A sovereign Islamic bond facility established

Monday Morning:The Monetary Authority of Singapore (MAS) is the first central bank in a non-Muslim majority jurisdiction to develop an ongoing local-currency program for issuing the bonds, known as sukuk, they said.

“This sukuk is the Sharia-compliant equivalent of Singapore government securities, and is of the highest credit standing”, MAS Managing Director Heng Swee Keat said at a signing ceremony.
The program is jointly arranged by Standard Chartered Bank and the Islamic Bank of Asia, which was set up in 2007 by Singapore’s DBS Bank and prominent investors from the Arab Gulf region...Continue Reading

Singapore's de facto central bank sees 'promising growth' in Islamic finance

(Thomson Financial) Singapore is proceeding smoothly in the development of its Islamic finance industry with the first listing of a Shariah-compliant exchange traded fund (ETF) on the local bourse.

'We have seen promising growth,' Monetary Authority of Singapore (MAS) managing director Heng Swee Keat said on Tuesday at the launch of the Daiwa FTSE Shariah Japan 100 ETF.

Daiwa's first ETF that debuted on the Singapore Exchange (SGX) today offers an investment channel into Japanese companies that fully complies with Shariah investment principles.

Daiwa Asset Management Co. Ltd. president and chief executive officer Michihito Higuchi hopes to grow the size of the ETF to between 30 billion to 50 billion yen ($290 million to $484 million) in the next six months.

Heng said this listing adds to the range of ETF and Shariah compliant products in Singapore and provides a direct channel for investing in Japan.

Singapore has refined its regulatory framework and tax structures over the years to facilitate the growth of the Islamic finance industry, he said.

The initiatives include the grant of a 5 percent concessionary tax rate for income derived from Shariah-compliant fund management, lending and insurance and re-insurance that was announced in February, Heng said.

The MAS will also be developing a facility for the issuance of Singapore dollar denominated sovereign-rated sukuks, which are Islamic financial certificates of indebtedness similar to a bond, in response to the needs of financial institutions conducting Shariah-compliant activities in Singapore.

'These initiatives are catalysed by feedback from the industry, which has taken an active interest in the development of Islamic Finance in Singapore,' Heng said.

Bahrain readies to develop Islamic finance in Singapore

Bahrain Tribune) The Kingdom would facilitate the development of Islamic financial institutional network in Singapore. "The development of Islamic banking is something we are proud of in Bahrain," said the Central Bank of Bahrain Governor, Rasheed Al Maraj yesterday.

He held talks with the visiting Managing Director of the Monetary Authority of Singapore (MAS), Heng Swee Keat and his accompanying delegation. The two sides discussed issues of mutual interest, particularly the development and growth of the banking and financial sectors of Bahrain and Singapore.

Areas of interest to the Singapore apex monetary agency included CBB's experience and knowledge of Islamic finance in view of its recent announcement to issue sovereign-rated sukuk to meet the needs of Islamic financial institutions there.

Al Maraj extending CBB cooperation to MAS in its efforts to develop the infrastructure for Islamic finance said Bahrain played a key role in innovating the development of Islamic banking, which is one of the fastest growing segments of its financial services industry.

More recently, with the development of a comprehensive regulatory framework for Islamic insurance (takaful), several global insurance firms have established takaful operations in Bahrain. In addition to Islamic finance, the CBB also saw good prospects for the fund management industry, trust administration business and insurance sectors.

These are all areas where we see a good potential for a homegrown industry, not just for foreign players," he said. He pointed to the long-standing cooperation between Bahrain and Singapore on several fronts, including education and training.

Singapore has been a role model for many developing countries and we look forward to strengthening our bilateral cooperation." Also present at the meeting were Dr Anwar Khalifa Al Sadah, Deputy Governor of the CBB, and other senior CBB officials.

Singapore to develop Islamic bonds denominated in local currency

Thomson Financial) - The Monetary Authority of Singapore (MAS) said it will develop a facility to issue Singapore dollar-denominated, sovereign-rated 'sukuks', or Islamic bonds, to aid financial institutions conducting Shariah-compliant activities in Singapore.

