“Commercial gains are very important,” said Daud, who is listed by consultants Funds@Work as among the world’s most active scholars, sitting on 22 syariah boards.

“We are not a charitable organisation. Shareholders are looking for ROE (return on equity) at the end of the day.”

As Islamic banking tries to reach wider markets, syariah scholars such as Daud are weighing more than just Islamic tenets when they rule on the validity of financial instruments, reflecting commerce’s growing role in the RM3.5 trillion industry.

The desire to win market share, the level of expertise of individual scholars and the scarcity of scholars may all shape Islamic financial rulings and the future of the sector.

Some syariah advisers say it is not always easy to balance religion and business as they grapple with modern funding techniques that sometimes challenge Islam’s basic beliefs.

Once at odds with the syariah’s ban on gambling and excessive speculation, contentious conventional practices such as hedge funds, short-selling and derivatives are slowly finding a place in Islamic finance.

Tasked with applying Islamic law and global financial practices, syariah scholars are powerful gatekeepers, whose approvals are necessary before a product can be marketed as an Islamic instrument.

There are no official figures but some practitioners say there are around 200 syariah scholars worldwide.

Some syariah advisers say the drive to grow the industry influences their decisions on whether certain products meet the syariah’s standards.

Ahmad Hidayat Buang, who advises Islamic insurer Takaful Ikhlas, says Malaysian scholars try to meet companies’ business needs, reflecting a popular view that the country is more liberal in its syariah interpretation than the Gulf.

“We see what happens, then we try to adopt the more flexible view of syariah in order that our product could be introduced,” said Hidayat.

“It’s not necessarily a question of syariah. When you decide on the matter many aspects have to be taken into consideration.”

STAR ENDORSEMENTS?

Syariah scholars are not formally accredited by a single authority so their qualifications can vary vastly, raising questions about the ability of some to understand complex financial structures, especially if they are pressed for time.

With newer financial firms, “they know that the syariah board can be very powerful so they bring in very junior scholars and give them very little information or not enough information within a very limited period of time,” said Megat Hizaini Hassan, a Kuala Lumpur-based Islamic banking lawyer.

“So these scholars may be under pressure to give approvals or certifications.”

A select group of syariah scholars are highly sought after as the bigger a scholar’s name, the greater the drawing power of the product he approves. The industry’s most influential figures can make or break markets with their decrees.

Bankers say Islamic bond issuance fell sharply last year after Sheikh Muhammad Taqi Usmani, chairman of the board of scholars at influential industry body AAOIFI, declared about 85 per cent of sukuk were un-Islamic.

Among the most active scholars are Bahrain’s Sheikh Nizam Mohammad Saleh Yacouby, who sits on 46 advisory boards, and Syria’s Abdul Sattar Kareem Abu Ghuddah, who is on 45 boards, according to Funds@Work.

This has raised concerns about whether some scholars have enough time to thoroughly vet contracts, some of which consist of reams of documents detailing complex financial instruments.

There are also concerns about the possibility of Islamic financial rulings being affected by conflicts of interest where a scholar sits on various boards.

“Syariah board conflicts of interest are part of the practice of modern economic institutions,” said Mousa Isa, a syariah adviser in Saudi Arabia. “There should be transparency.”

Other contentious issues include giving scholars incentive-based payments linked to the success of products they approve. This echoes complaints about the hefty bonuses of some Wall Street bankers which analysts say fuelled excessive speculation and helped trigger the recent credit crisis.

Ayashi Faddad, syariah adviser at Islamic Development Bank, said scholars’ fees should be approved directly by shareholders, not management, to reduce potential for conflicts of interest.

But scholars say some lines cannot be crossed. In cases where there is no room for Islam to accommodate a structure or product, Daud said “the commercial must adjust to the syariah”. — Reuters

OMAHA, Nebraska: Billionaire Warren Buffett said Wednesday the economy has not yet had any bounce and will take some time to recover, but he complimented the government’s efforts over the past year to solve the problems.

Berkshire Hathaway’s chairman and chief executive conducted a couple of live television interviews in New York.

The interviews came before his lunch with a Chinese investment manager who bid $2.1 million in a charity auction to dine with the Oracle of Omaha.

Buffett said during an interview on CNBC that all the reports he sees from Berkshire’s retail, manufacturing and utility businesses show the economy has remained fairly flat.

