Incentives to boost AgroSukuk lauded

KUALA LUMPUR: Bankers and industry players welcomed the government's plan to encourage the issuance of AgroSukuk.

Under the budget, the expenses for such issuance will be given a double deduction for a period of four years effective 2012 to 2015.

Bankers and industry players said this will help bolster the country's dominance in the global sukuk market.

Maybank Investment Banking chief executive officer Tengku Datuk Zafrul Tengku Abdul Aziz said the incentive will motivate agriculture-based enterprises to actively tap into the robust liquidity that the sukuk market offers.
He said the sukuk market has proven to be an alternative source of funding and efficient capital creation which can translate into greater gains in overall productivity yield and output for Malaysia's agri-based sector.

Prime Minister Datuk Seri Najib Razak in the 2013 Budget announcement said the first seven months of this year, Malaysia continued to dominate sukuk issuance, accounting for 71 per cent or RM171 billion of the total global sukuk issuance.

Maybank group president and CEO Datuk Seri Wahid Omar said the AgroSukuk incentive will boost sukuk issuances in the country consistent with the development of Malaysia International Islamic Financial Centre.

Meanwhile, CIMB Group chief executive Datuk Seri Nazir Razak said the banking group looks forward to engaging with the Securities Commission as it finalises the AgroSukuk framework, "which in principle is a good idea".

Standard Chartered managing director and CEO Osman Morad said issuance of AgroSukuk for the agriculture sector facilitates access to capital by these companies and provides investors with more choices.

"Opening the plantation sector for sukuk issuance strengthens Malaysia's leadership in the sukuk market," he said.

Head of the Islamic Ratings at RAM Ratings Zakariya Othman said the proposed AgroSukuk can "bring the genuine green revolution to an economy".

"It is necessary for the growing network of Islamic financial institutions to cater to the rural areas of the country for their financial services," he said.

Spire Research and Consulting CEO Leon Pereira commented that the new framework for the issuance of AgroSukuk and additional tax benefits for retail sukuk will stimulate the sukuk market where Malaysia is a world leader, strengthening the country's global position in the key area of Islamic finance