Even in countries where the tax treatment measures are already in place, such as Singapore, activities seem to be in limbo both from a sovereign and market perspective. Singapore has the stated ambition of developing the island-state into a global hub for Islamic capital markets products. Judging by the recent speeches of Singapore regulatory officials, nothing new is happening.
In fact, after the first reverse inquiry sovereign sukuk a couple of years ago, the only two subsequent issuance have been by foreign originators. The Islamic Development Bank issued its SGD200 million sukuk and two months ago Khazanah Nasional Berhad, the Malaysian sovereign wealth fund, issued its debut SGD1.5 billion Wakala Sukuk, of which some of the proceeds went to finance its acquisition of a Singapore health care company.
The only other regulatory development of note has been the consultation on the proposal of the Monetary Authority of Singapore (MAS), the central bank, to amend the country’s Deposit Insurance Act to allow MAS to prescribe products as insured deposits, and to prescribe Murabaha as an insured deposit.
MAS launched the public consultation on Feb. 25, 2010 as part of its review with the Singapore Deposit Insurance Corporation (SDIC), on whether to amend and enhance various features of the Deposit Insurance Scheme in Singapore. At the end of September it reported back on the findings of the consultation.
“None of the respondents objected to the proposal. A respondent expressed support to insure Murabaha deposit as it would enable Islamic products to compete on equal footing with conventional products with similar features, encourage more product innovation, and widen consumer choice,” stressed MAS, which also confirmed that "we will proceed with prescribing Murabaha as proposed”.
At two recent conferences Singapore officials have been pretty bland about the prospects of the Islamic finance industry in the country and in Asia, effectively recycling the same ideas and saying nothing new of note. Perhaps the twin effects of the continuing global financial crisis and the reluctance of Singapore’s own market players and government to engage the sector through origination and other transactions has not helped.
Ng Nam Sin, assistant managing director of development at the Monetary Authority of Singapore, at an Islamic finance conference in Bahrain last week trumpeted the encouraging prospects for the Asian economy citing the Asian Development Bank, which has lifted its 2010 GDP forecast for Asian economies to 8.2 percent before easing to 7.3 percent in 2011.
The OECD also sees The Association of South East Asian Nation (ASEAN)’s larger economies expanding at a sustainable 6 percent clip over the next five years. Singapore’s economy specifically, according to Ng Nam Sin, is expected to grow by 15 percent in 2010.
“As Asia expands, its demand for financing and investment into real economic activities including corporate, trade and infrastructure financing will be large. The region is expected to account for one-third of global trade and would require infrastructure financing of $8 trillion up to 2020. As more than 60 percent of the world’s Muslims live in Asia, and coupled with its increased affluence, the conditions are ripe for Islamic finance to ride on Asia’s growth,” he emphasized.
However, MAS’s message is that all banks have to learn from the global crisis. The Islamic finance industry in Asia, MAS warns like conventional banks need to continue to improve their risk management and corporate governance standards, especially asset-liability management and liquidity ratios.
Singapore is adamant that Asia needs an active pan-Asian Islamic securities market to provide more short-term liquid instruments for Islamic banks as they expand across the region. “It is encouraging that more countries in Asia are now familiarizing with Islamic finance and its structures, and have expressed interest to issue sukuk. Several are adopting the necessary legal and regulatory frameworks to enable Islamic finance to take root and grow. More focus on growing the issuance of trade-able liquid instruments, over time, would help to improve liquidity and cross-regional flows,” explained Ng Sam Sin.
Singapore is also concerned of the lack of human capital serving the sector especially to meet the demand of the next phase of growth and expansion.
Singapore is seeking to play a catalytic role in developing Islamic finance.
“Islamic wholesale banking, though still a small part of our almost $1 trillion Asian dollar market and domestic banking sector, has received greater attention lately and has scope to grow. For instance, Parkway Holdings, a Singapore-based health care firm, recently concluded the largest Islamic financing deal in Singapore thus far amounting to SGD750 million ($580 million) Murabaha via a syndicated bank loan involving six banks including The Islamic Bank of Asia,” explained Ng Sam Sim.
But what he did not say is that Parkway is now owned by Khazanah of Malaysia which is already very active in the Islamic finance sector and now sees the sector as its mainstream activity and conventional investment as its alternative activity.
Other developments this year include the “world’s first Shariah-compliant global data center fund” launched by Saudi Arabia’s Al-Rajhi Group and Keppel T&T in June; and listing of the Shariah-compliant Sabana REIT on the Singapore Exchange with Al-Salam Bank Bahrain as a cornerstone investor
Ng Sam Sin had nothing new to say about MAS’s own sukuk program launched in early 2009 and whether the sovereign would issue new offerings or whether Singapore-based financial institutions may seek to launch further issuance under the program.
