|
RUSD MARKET REPORT
|
RUSD Investment bank is
sponsoring
The establishment of new Islamic bank in Malaysia
Background
RUSD capitalized an exceptional opportunity to enter into the vibrant economy of
Malaysia in one of its most professionally regulated and protected sectors by
securing an Islamic banking license. Before the recent approvals for issuance of
licenses, Malaysia had only two Islamic Banks providing Islamic banking
services, while 37 other conventional banks have their Islamic windows catering
to the growing demand for Islamic financial and banking services.
Key features of this singular opportunity are:
• A buoyant and dynamic Malaysian Economy with a stable political and investment
environment.
• A broader range of banking services, not offered by the existing conventional
banks
• A closed and transparent regulatory environment, providing equitable
environment to all participants.
• Islamic Banking activity has experienced rapid growth over the past years and
growth potential in the years to come is tremendous.
• still remains extraordinary potential of growth in the years to come
MALAYSIA
Peninsular Malaysia and islands of
Sabah and Sarawak bordering Thailand, Indonesia, and Brunei in the South Eastern
Asia.
The total area of the country is 329,750 sq km
The Federation of Malaysia was formed in 1963
The country’s total population is over 25.6 million (2004 estimates)
with an average population growth rate of 1.83%
Malaysia is a multi-ethnic country with 58% population comprising of Malay and
other indigenous population, 24% Chinese, 8%Indian, and the remaining 10%
constituting other ethnic groups.
natural resources that include tin, petroleum, timber, copper, iron ore, natural
gas.
Malaysia – The Country, Political System, Demographics, Natural
Resources:
Malaysia is a country comprising of
peninsular Malaysia and islands of Sabah and Sarawak bordering Thailand,
Indonesia, and Brunei in the South Eastern Asia. The total area of the country
is 329,750 sq km comprising of coastal plains rising to hills and mountains. The
country has a tropical climate.
The federation of Malaysia was formed in 1963 and enjoys a stable political
system of a parliamentary form of Government headed by the Prime Minister, with
constitutional monarchy.
The country’s total population is over 25.6 million with an average population
growth rate of 1.83%. Malaysia is a multi-ethnic country with 58% population
comprising of Malay and other indigenous population, 24% Chinese, 8%Indian, and
the remaining 10% constituting other ethnic groups. Muslims are in majority,
while other religious communities include Buddhists, Daoists, Hindus,
Christians, and Sikhs.
Nature has endowed Malaysia with natural resources that include tin, petroleum,
timber, copper, iron ore, natural gas, and bauxite, which it exports and also
utilizes for its own consumption. However, over the years the country has
concentrated on developing its human capital and focused on building its
infrastructure to develop indigenous industrial base.
Malaysian Economy: From 1971 through the late 1990s, Malaysia transformed
itself from a middle-income country and a producer of raw materials into an
emerging multi-sector economy. Growth was almost exclusively driven by exports -
particularly of electronics. During 2001-2002, Malaysia had to face the effects
of global economic downturn and the slump in the information technology (IT)
sector. A substantial fiscal stimulus package of US $1.9 billion along with
other timely and wise measures by the government mitigated the worst of the
recession and the economy rebounded in 2002.
The ability of the Malaysian economy to show resilience to economic down turns
time and again provides confidence in the sustainable growth of the country in
the years to come. During 2003 the economy grew by 4.9%, notwithstanding a
difficult first half, when external pressures from SARS and the Iraq War led to
caution in the business community. Healthy foreign exchange reserves and a
relatively small external debt account make it unlikely that Malaysia will
experience a crisis similar to the one in 1997.
The Malaysian economy posted a strong growth of 7% in 2004 (2003:5.3%), largely
driven by buoyant growth in the manufacturing and services sectors. Continued
strength in domestic-led activities and positive growth across all sectors
coupled with a fairly favourable external environment is expected to yield
growth of 6% in 2005.
Agricultural Products: The agricultural products of Malaysia include
rubber, palm oil, cocoa, rice, timber, coconuts, and pepper.
key Industries: Industries of Malaysia include rubber and oil palm
processing and manufacturing, light manufacturing industry, electronics, tin
mining and smelting, logging and processing timber, petroleum production and
refining, and agriculture processing. Malaysia’s exports include 230,200 bbl/day
of oil and 22.41 billion cu m of natural gas.
Key Economic Indicators:
2003 average rate 3%
2004 average rate 4%
The forecast for 2005 is 6% owing
Key Economic Indicators: The
table below shows some of the key macro economic indicators for Malaysia, which
rank it high among other countries in the region:
|
Salient Macro Economic Features |
2002 |
2003 |
2004 |
|
Real GDP
(US $ Blns) |
57.74 |
61.18 |
65.46 est. |
Per Capita
GDP (ppp) (US $)
[Source: Economist 5/2004] |
6,340 |
6,640 |
- |
|
Real GDP
Growth |
4.1% |
5.2% |
7% |
|
Exports (US
$ Blns) |
92 |
101.6 |
|
|
Imports (US $ Blns) |
78.6 |
87.6 |
|
|
Trade Surplus (US $ Blns) |
14.6 |
14.0 |
|
|
Budget Revenues (US $ Blns) |
|
$22.95 |
|
|
Budgetary Expenses (US $ Blns). This includes capital expenditures on
infrastructure development |
|
$27.75 |
|
|
Budget Deficit as %age of GDP |
|
5.25% |
4.5% |
|
Foreign Currency Reserves (US $ Blns) |
34.22 |
44.52 |
59.46 |
|
External Debt (US $ Blns) |
|
48.84 |
51 |
|
Inflation |
|
1.1% |
|
|
Unemployment |
|
3.4% |
|
Labour force:
Malaysia’s total labor force is estimated at 10.4 million, out of which
unemployment figures were calculated at 3.4% for the 3rd quarter of 2004.
