{"id":1450,"date":"2022-09-19T07:00:00","date_gmt":"2022-09-19T07:00:00","guid":{"rendered":"https:\/\/blog.ethis.co\/?p=1450"},"modified":"2022-11-15T08:27:08","modified_gmt":"2022-11-15T08:27:08","slug":"islamic-investments-in-singapore","status":"publish","type":"post","link":"https:\/\/ethis.co\/blog\/islamic-investments-in-singapore\/","title":{"rendered":"What You Need to Know About Islamic Investments in Singapore"},"content":{"rendered":"

Islamic investments are growing rapidly in Singapore. The country, which is the world\u2019s third-best financial center<\/a> behind leaders London and New York,<\/span> is a growing Islamic investment hub. This is evident through the rise of 22% in Islamic investment<\/a> (assets under management) since 2010<\/span>. Apart from that, it also has a higher amount of outstanding <\/span>Sukuk<\/span><\/a> issuances than any other conventional jurisdiction, reaching a high of US$2.71 billion in 2014.<\/span> Furthermore, Singapore is the only non-Muslim majority country<\/a> among the top 15 countries for Islamic banking and investment.<\/span><\/p>\n

Even though the corporate and institutional Islamic investment platform in Singapore looks set for <\/span>forceful growth in the coming years, similar sentiment cannot be assumed for its consumer or retail investment space. This may be largely due to the lack of critical mass in Singapore, given its relatively small population, of which Muslims form less than a 15% minority<\/a>, which has caused financial institutions in Singapore to shy away from developing Islamic consumer banking<\/span>. However, this trend is positively changing. <\/span><\/p>\n

According to Sani Hamid<\/a>, Director (Economy & Market Strategy) of Financial Alliance Pte. Ltd., \u201cwe are certainly now seeing a higher demand from consumers who want to do their financial planning including investments in a Shariah-compliant manner.\u201d He further continued that they now received more and more queries via social media and also a strong level of participation at Islamic financial planning seminars they hold. Sani heads Financial Alliance Islamic Wealth Advisory (FAiWA)<\/a>. <\/span><\/p>\n

A similar sentiment<\/span> is also shared by Helmi Hakim<\/a>, a certified financial consultant in Singapore. Helmi also manages Takaful.sg<\/a>, which provides a tool for Singapore Muslims to calculate the amount of riba (usury\/interest) incurred in their loans. According to him, there is now more awareness amongst Singaporean Muslims of the need to plan their finances according to Shariah. This is evident through more inquiries and signed-up rates for Shariah-compliant instruments. <\/span><\/p>\n

Thus far, there have been various Islamic investment types found in Singapore. Other investment options include HSBC Insurance Ethical Global Sukuk Fund<\/a>, Maybank\u2019s Singapore Unit Trusts Ethical Growth Fund, NTUC Income Takaful<\/a> fund etc.  The table below summarised the Islamic investment activities in Singapore from its initial emergence in 1991 till the year 2017. <\/span><\/p>\n

