Sukuk 1Malaysia

Bank Negara Malaysia has launched a government savings plan, Sukuk 1Malaysia, for Malaysians above 21 years old. This is a 3-year syariah-compliant savings plan which guarantees tax free 5% profit rate per annum, to be paid quarterly. The minimum and maximum subscription is RM1,000 and RM50,000 respectively. There will be a 0.1% admin charge payable to the agent banks when you buy the sukuk.

The key features of this savings plan is available here and the extensive FAQ is available here.

From my personal observation, Sukuk 1Malaysia is good because:

1. Provides much higher profit rate than fixed deposit/cash fund
2. Government guaranteed returns
3. Can sell/transfer easily without any cost.

Frequently Asked Questions of Sukuk Simpanan Rakyat (SSR) 01/2009

The following information is to help you understand better the features of SSR 01/2009:

1. Who is eligible for the SSR 01/2009?
Malaysian citizens who are 21 years old and above

2. When is the offer period for the SSR 01/2009?
The SSR 01/2009 is offered to the public from 14 April to 13 May 2009.

3. When is the SSR 01/2009 application form made available to the public?
The SSR 01/2009 application form will be made available to the public before the sales period at branches of the agent banks, and can be downloaded from www.treasury.gov.my and www.bnm.gov.my/sukuksimpanan.

4. Can agent bank accept application and payment for SSR 01/2009 from the public before the sales period?
No. Agent banks can only accept application and payment for SSR 01/2009 from the public during the sales period commencing from 14 April 2009.

5. What is the basis of the allocation of the SSR 01/2009?
The allocation of SSR 01/2009 to the applicant is based on a first-come first-served basis and is subject to such terms and conditions specified. The payment for the application of the SSR 01/2009 during the sales period does not imply that the applicant would be successful in the allocation of the SSR 01/2009.

6. What is the frequency of issuance for the SSR in 2009?
There will be two issuances of the SSR in 2009.

7. What is the tenure of the SSR 01/2009?
The SSR 01/2009 will have a maturity of three years.

8. What will the minimum and maximum amount of subscription be?
The minimum amount of holding per SSR 01/2009 holder is RM1,000 per application and in multiples of RM100, e.g. RM1,100, RM1,200, etc. The maximum aggregate holding per SSR 2009 holder for the two series is RM50,000.

9. Why is the maximum holding per SSR 2009 holder fixed at RM50,000 only?
The maximum holding of RM50,000 per SSR 2009 holder is to allow a wider distribution of the SSR 2009, so that more citizens can benefit from it.

10. Would profit be paid on the applicant’s investment from the date of application to the date of issuance of SSR 01/2009?
* For SSR 01/2009 holder who chooses to open or maintain a savings account with agent bank for the purpose of receiving quarterly profit payment, early redemption and final redemption:
o The agent banks will pay the SSR 01/2009 holder the prevailing savings account rate for the period between the date of application and the date of issuance of SSR 01/2009.
o For example, if you apply for the SSR 01/2009 on 14 April 2009, you will receive the savings account rate from 14 April to 13 May 2009.
* If however, for SSR 01/2009 holder who chooses to open or maintain a current account with agent bank for the purpose of receiving quarterly profit payment, early redemption and final redemption, the SSR 01/2009 holder will not be receiving any profit for the period between the date of application and the date of issuance of SSR 01/2009.


11. What is the profit for the SSR 01/2009?
The profit for the SSR 01/2009 is 5% per annum. This means the profit is approximately 1.25% (5% divided by 4) of the holding amount at the end of each quarter.

12. When and how will profit be paid to the SSR 01/2009 holder?
Profit will be paid on a quarterly basis. The profit from the SSR 01/2009 will be credited directly into the SSR 01/2009 holder’s savings or current account maintained with the agent banks.

13. Will the returns on SSR 01/2009 be subject to tax?
No, returns on the SSR 01/2009 are exempted from tax.

14. Can the SSR 01/2009 holder exercise early and partial redemption of the SSR 01/2009?
* The SSR 01/2009 can be redeemed early at the nominal value and including the profit amount due before the maturity date but after the first profit payment. The profit payment will be apportioned based on the number of days the SSR 01/2009 is held. Minimum redemption amount allowed is RM100.
* SSR 01/2009 holder may redeem the SSR 01/2009 in multiples of RM100.


