Malaysia's 2018 Budget recognises religious teachers

The Malaysia government's 2018 Budget, delivered by YAB Dato' Sri Mohd Najib Tun Haji Abdul Razak, PM and Minister of Finance of Malaysia, will recognise religious teachers and continue to boost Islamic finance.

Islamic finance

According to the accompanying Economic Report, Malaysia's Islamic capital market remains a leader globally through an extensive regulatory and tax framework, strong shari'ah governance and many active service providers. Bursa Malaysia runs the world's first end-to-end shari'ah compliant investment platform, and has proposed an Islamic Securities Selling and Buying Negotiated Transaction Framework as a shari'ah-compliant alternative to the existing Securities Borrowing and Lending Negotiated Transaction framework in March 2017 to further grow shari'ah-compliant securities.

Sustainable and responsible investment (SRI) is to be supported through:

- Income tax exemption for recipients of the special Green SRI Sukuk grant totalling RM6 million; and

- Income tax exemption on income from management fees to be expanded to approved conventional SRI fund managers from the years of assessment 2018 to 2020.

Appreciation for the work of religious teachers

- In recognition of the services provided by Islamic teachers and other staff engaged in the service of Islam, the government will allocate a one-off payment amounting to RM1,500 to imam, bilal, Religious and Fardu Ain (KAFA) and takmir teachers as well as tok siak*. RM1,000 will be paid in January 2018, and the balance during Hari Raya Aidilfitri.

"This will benefit more than 65,000 individuals with an allocation of almost RM100 million," PM Najib said. RM588 million is allocated monthly as an allowance for imam, bilal, KAFA and takmir teachers.

- RM50 million will be given to GiatMara for the upgrading and maintenance of wiring in all registered tahfiz (Islamic) schools nationwide in response to recent reports of fires at such schools.

- The GiatMara skills training scheme will be introduced to tahfiz school students.

Water management

- RM420 million, including almost RM300 million for Sabah and Sarawak, is allocated to provide clean water, benefitting 3,000 homes.

- A Non-Revenue Water Programme worth RM1.4 billion is to be implemented, to reduce the average loss of water;

- Construct off-river storage at a cost of RM1.3 billion as alternative water resources; and

Other initiatives include:

- An additional RM1 billion is provided to the shari'ah-compliant SME Financing Scheme, increasing the fund size to RM2.5 billion. A subsidy of 2% will be provided on profit earned to ease the costs of financing;

- About RM82 million is allocated for the development of halal industries and products under various agencies.

- RM80 million is allocated under the Rural Economic Financing Scheme (SPED) through Bank Rakyat, an Islamic cooperative bank, and SME Bank to provide financing facilities to rural bumiputera entrepreneurs.

- Construction of houses of worship funded through donations are given goods and services tax relief. This applies for construction contracts signed on or after 1 April 2017.

Explore:

The new Budget is themed Prospering An Inclusive Economy, Balancing Between Worldly And Hereafter, For The Wellbeing Of Rakyat, Towards TN50 Aspiration. Transformasi Nasional 2050 or TN50 is Malaysia's national transformation strategy between 2020 and 2050 to become one of the top 20 countries in the world, introduced in the Budget last year, and the rakyat refers to the ordinary people of Malaysia. Read the text of the 2018 Budget speech

Hashtags: #Bajet, #Bajet2018 

*The imam acts as a worship leader and provides religious guidance. The bilal makes the call to prayer at designated times of the day. The tok siak works at a mosque, taking care of its cleanliness and maintenance over the course of the day. He may also conduct sacrifices and can also take over the responsibilities of the bilal or imam as required. KAFA and takmir teachers are religious teachers.

KSA's budget airline flyadeal is all set to take off on 23 September

KSA's new budget airline flyadeal was officially inaugurated at the the Royal Fleet Hangar at King Abdulaziz International Airport on August 23. At centrestage was the first flyadeal aircraft, which had arrived in Jeddah from the Airbus delivery center in Hamburg, Germany. The aircraft has been named Al-Nayyir (النيَر), which means 'bright star’.

Source: flyadeal. The budget airline flyadeal was inaugurated at a ceremony on August 24. The airline’s colours – a distinct palette of purple and lime – was on full display at the delivery event, along with members of the cabin crew, which gave guests a tour of the unique features onboard.

Announced in 2016, flyadeal will commence operations on 23 September 2017, on KSA's national day, serving domestic markets initially before expanding into Middle East markets. The airline is operated as a separate company under Saudi Arabian Airlines Corporation and focused on providing a low-fare, high-value product to a growing travel segment in the kingdom.

