Malaysia’s Sukuk market faces stiff competition (By IFN)

See: http://redmoney.newsweaver.co.uk/1oaxu5tp8hah38rwoni3wx?email=true&a=6&p=22954875&t=21009325

GLOBAL: Malaysia is poised to retain the lion’s share of the global Sukuk market this year, but could the country see stiffer competition from its neighboring Asian countries?
According to Herwin Bustaman, the head of HSBC Amanah Indonesia, Indonesia is most likely to see record Sukuk issuance this year with another US$1.5 billion sovereign Sukuk issuance, on top of US$1.5 billion already issued in March. The second sovereign sale is expected in the second half of this year.

In addition, he said that: “For the first time, we think Indonesia will see one or two corporates issue the country’s first US dollar-denominated Sukuk.” He noted that this is now possible following the country’s new tax and Sukuk laws, which allow for the issuance of US dollar-denominated Sukuk by corporates; and enables local companies to reach out to investors in the Middle East.

Meanwhile, although Malaysia is forecast to issue 60% of the US$44 billion-worth of Sukuk HSBC projects to be offered globally this year, other Asian countries are also proactively marketing themselves to boost their standing in the lucrative Sukuk market. One notable and new player to the fore is Hong Kong.

"Hong Kong has issued a consultative paper on Sukuk laws seeking response from the market whether provisions drafted in the country were adequate to provide the right platform," said Rafe Haneef, CEO of HSBC Amanah Malaysia. He also said that while the Malaysian market caters to investors seeking Shariah compliant solutions, jurisdictions such as Hong Kong and Singapore cater to investors seeking alternative sources of financing.

Furthermore, Malaysia must increase the issuance of US dollar-denominated Sukuk to achieve its aspiration of becoming a financial hub.
"The advantage of US dollar Sukuk issuances in Malaysia will be that the credit of companies will be regularly monitored by investors abroad and this will enable support from international investors,” said Rafe.