Sukuks will be issued according to the needs of financial institutions in Singapore with Islamic finance operations, and will be priced against Singapore government securities, Heng Swee Keat, managing director at MAS told an Islamic Finance summit in Jordan late Tuesday.

'This will provide a transparent price discovery mechanism for this new instrument. As the (Singapore dollar) sukuk market grows and deepens in time, it can then develop its own pricing benchmarks,' Heng said in a statement released in Singapore.

The MAS said it will give further details about the facility in due time.

yuinmunn.szetoh@thomsonreuters.com

Singapore set to boost Islamic finance – monetary authority

Singapore has its eyes set on boosting Islamic finance and has created a “level playing field” for Shariah products and conventional funding tools.

The city state now provides tax neutrality between conventional and Islamic financing by removing hurdles such as stamp duty, Monetary Authority of Singapore (MAS) deputy managing director Ong Chong Tee said in an interview with Gulf Times. “We are providing general sales tax exemption for financing based on the Murabaha structure,” he said.

Singapore’s financial sector regulator MAS now allows the city state’s banks to offer Murabaha financing, investment products and deposits.

The city state recently licensed DBS Bank to set up Singapore’s first Islamic bank as a joint venture. The Islamic Bank of Asia, with a paid up capital of $500mn was incorporated in May 2007, and its major shareholders include DBS, Singapore’s largest bank and some prominent businessmen based in the GCC region.

“We are the only non-Islamic country to be a full member of the Islamic Financial Services Board. Singapore will play host to the Board’s 6th Annual Summit in May 2009,” Tee said.

Central bank governors, top securities and insurance regulators officials as well as major private sector participants are expected for the meeting, which will discuss key issues and developments on the regulation and supervision of Islamic financial services.

Tee said Singapore has witnessed a rising interest in Islamic finance in the last few years. Although volumes are still small in comparison to conventional products, Islamic finance industry is growing year after year.

Some forms of Islamic financial services are already available in Singapore. They include Islamic deposits, funds and Takaful insurance.

“We are developing expertise in Islamic banking to meet the growing demand for Shariah-based financial products,” the Tee said.
He said Singapore’s prominence as global financial centre was attested by the fact that the city state is now home to over 600 financial institutions. Besides banks, insurance firms, finance companies, fund managers and financial advisors, they include major players in securities, insurance brokerage, futures trading and corporate finance.

“Our financial sector now accounts for 11.2% of the GDP, up from 5% in the 70s,” Tee said.

In August last year Singapore’s banking assets stood at S$1.79tn compared with S$36bn in 1974. The stock market capitalisation in October 2007 was S$824bn compared with S$14bn in 1975.
Singapore’s average forex daily turnover in September 2007 was S$344bn compared with S$0.8bn in 1974. The country is the world’s fifth largest forex trading centre and Asia’s second largest OTC derivatives trading centre.

Tee said Singapore has one of the fastest growing local currency debt markets. The total outstanding debt securities have tripled in size since 2000 with foreign issuers accounting for 25% of the market.
Assets under management totalled S$891bn in 2006 compared with S$18bn in 1990.

Singapore Government Securities Market was worth S$96.3bn in October 2007 compared with just S$4.5bn in 1987.

Tee said Qatar and other Gulf investors could cash in on the asset management capabilities of leading institutions in Singapore. The county is now an important centre for institutional fund management. Assets under management in Singapore have seen a 20% to 30% growth in the last five years.

Singapore has also emerged as the Asia-Pacific insurance hub, Tee said. Some 20 of the top 25 global reinsurers are currently based in the city state. It is the largest Asia-Pacific domicile for captive insurance companies.

“We also provide a rich mix of insurance intermediaries and ancillary service providers,” Tee said.

He said investors in the GCC region could leverage on Singapore’s strengths in asset management, project and trade financing.
“I am delighted some GCC banks including QNB and Doha Bank through their Singapore representative offices were contributing to increasing bilateral trade between the city state and the region,” Tee said.