Al-Nayyir is flyadeal's first aircraft and the first of eight Airbus A320ceo aircraft acquired for its fleet from Dubai Aerospace Enterprise, Airbus reported. With 186 seats in a single-class configuration, flyadeal’s A320 features the latest Recaro 18” wide economy class seats, equipped with USB power outlets and personal device holders.

Chairman of flyadeal HE Saleh Al Jasser said: “Saudi Arabia has launched its Vision 2030; a strategic platform for the future development of the kingdom where transportation and tourism are key pillars. The launch of flyadeal is core to the strategy to mobilise further the country and the region.”

Al Jasser added, “The unique identity and service model of flyadeal will provide travellers with an experience that is complementary with the modern and budget conscious traveller.”

CEO of flyadeal Con Korfiatis said: “Flyadeal will be Saudi Arabia’s newest airline, providing a unique experience with an optimal fleet to serve our domestic and regional markets. The Airbus A320 has been distinctly selected for the needs of our operation, and we look forward to passengers experiencing flyadeal’s onboard service.

“Saudi Arabia and the region have a very young and digitally savvy population that has an increasing thirst for low fare travel domestically and across the region. Flyadeal plans to serve and grow this significant segment of air travel.”

DAE CEO Firoz Tarapore said, “We are delighted to be able to support flyadeal’s fleet strategy as it begins operations, and we look forward to working with the airline to fulfill its fleet ambitions, going forward.

“Having listened to our customers, we feel that the acquisition of these popular and efficient single aisle aircraft reflect continuing market demand for this type of plane.”

John Leahy, Chief Operating Officer Customers, Airbus Commercial Aircraft added, “Airbus is committed to play a major role in supporting flyadeal in its exciting journey, enabling more people to fly at affordable cost.

“Flyadeal’s decision to launch its operations with an A320ceo fleet is a clear affirmation of the continuing appeal of a product that provides an exceptionally comfortable cabin, low operating costs and excellent fuel consumption. These factors will provide a framework from which the airline can build and sustain its future successes and market growth, in both KSA and the region.”

The A320 family is the aircraft family of choice within the low cost carrier market, said Airbus. To date, the family has won over 13,200 orders and more than 7,700 aircraft have been delivered to some 400 customers and operators worldwide. The full fleet for flyadeal will arrive by mid-2018, and expansion is expected for the future.

KSA releases 2017 budget

King Salman bin Abdulaziz of KSA has issued a royal decree outlining the country's 2017 budget. The budget is estimated to reach SAR890 billion, an 8% increase from 2016, and is projected to reflect a record 33% decrease in the kingdom's national deficit.

"Our economy is firm and it has sufficient strength to cope with the current economic and financial challenges," said King Salman. "We have sought through this budget and its programmes to improve the efficiency of capital and operational expenditures in the state, strengthen the situation of public finances, enhance their sustainability, give priority to developmental and service projects and programs that serve citizens directly, contribute to activating the role of the private sector and increase its contribution to the gross domestic product (GDP)."

Revenue is projected to reach SAR692 billion in 2017, a 31% increase from initial projections. Oil revenues are expected to increase by 46% and non-oil revenues are estimated to grow by 6.5%. The budget deficit is expected to reach SAR198 billion in 2017, reflecting 7.7% of the GDP. Combined, these efforts will move the kingdom closer to its Vision 2030 goal of balancing the budget by 2020.

2017 budget expenditures include a fous on:

• Education: SAR200 billion, covering public education, higher education and training.
• Military: SAR191 billion, to support and expand KSA's military capabilities.
• Economic resources and general programmes: SAR155 billion, including the expansion of the Grand Mosque in Makkah and the completion of the first ring road around the expansion of the Grand Mosque.
• Health and social development: SAR120 billion, to enable the construction and subsequent equipping of healthcare centres. Thirty-eight new hospitals are already in the process of being built.
• Security and regional administration: SAR97 billion. The establishment of naval bases for border control will be among the new projects under this budget.
• Municipality services: SAR55 billion. 
• Infrastructure and transport: SAR52 billion, towards the building roads, ports, railway, airports, postal services and developing industrial cities.  
• National Transformation Plan (NTP): SAR42 billion. 
• Public administration: SAR27 billion, including 46 new initiatives. The funding is intended to help implement the NTP 2020 initiatives related to the Ministries of Justice, Hajj and Umrah as well as Civil Service, and aims to enhance the performance of these ministries by increase efficiency of existing resources and maximising quality output.

Interested?

