| March 12
March 12 Malaysia's Securities Commission plans
to introduce guidelines for the issuance of "socially
responsible" sukuk, the regulator said on Wednesday, in an
expansion of the standards covering Islamic bonds.
Up to now, sukuk standards introduced by regulators and
bodies of scholars around the world have focused on ensuring
that the structures of the sukuk and the assets backing them
comply with Islamic principles.
Malaysia's initiative appears to go a step further by
setting formal guidelines for the ways in which money raised by
sukuk should be used.
The initiative, known as "SRI sukuk", was announced by Prime
Minister Najib Razak in his annual budget speech last October;
he said funds raised by SRI sukuk would go towards "sustainable
and responsible" investments.
The prime minister did not elaborate on how SRI sukuk would
work, and the Securities Commission did not give any details.
But the guidelines could attract to Malaysia issuers and
investors from the West who are familiar with the concept of
socially responsible investing but have yet to venture into the
The new standards may focus on ensuring that money raised is
not spent in economic sectors banned by Islam, such as tobacco,
gambling and banking based on interest payments. The SRI
standards will not be compulsory; sukuk issuers can continue
using their current formats.
In its 2013 annual report, the Securities Commission also
said it would continue to encourage cross-border and
multi-currency bond and sukuk issuance.
According to data released by the commission on Wednesday,
Malaysia retained its global lead in many areas of Islamic
Malaysia accounted for 58.8 percent of global sukuk
outstanding and 69 percent of sukuk issuance last year. It has
been innovating with new sukuk formats: Malaysia became the
first country in the region to see a sukuk issue designed to
raise capital to meet global Basel III banking standards, and
the second country to raise money by selling sukuk to retail
Last year the Malaysian regulator approved issuance of 49
local-currency sukuk worth a combined 99.1 billion ringgit
($30.2 billion), up from 41 worth 71.1 billion in 2012.
Sukuk, while still dominated by short-term commercial paper
and medium-term notes, accounted for two-thirds of total private
debt securities issued in Malaysia last year.
Islamic assets under management in Malaysia grew 22.5
percent last year to 97.5 billion ringgit. There were 178
Islamic unit trusts as of December 2013 with 42.82 billion
ringgit in assets, up from 169 and 35.56 billion a year earlier.
In the wholesale fund sector, there were 52 Islamic
wholesale funds holding 16.43 billion ringgit of assets, up from
41 holding 16.22 billion.
Malaysia's private retirement scheme (PRS), launched in
mid-2012, posted a five-fold increase in Islamic assets under
management and had 22,511 accounts at the end of last year.
A total of 17 Islamic PRS funds held 79.52 million ringgit
in assets as of December, up from nine with 14.45 million a year
earlier. This represented roughly a quarter of all PRS assets.
($1 = 3.2800 Malaysian ringgit)
(Additional reporting by Al-Zaquan Amer Hamzah in Kuala Lumpur;
Editing by Andrew Torchia)