services in addressing their liquidity management. The initiative will also facilitate greater investment flows for the Islamic financial services industry. The IILM will also be part of their efforts to enhance cross-border flows and also as part of an initiative to facilitate the growing significance of the international dimension of Islamic finance and its increased role in the international financial system
  • The IILM is expected to be operational within the first half of next year and be based at Petronas’s Twin Tower, Kuala Lumpur.
  • 

Who?

  • Shareholders – The regulators collaborating with Bank Negara Malaysia for the setup of IILM would be the shareholders of the initiative, as well as sit on its board whom each would contribute US$5 million (RM15.5 million) as their capital for IILM.
  • Signatories- 13 signatories for the setup of IILM such as BNM, the central banks of Indonesia, Iran, Luxembourg and the United Arab Emirates, and multilateral organisations such as The Islamic Development Bank and the Islamic Corporation for the Development of the Private Sector

How?

  •  The IILM will issue short-term papers in international reserve currencies, such as the US dollar and the euro
  • The initial ones will be in major currencies because it is to facilitate cross-border liquidity management
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Written by Suapi Shaffaii

October 28, 2010 at 11:26 am

Malaysian court rules divisive Islamic contract valid

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Points of Essence:

  • The Malaysian court of appeal has finally delivered a verdict which is in favor of Bai Bithaman Ajil. The controversy surrounding this Islamic home product in the global Islamic banking arena is well known which is further exacerbated by lower court rulings holding the product  contractual document invalid. However, the latest ruling by the second highest court in the court upholding the validity of the product’s contract will be at least for now set a clear direction for Islamic finance in the country.  Reuters has the report.

KUALA LUMPUR, April 1 (Reuters) – A Malaysian court has ruled that a popular but controversial Islamic finance contract is valid, a move expected to boost sharia banks in Southeast Asia’s most developed Islamic financial market.

The bai bithaman ajil or deferred payment sale contract is the mainstay of Malaysia’s Islamic finance industry and is commonly used in home loans. But some religious scholars, especially in the Gulf, say it is an interest-based loan cloaked in Islamic dress.

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Written by Suapi Shaffaii

April 5, 2009 at 1:38 am

Malaysia: Islamic Banking Should Be Most Important Agenda For Government

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Points of Essence:

  • The Government is urged to tap Islamic banking as an energy capacity tool in future. With the current pool of the talents in the area, the agenda will be seamlessly carried out.  But it is cautioned against the advances of other countries in promoting Islamic finance which may overshadow the Government’s existing accomplishments. Bernama has the report.

KUALA LUMPUR, March 27 (Bernama) — The government is urged to make Islamic banking as one of the most important agendas in efforts to build energy capacity in future.

The representative from the Pahang Umno Liaison Body, Amiruddin Mohd Said, who made the proposal when tabling the motion on economy at the Umno general assembly 2008, here today, said Malaysia had the expertise needed to realise the agenda.
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Written by Suapi Shaffaii

March 28, 2009 at 6:43 pm

Posted in General Issue

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Malaysian bourse to launch Islamic platform in June

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Points of Essence:

  • Malaysia’s stock exchange created the Commodity Murabaha House system to facilitate commodity murabaha transactions by Islamic institutions. With  a market worth more than $100b, the platform looks set to accommodate the structure of financing which reflects real economic activities. This is amid the reservations from scholarly institutions on its validity. The Financial24 has the report.

Posted by:mark

Malaysia’s stock exchange will launch in June a platform to allow banks to execute a popular but controversial Islamic contract with a market worth more than $100 billion.

Bursa Malaysia’s Commodity Murabaha House system will enable Islamic institutions to carry out commodity murabaha transactions which are commonly used to structure sharia bonds, financing and derivatives, said Norfadelizan Abdul Rahman, Bursas head of product development for Islamic capital market.

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Written by Suapi Shaffaii

March 10, 2009 at 1:27 pm

Malaysia gives out more Islamic fund licenses

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Points of Essence:

  • New fund management licencees, Aberdeen Islamic Asset Management, BNP Paribas Islamic Asset Management and Nomura Islamic Asset Management made up a total of 8 foreign fund managers allowed by the Securities Commission to operate Islamic fund operations in Malaysia. As Malaysia allows 100% foreign ownership of the Islamic fund management companies, it has gained interest from global key players with some have already set up offices in the country. This will augur well for Malaysia’s global hub ambition. The Asian Investor has the report.

By Rita Raagas De Ramos, 2 February 2009

The country steps up efforts to become a global hub for Islamic investments by awarding licenses to Aberdeen, BNP Paribas and Nomura.

Malaysia’s Securities Commission has awarded three new foreign Islamic fund management licenses to Aberdeen Islamic Asset Management, BNP Paribas Islamic Asset Management and Nomura Islamic Asset Management. That brings to eight the total number of fund houses allowed to operate Islamic fund operations in the country.

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Written by Suapi Shaffaii

February 3, 2009 at 3:15 pm

KL seeks global standards on Islamic banking

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Points of Essence:

  • Malaysia advocates issuance of global standards for Islamic banking with a preliminary meeting to be held in Kuala Lumpur soon to discuss the initiative. The Star has the report.

DOHA (Qatar): Malaysia has proposed a meeting be held to set up global standards for Islamic banking and finance, Prime Minister Datuk Seri Abdullah Ahmad Badawi said.

Abdullah said he had discussed this with Qatar Prime Minister Sheikh Hamad Jassem Jabor Al-Thani during meetings yesterday and had proposed for the first meeting to be held in Kuala Lumpur.

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Written by Suapi Shaffaii

January 22, 2009 at 2:57 pm

Debate over commodity murabahah

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Points of Essence:

  • It is not always rosy for Islamic financial products which  often become subjects of differing views from Islamic scholars on their Shariah compliance. The newest product adopting the concept of commodity murabahah is of no exception. Initially introduced as a money market instrument, it has expanded to other spectrum of financial products. The trade elements tied to the product structure with pre-determined profit rate completing the backbone, commodity murabahah is generally accepted, albeit with caution.
  • Even with one edict banning it claiming its similarity with with interest bearing elements and the other to condition it upon the numbers of contracting parties, this looks like the best bet we have so far as conceptual wise, it is globally accepted. Thus, until we find a better alternative, this product is here to stay. The Star has the report.

Some Islamic scholars think commodity murabahah should be avoided as much as possible, saying it closely resembles an interest-bearing transaction. Is there a better alternative financing structure?

THE concept of commodity murabahah (or tawarruq in some jurisdictions) has only recently been widely applied in Islamic finance, along with other syariah contracts such as mudarabah, musharaka and bai murabahah.

The application of this trade-related structure with a pre-determined profit rate (or pre-agreed “margin” or “mark-up”) is possible in syariah-compliant financing and deposit products as well as in liquidity management/treasury instruments and other investment products/securities.

However, resistance still exists on the ground from some critics who say that commodity murabahah-based financial products bear a striking resemblance to interest-based products.

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Written by Suapi Shaffaii

January 21, 2009 at 12:27 pm