Read the 2017 Budget (PDF)

Malaysia's 2017 Budget benefits Islamic finance firms, imams, religious teachers

The 2017 Budget for Malaysia has benefits for Islamic finance, religious teachers, imams as well as caretakers of mosques.

To maintain Malaysia as an international Islamic financial centre, Malaysia Prime Minister and Minister for finance YAB Dato' Sri Mohd Najib Tun Haji Abdul Razak announced as part of the 2017 Budget that the period of income tax exemption to entities carrying out Islamic banking and takaful business through the International Currency Business Unit (ICBU) in foreign currencies as well as stamp duty exemption on instruments of such activities, will be extended to the year of assessment 2020.

The government further recognised the work of imams by increasing their monthly allowance via JAKIM from RM750 to RM850. "This will benefit nearly 15,000 imams throughout the nation," he said.

A one-off payment amounting to RM500 will also be given to nearly 16,000 bilal and siak (Editor's note: the ones who perform the call to prayer and the ones who look after mosques respectively) throughout the nation to appreciate their service in managing mosques.

Kelas Agama Fardu Ain (KAFA, an organisation that conducts religious classes) teachers will see their allowance increased from RM800 to RM900 a month, benefitting nearly 33,000 KAFA teachers, PM Najib added, while tahfiz education (Editor's note: education around memorisation of the Quran) will be coordinated through the National Tahfiz Education Policy to the tune of RM30 million.

PM Najib also took the opportunity to welcome 23,000 Hajj pilgrims home.

Interested?

Read the full Budget speech

Update on Muslim affairs in Singapore at the Committee of Supply Debate 2016

Dr Yaacob Ibrahim, Minister-In-Charge of Muslim Affairs in addition to being Singapore's Minister for Communications and Information, has updated the Committee of Supply on the success of existing initiatives and announced new initiatives at the 2016 Committee of Supply Debate.

MENDAKI

Yayasan MENDAKI (MENDAKI, the Council for the Development of Singapore Malay/Muslim Community) is a self-help group dedicated to empowering the community through excellence in education, in the context of a multiracial and multi-religious Singapore. MENDAKI recently established the Future Ready Unit to promote SkillsFuture to the community, Dr Yaacob said, and will reach out to the Muslim community through a series of Future Ready Conversations and NextStop engagements. The first-ever NextStop Seminar was organised by the Future Ready Committee on 19 March, for example.

"The Conversations will help MENDAKI to better understand the hopes and aspirations of our community, and how it can provide more targeted and effective support," said Dr Yaacob. "NextStop is more targeted. MENDAKI will engage students from secondary schools, institutes of technical education (ITEs) and polytechnics so that they have a better appreciation of the growth sectors in our economy, and relatedly, the range of academic and career pathways under SkillsFuture."

Dr Yaacob also announced that he will introduce Future Ready Mentoring for secondary level and ITE students¹ while MENDAKI SENSE will help individuals better understand SkillsFuture through initiatives such as the Making SENSE of SkillsFuture Fairs. MENDAKI SENSE will also offer a number of free courses that support lifelong learning, career readiness and skills-upgrading.

MENDAKI will collaborate with the Early Childhood Development Agency (ECDA) to better support vulnerable Malay/Muslim families on KidSTART as well as enhance the accessibility of its flagship programme, the MENDAKI Tuition Scheme (MTS). "We will expand the MTS@Mosques programme to include Al-Muttaqin Mosque and Al-Mawaddah Mosque. And six more community partners will host MENDAKI Homework Cafes to help students with their school work, bringing the total number to 18 centres for 300 students," Dr Yaacob said.

Modern religious guidance

MUIS, the Islamic Religious Council of Singapore, will hold the inaugural Conference on Fatwa in Contemporary Societies, bringing together community leaders and religious scholars. "This conference will highlight how we practice Islam in Singapore, and how religious guidance and social policies are shaped within the context they are in. We hope to build this conference into a platform for the discussion and dissemination of progressive religious thinking for minority Muslim communities living in a multiracial society," Dr Yaacob said.

Mosque Building & Mendaki Fund

Dr Yaacob noted that the revision in the contribution rates of the Mosque Building and Mendaki Fund (MBMF) was necessary to meet critical needs of the community. "Since 2009, we have built two mosques and upgraded 17 mosques², providing more prayer spaces for Muslims congregants...When all the current projects are completed by 2018, we can look forward to an increase of 24,700 prayer spaces since 2009," Dr Yaacob said.

