Sales of syariah-compliant debt rose 56 per cent to 26.2 trillion rupiah (S$3.77 billion) in Indonesia in 2010, compared with an 11 per cent drop to RM28.5 billion (S$12 billion) in Malaysia, data compiled by Bloomberg show.
The central bank plans to submit proposals, including tax cuts for mudarabah investment accounts, Mulya Siregar, director of Islamic banking at Bank Indonesia, said in a Dec 30 interview in Jakarta, without saying when. A mudarabah is a partnership in profit, in which each party provides either capital or labour.
HSBC Holdings plc and Citigroup Inc, the third and eighth-biggest sukuk underwriters in 2010, said the plan will boost sales of Islamic debt from the nation with the world's biggest Muslim population.
Lebanon, Afghanistan and Australia have announced plans to revise laws to avoid excess levies on financial products that involve transfers of assets to comply with Islam's ban on interest payments.
'The Indonesian authorities are looking at facilitating their corporate sector to issue sukuk,' Rafe Haneef, Kuala Lumpur-based managing director of global markets for HSBC Amanah, the syariah-compliant unit of Europe's largest bank, said in a Dec 23 interview. 'Though there is significant demand for the country's corporate sukuk, there will be resistance in issuance until tax implications are clear.'
Indonesia had 86 trillion rupiah of Islamic banking assets as at October 2010, or about 3 per cent of the total, according to the central bank. That compares with RM337.6 billion in Malaysia, or 20 per cent of banking assets, the Finance Ministry said.
Global sales of sukuk, which pay returns based on asset flows, dropped 15 per cent to US$17.1 billion in 2010, according to data compiled by Bloomberg. -- Bloomberg
Source : http://www.businesstimes.com.sg/sub/news/story/0,4574,420692,00.html - Jan 7, 2011
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