Sharia Banking and the Financial Industry http://www.shariabanking.info Islamic Banking The Fastest Growing Segments of The Financial Industry Mon, 07 May 2012 07:52:54 +0000 en hourly 1 http://wordpress.org/?v=3.2.1 Real Estate Investment Trusts in Indonesia http://www.shariabanking.info/real-estate-investment-trusts-in-indonesia.php http://www.shariabanking.info/real-estate-investment-trusts-in-indonesia.php#comments Mon, 07 May 2012 07:52:54 +0000 admin http://www.shariabanking.info/?p=866 Al-’Aqar Healthcare Real Estate Investment Trust (REIT), Malaysia’s oldest Islamic REIT, is considering opening a trust in Indonesia as the nation reviews its first application five years after legalizing such property companies. Kuala Lumpur-based Al-’Aqar, which already owns two hospitals in Indonesia, would look at registering a trust in the Southeast Asian country provided it gets tax incentives and clearer rules on foreigners owning land are implemented. Indonesia has received its first proposal for a real-estate trust five years after introducing laws allowing them, according to the Capital Market and Financial Institution Supervisory Agency.
Expanding Industry Indonesia is trying to expand its Islamic finance industry to catch up with Malaysia, which has eight times the amount of financial assets that comply with the religion’s ban on interest, with just 8 percent of the number of Muslims. Islamic bond sales worldwide have reached $13.3 billion in 2012, compared with $5.8 billion in the same period last year, according to data compiled by Bloomberg. Shariah-compliant securities, or sukuk, returned 3.4 percent in 2012, while developing- market debt rose 7.2 percent, JPMorgan Chase & Co.’s EMBI Global Composite Index shows.

Malaysia was the first country to issue rules for Islamic real-estate trusts in Nov. 2005, stipulating they must earn at least 80 percent of income from Shariah-compliant activities. Property trusts in the world’s largest Islamic bond market are exempt from paying income taxes should they distribute at least 90 percent of their annual earnings to investors, according to Bursa Malaysia. Indonesia can start a REIT market when it drafts similar regulations to Malaysia.
Indonesia has no provisions to allow income-tax relief on distributed profits or stamp duty exemptions. The government only allows citizens to hold full land ownership, while companies and foreigners may buy leases for the right to use, cultivate or build on a plot. These contracts last 20 to 25 years and can be extended depending on approval from the National Land Agency.

]]> http://www.shariabanking.info/real-estate-investment-trusts-in-indonesia.php/feed 0 Lower Yields Into Indonesia’s Islamic Lending http://www.shariabanking.info/lower-yields-into-indonesia%e2%80%99s-islamic-lending.php http://www.shariabanking.info/lower-yields-into-indonesia%e2%80%99s-islamic-lending.php#comments Fri, 20 Apr 2012 01:41:39 +0000 admin http://www.shariabanking.info/?p=860 A yearlong drought in the sales of corporate sukuk in Indonesia is ending as falling yields spur offers by Bank Muamalat Indonesia and Mayora Indah. Bank Muamalat, the nation’s second-largest Islamic lender, will offer as much as Rp 800 billion ($87.2 million) of Shariah-compliant notes in June. Mayora Indah, a biscuit maker, will sell Rp 250 billion of debt in May. The average yield on Indonesian corporate dollar-denominated debt has fallen 34 basis points to 4.87 percent since Jan. 17, the day before Moody’s Investors Service gave the country an investment-grade rating. Corporate sukuk sales will hit Rp 8 trillion this year, from Rp 5.4 trillion at the end of March, the Capital Market and Financial Institution Supervisory Agency (Bapepam-LK) estimated this month. The regulator is working to approve so-called musharakah and istisna sukuk.

The nation’s companies sold a total of Rp 200 billion of sukuk last year, according to government data. Bapepam-LK, is in discussions with the Indonesia Stock Exchange (IDX) to lower listing fees for Islamic bonds and is proposing to add two new types to its list of approved Shariah-compliant securities. Musharakah is based on sharing profits and losses in a joint enterprise while istisna is a contract to buy an asset on an agreed schedule.

