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Thursday, 6 September 2007

Thailand Keen To Work With Malaysia On Sukuk Bonds

BANGKOK, Sept 6 (Bernama) -- Thailand is keen to work with Malaysian financial institutions to explore the possibility of issuing sukuk bonds to finance infrastructure projects which require investments of over US$50 billion (US$1=RM3.51) in the next decade. Deputy Finance Minister Sommai Phasee said Thailand could gain access to a vast pool of Asian and Middle Eastern funds with the launch of syariah-compliant bond issues.He said private sector projects -- electricity, petrochemicals, property development and manufacturing -- could also tap Islamic financing for expansion."Our Malaysian friends have the technical, banking and legal expertise to put us on the right track, in terms of both retail banking and capital market operations of Islamic financing," he said in his keynote address at the First Thailand Islamic Finance Conference here today.He said Malaysian Islamic banking system already has some US$36 billion in assets while the Islamic capital market has issued some US$36 billion of Islamic corporate bonds, almost half of which were issued in Malaysia.In this aspect, Sommai said, Thailand could learn from Malaysia's experience as the kingdom has a long way to go before it could develop such a sophisticated Islamic banking and finance system.Currently, there are 11 full-fledged Islamic banks operating in Malaysia including three which have global Islamic banking links, namely Al Rajhi Banking and Investment Corp Bhd, Kuwait Finance House and Asian Finance Bank Bhd.Bank Negara Malaysia assistant governor, Muhammad Ibrahim, said since Malaysia first introduced the sukuk bonds in 2002, it has become one of the mainstream financing modes, adding that other countries like Japan wanted to issue such Islamic bonds in Malaysia."The Islamic financing in Malaysia attracted a lot of non-Muslims which showed that it is a successful system and as competitive as the conventional banking," he said.Meanwhile, Aseambankers Malaysia Bhd executive vice-president/head of Islamic Capital Markets, Wan Asmadi Wan Ahmad, said the bank was ready to assist the Thai government and corporations in issuing sukuk bonds."We had talked with some Thai companies on the matter recently. This conference today gives us the platform to further explore the market and share our experience with the Thai financial sector," he said on the sidelines of the conference.Wan Asmadi said Thailand offered a vast potential to tap the sukuk bond market with its growing economy and Middle Eastern investors were keen to explore such a market in the region.Danial Mah, the Labuan Offshore Financial Services Authority deputy director-general, said sukuk-based bonds in the region were snapped by Middle East buyers."Sukuk bonds are attractive for them. If you want to attract financing from Middle East, the way to go is Islamic financing," he said.
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