Buffett joked that he had hoped the cataract surgery he had a couple weeks ago would help him see the “green shoots” of recovery others have talked about, but he still hasn’t.

“There were a lot of excesses to be wrung out, and that process is still under way,” Buffett said.

“And it looks to me like that process will be under way for quite a while.”

Buffett said the United States has a good team leading the Treasury Department and Federal Reserve as it fights what he’s called an economic war.

Buffett complimented Federal Reserve Chairman Ben Bernanke, Treasury Secretary Timothy Geithner and the president’s economic adviser, Larry Summers, and he said Bernanke has played a key role.

Bernanke’s term ends Jan. 30, and there is speculation that Obama may appoint someone else, possibly Summers, to lead the Fed.

“I don’t see how you can do better” than Bernanke at the Fed, Buffett said.

Bernanke took decisive action at a time when the nation’s economy needed that. Buffett didn’t weigh in on the wisdom of the new financial regulations proposed by President Barack Obama.

Buffett said he first needs to see the details of what’s included in the plan.

But Buffett said the government needs to do something to make sure the economy doesn’t wind up in a situation similar to last September, when the level of borrowing threatened to cripple the economy.

But that will be hard to do, Buffett said, because it’s hard to write rules to prevent excesses.

“It’s in human nature to go to excess,” Buffett said.

Buffett said he’s sure the actions the government has taken in the past year to help the economy will result in high inflation down the road.

But he said the actions were appropriate.

Buffett addressed several other topics in the interviews besides the health of the economy:

_ Apple should have disclosed Steve Jobs’ liver transplant because it’s relevant to investors, and they’re likely to find out anyway.

“Certainly, Steve Jobs is important to Apple. It’s a material fact,” he said on CNBC.

Buffett said he would disclose any serious health issues to Berkshire shareholders.

_ He has no plans before they mature to sell the $5 billion in preferred shares of Goldman Sachs Group Inc. that Berkshire acquired last September.

They pay a 10 percent dividend, and Buffett said, “I think we’ll make a lot of money out of those.”

_ He doesn’t think the United States will lose its AAA credit rating anytime in the next generation. “As long as you’re issuing money and you’re issuing debt in your own currency, you can print money,” Buffett said to the Fox Business Network.

Berkshire Hathaway Inc. owns more than 60 subsidiaries including insurance, clothing, furniture, jewelry and candy companies, restaurants, natural gas and corporate jet firms and has major investments in such companies as Coca-Cola Co. and Wells Fargo & Co. – AP

Names that have been linked to PNB’s plan include Mah Sing Bhd and S P Setia Bhd — two companies in which the investment fund is a shareholder.

Two weeks ago, it was reported that PNB was looking to jointly develop, with Mah Sing, its landbank in the centre of Kuala Lumpur as well as in Johor.

Observers reckon the rationale for choosing Mah Sing is probably because the developer is well known for its ability to develop small pockets of land within a short time frame.

Another name that has been cropping up in PNB’s property rationalisation plan is S P Setia — one of the biggest names on the local property development scene. Its Setia Alam township development is well established while other projects associated with it have also been well received. Buyers have made handsome profits on the secondary market from the resale of its homes.

S P Setia’s president and CEO Tan Sri Liew Kee Sin did not deny such talk when the media asked him about it. He said though that whatever the plan, it “must add value” to the company.

While S P Setia and Mah Sing have their niche in property development that has attracted PNB, it must not be forgotten that PNB has within its stable Sime Darby Property Bhd (SDP).

Why isn’t PNB looking at SDP, which has an extensive property development division? The latter also has the largest landbank in the country. Isn’t it good enough to develop PNB land within the city centre?

The property arm of the conglomerate has a relatively good track record for its projects. The merged Sime Darby may not be, to some, the most efficient oil palm planter, but its brand certianly carries weight in property development. Its flagship development, the township of Subang Jaya, is proof of its skills and capabilities.

Sime Darby’s landbank in the Klang Valley stretches from the Guthrie Corridor in the north of Selangor, to Putrajaya, Seremban and Port Dickson. The 37,000 acres in its landbank is about as big as Kuala Lumpur and three times the size of Putrajaya.

That, however, isn’t enough to whet PNB’s appetite for property assets as it continues buying stakes in public-listed developers.

