KFH arranges first $120m Islamic finance deal to build petrochemical factory in Singapore

Kuwait Finance House (KFH) has gained the right of organizing and managing the first Shariah compliant deal in Singapore for the benefit of 'TPLIS' India Singapore Pte Ltd to finance building regular $120m paraffin factory.

The Development Enterprise Holding Company (DEH), which is owned by KFH and is located on Jurung Island in Singapore.

The production is expected to reach 100,000 metric ton annually of paraffin, which is extracted from kerosene.

The International Investment Department Manager Emad Al-Menae stated in a press release that the deal is a penetration of a new, rich and diverse market, which paves the way for further cooperation during the coming period.

Moreover, he praised the cooperation of the Singaporean government and its encouragement of Islamic finance.

This has been proven by its cooperation and encouragement in this deal by making necessary modifications to the existing laws and standards to make them suitable for Islamic finance contracts.

TPLIS, which is a shareholding company owned by TPL, a pioneer Indian company in the gas business, located in south India, and DEH, which is located in Kuwait and owned by KFH, and works in petrol and poawer projects all over the world, in addition to EDB, which is a subsidiary of the Singaporean government and the investment arm for the Economic Development Council. It was established in 1991 to develop the industrial and economic sectars in Singapore.

Al-Menae added that KFH is organizing and participating in the deal, since it is always keen on financing major development projects, in addition to supporting the markets' abilities that is operates in, especially vital fields that are related to the development of societies, like power, communications, infra structure, health, education, and real investment development.

He noted that this deal is rendered a model for economic cooperation among several companies and corporations, where KFH-Malaysia (KFHM) will participate in it. Moreover, shares will be available in the coming period for financial institutions, banks, regional and global corporations.

He concluded that the deal depends on Murabaha during the construction of the factory, then Ijarah that ends by ownership during the operation phase. This means that there can be several Shariah forms in one project, in addition to the flexibility of the contracts and existing Shariah compliant arrangements to absorb the developments and different growth stages in projects.

On the other hand, Executive Director of KFHM Salman Younis announced that the deal stresses the strategic role that KFH Group plays in achieving cooperation and contribution among major financial corporations in Kuwait, the Gulf and its counterpart in the Asian area.

The deal proves again the ability of the Islamic financial business to absorb the diverse characteristics of the markets, and deal positively and rapidly with the available opportunities; in addition to achieving a benefit to the markets and the economies of the countries that encourage and facilitates Islamic financial business.