The new prayer spaces will come from the upgrading of five mosques under Mosque Upgrading Programme (MUP) Phase 2, including the redevelopment of Darul Ghufran Mosque, the completion of Maarof Mosque in Jurong West later this year, and Yusof Ishak Mosque in Woodlands in early 2017. Al-Istighfar Mosque will offer a temporary covered prayer space opposite the mosque later this year, to cater to about 500 congregants. "For the longer term, MUIS will upgrade Al- Istighfar," Dr Yaacob said. He also shared that a site in Tampines has already been chosen for a new mosque.

Education

A 30-year lease for Madrasah Arabiah at a new site adjacent to the current building in Toa Payoh has been secured. Redevelopment begins next year, Dr Yaacob said.

"Our preparations to implement the enhanced Joint Madrasah System (JMS) curriculum and syllabi for the secondary level are progressing well. Arabic, Islamic law and theology subjects for Madrasah Aljunied, and the Islamic Studies subject for Madrasah Arabiah will be rolled out. In tandem, our teachers are being equipped with the skills and resources to implement the curriculum effectively," he added.

As for using infocomm, Madrasah Irsyad Zuhri Al-Islamiah collaborated with IDA to set up a science, technology, engineering and mathematics (STEM) laboratory to expose students to game designing and educational robotics programming, while Madrasah Aljunied is piloting the teaching of Arabic using iBooks to make learning more interactive, Dr Yaacob said.

To meet demand for adult Islamic learning (ADIL), MUIS has added two more ADIL centres, bringing the number of centres to "MUIS will introduce intermediate modules that focus on the theme of Singaporean Muslims and contemporary challenges. The Office of Mufti (OOM) has also partnered mosques to offer free ADIL modules, and close to 2,400 participants have benefited from ADIL programmes. MUIS will also continue to work with the Private Islamic Education Network (PIENet) to offer quality Islamic education," Dr Yaacob said.

In keeping with Singapore's efforts against extremist influences, Dr Yaacob said that the curricula of both aLIVE and ADIL will include lessons that inoculate youth against online radicalisation. "We are actively engaging parents on cyber safety for their children so that they are more critical with what they read online. In so doing, our young are better protected against radical teachings. For the wider community, OOM and the Religious Rehabilitation Group (RRG) are working together to develop both print and online materials to provide guidance in countering extremist ideologies," he said.

Support for the vulnerable

Zakat collection has risen from S$22.7 million in 2010 to about S$35.3 million (unaudited) in 2015, Dr Yaacob shared. "MUIS disburses zakat to an average of 5,300 beneficiaries annually. With the revision of eligibility criteria of the per capita income and increase in the disbursement quantum in 2014, MUIS was able to increase assistance to the poor and needy from S$13.8 million in 2014 to S$17.2 million last year, constituting almost 50% of the total zakat collected," he said.

MENDAKI's six centres under the MENDAKI@Heartlands initiative enable MENDAKI to connect the less advantaged to social assistance offered by the social service offices (SSOs). "In the past year, the six centres reached out to more than 14,000 individuals through various outreach platforms. Over 400 referrals, including individuals and families, were made to mosques and SSOs for social assistance, while another 600 were matched to educational programmes, job placement and skills upgrading," he added.

Nearly S$10 million was disbursed through the Malay/Muslim Community Development Fund, or MMCDF between 2013 and 2015, benefiting on average 55 partner organisations per year. "The funding criteria is based on ground-up initiatives that are in line with Mendaki’s mission to support the community, in areas such as education, youth, family, and employability. Developing and delivering programmes in these areas are not core to the objectives of the mosque. The core objective of the mosque is to facilitate the community’s religious life. Our mosques, nevertheless, can play a supporting role by providing their premises to Malay/Muslim organisations (MMOs) who deliver such programmes. Mosques can tap on zakat funds to run programmes for families and for the young which are religious in nature or which involve values and character development," said Dr Yaacob.

The Syariah Court, or SYC, will work with MUIS Academy to develop a new certification programme on the practice of Muslim law in Singapore. "The programme will help practitioners understand marriages, divorces and inheritance as practised in Singapore. SYC will also be producing the next set of the Singapore Syariah Appeals Reports (SSAR) in the second half of this year. The SSAR provides a source of reference to Muslim family law, which is vital to the development and advancement of Islamic jurisprudence," Dr Yaacob noted.

The Administration of Muslim Law Act (AMLA) is to be amended. "This will aim to strengthen our Muslim institutions, better manage our community’s assets, and improve existing measures with respect to Muslim marriages and families," Dr Yaacob said.