PNB took Petaling Garden Bhd, Island & Peninsular Bhd and Pelangi Bhd private between 2005 and 2007. The three collectively own 7,200 hectares of land. Apart from land, PNB also has buildings in prime locations that can easily be packaged into a real estate investment fund (REIT). Within its fold is also Syarikat Perumahan Pegawai Kerajaan Sdn Bhd (SPPK), which has a good property development record.

Because of its huge landbank, Mah Sing and S P Setia are said to be possible vehicles for PNB to unlock value.

Like it or not, if any such move takes place, Sime Darby may be viewed by the market as not being the “favourite child” of PNB. That’s despite PNB having the highest stake in Sime Daby among all the property companies that it owns.

PNB holds about 53% stake in Sime Darby, which wholly owns Sime Property.

In contrast, PNB has accumulated almost 20% in Mah Sing and has direct and indirect interests of close to 32.9% in S P Setia. Another company that PNB has bought a stake in is I-Bhd, where it has 18.1%.

There are other property companies, such as A&M Realty Bhd, IGB Corp Bhd, Crescendo Corp Bhd, in which PNB and its units have about a 5% stake or less. But these are held merely for investment purposes.

But to be fair to the government-backed fund management company, it has not firmed up any plans on how it plans to monetise its property development division. While it has accumulated massive property assets over the past two years, nothing has come out of it so far.

At the end of the day, whichever property company PNB chooses to use, nobody would probably question its decision. But it certainly won’t stop tongues wagging as to why it isn’t looking at companies where it has the most say.

This article appeared in Corporate page of The Edge Malaysia, Issue 755, May 18-24, 2009

By JAGDEV SINGH SIDHU (The Star)

KUALA LUMPUR: Proton Holdings Bhd yesterday announced a net loss of RM341.5mil for its fourth quarter ended March 31 as write-downs and impairments dragged down the company’s financial performance that has already been hurt by a slowdown in sales.

Group chairman Datuk Mohd Nadzmi Mohd Salleh said Proton’s performance reflected the current global economic condition.

“The softening of the automotive industry arising from the global financial crisis had also adversely affected the performance of the group in the second half of the financial year,” he said in a statement.

For the fourth quarter, Proton posted an 18.4% drop in revenue to RM1.4bil and net profit swung into the red with a loss of RM341.5mil from a profit of RM217.5mil.

“The main reason for the group loss was Proton’s decision for the impairment of property, plant and equipment (PPE) and inventory write-down for certain models impacted by volume contraction,” said Nadzmi.

“Additionally, the results for the second half of the financial year had also been adversely affected by the accelerated amortisation of certain dies and jigs as well as the increased costs of components and raw materials arising from higher foreign currency exchange rates, particularly, the Japanese yen and the US dollar,” he added.

The write-downs and provisions cost Proton RM360mil during the fourth quarter and the company also sold 34,490 cars compared with 40,903 in the same period last year.

Nadzmi added that Proton was now reassessing its production volume after the contraction in sales during the current economic times.

For this financial year, Proton is expected to receive a research and development grant from the Government under the National Automotive Policy amounting to RM81mil.

For the full year, Proton posted a net loss of RM320.3mil, or 58.3 sen a share, compared with a profit of RM184.6mil, or 33.6 sen a share.Revenue for the year rose to RM6.49bil from RM5.62bil previously.

Proton managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir said Proton’s balance sheet remained healthy despite the loss and that cash reserves at the end of the quarter stood at RM899.5mil compared with RM1.17bil last year.

“As a fully fledged automotive company, we spent a substantial amount on the development of new models such as the Proton Exora and Lotus Evora during the year. While this had affected our cash reserves, we will be able to recover when the cars are sold,” said Syed Zainal.

The Proton Exora has received bookings totalling 11,000 units.

“The Exora has also given Proton the opportunity to tap into a new segment – the MPV segment, which has a lot of potential and could help improve Proton’s market share and overall volume growth,” he said.

“Following the success of the Exora in the domestic market, we are now planning to launch the MPV in the Indonesian market in July, which has a sizeable middle-class market and is predominantly an MPV market.”

Proton recently reached an agreement with Edaran Otomobil Nasional to rationalise its distribution network that will see the number of dealers reduced to 191 and service centres to 224.

