Indonesia lists world’s biggest sukuk in Dubai

| 14/09/2015 | Reply

Issac John – Khaleej Times

Indonesia listed on Sunday four sukuk valued at Dh22 billion – the largest ever carried out by a sovereign issuer on Nasdaq Dubai – as Dubai further reinforced its position as the world’s leading hub for Islamic economy.

Bambang Bodjonegoro

Indonesia’s Finance Minister Bambang Bodjonegoro

Indonesia’s Finance Minister Bambang Bodjonegoro, who rang the market-opening bell to celebrate the listing of the Islamic bonds said it was an important step forward in further strengthening his country’s ties with the UAE and the wider Middle East.

With the new listings, Dubai, which had already overtaken rival financial centres to become the world’s leading sukuk hub in line with the goal set by the leadership, has boosted the listed nominal value of sukuk to Dh135 billion, with Nasdaq Dubai accounting for 93 per cent of that amount.

Sunday’s sukuk listings are the largest ever carried out by a sovereign issuer in Dubai, underscoring the Emirate’s growth as the global capital of the Islamic Economy.

Bodjonegoro said Indonesia, the biggest Muslim nation with a total population of 255 million people, is a frequent sukuk issuer in the global market. “Since our international debut in 2009, we have issued global sukuk valued at 7.65 billion dollars,” he said.

The minister said the latest listings underlined importance of sukuk as a global sovereign financial tool for investment and development and strengthen confidence in Islamic finance regulatory environment in Dubai and the UAE.

Mohammed Abdulla Al Gergawi, the UAE Minister for Cabinet Affairs and Chairman of the Dubai Islamic Economy Development Centre, said the listing of the Indonesian sukuk was a milestone in the drive by Dubai to become the capital of the global Islamic economy.

Gergawi said Sunday’s listing would play a significant role in attracting further sukuk from around the world and further strengthen global confidence in Dubai as the capital of the Islamic Economy. It will encourage more countries and  corporations to utilise sukuk as a financial sovereign and investment tool in their development plans in the medium and long term.

Nasdaq Dubai attracted sukuk listings valued at $13.4 billion in 2014 and has added $12.6 billion so far in 2015.

By July, Dubai has overtaken other Islamic bond markets as the value of sukuk listed on the emirate’s exchanges hit $36.7 billion, ahead of the world’s three traditional sukuk centres: Malaysia, with $26.6 billion listed on Bursa Malaysia and the Labuan free trade zone, the Irish Stock Exchange with $25.7 billion, and the London Stock Exchange with $25.1 billion.

Leadership in global sukuk was a goal set by His Highness Shaikh Mohammed bin Rashid Al Maktum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, in his 2013 initiative to make the emirate the capital of the Islamic economy.

While 56 per cent of Dubai’s listed sukuk are from UAE issuers, 22 per cent are from Saudi Arabia. Ali said he wanted the proportion from the Gulf countries outside the UAE to grow.

The four sukuk listings by the Indonesian government under its Trust Certificate Issuance Programme comprise one issuance of $2 billion, two of $1.5 billion each, and one of $1 billion.

“The success of Dubai’s Islamic capital markets is based on our deep-rooted traditions in this field and the profound knowledge of the many experts based within the Emirate. We are delighted to collaborate with issuers and other specialists around the globe to maintain the growth of the sector for the benefit of all participants,” said Essa Kazim, Governor of DIFC, Secretary General of DIEDC and Chairman of DFM.

Abdul Wahed Al Fahim, Chairman of Nasdaq Dubai, said the exchange would further develop its close ties with international and regional investors,  underpinning the global visibility of the sukuk issued by the government of Indonesia. “Nasdaq Dubai is positioned to support many more Islamic capital-raising activities by governments and public and private sector issuers around the world.”

Hamed Ali, Chief Executive of Nasdaq Dubai, said  Nasdaq Dubai is continually  enhancing its swift and responsive listing process, as well as its comprehensive post-listing services. “We are committed to introducing further innovation and product development across the Islamic capital markets sector.”

ARTICLE TWO ON INDONESIA – VISIT TO UAE

By Fareed Rahman – Gulf News

Indonesia seeks investment to boost economy

President Joko Widodo urges UAE companies to invest in infrastructure development in his country

Abu Dhabi: Indonesia provides a lot of opportunities for UAE companies to invest, especially in the fields of infrastructure development, agriculture, energy and food processing, UAE Economy Minister Sultan Saeed Al Mansouri said in Abu Dhabi on Sunday.

Al Mansouri was speaking at an event hosted by the Abu Dhabi Chamber of Commerce to welcome Indonesian President Joko Widodo to the UAE.

“The UAE is capable of investing in areas like infrastructure development in building ports, airports, roads and many other areas. It is an area Indonesia needs investment and [the] UAE has the ability to deliver these projects,” Al Mansouri told Gulf News on the sidelines of the event.

He said Indonesia is growing at an average rate of about 5 to 6 per cent annually and the demand for energy is increasing.

“It means that there is a need to find ways of how to bring investment in that field. UAE companies are capable of providing on [the] energy side,” he said. “We are also looking at agriculture and food security. And Indonesia has good climatic conditions. It can grow a lot of products that are in high demand in the UAE like rice, sugar and other products. Food processing industry is another area which the UAE can invest in Indonesia.”

The trade figures between the two countries stand around $2 billion (Dh7.34 billion), most of it coming from Indonesia.