Summary of selected Islamic finance and Islamic investments in Singapore (1991-2017)<\/b><\/h2>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Year<\/b><\/td>\nActivities<\/b><\/td>\n<\/tr>\n
1991<\/span><\/td>\n\n
    \n
  • Mendaki Growth Fund (Amanah Saham Mendaki) was one of the world\u2019s earliest Shariah-compliant funds<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
1995<\/span><\/td>\n\n
    \n
  • Availability of Islamic window facilities and <\/span>takaful<\/span><\/i> products<\/span><\/li>\n
  • Launched of the Takaful Global Fund by HSBC (Singapore)<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
2001<\/span><\/td>\n\n
    \n
  • Malayan Banking Berhad (\u201cMaybank\u201d) introduced its Shariah-compliant Unit Trust Ethical Growth Fund<\/span><\/li>\n
  • Majlis Ugama Islam Singapura (\u201cMUIS\u201d) launched a S$25 million <\/span>musharakah<\/span><\/i> bond to purchase an office building to replace certain <\/span>wakaf <\/span><\/i>properties originally held in trust by MUIS.<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
2002<\/span><\/td>\n\n
    \n
  • United Overseas Bank Limited acted as arranger of the US$35 million <\/span>musharakah<\/span><\/i> bonds issued by MUIS for the purpose of developing a mixed-use <\/span>wakaf<\/span><\/i> property.<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
2003<\/span><\/td>\n\n
    \n
  • The Takaful Global Fund established in 1995 has since been renamed as HSBC-Link Ethical Global Equity Fund<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
2004<\/span><\/td>\n\n
    \n
  • Islamic Far Eastern Real Estate Fund was set up by Singapore\u2019s ARA Asset Management in partnership with Dubai Islamic Bank<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
2005<\/span><\/td>\n\n
    \n
  • Waived the imposition of double stamp duties in Islamic transactions involving real estate and accorded the same concessionary tax treatment on income from Islamic bonds that are applicable to conventional bonds<\/span><\/li>\n
  • Establishment of a US$96 million <\/span>murabahah<\/span><\/i> facility for Baitak Asian Real Estate Fund I by Standard Chartered Bank<\/span><\/li>\n
  • HSBC Insurance launched the Takaful Sinaran Fund<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
2006<\/span><\/td>\n\n
    \n
  • Launched the FTSE SGX Asia 100 Shariah Index which comprised of 100 Shariah-compliant Asia-Pacific stocks<\/span><\/li>\n
  • Overseas Chinese Banking Corporation Limited became the first local bank to launch Shariah-compliant term deposits<\/span><\/li>\n
  • MAS gave its approval to banks to engage in non-financial activities such as commodity trading and to facilitate <\/span>murabahah<\/span><\/i> transactions for clients\u2019 investments<\/span><\/li>\n
  • Applicability of income tax and Goods and Services Tax (\u201cGST\u201d) on some Islamic products was further clarified<\/span><\/li>\n
  • Remission is granted on stamp duties for immovable property, incurred under a <\/span>sukuk<\/span><\/i> structure that is in excess of that chargeable in the case of an equivalent conventional bond issue<\/span><\/li>\n
  • MUIS has innovated the issuance of <\/span>sukuk<\/span><\/i> for the development of <\/span>waqf<\/span><\/i> properties<\/span>, <\/span><\/i>which has put Singapore on the world map for product innovation<\/span><\/li>\n
  • DWS Investments, the retail mutual funds arm of Deutsche Asset Management introduced Islamic funds.<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
2007<\/span><\/td>\n\n
    \n
  • The Development Bank of Singapore Limited (DBS Bank) launched the first Islamic bank in Singapore, the Islamic Bank of Asia <\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
2008<\/span><\/td>\n\n
    \n
  • MAS announced its intention to develop a facility to issue <\/span>sukuk<\/span><\/i> on a reverse-enquiry basis<\/span><\/li>\n
  • Daiwa Asset Management listed the first FTSE Japan Shariah ETF on SGX<\/span><\/li>\n
  • City Development, a major property firm, launched Singapore\u2019s first corporate<\/span> sukuk<\/span><\/i> through  S$1bln Islamic Trust Certificate Programme<\/span><\/li>\n
  • Introduction of two tax incentives. The first incentive was the FSI-Islamic Finance award, introduced to encourage more prescribed Shariah-compliant financial activities to be done out of Singapore by granting a 5% concessionary tax rate for income from qualifying activities endorsed by an approved Shariah board. The second incentive was for offshore<\/span> takaful<\/span><\/i> and re-<\/span>takaful<\/span><\/i> business, which offered a 5% concessionary tax rate to an approved <\/span>takaful<\/span><\/i> insurer for income derived from writing offshore general <\/span>takaful <\/span><\/i>and re-<\/span>takaful<\/span><\/i> insurance. <\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
2009<\/span><\/td>\n\n
    \n
  • MAS S$200mln <\/span>Sukuk<\/span><\/i> al-ijarah<\/span><\/i> Trust Certificate Issuance Program<\/span><\/li>\n
  • Olam International, an SGX-listed global supply chain manager launched the \u2018first of its kind\u2019 initiative to use its agricultural commodity trade flows as a platform to structure commodity <\/span>murabahah<\/span><\/i> transactions<\/span><\/li>\n
  • Olam International, an SGX-listed global supply chain manager closed a USD115mln Islamic syndicated <\/span>murabahah<\/span><\/i> facility and a USD100mln Islamic Revolving Trade Finance Facility<\/span><\/li>\n
  • IDB placed its inaugural S$200mln trust certificate<\/span><\/li>\n
  • MAS issued its guidelines on the application of its banking regulations to Islamic finance and new regulations permitting banks to conduct <\/span>murabahah<\/span><\/i> interbank placements, <\/span>ijarah<\/span><\/i>, diminishing <\/span>musharakah <\/span><\/i>financing and spot <\/span>murabahah<\/span><\/i><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
