By BUSINESS TIMES
MALAYSIA Building Society Bhd (MBSB) (1171), a finance company, said it is poised to partner a government-linked developer to build a RM300 million property under its latest Islamic finance product.
It launched the musharakah programme yesterday, basically a joint venture concept where the lender and partner work on a venture and share the profits and losses, unlike conventional banking.
This is the most preferred and globally accepted financing structure, especially in the Middle East. However, it has yet to make it big in Malaysia.
“This is an untapped market and we are excited of the prospects for our programme,” MBSB chief executive officer (CEO) Ahmad Zaini Othman told a briefing after the launch in Petaling Jaya yesterday.
Last year, musharakah made up only 3 per cent of the total approved Islamic financing of RM30 billion in Malaysia.
“Ours is a business model, not a lending model. We have an investment committee and not a credit committee like banks do,” he said.
Ahmad Zaini, who was formerly AmIslamic Bank CEO, said since MBSB is not under Bank Negara Malaysia, there was no need for the central bank’s approval for its musharakah programme.
MBSB is exempted from the banking law and it reports to the Finance Ministry and not Bank Negara.
Ahmad Zaini said the approval process for this financing will be rigorous as MBSB only wants genuine partners.
“We have to do this strategically and be a responsible partner.”
MBSB is 67 per cent owned by the Employees Provident Fund and about 15 per cent by Permodalan Nasional Bhd.