KUALA LUMPUR: The domestic economy is still growing while the global economy has yet to bottom out, Bank Negara Malaysia (BNM) governor Tan Sri Dr Zeti Akhtar Aziz said on April 15.

Maintaining BNM’s gross domestic product (GDP) growth forecast of between 1% and -1%, she said the central bank’s main objective was to ensure that the domestic economy was sustained and banks continued to lend.

“What we are seeing now is the external sector experiencing a contraction but the domestic economy is still growing and this (is) what we need to sustain.

“We expect flat growth because of contraction of external sector that is offset by domestic demand. The first quarter was very affected by contraction in export numbers, and it will continue to show in the second quarter,” she said.

Zeti said given that the financial sector resolutions in the advanced countries were still taking place, the central bank would adopt a wait-and-see attitude while looking out for stabilisation signs to occur.

“Our assumption is that the second half would see some stabilisation taking place, as fiscal stimulus is being implemented,” she said.

Meanwhile, Zeti added that there was no need at the moment for BNM to raise the minimum capital requirements for banks from the current 4% and 8% for core capital and risk-weighted capital ratios.

She said non-performing loans (NPLs) were at a historical low of 2.2% currently, and banks would be able to handle any uptick in NPLs.

On the ringgit, Zeti said BNM would not manage the currency as it was not a policy instrument but to facilitate trade and investments.

Zeti was speaking to reporters after launching the Association of Islamic Banking Institutions Malaysia’s (AIBIM) adoption of standardised master agreements for deposit taking and placement transactions here on April 15.

AIBIM president Datuk Zukri Samat said so far, two Islamic banks had signed the agreements to adopt two standardised agreements — the Interbank Murabahah Master Agreement (IMMA) and the Master Agency Agreement (MAA).

“Eventually, the adoption of both IMMA and MAA should help set the stage for a critical mass of commodity murabahah-based financial transactions ahead of the anticipated launch in July 2009 of Bursa Malaysia’s Commodity Murabahah House, an international spot commodity platform,” he said in a speech here on April 15.

Zukri, who is also Bank Islam Malaysia Bhd managing director, said with the standardised agreements, the intensity of Islamic inter-bank activities would increase.

He added that all 20 members of the AIBIM would be required to adopt the agreements.

Reuters reported that commodity murabahah enables syariah lenders to create financing transactions which involved specific assets, fulfilling Islam’s demand that all deals must involve real economic activity.

When an Islamic bank uses commodity murabahah to provide financing, it will first buy an asset which it then sells to the borrower. The borrower then sells the commodity to a third party using the bank as its agent, and it receives payment and secures the financing it had sought.

The International Islamic Financial Market, an industry body backed by the central banks of several Muslim countries, had estimated that the global commodity murabahah market was valued at more than US$100 billion (RM360 billion).

However, Reuters reported that some religious scholars had criticised the structure, saying it resembled conventional-based lending instruments.
 
Bursa Malaysia is expected to launch in July the Commodity Murabahah House, which uses crude palm oil as the underlying commodity to facilitate Islamic financing based on the murabahah concept.