Malaysia offers boost to Japan’s Islamic finance efforts - IFN

Malaysia offers boost to Japan’s Islamic finance efforts

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GLOBAL: Malaysian prime minister Najib Razak and the Japanese premier Shinzo Abe met in the political capital of Malaysia, Putrajaya yesterday, discussing their intentions to renew a bilateral swap agreement which had expired in October 2007. On the agenda of the discussions was Islamic finance, where Najib said that Malaysia is looking forward to receiving inward investments from Japanese enterprises, financial institutions and investors to engage in Islamic finance-related activities with Malaysia. He also added that Malaysia would like to offer technical assistance to Japan in relation to this sector. In return, the Japanese government will affirm its commitment towards the second wave of the ‘Look East Policy’ which entails the enhancement of trade and business ties with other Asian countries. Shinzo said that the government will look to modify its policies to suit the current global economic environment, while promoting cooperation in infrastructure development with Malaysia. “We will make use of our high technology expertise especially in high-speed train and water and energy system in Malaysia,” he said. On the sidelines of the event, Malaysian government investment arm 1MDB signed an agreement with the Japan Bank for International Cooperation (JBIC) to open opportunities for both countries to benefit from Samurai bonds under the Guarantee and Acquisition toward Tokyo market Enhancement (GATE) facility. JBIC had since 2006 expressed its intentions to issue a Sukuk, but has yet to come to market with such an issuance. Speaking to Islamic Finance news, a Japan-based lawyer commented on the latest initiative between the two governments, saying: “Although we have not seen significant activities in the Islamic issuance market in Japan following the amendments to the laws on securitization, it is hoped that such initiatives will increase the chances of Japan issuing a Sukuk in the country. We have been considering this, and the Japanese government has been keen to accept Islamic money in Japan. The environment, following the amendments to the law, has already been primed for such issuances.” Although there have not been any domestic Islamic issuances within the Japanese market itself, several Japanese corporations have raised Sukuk outside of the country, including AEON Credit, Toyota Corporation and Nomura Holdings. The Bank of Tokyo Mitsubishi-UFJ’s Malaysian operations also recently affirmed that it will be rolling out more Islamic financing products in the coming year to satiate rising demand from consumers and investors.