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Adinan Maning said the bank planned to have at least two Islamic banking branches in every state. It now has three Islamic bank- ing branches – one each in Bangi (Selangor), Kelantan and Terengganu. BSN currently has a total of 380 branches nationwide.
“At the moment, we are still behind in our target of 26 but will strive to achieve it. We hope to add another two, one in Terengganu and another in Shah Alam.
“We will spend about RM250,000 per branch for renovation purposes and will probably convert some of our existing conventional banking branches to Islamic branches,’’ he said.
Adinan said this after the signing of a mem- orandum of understanding (MoU) between BSN and Bank Rakyat Indonesia (BRI) here yesterday.
The event was witnessed by Indonesian Embassy representative and deputy chief of mission Tatang B. Razak. Under the MoU, BSN would offer Indonesians working in Malaysia the flexibility to transfer their funds back home through BRI. Adinan said BSN expected to undertake an average of 40,000 remittance transactions worth close to RM400,000 per month.
Asked whether BRI was keen to obtain a banking licence in Malaysia as reported by a local English publication its managing di- rector Sulaiman Arif Arianto said it had no plan to do so. BRI is Indonesia’s second- largest bank in terms of assets, with more than 6,000 outlets and 20 million custom- ers throughout the country.
It also specialises in micro-financing. Adinan said the collaboration with BRI was another platform for BSN to widen its remittance services and hoped the synergy with BRI would be further strengthened with new ini- tiatives in the future.
The new service is available at all 6,400 BRI branches in Indonesia and also ex- tended to all BSN branches.
Emirates Steel Look to Banks for Funds
Abu Dhabi’s Emirates Steel Industries is asking banks to respond to financing re- quests for the long term debt for the de- velopment of its plant at Taweelah by mid May and is aiming to close the deal by mid- dle of July.
The financing is split into three tranches, USD 500 million 7 year commercial loan USD 500 million Islamic finance tranche and a similarly sized working capital facility. The total raised is expected to be in the region of
8 GlobalIslamic Finance June 2010
USD 1.3 billion to USD 1.5 billion. The deal is being targeted to close in July to ensure that USD 700 million bridge loans that mature in August can be refinanced. Sources close to the deal say only UAE Islamic banks have been invited to fund the Islamic tranche.
One banker said that it is a tough timeline to get this deal done with the bridge loan ma- turing in August and also Ramadan mean- ing that if it is not done by the end of July, it could be delayed until even later in the year.
There is also a loan of USD 500 million for General Holding Corporation the parent of Emirates Steel, which will be backed by Ital- ian export credit agency Sace.
International banks are understood to have only been invited to participate in this deal. The GHC loan follows the parent company putting an additional USD 500 million in- vestment into the development of the plant.
Islamic Banks Need to Play More Important Role in the Industrialisa- tion of the Muslim Nations
Islamic banks and financial institutions must play a more significant role in the in- dustrialisation of Muslim countries if they are to be able to withstand future chal- lenges in the global financial system. In making the call, Former Malaysian Prime Minister Tun Dr Mahathir Mohamad said banks’ role in the industrialisation of de- veloped countries in Europe and East Asia cannot be understated.
“There is no reason why Muslim banks and financial institutions cannot play the same role. In fact, considering the lack of knowl- edge and initiatives in this area among Muslims generally and Muslim investors specifically, the Islamic banks must play an even bigger and more aggressive role than conventional banks,” he said in his special address at a Malaysia Showcase dinner in this capital city of Bahrain Monday.
Dr Mahathir said currently there was not a single Muslim country that was fully industr- ialised, with some of these countries having no natural resources to support industriali- sation. However, they make up by having the most valuable resources of all they have peo- ple who are intelligent, knowledgeable and skilled in the development of industries.
Dr Mahathir said Islamic banks and insti- tutions must have staff who are qualified not just in financial management but also in technology and intricacies of setting up and managing numerous industries that can create wealth and employment. “Assuming that Islamic banks have this expertise, they can help with the industrialisation of Muslim
countries through the promotion of selected industries and businesses and through in- troducing innovative ways of financing the enterprises,” he said.
Dr Mahathir, who was in the driver’s seat of the Malaysian economy for the past 22 years, said despite the availability of Islamic finance and banking, the Muslim World had not shown the kind of progress the western countries have. One of the reasons could be lack of knowledge in the wealth manage- ment for growth, he said.
Furthermore, the very rich Muslim countries have shown an unwillingness to invest their money in a way that could improve the situa- tion in the Muslim world, he said.
“If the availability of Islamic finance is to help create a better future for the Muslim world then the financial institutions themselves must come up and aggressively promote Is- lamic compatible ways of investing the great wealth of the Muslims,” said Dr Mahathir.
Among the ways are by identifying secure investment opportunities which give fair re- turns but transgress no Islamic injunctions, he said. He also said Islamic banks have not shown any aggressiveness in promoting their services.
While promoting, he said, it could be better if products offered do not match any product in the Western banking system. “The Islamic banking and financial system should not fol- low in the footsteps of the Western financial system in terms of Islamic financial market products.
Admittedly, it is not the Western system that has gone wrong. It is the abuses perpetrated by market players, the speculators and the gamblers who have done this,” said Dr Ma- hathir.
On this matter, he said, the banking and financial system in the Muslim world must be regulated and must remain under gov- ernment supervision even if this stifles the performance and the role of the banks in ensuring a better future for Muslims.
At the same time, he said, the very rich Mus- lims and Muslim countries should value and take care about their management of wealth to prevent any abuses by managers who are usually foreigners. In this case, the Islamic banks and financial institutions can help in raising awareness of the dangers of being dependent on others, he said.
“It is only if the Islamic financial institutions are aware of the full extent of the role they can play and they are willing to look beyond merely making money available to those who
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