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ISLAMIC FINANCE & CAPITAL MARKETS

FELDA to Organise EGM for Holders of RM9.9b Islamic Bonds

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The Federal Land Development Authority (FELDA) will hold an extraordinary general meeting (EGM) on Dec 2, 2021 for holders of the Malaysian statutory body’s RM9.9 billion Islamic bonds or sukuk, which are guaranteed by the Malaysian government, according to the bonds’ trustee AmanahRaya Trustees Bhd.

AmanahRaya Trustees, in a letter on Wednesday (Nov 3) to FELDA bondholders, however, did not specify the proposals for bondholders’ consideration and approval in the EGM.

Maybank Investment Bank Bhd, which is the facility agent for the Islamic Medium Term Notes programme of up to RM9.9 billion, attached AmanahRaya Trustees’ letter in Maybank Investment Bank’s filing with Bank Negara Malaysia’s Fully Automated System for Issuing/Tendering (FAST) website on Wednesday evening. 

“As the facility agent, we attach herewith the self-explanatory letter dated Nov 3, 2021 from AmanahRaya Trustees enclosing the issuer’s (FELDA) letter dated Nov 3, 2021, together with the notice of the EGM for sukukholders. “The issuer’s letter attached in the trustee’s letter is available with the trustee,” Maybank Investment Bank said.

According to AmanahRaya Trustees’ letter, the EGM will be held at 4pm on Dec 2 via videoconferencing to be operated by Mega Corporate Services Sdn Bhd.

AmanahRaya Trustees’ letter indicated that FELDA’s EGM notice “distribution list” comprises 12 entities, including the Employees Provident Fund, Retirement Fund (Incorporated), Malayan Banking Bhd (Maybank) and OCBC Bank (Malaysia) Bhd.

The Retirement Fund (Incorporated) is also known as Kumpulan Wang Persaraan (Diperbadankan) (KWAP).

According to FELDA’s website, the organisation was established on July 1, 1956 under the Land Development Ordinance of 1956 for the development of land and relocation of settlers with the objective of poverty eradication through the cultivation of oil palm and rubber. 

“In 1990, FELDA was no longer recruiting new settlers. [The] government entrusted FELDA to stand with its own financial [resources] and become a statutory body that can generate [its] own income to support various developments through a variety of businesses.

“Today, FELDA continues to carry [the] major role by providing adequate and modern facilities for the schemes, ensuring the next generation of explorers [is] educated to enhance the socio-economic and quality of life, and ensuring the schemes can generate various economic activities as well as bridge the gap between urban and small urban areas. FELDA’s focus is to be the ‘economic powerhouse’ in generating economic activities in 2020 through its structural programme with a wide range of human capital potential,” FELDA said.

News reports on Oct 28, 2020, quoting a statement by Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed, reported that the Cabinet had agreed to approve the proposed issuance of FELDA’s sukuk worth RM9.9 billion with government guarantees for FELDA’s recovery plan.

It was reported that the Cabinet had also agreed with the proposal to restructure FELDA’s debt with financial institutions. Mustapa reportedly said FELDA’s recovery plan will also involve efforts to increase its settlers’ independence.

“FELDA’s financial position is expected to record a positive trend, starting in 2023, with the implementation of these initiatives. FELDA will return to its path as a respected and viable body.

“Solutions to the issues faced by FELDA will not be complete without strengthening governance and efficiency in managing the firm. In this regard, the board of directors and the management of FELDA must be committed to improving management efficiency and improve governance. Among the main problems faced are the unsustainable capital structure and the high debt burden of RM10.6 billion,” Mustapa was quoted as saying by Astro Awani.


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ISLAMIC FINANCE & CAPITAL MARKETS

The Future of Financial Services Talent

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Cities like Dubai and Singapore have witnessed an influx of financial services professionals from more traditional global financial hubs

The Covid-19 pandemic led to the `Great Resignation’ as many professionals reconsidered elements of their careers, including career progression, compensation, corporate culture, training opportunities, working arrangements, and wellbeing. Employers who are receptive to these new expectations are more likely to attract and retain talent. Financial institutions recognise that they can access a wider pool of talent if they improve their career development programmes.

Since the pandemic, large financial institutions have been providing more career opportunities at new offices in cities such as Dubai, as a way to retain current employees and attract new highly skilled professionals. Dubai offers an enticing array of benefits for international talent, including its strategic location, easy immigration processes and a high quality of life that supports a wide array of lifestyles.

The “Future of Financial Services Talent” report, the third in a series covering recent trends in Dubai’s financial industry, is a collaborative effort between DIFC and LSEG Data & Analytics. It offers an overview of the financial services talent landscape and insights into the new expectations talent has from employers, which will influence management styles in the industry. Furthermore, the report outlines DIFC’s value proposition as a global hub that attracts world-class specialized talent.

