KUALA LUMPUR, April 1 (Reuters) - Malaysian lender Affin Islamic Bank Bhd launched on Tuesday an Islamic financing strategy to help small firms raise funds and increase the industry's share of domestic banking assets.
Under the new strategy, banks will be partners instead of just lenders in the development of projects such as the construction of homes.
In its pioneer project, Affin Islamic will team up with small Malaysian property firm Mutiara Goodyear Development (MGDE.KL: Quote, Profile, Research) to develop a 180 million ringgit ($56.30 million) apartment project in northern Penang state.
Under the deal, the two companies will form a special purpose vehicle that will buy land to be used for the development and jointly undertake the project. Profits and losses from the project would be shared equally between the parties.
Mostly Muslim Malaysia is prodding its Islamic lenders to develop products to draw more investors as part of a plan to make the country a global hub for the $300 billion Islamic finance sector.
Record crude oil prices have fuelled a surge of petrodollars into Asia, with cash-rich Gulf investors hungry for investments that comply with the sharia or Islamic law.
Malaysian Islamic assets such as property and bonds are popular with investors who want exposure to Asia's growth story while complying with the sharia, which forbids interest-bearing loans and investments in alcohol and gambling.
Mutiara Goodyear Chief Executive Kee Cheng Teik said Affin Islamic's financial backing would boost investor confidence in the development.
"Purchasers do not only look at the strength of the development and design, they also look at the strength of the financials, that we can carry through all the project, " Kee told reporters.
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