Hashtags: #COS2016, #SGBudget2016, #YaacobIbrahim

*A Committee of Supply in Singapore consists of the whole Parliament, which will debate to consider the business of supply. It usually sits for seven days or more to deal with the estimates of expenditure for the coming financial year. The Committee considers each ministry’s request for funds and votes on it. In 2016, the debate runs from 6 to 14 April.

1 Future Ready Mentoring will be part of the current Youth-in-Action (YIA), Empowerment Programme for Girls (EPG) and Mentoring@MTS programmes.

2 Mosque-Upgrading Programme (MUP) Phase 1: Muhajirin, Hajjah Rahimabi, Kampung Siglap, An Nur, Alkaff Upper Serangoon, Al-Ansar; MUP Phase 2: Jamiyah Ar-Rabitah, Mujahidin, Al-Istiqamah, Al-Amin, Darul Aman, Hj Mohd Salleh (Geylang), En-Naeem, Hj Yusoff, Sultan, Sallim Mattar (completed in March 2016), Al-Falah (to be completed in April 2016).

Malaysia introduces new measures to maintain leadership in Islamic finance

Malaysia's Prime Minister and Finance Minister Datuk Seri Najib Tun Razak has made several announcements concerning Islamic finance in his Budget 2015 speech on October 10.

"The Government will introduce a new shari'ah-compliant investment product in 2015 called the Investment Account Platform (IAP). IAP will provide opportunities to investors in financing entrepreneurial activities and developing viable SMEs. At the same time, IAP will be a platform to attract institutional and individual investors including high net worth individuals to invest in the Islamic financial market. Initially, IAP will be implemented with a startup fund of RM150 million," he said.

"To promote investment in IAP, the Government proposes individual investors be given income tax exemption on profits earned from qualifying investment for three consecutive years," he added.

"To boost domestic sukuk and bond issuance and trading, the Government introduced the Exchange Traded Bond and Sukuk (ETBS) in January 2013. The Government proposes that the Malaysian Government Securities and Government Investment Issues be listed and traded in ETBS," he continued.

"In addition, expenses incurred in the issuance of sukuk are given deductions from year of assessment 2003 until year of assessment 2015. Therefore, it is proposed that deduction for expenses incurred in the issuance of sukuk based on ijarah and wakalah principles be extended for another three years until year of assessment 2018."

According to the Prime Minister, Malaysian Islamic finance accounts for 25% of total assets in the banking system, and Malaysia remains as the largest sukuk market internationally, accounting for 60% of the global sukuk market.

Tan Sri Azman Hashim, speaking as Chairman of the Malaysian Investment Banking Association, has praised the government’s efforts to strengthen the financial services industry, especially by promoting Islamic finance at the domestic and international levels. 

"The Government has encouraged developing a new shari'ah-compliant investment product in 2015 called the Investment Account Platform (IAP). It will provide opportunities to investors in financing entrepreneurial activities, developing viable SMEs and will serve as a platform to attract institutional and individual investors including high net worth individuals to invest in the Islamic finance market.

"The Budget 2015 has also proposed that deduction for expenses incurred in the issuance of sukuk based on ijarah and wakalah principles be extended for another three years until year of assessment 2018. We believe these measures will help promote Malaysia as a preferred destination of Islamic finance as we will be able to leverage on our robust and comprehensive Islamic finance ecosystem as well as pro-business environment," he said.

"At Maybank, we are very pleased to note that Budget 2015 placed the financial system's direct and facilitative roles in the economy's growth and development, high on the agenda. At the outset, the Budget sets out to invigorate services sector, where financial services, accounting for 16% of services sector GDP – make it the largest activities within services," noted Datuk Abdul Farid Alias, Group President & CEO of Maybank, who is also Chairman of the Association of Banks Malaysia.

"This is evident with measures like the extension of deduction for expenses incurred in the issuance of sukuk under ijarah and wakalah principles until 2018, as well as the incentives for SMEs, such as the shari'ah-compliant Investment Account Platform (IAP), the RM5 billion Services Sector Guarantee Scheme and the proposed 1 percentage point cut in SME income tax rate for assessment year 2016. The IAP in particular offers great news for the Islamic banking industry and more specifically for Maybank Islamic, as we are among the few Islamic banks which are embracing the Investment Account enhancement under the Islamic Financial Service Act (IFSA). 

"We believe the Investment Account Platform (IAP) is moving the industry to the right direction. We also see opportunities from capital allowance incentives for automation in labour-intensive industries which are predominantly in the SME space. These gel nicely with Maybank's strategies of 'Islamic First' and growing our SME financing, and will further boost the banking industry’s effort to innovate and create further value for our customers and our stakeholders."