15. When and how can SSR 01/2009 holder redeem the SSR 01/2009 at maturity?
Redemption proceeds (including the last profit payment) will automatically be paid by crediting directly into the SSR 01/2009 holder's account maintained with the agent bank at maturity.

16. Is the SSR 01/2009 transferable?
The SSR 01/2009 is non-negotiable, non-transferable and non-assignable. In the event of the demise of the SSR 01/2009 holder, the SSR 01/2009 held by the deceased SSR 01/2009 holder shall form part of his estate.

17. What documentation is required when applying for subscription of the SSR 01/2009?
An original or a certified copy of the Identity Card (I.C.).

18. Where can the SSR 01/2009 be subscribed?
The SSR 01/2009 can be subscribed at all agent banks, i.e. commercial banks, including Islamic banks, Bank Kerjasama Rakyat Malaysia Berhad, Bank Simpanan Nasional and Bank Pertanian Malaysia Berhad.

The application form for Sukuk Simpanan Rakyat is available here.

AmConstant Extra Bond Fund

AS INTEREST rates globally continue to fall and are expected to stay low at least this year, AmInvestment Bank Group is starting a bond fund aimed at "preserving wealth".

"Amid the turbulent financial times and falling interest rates, investors prefer bonds and bond funds as safe haven investment tools," chief executive officer at the funds management division Datin Maznah Mahbob said in Kuala Lumpur yesterday. The division manages RM16 billion at the end of March.

"Bonds had overtaken equities as the preferred asset class amid the current volatile market," Maznah said, citing a recent poll by a regional online unit trust portal which has a presence in Malaysia, Singapore and Hong Kong.

Central banks around the world are likely to keep slashing interest rates this year to boost the weak economy and chances are high that interest rates will remain low next year, head of Asian Fixed Income at the bank, Julian Chow said.

With a RM200 million approved size, the AmConstant Extra is benchmarked against the current fixed deposit (FD) rates and aims to provide investors with regular income throughout the tenure.

Up to 99 per cent of the fund will buy debt papers issued by the Malaysia government and local corporates rated "BBB" and above. It may also invest in foreign papers and US dollar convertible bonds that are rated or unrated. The fund adopts a buy and hold strategy where investments are held to maturity.

"We have a strong credit team with a track record in picking up quality papers. All our funds have never experienced a credit default before," Maznah said.

The new fund is targeted at risk-averse investors who seek potentially higher returns than the FD, but less risky unit trust compared to equity funds.

Source: BusinessTimes

For more details about the new fund, click here.

Comments: For a bond fund that intends to beat the fixed deposit rates and yet charge 2% sales charge, i guess this fund is not worth the investment, in my opinion. The fees alone are probably enough to offset the difference between the gain of the fund and the FD rates.

Bank Negara To Issue RM2.5 Billion Sukuk Simpanan Rakyat

The Finance Ministry today announced the issuance of Sukuk Simpanan Rakyat 01/2009 amounting to RM2.5 billion on May 14, 2009.

This is the first issue of the two series of three-year RM2.5 billion sukuk each and it will be issued by Bank Negara Malaysia on behalf of the government, the ministry said.

The sukuk, which will be scripless and based on Syariah principles, is an additional investment instrument for Malaysian citizens who are 21 years and above, it said in a statement.

The sukuk offers a return of 5.0 percent per annum and provides the flexibility for early redemption before the maturity date, the ministry said.

It is available for subscription during the sales period from April 14 to May 13, 2009.

The minimum investment is RM1,000 with a maximum of RM50,000 per investor and the maximum aggregate holdings per investor for the two sukuk series is RM50,000, the ministry said.

It can be subscribed at all commercial banks, including Islamic banks, Bank Kerjasama Rakyat Malaysia Bhd, Bank Simpanan Nasional and Bank Pertanian Malaysia Bhd.

Allocation for the sukuk is based on a first-come first-served basis, and successful applicants will be notified by their agent banks.

Profit payments will be made on a quarterly basis via the sukuk holders' accounts with their agent banks.

Those seeking further information can contact Bank Negara's Telelink at 1300-88-5465 or by visiting the websites www.treasury.gov.my and www.bnm.gov.my/sukuksimpanan.

Source: Bernama