Unemployment has on the average remained within the 3% range. The sectoral
distribution of labour force according to 2000 estimates is:
• agriculture 14.5%
• industry 36%
• services 49.5%
Banking System:
The banking system in Malaysia enjoyed a risk-weighted asset base of over RM 507
billion as of end of 2003. The banking institutions operate in an open
environment and both domestic and foreign controlled banking institutions are
governed by the same set of legislations and regulation. The Financial Sector
MasterPlan (FSMP) focuses on building capacity and capabilities of domestic
banking institutions to enhance their competitiveness and building the
infrastructure for a robust banking system.
The banking system remains the largest provider of
funds to the private sector, providing support to different sectors of the
economy. The measures that are being put in place are to ensure that the banking
sector conuinues to support sustainable economic growth and provide the banking
sector with a more liberalized and global economic environment.
Islamic Banking System in Malaysia :
The rapid progress of the domestic Islamic banking system, accentuated by
significant expansion and developments in Islamic banking and finance has become
increasingly more important in meeting the changing requirements of the new
economy. The Islamic banking institutions offer a comprehensive and broad range
of Islamic financial products and services ranging from savings, current and
investment deposit products to financing products such as property finance,
working capital finance, project finance, plant and machinery finance, hire
purchase, education finance and other financing products that also include trade
finance. The ability of the Islamic banking institutions to arrange and offer
products with attractive and innovative features at prices that are competitive
with conventional banking products, has appealed to both Muslim and non-Muslim
customers, reflecting the capacity of the Islamic banking system as an effective
means of financial intermediation.
Policies & Steps to promote Islamic banking:
• Government and Central Bank initiatives to strengthen the legal infrastructure
to support development of the Islamic banking industry.
• Establishment of the Islamic Financial Services Board in 2002 to develop
international prudential regulatory standards.
• Introduction of guidelines on the Shariah Committees for Islamic banking
institutions to enhance the effectiveness of the Shariah governance framework.
The total capital base of the Islamic banking institutions increased from RM6.8
billion as at end 2003 to RM7.8 billion as at end-2004. New capital injections
contributed RM 1 billion to the increase in capital base in 2004 whilst the
audited profits contributed another RM414.6 million.
As at end-2004, the total assets of the Islamic banking sector increased by RM
12.3 billion to RM94.6 billion.
Financing extended by the Islamic banking system expanded by 19% or RM9.2
billion (2003: 32.4% or RM11.9 billion).
The Sponsoring Consortium and Founding Shareholders – The Underlying Strength of
Asian Finance Bank:
Qatar Islamic Bank (QIB) – Qatar: Qatar Islamic Bank is listed on Doha
Securities Market and was established in November 1983, with the objective to
provide Sharia compliant Islamic banking and investment services. As of 2004,
QIB had a total assets base of 6.8 billion Qatari Riyals with shareholders’
equity of 1.3 billion Qatari Riyals, which figures speak of QIB’s financial
strength and broad deposit base.
QIB is the first Islamic bank in Qatar and maintains a lead position in the
local, regional and international banking sectors by providing developed and
sophisticated banking services using its full service branches and ATM network
throughout the State of Qatar. QIB provides a diversified range of Islamic
Investment and financing products.
RUSD Investment Bank (RUSD) – Labuan: RUSD Investment Bank is a member of
RUSD Group based in Jeddah Saudi Arabia. RUSD is an offshore Islamic investment
bank, registered in Labuan, Malaysia. RUSD received its license in February 2003
and has a capital of US$ 50 million. RUSD Bank is part of RUSD Group that owns a
number Islamic insurance and financial sector companies.
RUSD’s support comes from a number of Islamic insurance and other companies, for
which RUSD is an investment and financial arm. RUSD provides financial planning
products and services for its clients giving them the flexibility of placing
their savings and investments to generate higher risk adjusted Shariah compliant
returns and to participate in generating healthy economic activity within the
Muslim world.
Global Investment House (Global) – Kuwait: Global Investment House K.S.C. is
a listed company on the Kuwait Stock Exchange. As of 2003 Global’s asset base
was KD50.12 million (US$170 million) with an equity of KD33.85 million (US$115
million). Global offers a wide range of financing and investment
services under one roof through its Corporate
Finance & Treasury, Local & GCC Investment Funds divisions.
Global’s ability to originate Sharia compliant asset structures, combined with
it’s strong relationships with major financial institutions, has given it the
ability to come with innovative asset management products for its clients and
investors. Global’s management team comprises of highly qualified and
experienced investment industry professionals spearheading their areas of
responsibility.
|
Founding Shareholder |
Shareholding Percentage |
Shareholding Amount
(Malaysian Ringgits) |
|
Qatar Islamic
Bank |
70% |
RM
266,000,000 |
|
RUSD
Investment Bank |
20% |
76,000,000 |
|
Global
Investment House |
10% |
38,000,000 |
|
Total Capital |
100% |
RM 380,000,000 |
|
