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Islamic Finance Briefing - Category | Emerging Trends more

Future of Islamic banking promising, says Shihab

Posted on 19 March 2013 by Laxman  |  Email|Print

Islamic banking is making steady progress in the Sultanate since the promulgation of the Royal Decree No. 69/2012. It has a promising future, said HH Sayyid Shihab Bin Tariq Al Said, His Majesty’s Adviser.
Although the Islamic banking industry is still in the initial stage, it has resulted in remarkable activity in the banking sector, said CBO Executive President HE Hamoud Bin Sangour Al Zadjali. It has forced many licensed commercial banks to increase their capitals to open independent Islamic windows to operate alongside with the two licensed Islamic banks, he said………………………………………..Full Article: Source

Affin Islamic sees strong growth

Posted on 19 March 2013 by Laxman  |  Email|Print

Affin Islamic Bank targets its financing segment to expand by between 10 per cent and 15 per cent this year, compared with 17 per cent last year. Its chief executive officer Kamarul Ariffin Mohd Jamil said the growth last year was in tandem with the robust performance of the country’s Islamic banking industry.
Last year, Affin Islamic’s pre-tax profit was RM106.4 million, which translated to a 42.1 per cent growth. Kamarul said the strong growth of Islamic finance was not limited to Malaysia, but covers the region and Affin Islamic is “always keen to expand regionally”………………………………………..Full Article: Source

Strong sukuk issuance and performance is anticipated this year

Posted on 19 March 2013 by Laxman  |  Email|Print

Strong investor demand supported by improving liquidity is expected to boost both issuance and performance of sukuk this year, according to rating agency Standard & Poor’s.
“Global issuance expanded for the fourth year in a row in 2012, growing 64 per cent to about $138 billion, and we expect another strong few years,” said Standard & Poor’s credit analyst Paul-Henri Pruvost. While sukuk is still considered an alternative investment, Standard & Poor’s Ratings Services believes it has the potential to grow and join the mainstream fixed income universe………………………………………..Full Article: Source

There’s nothing wrong with Islamic finance as long as it really is Islamic finance

Posted on 18 March 2013 by Laxman  |  Email|Print

Whether the Qur’an bans all forms of interest, or specifically its exploitative forms, was a matter of controversy in the early decades of Islam. It still remains in doubt. What is crystal clear is that what passes as Islamic finance is anything but interest-free.
Almost all of the Islamic banks in existence, including those in Egypt, charge their borrowers what any economist would call interest; they also pay their depositors interest as a matter of course. This is not surprising, for interest continues to provide tangible benefits to both lenders and depositors………………………………………..Full Article: Source

Will Islamic finance flourish in Russia?

Posted on 18 March 2013 by Laxman  |  Email|Print

Conventional finance may need to make room for the Islamic variety, at least in Russia. In 2009 and 2010, one survey found that 97 percent of people who were mainly Muslim or from an Islamic background were interested in using an Islamic bank. Of that 97 percent, 40 reside in Moscow. How far has Islamic finance come in a country that’s one of the most influential game-players in the financial world?
The Voice of Russia invited two experts in the field, Farmida Bi, lawyer and partner at Norton Rose LLP and Adnan Halawi, Head of Islamic Finance at Zawya, to share their views on the market’s current trends and future potential………………………………………..Full Article: Source

The new home of Islamic finance?

Posted on 18 March 2013 by Laxman  |  Email|Print

Is Dubai’s ambition to be a hub for sharia-compliant finance realistic? Orlando Crowcroft finds some optimism, though there is a need for trained financial advisers.
The announcement at the start of the year from Dubai’s ruler, Sheikh Mohammed bin Rashid, that he wants to turn the emirate into a world capital for Islamic finance may have raised eyebrows in the global business community. Talk is cheap, after all, and new initiatives ten-a-penny since the global recession took an axe to the United Arab Emirate’s breakneck economic growth………………………………………..Full Article: Source

Malaysia: Efforts to bolster sukuk market will continue

Posted on 15 March 2013 by Laxman  |  Email|Print

Malaysia has done well in developing its Islamic capital market and will seek to bolster the sector further. In its annual report 2012, the Securities Commission (SC) said efforts to further innovate and broaden the sukuk market will continue via the introduction of a frame-work for the issuance of AgroSukuk for companies in the agriculture sector.
To improve the availability of fund-raising avenues for agriculture activities and agro-based in-dustries, the government has also proposed in the 2013 Budget that expenses for the issuance of AgroSukuk will be entitled to a double deduction for a period of three years, effective from assessment year 2013 to 2015. …………………………………..Full Article: Source

