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Kapital News Highlight - Sept 7

Friday, September 7, 2018

A weekly highlight for your updated and forward-thinking financial insight :

• According to Moody's Investors Service, global sukuk issuance is expected to reach up to US$100 billion in 2018, with more volume expected from Malaysia and Indonesia in the second half of the year. Previously, in the first half of 2018, the sukuk issuance experienced a decline due to a decrease in volume from the Gulf Cooperation Council (GCC) region. the Vice President and Senior Credit Officer at Moody's, Nitish Bhojnagarwala said that sukuk issuance volumes is expected to continue to grow over the long term as governments across the core Islamic finance markets change their financing mix towards a combination of conventional and Islamic instruments. (Salaam Gateway)

• The global consultancy Bain & Company's reported that the digital economy can potentially add more than US$1 trillion to Southeast Asia's combined gross domestic product by 2025, when the region can address digital trade barriers and improve internet infrastructure. The findings from their research suggested that Southeast Asian countries should come together and grow as a single digital regional digital economy, rather than operating separately. Bain & Co also noted that even the small and medium enterprises play a critical role in boosting the region's economy. However, there is only 16 percent of SMEs that can utilize and maximize digital tools and regional integration as opportunities. The Chairman and Group Chief Executive of Sea Forrest Xiaodong Li said that SMEs can be the powerhouse of the next phase of Southeast Asia's growth if they can unlock their true potentials. (Jakarta Globe)

• The leaders of Indonesia and Australia announced the conclusion to talks on a free trade agreement (FTA) when the Australian Prime Minister Scott Morrison met President Joko Widodo at the Bogor Palace last week. The two leaders also committed to finalising the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA). Moreover, the two also signed memoranda of understanding on transport, the creative economy and cyber security cooperation. According to Morrison and Indonesian Trade Minister Enggartiasto Lukita said that the IA-CEPA would be signed by November as now they are still working on the legal scrubbing and the translations. President Joko Widodo also said that Indonesia and Australia will continue to collaborate on regional global issues including terrorism. (The Malaysian Reverse)

• The Indonesian government announced a new financial regulation that would impose a higher tax on 1.147 imported consumer goods to control imports of consumer goods that had little impact on productive business activities. The new regulation is to replace Ministerial Regulation No. 34/2017 next week that imposes an import tax of 10 percent from the previous 2.5 percent on imported personal care products like soap, cosmetic and along with 215 other goods. Moreover, the regulation also increase the import tax from 7.5 to 10 percent for 210 goods like luxury items. The new regulation is part of an effort to reduce the swollen current account deficit, which has been regarded as one of the main drivers of the negative market sentiment that has contributed to the steep rupiah depreciation. (The Jakarta Post)

• A halal online investment company based in New York, Wahid Invest, has launched two sharia-based index tracking funds under its robo-advisor platform. Wahid's auto investment services are part of a broader effort to introduce new technologies and fintech in the Islamic finance industry, which has its main centers in Middle East and Southeast Asia. The Chief Executive Junaid Wahedna said that Wahid Invest aimed to make every asset class available to Muslim investors as Islamic banks have so far focused on high net worth individuals yet they ignored the retail component. (Reuters)

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