Source : http://arabnews.com/economy/islamicfinance/article202777.ece -Nov 29, 2010
In fact, after the first reverse inquiry sovereign sukuk a couple of years ago, the only two subsequent issuance have been by foreign originators. The Islamic Development Bank issued its SGD200 million sukuk and two months ago Khazanah Nasional Berhad, the Malaysian sovereign wealth fund, issued its debut SGD1.5 billion Wakala Sukuk, of which some of the proceeds went to finance its acquisition of a Singapore health care company.
The only other regulatory development of note has been the consultation on the proposal of the Monetary Authority of Singapore (MAS), the central bank, to amend the country’s Deposit Insurance Act to allow MAS to prescribe products as insured deposits, and to prescribe Murabaha as an insured deposit.
MAS launched the public consultation on Feb. 25, 2010 as part of its review with the Singapore Deposit Insurance Corporation (SDIC), on whether to amend and enhance various features of the Deposit Insurance Scheme in Singapore. At the end of September it reported back on the findings of the consultation.
“None of the respondents objected to the proposal. A respondent expressed support to insure Murabaha deposit as it would enable Islamic products to compete on equal footing with conventional products with similar features, encourage more product innovation, and widen consumer choice,” stressed MAS, which also confirmed that "we will proceed with prescribing Murabaha as proposed”.
At two recent conferences Singapore officials have been pretty bland about the prospects of the Islamic finance industry in the country and in Asia, effectively recycling the same ideas and saying nothing new of note. Perhaps the twin effects of the continuing global financial crisis and the reluctance of Singapore’s own market players and government to engage the sector through origination and other transactions has not helped.
Ng Nam Sin, assistant managing director of development at the Monetary Authority of Singapore, at an Islamic finance conference in Bahrain last week trumpeted the encouraging prospects for the Asian economy citing the Asian Development Bank, which has lifted its 2010 GDP forecast for Asian economies to 8.2 percent before easing to 7.3 percent in 2011.
The OECD also sees The Association of South East Asian Nation (ASEAN)’s larger economies expanding at a sustainable 6 percent clip over the next five years. Singapore’s economy specifically, according to Ng Nam Sin, is expected to grow by 15 percent in 2010.
“As Asia expands, its demand for financing and investment into real economic activities including corporate, trade and infrastructure financing will be large. The region is expected to account for one-third of global trade and would require infrastructure financing of $8 trillion up to 2020. As more than 60 percent of the world’s Muslims live in Asia, and coupled with its increased affluence, the conditions are ripe for Islamic finance to ride on Asia’s growth,” he emphasized.
However, MAS’s message is that all banks have to learn from the global crisis. The Islamic finance industry in Asia, MAS warns like conventional banks need to continue to improve their risk management and corporate governance standards, especially asset-liability management and liquidity ratios.
Singapore is adamant that Asia needs an active pan-Asian Islamic securities market to provide more short-term liquid instruments for Islamic banks as they expand across the region. “It is encouraging that more countries in Asia are now familiarizing with Islamic finance and its structures, and have expressed interest to issue sukuk. Several are adopting the necessary legal and regulatory frameworks to enable Islamic finance to take root and grow. More focus on growing the issuance of trade-able liquid instruments, over time, would help to improve liquidity and cross-regional flows,” explained Ng Sam Sin.
Singapore is also concerned of the lack of human capital serving the sector especially to meet the demand of the next phase of growth and expansion.
Singapore is seeking to play a catalytic role in developing Islamic finance.
“Islamic wholesale banking, though still a small part of our almost $1 trillion Asian dollar market and domestic banking sector, has received greater attention lately and has scope to grow. For instance, Parkway Holdings, a Singapore-based health care firm, recently concluded the largest Islamic financing deal in Singapore thus far amounting to SGD750 million ($580 million) Murabaha via a syndicated bank loan involving six banks including The Islamic Bank of Asia,” explained Ng Sam Sim.
But what he did not say is that Parkway is now owned by Khazanah of Malaysia which is already very active in the Islamic finance sector and now sees the sector as its mainstream activity and conventional investment as its alternative activity.
Other developments this year include the “world’s first Shariah-compliant global data center fund” launched by Saudi Arabia’s Al-Rajhi Group and Keppel T&T in June; and listing of the Shariah-compliant Sabana REIT on the Singapore Exchange with Al-Salam Bank Bahrain as a cornerstone investor
Ng Sam Sin had nothing new to say about MAS’s own sukuk program launched in early 2009 and whether the sovereign would issue new offerings or whether Singapore-based financial institutions may seek to launch further issuance under the program.
Source : http://arabnews.com/economy/islamicfinance/article202777.ece -Nov 29, 2010
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