Click here to access the full report: 


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ISLAMIC FINANCE & CAPITAL MARKETS

Malaysia As An Islamic Finance Hub: From Humble Seed to Global Sun

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Malaysia’s rise as the world’s premier Islamic finance hub is a compelling tale of vision, perseverance, and unwavering commitment to ethical principles. It’s a story not just of numbers and financial products, but of a nation transforming itself into a beacon of hope for a more equitable and sustainable financial future. Let’s delve into the key chapters of this remarkable journey:

Planting the Seeds: 1960s-1980s – A Spark Ignites

While the concept of Islamic finance predates modern history, its modern incarnation began in the 1960s. In Malaysia, the embers of change were first stoked in the 1980s with the establishment of Bank Islam, the nation’s first dedicated Islamic bank. This pioneering step, however, faced challenges like limited awareness and nascent regulations. The industry remained a small sapling, yearning for sunlight and nourishment.

Blossoming Under Policy Sun: 1990s-2000s – Government Nurturing Propels Growth

The 1990s witnessed a transformative downpour. Recognizing the economic and ethical potential of Islamic finance, the Malaysian government adopted a proactive approach. Landmark initiatives like the Islamic Banking Act of 1989 and the establishment of the International Centre for Education in Islamic Finance (INCEIF) provided the vital nutrients the industry needed to flourish.

With government backing, public trust blossomed. Innovative products like sukuk bonds and microfinance options catering to diverse needs emerged, painting the financial landscape with vibrant hues of Sharia-compliant solutions. By the early 2000s, Malaysia had transformed from a humble sapling to a thriving tree, attracting international investors and solidifying its position as a regional Islamic finance hub.

Beyond Banking: 2010s-Present – Diversification Unfurls New Branches

The past decade has seen the Malaysian Islamic finance ecosystem diversify beyond mere banking. Sharia-compliant insurance, capital markets, wealth management, and fintech solutions have taken root, creating a sprawling canopy of ethical financial activity. This diversification strengthened Malaysia’s position as a comprehensive one-stop shop for global investors seeking Sharia-compliant solutions.

Specifying Milestones:

  • 1983: Bank Islam, the first dedicated Islamic bank in Malaysia, established.
  • 1990: Islamic Banking Act of 1989 laid the legal foundation for the industry.
  • 1993: International Centre for Education in Islamic Finance (INCEIF) established, becoming a global leader in Islamic finance education.
  • 1998: International Islamic Financial Market (IIFM) launched, facilitating cross-border sukuk issuance.
  • 2004: Global Sukuk Challenge launched, driving innovation and growth in the sukuk market.
  • 2008: Financial Sector Blueprint 2009-2015 introduced initiatives to further develop the Islamic finance industry.
  • 2011: Securities Commission Malaysia (SC) established a dedicated Islamic Capital Market Unit.
  • 2016: Financial Services Act 2013 implemented, creating a single regulatory framework for all financial institutions, including Islamic finance providers.

Looking Ahead: A Future Rooted in Innovation and Ethics

Today, Malaysia’s Islamic finance industry boasts a robust infrastructure, a diverse product range, and a thriving ecosystem of players. It contributes significantly to the national economy, attracting foreign investment, creating jobs, and promoting financial inclusion. But Malaysia’s ambitions reach beyond its present borders.

The country is actively embracing technological advancements, with blockchain and big data being explored to enhance reach and efficiency. Research and development initiatives are paving the way for new Sharia-compliant instruments, ensuring Malaysia remains at the forefront of Islamic finance innovation.


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ISLAMIC FINANCE & CAPITAL MARKETS

Nigeria’s Finance Minister Advocates Shift to Islamic Finance for Economic Growth

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Nigeria’s Finance Minister and Coordinating Minister for the Economy, Wale Edun, addressed a gathering in Abuja, shedding light on the Federal Government’s decision to embrace Islamic Finance as an alternative economic model. Edun highlighted the pressing need to move away from “elevated high levels” of interest-based financing, stating that global financial dynamics can no longer sustain such practices.

Speaking at a program organized by the Security Exchange Commission (SEC) and the Islamic Financial Services Board (IFSB), Edun pointed out that both man-made and natural shocks have driven interest rates to unsustainable heights. He emphasized how these elevated rates have become a significant constraint on development, particularly due to the soaring cost of borrowing.

“The detrimental impact of high interest rates makes it impossible to access the funds needed for development, infrastructure, and even social services,” stated Minister Edun, underlining the severe consequences on vital sectors such as infrastructure, education, and healthcare.

In a notable shift towards alternative financing, Edun drew attention to a recent $30 million grant from the United Arab Emirates (UAE), dedicated to climate action and adaptation in Nigeria. What sets this grant apart is that it was funded through Islamic finance principles, signaling a change in the landscape of available resources.

“Funds these days are with those who practice Islamic finance. You better follow the money,” urged Edun, pointing to the increasing prominence of Islamic finance in global financial flows.

Edun stressed the importance of a deeper understanding and utilization of Islamic finance, labeling it “a veritable tool for financing development,” as endorsed by the IFSB (Islamic Financial Services Board). He emphasized the imperative of harnessing the potential of Islamic finance to fuel economic growth effectively.

“With Nigeria’s objective of achieving rapid, inclusive, and sustainable economic growth, it is crucial to learn from the IFSB and educate oneself to make optimal use of this financing tool,” said Edun.


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