Director of Accounting Standards and Disclosure Bureau at the agency said that allowing istisna may prompt infrastructure companies to issue sukuk, while musharakah can support various industries. Indonesia seeks Rp 4.012 trillion of investment for its 15-year development plan, with about Rp 1.786 trillion allocated for highways, ports and power stations. Bank Muamalat sold its first Shariah-compliant debt in 2003 to mature in seven years with a variable coupon rate and indicative yield of 17 percent. This year’s offer will be its second sale. The lender was rated A, the sixth-highest investment-grade, by Fitch Ratings in 2008. Mayora Indah spokeman said it plans to offer yields as high as 9 percent on its five-year Islamic bonds. That compares with a coupon of 13.75 percent for its debut sukuk, of the same tenor, issued in 2008. The instrument is rated AA-, the fourth-highest investment-grade level, by Pefindo Credit Rating Indonesia, a local risk assessor.

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]]> http://www.shariabanking.info/lower-yields-into-indonesia%e2%80%99s-islamic-lending.php/feed 0 PT Mayora Issue Rp 250 billion Sukuk http://www.shariabanking.info/pt-mayora-issue-rp-250-billion-sukuk.php http://www.shariabanking.info/pt-mayora-issue-rp-250-billion-sukuk.php#comments Tue, 10 Apr 2012 04:46:22 +0000 admin http://www.shariabanking.info/?p=851 Manufacturers of processed foods, PT Mayora Indah Tbk, public expose in order to organize a public offering of sukuk mudaraba Mayora Indah II in 2012. The emission value of PT Mayora sukuk mudaraba is Rp 250 billion. Director General and Operations PT Mayora, David Atmadja, yesterday (9 April 2012) said that “Sukuk Mudharabah is offered without papers,”. Sukuk Mudharabah has offered a five-year tenor. Revenue sharing for sukuk will be paid every three months. By PT Indonesia Rating Agency (Pefindo) sukuk is ranked AA-(Double A minus). As executor, PT Mayora has appointed PT Danareksa Securities and PT Mandiri Securities. For the trustee, PT Mayora appointed PT Bank CIMB Niaga.

The issuance of sukuk funds will be used for working capital of the company consisting of raw materials, packaging materials, machinery and spare parts to support the performance of the company. Not only that, at the same PT Mayora also issue bonds worth Rp 500 billion, bringing total debt securities issued by PT Mayora to Rp 750 billion. Tenor is set for conventional bonds is seven years old, two years longer than mudaraba sukuk.

About 70 percent of the proceeds of the bonds will be used for the development of a biscuit factory and supporting facilities which are located in Tangerang. A total of 20 percent will be used for routine asset finance division of the company, the wafer, chocolate, and candy. “The rest is used for the development of cocoa processing plant in the child entity, namely PT Kakao Mas Gemilang,” said David.

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]]> http://www.shariabanking.info/pt-mayora-issue-rp-250-billion-sukuk.php/feed 0 BI to regulate gold pawning at sharia banks http://www.shariabanking.info/bi-to-regulate-gold-pawning-at-sharia-banks.php http://www.shariabanking.info/bi-to-regulate-gold-pawning-at-sharia-banks.php#comments Sat, 14 Jan 2012 10:31:21 +0000 admin http://www.shariabanking.info/?p=849 Bank Indonesia (BI) will soon issue a regulation to limit the pawning of gold at sharia banks, as most of bank customers tend to use the service for speculation, the central bank’s senior executive said in Jakarta on Thursday. BI sharia banking director Mulya Siregar said that it is not appropriate for sharia banks If deposits from the public are used to fund people speculating on rising gold prices. In certain circumstances gold prices are not rising, they’re going down. Mulya said customers traditionally pawned their gold at sharia banks in the hope of securing necessary short-term financing. Now, however, many sharia lenders are making profits from customers pawning gold as an investment to seek higher returns, a practice that is a radical departure from the spirit of sharia financing, which is supposed to fund people’s immediate needs or the real economy. The price of gold at state gold miner Aneka Tambang (Antam) has dropped Rp 61,000 per gram, or 12.3 percent, in the past four months to Rp 555,500 on Thursday. Global gold prices have also fallen by about 17 percent during the same period to trade at US$1,610 per ounce. BI will limit the transaction-value per customer and determine a specific financing to value ratio to avoid speculation. The regulation would be issued later this month in the form of a circular letter to sharia banks and business units that provided gold-pawning services. The financing-to-value (FTV) ratio would be set at a maximum of 80 percent, meaning customers would have to provide gold worth 20 percent of the amount of funds they borrowed, while the value of transaction for financing would be limited to Rp 100 million per customer. BI has recently urged the four sharia banks and four sharia units to limit their gold-pawning services to those standards. Of the total 11 sharia banks and 24 sharia business units, only eight of them engage in gold-pawning.

