South Korea’s central bank has joined the Islamic Financial Services Board (IFSB), one of the main standard-setting bodies for Islamic finance, as regulators across Asia build closer ties to the growing industry.
Guidelines issued by the Kuala Lumpur-based IFSB are gaining prominence as the industry takes a greater share of the banking sector in several majority-Muslim countries and expands into new markets.
First-time sellers of bonds that adhere to Islam’s ban on interest are poised to revive an industry suffering its worst quarter in more than four years.
Luxembourg and Hong Kong aim to market debut offerings of sukuk next month, while , , and Tatarstan have announced plans for maiden issues. Islamic bond sales have fallen 82 percent to $2.6 billion this quarter compared with the previous three months, their lowest level since the first three months of 2010, according to data compiled by Bloomberg.
The recent decision by South Korea's central bank to join the Islamic Financial Services Board (IFSB), one of the main standard-setting bodies for Islamic finance, as well as Japan's Bank for International Cooperation’s proposal to issue ringgit sukuk shows a second wave of interest in Islamic Finance for the East Asian economic powerhouses.
The GCC’s top utilities provider just signed a deal that will deliver one of the Gulf’s biggest ever infrastructural improvements. It was made possible thanks to a surge in demand for Islamic securities
In June, the Saudi Electricity Company closed one of the country’s biggest deals of the year so far. One of the Gulf’s top utilities providers signed an agreement with various national firms worth SAR6.3bn that will see the region’s infrastructure completely overhauled with new, state-of-the-art cables for its power distribution network.
Indonesia is marketing dollar-denominated Islamic bonds at the highest yield since 2009 as it seeks to bolster its foreign-exchange reserves to support the plunging rupiah.
The nation is offering $1.5 billion of notes maturing in 5.5 years, the Finance Ministry said today. The notes will be offered at 6.375 percent, according to a person familiar with the matter who asked not to be named as the matter is private. That would be the highest rate for global Shariah-compliant securities since Indonesia paid 8.8 percent on its debut dollar sukuk in 2009. The country last offered global Islamic paper in November, selling $1 billion of 10-year securities at a record-low yield of 3.3 percent.
The South Korean government will again push forward a bill to introduce sukuk, or Islamic bonds, a senior finance ministry official said on Thursday, after lawmakers rejected the proposal in December. "We will give one more try to get a special tax bill for Islamic bond issuance passed in parliament in February," the official told reporters, declining to be identified until an official announcement is made.
Japan will alter regulations to give foreign investors tax breaks on sharia bond dividends, the latest country to pursue Islamic finance to woo investors demanding sharia-compliant assets.
Islamic bond dividends received by foreign investors may be declared tax-free as early as end-2011.
The reported failure of the strategy and finance committee of the South Korean National Assembly chaired by Kang Ghil Boo in December to approve a finance bill introduced by the Ministry of Finance which would have given tax neutrality to alternative financial products such as sukuk (Islamic securities) is a wake-up call for the global Islamic finance industry.
Islamic bond sales will pick up next year as governments in Asia and the Middle East spend more on roads and other infrastructure developments, according to Barclays Capital and CIMB Group Holdings Bhd.
Malaysia, the world’s largest sukuk market, last week announced a five-year plan showing annual development spending will rise 23 percent to 142.4 billion ringgit ($44 billion) in 2015, from an estimated 115.5 billion ringgit in 2010. Saudi Arabia, the world’s biggest oil supplier, plans to spend $400 billion in the five years through 2013 on infrastructure projects such as roads, airports and water projects.
What is the "elevator" pitch of Islamic finance to the non-Muslim and the sceptical Muslim? Why do news releases often become articles in Islamic finance?