'M'sia has edge in issuance of multi-currency sukuk'

Prime Minister Datuk Seri Mohd Najib Tun Abdul Razak delivering a speech at the Global Islamic Finance Forum in Kuala Lumpur yesterday. Picture: Bernama

Tuesday, October 26, 2010

MALAYSIA is well-positioned as a multi-currency issuance platform for sukuk given its access to a wide range of players and investors, backed by significant tax incentives, Prime Minister Datuk Seri Najib Tun Razak said yesterday.

He said there were numerous fund-raising opportunities through the Malaysian International Islamic Finance Centre (MIFC) initiatives where Malaysia offers itself as a hub for fund raising.

For instance, he said, a foreign company could engage an internationally-renowned lead arranger in Malaysia and issue a US dollar currency sukuk with investors coming from all over the world.

"Fund-raising can also be done by setting up equity-based funds, where fund originators can create project or infrastructure funds in Malaysia and enjoy over 60 double-tax relief agreements that we have with other countries," he said in his keynote address at the Global Islamic Finance Forum here.

Najib, who is Finance Minister, said funding needs of over US$450 billion ($581.5 billion) required for Malaysia's economic transformation over the next decade would likely be addressed through sukuk raising exercise.

"I am confident that some of these funding needs will be addressed through a sukuk-raising exercise as the global market picks up," he said.

He said Islamic finance continued to present itself as a viable and competitive funding option to sustain robust economic growth in Asia especially with Asian countries projected sizeable funding requirements in their long term plan.

"Although global issuance of sukuk this year to date has fallen by about 16 per cent from the same period last year, the sukuk market is set to improve next year as the global debt market recovers and supply increases," he said.

Najib said as the market continued to face a supply shortage, new issuance of sukuk might be cheaper or else met by a high take-up rate, which would also increase its attractiveness.Bernama