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]]> http://www.shariabanking.info/bi-to-regulate-gold-pawning-at-sharia-banks.php/feed 0 BNI Syariah Optimistic Funding Increase 30 Percent http://www.shariabanking.info/bni-syariah-optimistic-funding-increase-30-percent.php http://www.shariabanking.info/bni-syariah-optimistic-funding-increase-30-percent.php#comments Thu, 29 Dec 2011 04:07:13 +0000 admin http://www.shariabanking.info/?p=837 Funding of cheap funds (savings and current accounts) and expensive funds (deposits) in BNI Syariah still predicted to grow by 30 percent. This growth will be supported from the increasing public interest in cheap funds of sharia banks. Value of funding or the Third Party Funds (TPF) in targeted next year could increase from 2 to 2.5 trillion USD. While BNI Syariah deposits as of end November 2011 reached Rp 7 trillion. Director of Business BNI Syariah, Bambang Widjanarko stated that public interest is now growing steadily, more and more interest to cheap funds. Growth funding, he added, will be supported by strong domestic economy. Europe’s debt crisis is predicted to be relatively minor in the country. In addition, the rise in Indonesia’s debt rating to be worth the investment would create stronger economic conditions. As for financing, BNI Syariah 40-50 percent growth target. Financing that has been distributed as of November 2011 has reached USD 6 trillion. Bank ready for next year will still focus on the retail sector and consumer financing. Retail and consumer finance sector will rely on two products that is housing Griya iB Hasanah Hasanah and card financing. Next year, BNI Syariah targeting can channel Griya Hasanah financing of up to Rp 3 trillion. As for the card Hasanah, BNI Syariah targeting could raise up to 150 thousand cards. Of that amount, outstanding financing is estimated to reach Rp 278 billion. While in late November 2011, the value of card transactions Hasanah has reached Rp 516 billion. In addition to these sectors, BNI Syariah will serve commercial financing with no value will be more than 20 percent of the financing portfolio. Commercial financing channeled into infrastructure sector is still dominated with a ceiling of more than Rp 10 billion. By the end of November 2011, commercial financing channeled reach USD 1 trillion.

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]]> http://www.shariabanking.info/bni-syariah-optimistic-funding-increase-30-percent.php/feed 0 Muamalat Bank Optimistic Share-e Translucent $ 1 Trillion http://www.shariabanking.info/muamalat-bank-optimistic-share-e-translucent-1-trillion.php http://www.shariabanking.info/muamalat-bank-optimistic-share-e-translucent-1-trillion.php#comments Thu, 22 Dec 2011 13:59:51 +0000 admin http://www.shariabanking.info/?p=832 Muamalat targeting can raise funds from share-e savings account $ 1 trillion at the end of this year. Achievements are supported by the growth of share-e gold card. Director of Compliance and Risk Management Muamalat, Andi Buchori said the growth of share-e gold has exceeded 100 thousand cards within one year. This growth increased the number of share-e card owners that have penetrated more than 1 million holders. Muamalat to increase the share of e-gold continue to increase savings by increasing services such as cooperation with the various merchants. Share of services in e-gold is currently provided by the various advantages such as providing discounts at certain restaurants. The cards also can be used for international transactions because there is a visa service. Share-e card features will be enhanced by utilizing a variety of co-operation. To increase share-e savings account, Muamalat to add to your office network next year. Targeted additional 100 branches supported by 500 Automated Teller Machine (ATM). Shopping places targeted for the addition of ATM Bank Muamalat. The addition of Muamalat network will be focused in the country. Bank Muamalat already had offices in Malaysia Kuala Lumpur but the addition of a branch office in Malaysia may not be done in the near future. It is because the performance of the transaction in Malaysia branch is not optimal. Transactions at the branch office in Malaysia are still limited. Bank Muamalat non-ringgit transactions is limited and regulation is still rigid (tight). However, there are a number of U.S. dollar transactions with a capacity large enough value in Malaysia. Muamalat asset value as of November 2011 has reached Rp 28 trillion. This number grew 46.9 percent compared to last year, while total funding has reached Rp 21.4 trillion.

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