The company said the exercise would allow it to have better branding and improve on its after-sales services.

In addition to expanding the local market, Proton has also put into place a strategic plan to focus on building its export markets.

“Besides having a strategic partnership with Zagross Khodro for the CKD (completely knocked down) assembly of the Wira and more recently the Gen.2 models in Iran, we have also entered into a business relationship with Youngman of China for the CBU supply of our Gen.2 and Persona models, which is sold and distributed in China under Youngman’s Europestar badge, potentially leading to CKD assembly operations,” said Syed Zainal.

“We are also finalising our India strategy by the end of the year and we are indeed excited with these prospects in making Proton cars available and more visible in the overseas markets as this will hopefully enhance our revenue,” he said.

He said exports to foreign markets were expected to improve in the future and represent a significant portion of Proton’s sales.

“In terms of volume, we are aiming at doubling our total sales volume by 2010, of which the bulk will be derived from the export markets,” he said.

***

Generation-Y employees rate cash bonuses, job flexibility and mobility as their top wants in their line of work.

A PricewaterhouseCoopers (PWC) survey titled “Malaysia’s Gen Y unplugged”, found that 49 per cent of those polled said cash bonuses was the most valuable job benefit.

About 91 per cent said they would work across geographic borders while 58 per cent desired flexible working hours.

The survey polled Gen Y employees on their career expectations now and in 2020. Gen-Y refer to individuals born from 1980 onwards and entered the workforce after July 1 2000.

Gen-Y, who are sometimes misunderstood, may be difficult to manage.

“However, they make up a sizeable portion of today’s workforce and have the potential to help organisations take on the upswing fully prepared,” PWC said in a statement issued yesterday on its survey.

PWC advisory service Malaysia executive director Lim Chin Han said the talent war was alive and thriving in Malaysia.

“Due to the downturn, employers have an opportunity to bring in new talent which previously might not have been available to them and try out different hiring strategies,” he said.

The survey found that Gen-Y employees also value coaching and mentoring and on-the-job training over formal training mechanisms.

This indicates a departure from traditional reward and development methodologies.

Meanwhile, corporate responsibility is high on Gen-Y’s agenda as 86 per cent of the respondents look for employers with social responsibility values that reflect their own.

Roughly 77 per cent would consider leaving an employer whose values no longer reflect their own.

Gen-Y is also big on gender diversity, as 66 per cent feel future income streams would come equally from themselves and their partners.

KUALA LUMPUR, May 28 (Bernama) — Robert Kuok, the Kuok Group patriarch, remains Malaysia’s richest with a net worth of US$9 billion, down from US$10 billion a year ago, according to the 2009 Forbes Asia Malaysia Rich List.

In a statement here today, Forbes said Kuok has held the top spot every year since Forbes Asia began ranking the 40 richest Malaysians in 2006.

Businessman Ananda Krishnan held on to his second place with a net worth of US$7 billion,just down from US$7.2 billion last year.He has also maintained the same ranking every year since 2006.

Together, Kuok and Ananda account for 44 percent of the top 40’s wealth.

They are also the two richest people in Southeast Asia.

The third richest is Tan Sri Lee Shin Cheng, head of IOI Group, one of the world’s leading operators of palm oil plantations. He is worth US$3.2 billion, down from US$5.5 billion last year but keeps his position in the top three.

Malaysia’s 40 richest people are worth a combined US$36 billion, down from US$46 billion a year ago.

It said the 22 percent loss in wealth is largely in line with the 21 percent drop in the Kuala Lumpur Composite Index (KLCI) and is not too bad, considering the fact that the Malaysian ringgit has lost 10 percent against the US dollar, the currency by which the net worths are measured.

Malaysia has nine billionaires who are collectively worth US$30 billion or 84 percent of the total wealth amassed by the country’s top 40.

This is the biggest wealth disparity among Forbes Asia’s rich list.

Tan Sri Vincent Tan (ranked 10, US$750 million) of Berjaya Corporation Bhd is the only Malaysian to drop out of the billionaire ranks in the past 12 months as share prices in his companies have declined.

Three making their debut are IOI Board member Chan Fong Ann (ranked 18, US$209 million), gaming tycoon Tan Sri Chen Lip Keong (ranked 21, US$195 million) and software executive Goh Peng Ooi (ranked 34, US$112 million).