London could become western hub for Islamic finance, says Government

Posted on 14 March 2013 by Laxman  |  Email|Print

The UK’s first Islamic Finance Task Force will be led by Greg Clark, Financial Secretary to the Treasury, and Foreign Office minister Baroness Warsi. The co-chairs will be supported by experts from the banking industry and UK Islamic Finance Secretariat.
“We expect the global market for Islamic financial services to experience significant growth over the coming years, but feedback from decision-makers in the Middle East and South East Asia suggests there is a lack of awareness of the UK industry and that we should be doing more to promote the sector,” Baroness Warsi said. “There are also major opportunities to attract investment into the UK as demand for Islamic finance increases from private investors and sovereign wealth funds.”……………………………………Full Article: Source

India insurance giant to focus on ‘takaful’ to boost Mena growth

Posted on 13 March 2013 by Laxman  |  Email|Print

India’s General Insurance Corp (GIC Re), the 15th largest re-insurer in the world, is planning to convert its Dubai office into a subsidiary as part of strengthening the Middle East and North Africa (Mena) business from which it generated premium worth $385mn.
The public sector re-insurance giant is also focusing more on life and Islamic ‘takaful’ in a big way to make its presence felt in the Mena region, P K Bhagat, general manager of GIC Re, said. “We might consider converting Dubai office into a subsidiary in the next few years as part of strengthening the operations in the Mena region,” he said………………………………………..Full Article: Source

Ringgit still preferred currency for sukuk issuance

Posted on 13 March 2013 by Laxman  |  Email|Print

A combination of factors is making the ringgit the preferred currency for sukuk issuance as the East Asian and Gulf Cooperation Council (GCC) countries become more interdependent due to the pick-up in cross-border transactions.
Standard & Poor’s Rating Services analyst Paul-Henri Pruvost noted in a report that both regions had relatively strong economies seeking huge amounts of capital to fund new infrastructure, support economic development and entice more private-sector investment………………………………………..Full Article: Source

Sukuk: An alternative capital structure for some

Posted on 13 March 2013 by Laxman  |  Email|Print

With liquidity still an issue, small and mid-size upstream oil and gas companies continue to feel a disproportionate impact of the ongoing financing squeeze from the debt crisis and the uncertainty in the capital markets.
While lenders and debt investors continue to show a willingness to provide capital to larger oil and gas companies, the same cannot be said for small and mid-sized upstream companies, those with leaner operating cash flows and a smaller asset base. Compounding the effect of the crisis, Basel III regulations are forcing lenders to deleverage and recapitalize, which will continue to leave, for the foreseeable future, many small and mid-sized companies in need capital-starved………………………………………..Full Article: Source

U.K. Islamic bond back on agenda as London seeks Shariah market

Posted on 12 March 2013 by Laxman  |  Email|Print

The U.K. government is considering reviving plans to sell Islamic bonds as part of an initiative to boost Britain’s role as a center for Shariah-compliant financing.
Treasury Minister Greg Clark and Sayeeda Warsi, a minister in the foreign office, are leading a working group to raise the profile of the Islamic finance industry, the Treasury said in an e-mailed statement today. Among items discussed at today’s inaugural meeting was the sale of Islamic bonds, said Shabir Randeree, chairman of DCD London & Mutual Plc in London and a member of the taskforce………………………………………..Full Article: Source

Malaysia: Islamic banking shines

Posted on 12 March 2013 by Laxman  |  Email|Print

Malaysia proves its worth as a global model for a modern and dynamic industry. Malaysia has succeeded in developing a vibrant and modern Islamic banking and financial industry over the last three decades.
The Islamic Banking Act, which came into force in 1983, had paved the way for the nation to develop a vibrant and modern Islamic banking and financial industry. Initially, the industry served as an alternative channel for Muslims to perform banking and financial transactions in accordance with Islamic practices, and thus, avoid practices that have elements of oppression that are prohibited by Islam………………………………………..Full Article: Source

The exciting future of non-interest banking in Nigeria

Posted on 12 March 2013 by Laxman  |  Email|Print

For so many reasons, Islamic banking is growing at a fast pace around the world. It is asserting itself as a key player in the global financial system. In 2011, for instance, Islamic banking worldwide assets grew by 19 percent to $1.3 trillion. Altogether, Islamic banking worldwide increased profit-making by 15 percent during that period.
The first private Islamic bank, the Dubai Islamic Bank, was set up in 1975 by a group of Muslim businessmen from several countries. Two more private banks were founded in 1977 under the name of Faisal Islamic Bank in Egypt and Sudan. In the same year, the Kuwaiti government set up the Kuwait Finance House. Since then, Islamic banking has grown steadily………………………………………..Full Article: Source

