The fourth World Islamic Banking Conference: Asia Summit successfully convened in Singapore this month, with speakers and delegates from all over the world. In his opening address the deputy chairman of the Monetary Authority of Singapore (MAS), Lim Hng Kiang, announced that MAS has been conducting a review of the regulatory and tax treatment to speed up the issuance of Islamic financial instruments — an initiative which should help to further boost Singapore’s credentials as a conducive jurisdiction for Islamic financial activity.
The first few months of 2013 have showcased the launch of a wide range of Islamic financing products and activities, involving a mix of some familiar names, and some new ones. In the Islamic capital markets space, CIMB Bank established a SGD500 million (US$398.53 million) multicurrency Islamic trust certificates issuance program for Sabana Shariah Compliant Industrial REIT (Sabana REIT), which continues to be a flag-bearer for Islamic finance in Singapore. The property-based Wakalah structure for the Sukuk program is a variation of the structure adopted by Sabana REIT for its multiple-award winning SGD80 million (US$63.76 million) convertible Sukuk deal, issued in 2012.
In May 2013 Atlantic Navigation Holdings, a company listed on the Singapore stock exchange, announced that Maybank Singapore had extended a commodity Murabahah acquisition financing facility to one of its subsidiaries. The facility was structured specifically for the acquisition of vessels which will then be used to secure the financing and is understood to be the first of its kind in the republic.
Earlier in the year, Maybank Singapore also launched two new Shariah compliant products: home financing, and commercial and industrial property financing, specifically for Singapore buyers to finance the purchase of properties in Malaysia.
These wide range of developments within the Islamic capital markets and corporate banking and retail space, indicate a maturing Islamic finance market in Singapore which is gaining momentum. It is against the backdrop of these developments that the MAS disclosed more corporate Sukuk issuances for 2013. MAS’ review results with regards to the regulatory and tax treatment of Islamic finance instruments are certainly anticipated eagerly by the market and it is hoped that they will propel Singapore’s Islamic finance market to greater heights.
Yeo Wico is a partner at Allen & Gledhill. He can be contacted at
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