ING Funds will launch a new SharÆiah-compliant global Islamic funds unit in Malaysia during the first quarter of 2009. The new unit will sell SharÆiah-compliant funds to investors across the Asia-Pacific through ING Investment ManagementÆs 13 offices in the region.
Key target markets for the new unit include China, Dubai and Hong Kong.
ôWe are looking to export [SharÆiah-compliant funds] as the Malaysian market is not really big,ö says ING Funds chief executive officer Steve Ong. ôThis is the positioning that we want because we would like to manufacture it for ING Asia Pacific, Europe and America.ö
As of April 2008, Islamic banking assets in Malaysia totalled $62 billion, or 15.4% of total banking assets, according to MoodyÆs Investors Service. ING FundsÆ existing SharÆiah-compliant asset portfolio is worth M$1.56 billion ($449 million).
The launch of ING Funds' new Islamic finance unit aimed at global markets is in line with the Malaysian governmentÆs goal of becoming a global Islamic finance hub. In its 2009 budget, released in August, Malaysian prime minister Abdullah Ahmad Badawi announced a three-year tax holiday on fees and profits for Malaysia-based foreign currency-denominated sukuks sold overseas.
The global Islamic finance market has posted strong growth in recent years. According to Standard & PoorÆs, the market has grown from $500 million worth of global sukuks û Islamic securities û in 2001 to $60 billion in 2007. Also in 2007 there was approximately $500 billion in ShariÆah-compliant assets worldwide.
Asset funds sold by ING FundsÆ new SharÆiah-compliant funds unit will be in line with MalaysiaÆs state SharÆiah laws.
In addition to the new global Islamic funds unit, ING Funds also launched a new SharÆiah-compliant Annual Income Climate Structure Fund on Wednesday. The Malaysia-based Australian dollar-denominated fund offers 5% annual income distribution over three years, potential capital upside returns at maturity and 100% preservation of capital. The fund will track the Citi Climate Change Opportunities Index and deliver capital returns if the index outperforms other major global market indices, including the S&P500 and the Nikkei225.