Bank Indonesia (BI) and the Government of Indonesia have agreed to an IDR 574.59 trillion (USD 39.7 billion) burden-sharing scheme, which will see BI purchasing IDR 397.5 trillion in state securities at a maximum coupon rate of 4.25% corresponding with BI’s benchmark rate. BI will subsequently return the yield to the Government in full on the day it is paid. In addition, BI will support the Government in covering the debt costs related to the Government’s stimulus package for small and medium enterprises, as well as large businesses, estimated to gen...

According to a Global Sukuk Market report released by S&P Global Ratings (S&P Global) recently, investors are becoming less risk averse due to robust global liquidity. Mohamed Damak, Senior Director and Global Head of Islamic Finance at S&P Global, noted that this has resulted in issuers with good credit quality approaching the market by either reopening Sukuk or accessing established programmes, with debut issuance remaining rare. Despite this, S&P Global is expecting global Sukuk issuance to remain muted in 2020 as corporates are reducing capital expenditure. Glob...

Indonesia’s top Muslim clerical body, the Indonesia Ulema Council (MUI), has urged the Government of Indonesia to re-evaluate the controversial omnibus bill on the creation of jobs, particularly regarding the regulation of Halal certification and the hiring of foreign workers. In a statement issued recently, MUI Secretary-General Anwar Abbas suggested that the Government assign all concerns regarding Halal certification to the MUI to handle, to avoid the risk of violating religious principles. Anwar said that the bill, which specifies that Halal certification shou...

Halal industries in the Association of Southeast Asian Nations (ASEAN) region were urged to expedite adoption of the Fourth Industrial Revolution (IR 4.0) in the wake of the COVID-19 outbreak, at the 16th ASEAN Working Group on Halal Food (AWGHF) meeting held on the 7th of July 2020. The virtual video conference, which was hosted in Bandar Seri Begawan, Brunei Darussalam, was chaired by Haji Abdul Rahman bin Matzin, Acting Director of Syariah Affairs, Brunei Darussalam. Abdul Rahman highlighted the importance for Halal industries to use new technologies during the manu...

Bank Indonesia (BI) reported foreign exchange (forex) reserves of USD 131.7 billion at the end of June 2020, higher than the USD 130.5 billion reported at the end of May 2020.  According to a statement issued on the 7th of July 2020 by Onny Widjanarko, BI’s spokesman, the increase in forex reserves in June 2020 was largely attributed to the Government of Indonesia’s global Sukuk issuance. According to BI, Indonesia’s forex reserves are sufficient to sustain the resilience of the external sector and maintain stability of the fin...

Former Governor of West Nusa Tenggara in Indonesia, Zainul Majdi, has called for the merger of Islamic banks as a vital step to grow and enhance the Shariah-compliant financial sector in the country.  Zainul Majdi, more popularly known as Tuan Guru Bajang (TGB), emphasised the fact that Indonesia’s Islamic finance sector lags far behind those of Malaysia and the United Kingdom, with the latter two countries at the forefront of the Islamic finance sector within their respective geographic regions. TGB noted that this was the case, despite Indonesia hav...

Malaysian power infrastructure specialist Pestech International, with a market reach of over 22 countries, announced plans to issue perpetual Sukuk of up to MYR 1 billion in nominal value based on the Shariah principle of Musharakah.  The proceeds of the Sukuk issuance will go towards refinancing and working capital purposes. According to a stock exchange filing released by the company on the 7th of July 2020, the pertinent information related to the Perpetual Sukuk Musharakah Programme was lodged with the Securities Commission (SC), based...

In a publication on the Saudi Stock Exchange (Tadawul), Saudi Arabia-based National Commercial Bank (NCB) announced the completion of its Additional Tier 1 Sukuk offering via private placement. With a par value of SAR 1 million, the SAR 4.2 billion issuance carries a profit rate of 4.25% per annum. NCB has mandated NCB Capital as the sole lead arranger, lead manager and book-runner for the private placement offer.  According to NCB, this announcement is not to be considered as an invitation or offer t...

The Kingdom of Bahrain’s overall economic growth declined 1.1% year-over-year (YoY) in Q1 2020 according to Bahrain News Agency (BNA) citing the country’s Ministry of Finance and National Economy quarterly economic report.  The decline in real Gross Domestic Product (GDP) in Q1 2020 at constant prices of 1.1% YoY (4.9% decline at current prices) was attributed to the global impact of COVID-19 which affected Bahrain’s economic performance in March 2020 after witnessing growth at the start of the year. According to the report, the oil sector, which contribute...

The Government of the United Arab Emirates (UAE) announced the merger of the Insurance Authority (IA) and the Securities and Commodities Authority (SCA) as part of a wider simplification of the Federal Government's structure. According to Sheikh Mohammed bin Rashid Al Maktoum, the Prime Minister of UAE and Ruler of Dubai, who announced the merger of the regulators under the Ministry of Economy on the 5th of July 2020, the aim of the merger would help the Government make decisions and deal with changes faster, adding that continuous changes would be the forefront of the new Gover...