MIDF’s Development Finance Division to become a Shariah Compliant Entity
Kuala Lumpur, 6 June 2016 – The Development Finance Division of Malaysian Industrial Development Finance Berhad (MIDF) has offered a full range of Shariah compliant products for all its new businesses effective 1st June 2016. This is a major milestone towards making the Development Finance Division into a fully Shariah compliant entity.
MIDF was the country’s maiden development finance institution and was established in 1960. The setting up of MIDF was to ensure access to financing for domestic manufacturing-based companies. This is part of the country’s strategy to accelerate the industrial sector development as well as to create domestic based industries and job opportunities for Malaysians.
The division has provided financing in the form of soft loans to Malaysian enterprises in the manufacturing and services sectors and among the assistance offered under the soft loan schemes are term financing for factory, machinery and equipment as well as working capital financing. The financial assistance offered by MIDF enables domestic based companies to improve efficiency, increase capability and capacity, automate production, and reduce labour dependency as well as lower production costs.
All applications for financing received on or after 1st June 2016 would be approved primarily under MIDF’s Islamic financing products. This would not affect the existing conventional accounts managed by the Division. Clients who utilise Islamic financing with MIDF will be able to enjoy a 20% discount for the stamp duty imposed to the financing’s legal documentation.
The Islamic financing currently constitutes approximately 60% of its financing portfolio. The product types under the various Shariah compliant accounts cover all sectors such as Factory Financing, Industrial Hire Purchase, machinery, project, working capital and revolving credit. Ninety seven percent of its existing clients had businesses that comply with the Shariah requirements and has the potential to be converted to an Islamic financing facility.
By making a full range of Islamic financing facilities available, the Company is now able to expand aggressively into providing financing towards domestic halal based manufacturers and services providers.
“MIDF supports the Government of Malaysia in making a significant presence in the Islamic Finance space and leveraging Islamic Finance for Malaysian businesses. With the significant growth in Islamic Finance we aspire to support Malaysia as a prominent and renowned Islamic financial hub to the global community” stated MIDF Group Managing Director, Datuk Mohd. Najib Hj. Abdullah.
The Development Finance Division of MIDF has disbursed more than RM3.1 billion as at April 2016. These various scheme funds have benefitted more than 3,580 local companies. Currently, the Development Finance Division manages a total of 6 schemes fund under its portfolio with a total fund size of more than RM2.1 billion.
MIDF was established fifty-six years ago as a result of a study by the World Bank. MIDF is the country’s premier development finance institution for the purpose of accelerating the development and modernisation of the country’s manufacturing and services industries.
MIDF Group has evolved into a stronger and bigger entity, offering a competitive and diversified range of financial services to include Investment Banking, Development Finance, Asset Management and Mezzanine Financing.
For more information, please contact:
Head, Group Corporate Communications
Tel: (03) 2173 8756
Fax: (03) 2173 8866
H/P: (019) 332 4809