ISLAMIC Development Bank (IDB), which views Malaysia as a potential regional Islamic hub, will continue to provide loans and technical expertise to expedite the development of infrastructure, trade and financial services projects in the country.
The Saudi Arabia-based lender has to date approved private and public projects in Malaysia worth a total of US$735mil.
President Dr Ahmad Mohamad Ali said the bank was working closely with the Economic Planning Unit to identify the funding of new potential and productive projects in the country based on syariah laws.
IDB provides financing for project operations and trade.
The recent projects undertaken by IDB involve procurement of equipment of some of the faculty buildings and laboratories of Universiti Malaysia Sabah and the Health Ministry. IDB also provides assistance in the financing of some health projects and is looking at other viable infrastructure projects.
“IDB gives great emphasis on the financing of small- and medium-scale enterprises (SMEs) in the region.
“The bank anticipates undertaking more of such projects in Malaysia and in the Asian region.
“IDB’s total annual financing allocation for the region currently stands at US$4bil, of which RM1.7bil is in project financing. Infrastructure and SMEs account for a sizeable portion of the total project financing.
“In the area of trade, IDB provides financing for export and import purposes through its agent banks such as Malayan Banking Bhd, Bank Pembangunan and Bank Industri,” Ahmad said during an interview with StarBiz in Kuala Lumpur.
According to Ahmad, the bank is also working closely with Bank Negara to promote intra-trade investment, including in the field of information communication technology, between member countries.
IDB, which currently has 55 member countries and its headquarters in Jeddah, has an authorised share capital of US$20.5bil and a subscribed capital of US$11.1bil. Kuala Lumpur is one of IDB’s regional offices, apart from Morocco and Khazakstan.
On enhancing the Islamic financial services market, Ahmad said the bank had issued US$400mil in Islamic bonds (sukuk) last year. The second bond issue would be around US$500mil.
The second sukuk would be issued this month and CIMB Bhd would be one of the joint lead managers for the exercise.
The others are HSBC Holdings Plc, Deutsche Bank and Dubai Islamic Bank. The first tranche would have a maturity of five years and the second, five to seven years.
IDB's first sukuk with five-year maturity was rated AAA by Standard & Poor's. Malaysia was the first government to sell dollar-denominated Islamic bonds, in 2002.
Ahmad said the objective of the sukuk was to mobilise resources and help finance projects in member countries, including Malaysia.