2010<\/span><\/td>\n\n
    \n
  • Parkway Holdings Limited entered into a S$750mln syndicated <\/span>murabahah<\/span><\/i> financing facility, the largest Singapore dollar <\/span>murabahah<\/span><\/i> financing facility to date and one of the largest <\/span>murabahah<\/span><\/i> financing facilities worldwide<\/span><\/li>\n
  • Malaysia state investor Khazanah sold S$1.5bln in <\/span>sukuk<\/span><\/i> transactions that drew a demand of 4.3 times its book size, making it Singapore\u2019s largest <\/span>sukuk<\/span><\/i> sale (<\/span>sukuk wakalah<\/span><\/i>)<\/span><\/li>\n
  • Sabana Shariah Compliant Industrial REIT, the world\u2019s largest Shariah Compliant REIT by assets became the first Islamic REIT to be listed on SGX<\/span><\/li>\n
  • Securus Data Property Fund established by Keppel Telecommunications & Transportation and AEP Investment Management, as the world\u2019s first Shariah-compliant data center fund<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
2011<\/span><\/td>\n\n
    \n
  • Sabana Shariah Compliant Industrial REIT obtained S$144.3mln additional term and commodity <\/span>murabahah<\/span><\/i> financing, which was innovatively structured to include a profit rate hedge (IFN Guide 2012, \u201cSingapore: High Expectations\u201d by Suhaimi and Wico)<\/span><\/li>\n
  • MAS circular was issued confirming that double or triple stamp duties would be waived on murabahah deposits where the asset is an immovable property (IFN Guide 2012, \u201cSingapore: High Expectations by Suhaimi and Wico)<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
2012<\/span><\/td>\n\n
    \n
  • Establishment of Halal Universe, a news portal focused on Shariah-compliant investments for retail investors, the first ever portal of its kind in the world. <\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
2013<\/span><\/td>\n\n
    \n
  • The concessionary tax on income derived from approved Shariah-compliant investments and activities was extended by another 5 years to the end of 2018 (QDS and QDS+ schemes)<\/span><\/li>\n
  • Swiber Capital Pte. Ltd. becomes the second Singaporean company to issue a <\/span>sukuk<\/span><\/i>, being a 5-year S$150mln sukuk at a periodic distribution rate of 6.5%. This represents the first drawdown of its US$500mln Multi-Currency Islamic Trust Certificates Issuance Programme announced on the Singapore Exchange.<\/span><\/li>\n
  • Middle-Eastern banks based in Singapore have also started offering Islamic window facilities for their corporate clients<\/span><\/li>\n
  • Maybank launches its Islamic Home Financing and Islamic Commercial and Industrial Property Financing schemes, which allow Singaporean buyers to access properties in Malaysia. It also launched its Auto Finance product for vehicles based on the concept of <\/span>al ijarah thumma al bai<\/span><\/i> (AITAB).<\/span><\/li>\n
  • Franklin Templeton launches 3 new Shariah retail funds in Singapore<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
2014<\/span><\/td>\n\n
    \n
  • CIMB offers services to Muslims in Singapore via Islamic windows at two of its outlets. <\/span><\/li>\n
  • Sabana Shariah Compliant Industrial REIT raised S$100mln in September after selling S$90mln of the debt in March in a setback to Singapore\u2019s ambitions to become an Islamic finance hub. It is the sole entity in Singapore to have sold <\/span>sukuk<\/span><\/i> in 2014<\/span><\/li>\n
  • EthisCrowd.com, the world\u2019s first Real Estate Islamic Crowdfunding platform  was set up by a local entrepreneur, Umar Munshi<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
2015<\/span><\/td>\n\n
    \n
  • Change to the tax framework, effective on the 8<\/span> April 2015 through the Stamp Duties (Islamic Financial Arrangements) (Remission) Rules 2015, giving a provision for the remission of stamp duty to Islamic financial arrangements such as diminishing <\/span>musharakah<\/span><\/i>, <\/span>istisna\u2019<\/span><\/i> and <\/span>ijarah wa iqtina<\/span><\/i>, provided that the Islamic financial arrangements are endorsed by a Shariah council, body or committee formed for the purpose of providing guidance on compliance with Shariah law. <\/span><\/li>\n
  • The deputy managing director of MAS, Jacqueline Loh, confirmed that the apex bank was working in collaboration with industry participants and other government institutions to provide greater clarity in the regulatory and tax treatment for <\/span>sukuk<\/span><\/i> including a potential pre-approved standardized template for common <\/span>sukuk <\/span><\/i>structures<\/span><\/li>\n
  • Fitch Ratings has assigned its first \u201cA\u201d rating on Insurer Financial Strength to Singapore-based Etiqa Insurance Pte. Ltd. (EIPF)<\/span><\/li>\n
  • Kapital Boost SME P2P Crowdfunding platform was launched by Erly Witoyo, a former director of Barclays Singapore<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
2016<\/span><\/td>\n\n
    \n
  • Maybank Singapore announced its first-of-its-kind Islamic financing deal worth S$260 million together with RB Capital. The deal has a hotel, which is the 442-room mid-tier Holiday Inn Express Singapore Clarke Quay, as its underlying security. USD125.02 mln Islamic refinancing facility by one of the world\u2019s largest Islamic real estate investment trusts, Sabana REIT<\/span><\/li>\n
  • Sabana REIT confirmed plans to acquire three different properties and also met with China\u2019s Sichuan Development Holding to explore Islamic finance opportunities. <\/span><\/li>\n
  • Australian asset management firm Equitable Financial Solutions (EFSOL) launched an asset-backed Shariah-compliant fund <\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
2017<\/span><\/td>\n\n