“There is also a need to sign the Investment Protection Agreement between the two sides which has not been signed as yet,” Al Mansouri added.

Speaking on the occasion, Widodo invited UAE companies to invest in Indonesia, adding that his government is putting a lot of emphasis in building infrastructure projects and has allocated $21 billion from the national budget to develop the sector.

“Our infrastructure has [been] left behind. We have to start to build our infrastructure. It will stimulate our economy in [the] short term and [this] will give impetus to our mid- and long-term development.”

He said the government is planning to develop number of seaports, airports, dams, roads, mass rapid transport systems and power plant projects to boost the economy.

“This development will complement our aim to establish Indonesia as a manufacturing production base.”

Speaking about the changes in the global markets, he said a major transition is happening in the global economy and geopolitics.

“The world’s currency markets and the stock markets are in great volatility. One economic cycle has come to an end and a new economic cycle is beginning,” he said. “The commodities have expanded our economy but also distracted us from improving [the] economy and social parameters. We must see that our great resources are not from our natural resources but from our people. We must see a shift from [a] hydrocarbon-based economy to a knowledge-based economy.”

Widodo is on a three nation Gulf tour to attract investment and boost the Indonesian economy. He visited Saudi Arabia before coming to the UAE.

A major producer of oil, Indonesia recently rejoined Organisation of the Petroleum Exporting Countries (Opec).

ARTICLE THREE – INDONESIA GCC TOUR

Indonesia, Thailand, Vietnam forge closer trade ties with GCC

By Arno Maierbrugger -Gulf Times Correspondent Bangkok

The trade-focused state visit of Indonesian President Joko Widodo, who is currently on his first tour to the Gulf Cooperation Council (GCC), shows how important Gulf states have become for Southeast Asian nations beyond the oil business. Widodo, who arrived in Saudi Arabia on September 12 and is continuing his tour to the UAE and Qatar, said he hoped the visit would “pave the way for greater access of Indonesian products, including halal products, to Middle Eastern markets” and encourage investors to put their money in Indonesian infrastructure, maritime and energy projects, as well as in the financial sector. Arms sales and energy security for Indonesia are also on the agenda, he added, pointing out that the rapid development of Indonesia’s strategic defence industry has drawn “special attention” from the three Middle Eastern countries.
As per current statistics, Saudi Arabia is Indonesia’s largest trading partner in the Middle East. The UAE is the main destination for Indonesian exports in the Middle East, while Qatar is the biggest investor among Middle Eastern countries in Indonesia, including its portfolio investments.
Bilateral trade between Jakarta and Saudi Arabia reached $8.6bn in 2014, while two-way trade between Indonesia and the UAE and Qatar reached $4.25bn and $1.68bn, respectively, in the period. Widodo also said that he seeks improved strategic co-operation between Indonesia and the GCC as a council of nations, which is why he met GCC secretary general Abdullatif bin Rashid al-Zayani during his visit.
Observers feel one of the main reasons for such talks is Indonesia being in the process of rejoining of the Organisation of Petroleum Exporting Countries, or Opec, after a hiatus of almost seven years. Indonesia’s request to reactivate its full membership was circulated to Opec members recently, and following their positive feedback, Opec’s next meeting on December 4 will include the formalities of reactivating the country’s membership, despite it currently being the only net importer in the grouping.
Widodo also met the president of Islamic Development Bank (IDB), Dr Ahmad Mohamed Ali al-Madani, to talk about the IDB’s new $5bn financing programme to establish strategic co-operation with its member states. Indonesia is one of IDB’s founding members. Another meeting was scheduled with Iyad Madani, secretary general of the Organisation of Islamic Cooperation, of which Indonesia is also a member.
However, Indonesia is not the only country that works towards closer trade ties to the Middle East in times of a weakening Asian economy that seeks diversification from economic dependence from China and Europe.
Thai Union Frozen Products, the world’s largest tuna canner and one of the largest seafood companies worldwide with revenue of around $4bn in 2014 and 32,000 employees, last week entered a joint venture with Savola Foods Company, a subsidiary of Saudi Arabia-based food, retail and real estate development conglomerate Savola Group and one of the largest food manufacturers in the Middle East. The joint venture will bring canned seafood from Thailand to Saudi Arabia, UAE, Qatar, Oman, Kuwait, Bahrain, Jordan, Lebanon, Syria, Iran, Iraq and Egypt, a region where Thiraphong Chansiri, president and CEO of Thai Union Frozen, expects total annual sales volume of more than $400mn “within the next three to four years” on a market estimated at over $3bn annually.
The business orientation of Thai Union Frozen towards the Middle East is, however, also a result of the tightening of regulations and import tariff changes by European Union following a quarrel over labour standards in Thailand’s seafood industry.
In another development, Vietnam on September 6 entered a co-operation with London-based Falcon Group, a firm specialised in trade finance and corporate financial solutions with a focus on the Middle East and Southeast Asia regions. Falcon Group has been hired to pave the way for more Vietnam products to be sold in the GCC by using the UAE as a gateway, while, in turn, the group will also assist the UAE and other GCC companies in their trade with Vietnam, according to Pham Binh Dam, Vietnam’s ambassador to the UAE, a country which has grown to Vietnam’s fifth-largest export market.

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Category: Asia, Finance & Investment, Indonesia, Islamic Economy, Middle East & Africa, Research

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