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Brave New Islamic Finance Project
By Za'im Zaini

Bandar Seri Begawan - Bank Islam Brunei Darussalam Berhad launched a brand new innovative Islamic Structured product yesterday with the aim of providing potential investors exposure to international stocks while providing them with principal protection and returns that are compliant with Islamic Law.

In an interview with the Weekend, Zulhazransa Hj Emran Economic Research, Asset & Fund Management of Bank Islam Brunei Darussalam spoke on the product itself

The BIBD principal protected investment (PPI) is a three-year medium term investment that uses the Sharia concepts of Mudharaba to generate returns and Murabaha to provide the principal protection feature.

"This investment product is actually different to what we previously have introduced and the difference is the fact it provides exposure to international stocks. As I mentioned it is a structured investment product that gives the possibility of potential higher returns.

"Unlike previous projects the keyword is potential," he said.

The potential return is referred to the performance of a basket of four international telecom and technology stocks which are Nokia, Samsung electronics, vodafone and SAP from Germany.

Based on historical data and back testing this product has been able to generate an average return of 4.5 per cent returns. They are referred to the performance of the basket of stocks where the potential dividend of 2.25 per cent may be paid to investors each six months provided the performance of the stocks, on the six monthly observation dates, achieve a certain set of predetermined criteria and subject to investors holding it to maturity.

Investors’ initial investment however is protected at maturity even if the stocks do not achieve the set criteria for the six monthly dividend payments. This product is suitable for both individual and institutional investors who have the appetite to invest in global stocks to gain higher returns as compared to normal deposit products but are not willing to lose their initial investment.

As this is a structured investment product, potential investors are advised to fully understand and familiarise themselves with the contents, terms and conditions and the risk associated with any structured product. Further details can be obtained at any of the Bank's branches or call 223800 & 2235745.

Applications, on the other hand, can be made at all BIBD branches. The investment product will be offered on a "first come first served" basis where subscriptions can be made during the offer period beginning on December 17, 2007 until January 17, 2008.

"It is open for all ages 18 above. Even someone from overseas can participate but would have to maintain an account with BIBD. We don't charge an application fee and annual management fee," he said. -- Courtesy of Borneo Bulletin

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