Is­lamic-com­pli­ant fund­ing at­tract­ing grow­ing at­ten­tion of main­land in­vestors

China Daily (Hong Kong) - - BUSINESS -

KUALA LUMPUR — Rais­ing funds through Is­lamic bonds, or sukuks, in Malaysia has gained trac­tion among Chi­nese cor­po­ra­tions. They have been rais­ing funds over the past few weeks through Is­lamic bonds in the South­east Asian na­tion, which has po­si­tioned it­self as an Is­lamic funds hub.

Last week, China-owned Edra Power Hold­ings’ so­lar en­ergy unit Tadau En­ergy an­nounced it had is­sued a Sus­tain­able Re­spon­si­ble In­vest­ment Sukuk of up to 250mil­lion-ring­git ($58.36 mil­lion), the first green sukuk is­sued in Malaysia.

Two weeks ago, Chi­nese Beijing En­ter­prises Wa­ter Group’s sub­sidiary BEWG Malaysia made its de­but in the Malaysian sukuk mar­ket by is­su­ing 400-mil­lion-ring­git in Is­lamic medium term notes, the first-ever ring­git de­nom­i­nated sukuk on wa­ter in­fra­struc­ture by a Chi­nese Sta­te­owned en­ter­prise.

“We are heart­ened by the gov­ern­ment-driven ini­tia­tives in this space and we do ex­pect more Chi­nese com­pa­nies to par­tic­i­pate in the do­mes­tic in­fra­struc­ture space,” John Chong, the chief ex­ec­u­tive of­fi­cer of May­bank Kim Eng Group and May­bank In­vest­ment Bank, told Xin­hua.

Malaysian in­vestors can ex­pect more sukuk fund rais­ing to take place mov­ing for­ward, sup­ported and sup­ple­mented by other bank­ing so­lu­tions, he said.

Cit­ing BEWG Malaysia as an ex­am­ple, Chong said as some Chi­nese com­pa­nies grow big­ger in Malaysia, there should be an in­creased ap­petite for them to di­ver­sify fund­ing av­enues into the do­mes­tic sukuk or bond mar­ket.

An­a­lysts said the par­tic­ipa-

share of the to­tal global sukuk mar­ket taken by Malaysia in 2016

tion of Chi­nese com­pa­nies in Malaysia’s Is­lamic fi­nance mar­ket is in line with Malaysian gov­ern­ment pol­icy to pro­mote the coun­try as an Is­lamic funds hub.

Hong Leong In­vest­ment Bank an­a­lyst, Khairul Az­izi Kairudin, said the main rea­son for more Chi­nese com­pa­nies rais­ing sukuk lately is global in­vestors tend to see Malaysia as an Is­lamic hub, a suit­able des­ti­na­tion for sukuk.

He saw the pos­si­bil­i­ties that more Chi­nese com­pa­nies would raise funds in the sukuk mar­ket go­ing for­ward, as there are more Chi­nese com­pa­nies part­ner­ing with lo­cal en­ti­ties to un­der­take projects in Malaysia, es­pe­cially in the con­struc­tion in­dus­try.

BEWG Malaysia’s Chief Ex­ec­u­tive Of­fi­cer, Ong Kian Min, ex­plained that the group chose to raise funds via sukuk in Malaysia as the coun­try has the largest Is­lamic cap­i­tal mar­ket.

The pro­ceeds from the sukuk will be used to fi­nance the re­fur­bish­ment and up­grad­ing of a wa­ter treat­ment plant project that has been awarded by a Malaysian state gov­ern­ment, ac­cord­ing to Ong.

Mean­while, Tadau En­ergy is a project com­pany un­der­tak­ing a large-scale so­lar project in Malaysia’s Sabah state on North Bor­neo un­der two 21-year power pur­chase agree­ments en­tered into with Sabah Elec­tric­ity in De­cem­ber

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