Four people have returned to the rankings after an absence of a year or more.Among them are Tan Sri Syed Mohd Yusof Tun Syed Nasir (ranked 37, US$100 million) and Tan Sri Tan Teong Hean (ranked 39, US$95 million), who cashed out of Southern Bank several years ago and is now making new investments.

The latest issue of Forbes Asia also features Tan Sri Francis Yeoh, head of conglomerate YTL (ranked seven,US$1.8 billion).

The full list of Malaysia’s richest and the story on Francis Yeoh can be found in the June 8 issue of Forbes Asia, which is now available on newsstands.

– BERNAMA

* Pic: Lionel Messi scored past Van Der Sar in Champion League Final 2009 in Rome

***

Following the Second Stimulus Package announced by YAB Dato’ Sri Mohd Najib Tun Razak on 10 March 2009, the Securities Commission (SC) today implemented a new initiative that will create 500 jobs in the capital market for Malaysian graduates.

The SC Executive Enhancement and Development (SEED) programme, which was launched by Minister of Finance II YB Dato’ Seri Ahmad Husni Hanadzlah, will provide training and on-the-job attachment to enhance employability and career mobility in the capital market for 500 graduates over the next two years.

“The government is committed to alleviating the social hardship of those who find difficulty in securing employment given the challenging economic environment, said Dato’ Seri Ahmad Husni in his speech at the launch, which was also attended by Deputy Finance Ministers, YB Dato’ Chor Chee Heung and YB Datuk Dr Awang Adek Hussin.

“Towards this end, the efforts by the SC in training and placing the graduates in the financial sector will go a long way towards providing job opportunities. I am happy to note that the SC has been able to roll out this programme within such a short space of time.

In her speech, the SC Chairman Dato’ Sri Zarinah Anwar said, “The SEED programme offers a unique opportunity to train and develop graduates with a long-term capacity building perspective to ensure that the capital market is sufficiently equipped with skilled and knowledgeable employees.

Under the programme, which is funded by the SC and the Capital Market Development Fund, graduates will be enrolled in three training schemes which are specially developed to create entry level professionals for the conventional and Islamic capital markets, as well as executives for various regulatory functions within the SC and Bursa Malaysia.

The three training schemes, which will employ a multi-modal approach of structured learning for knowledge acquisition and experiential learning for skills acquisition such as interpersonal development, will also include on-the-job attachments with capital market intermediaries ranging from 11 to 22 months.

Additionally, graduates will be given the opportunity to sit for SC’s licensing examinations to further increase their employability in the capital market. This will also help reduce training and development costs for new entrants for the intermediaries and provide a ready pool of ‘fit-for-purpose’ graduates for employment in the capital market.

Source: Malaysia Securities Commission

The banks concerned are AmBank (M) Bhd, CIMB Bank Bhd, CIMB Investment Bank Bhd, EON Bank Bhd, Hong Leong Bank Bhd, HSBC Bank Malaysia Bhd, Malayan Banking Bhd, Public Bank Bhd, and RHB Bank Bhd.

“The review of their debt and deposit ratings will look at the extent to which Malaysia’s ability to provide support to its banking system, if needed, is converging with the government’s own debt capacity as a result of the ongoing global economic and credit crisis,” said Moody’s vice president and senior analyst Christine Kuo.

At present, the deposit and debt ratings of the nine banks on review receive between one and five notches of systemic support, the credit ratings firm said in a statement today.

“Moody’s believes that most governments are at least as likely, if not more likely, to support their banking systems as they are to service their own debt — a view that has traditionally led to bank ratings often benefiting from significant uplift due to systemic support,” Kuo said.

“However, as the financial crisis continues, the capacity of a country and its central bank to support its banks converges with, and is increasingly constrained by, the government’s own debt capacity,” she said.

As such, Moody’s will be reassessing the level of systemic support for the banks listed above to determine whether the systemic support they receive needs to be more closely aligned to the government’s local currency bond rating, Kuo said.

The firm expects to conclude the review over the next few weeks. — Bernama

Read more: World’s greatest investor tells all: invest like Warren Buffett

You don’t get paid for activity. You only get paid for being right.

(Berkshire Hathaway’s 1998 Annual Meeting)