Dubai rides high hopes on Islamic bond-mania

Posted on 11 March 2013 by Laxman  |  Email|Print

Dubai-based state-owned and private corporations show no let-up in issuing Islamic bonds or “sukuk” as market demands remain unchanged. On an almost weekly basis, big stakeholders in the United Arab Emirates announce plans to make use the booming market of sukuk amid an unprecedented economic comeback.
The debut was made by Dubai Electricity and Water Authority ( DEWA) which issued a sukuk worth 1 billion U.S. dollars with 5 years duration, attracting orders of over 5.5 billion dollars. The DEWA listed the Islamic bond at the NASDAQ Dubai, the UAE’s second stock exchange and the Middle East’s only international exchange………………………………………..Full Article: Source

Egypt sukuk issue would find buyers, end of year likely

Posted on 07 March 2013 by Laxman  |  Email|Print

Egypt is pinning its hopes for a return to the international capital markets on Islamic bonds. It is likely to be successful, provided it can hold parliamentary elections and resolve domestic legal wrangling over how to structure the bonds.
Struggling to narrow a big budget deficit and boost foreign currency reserves that are at critically low levels, President Mohamed Mursi’s government last week approved a draft law that would allow the state to issue sukuk for the first time. With its credit rating repeatedly downgraded to junk status by international rating agencies over the past year, and its economy undermined by political instability, Egypt might seem an unlikely borrower………………………………………..Full Article: Source

Profit shortfall slows Shariah bank expansion: Islamic finance

Posted on 06 March 2013 by Laxman  |  Email|Print

Islamic banks say their small scale and a lack of risk-management products makes it harder for them to compete, after Ernst & Young LLP warned lower profitability threatens to slow expansion of the $1.8 trillion industry.
The average return on equity at Shariah-compliant lenders was 11.6 percent in 2011, compared with 15.3 percent at their non-Islamic counterparts, according to a December report by Ernst & Young that covered 12 countries. The use of hedging and treasury solutions is lagging behind, Haszeri Hussin, head of Islamic global markets at Hong Leong Islamic Bank Bhd. (HLBK), a unit of Malaysia’s fourth-biggest lender, said………………………………………..Full Article: Source

Upward trend in Qatar’s sukuk issuance: S&P

Posted on 06 March 2013 by Laxman  |  Email|Print

Sukuk is becoming more important in the Gulf Cooperation Council’s fixed-income market, including Qatar, representing almost half of the regional banks’ issuance in 2011 and 2012. Market analysts see an upward trend in issuance from banks in Qatar on the back of strong domestic credit growth, which they anticipate will continue.
There was a sharp rebound in the Gulf banks’ activity in debt capital markets in 2012 as they took the opportunity to issue long-term debt at healthy prices under favorable market conditions. The sukuk segment is becoming more active as conventional banks are increasingly tapping into sharia-compliant products to diversify their funding bases, a research note issued by Standard & Poor’s (S&P) said………………………………………..Full Article: Source

StanChart: Sukuk market will see another good year

Posted on 06 March 2013 by Laxman  |  Email|Print

The sukuk market will see another promising year with escalating interest in both the US dollar- and ringgit-denominated Islamic bonds, said Standard Chartered Saadiq Malaysia chief executive officer Wasim Saifi.
He expects it to be as good or even better than the close to RM100 billion sukuk issuances which Malaysia enjoyed last year. “We see a lot of cross border movements on the sukuk side and definitely interest in the Malaysian market and issuers,” he said………………………………………..Full Article: Source

Qatar, UAE banks ‘to give impetus’ to 2013 debt issue

Posted on 06 March 2013 by Laxman  |  Email|Print

Banks in Qatar, along with those in the UAE, will provide the impetus for debt issue this year in view of high macroeconomic and credit growth as well as low interest rates, according to global credit rating agency Standard and Poor’s (S&P). “We expect most of the impetus to come from banks in the UAE, the largest issuers in 2012, and Qatar, where issuance has been steadily increasing,” S&P said in its latest report.
Finding that banks in Qatar raised $4.5bn in bonds and sukuk last year, of which QNB issued $2bn, followed by Qatar Islamic Bank ($750mn) and International Islamic ($700mn), Commercialbank and Doha Bank $500mn each in five-year notes; it said the country continues to display very strong domestic growth that is fostering the increase in issuances………………………………………..Full Article: Source

Hong Kong Islamic finance push won’t challenge regional rivals

Posted on 06 March 2013 by Laxman  |  Email|Print

Hong Kong’s Legislative Council is considering a bill that will ease taxes on transfers of underlying assets of Islamic finance products, giving them equal treatment to conventional instruments;But Hong Kong lacks cultural connections and a large shariah-compliant investor base.
Investors might instead be looking to invest in China;The bill only covers assets located in Hong Kong. To include assets in China, China would need to amend its relevant laws for equal tax treatment of shariah-compliant products……………………………………….Full Article: Source

Can global banking giants learn Islamic finance?

Posted on 06 March 2013 by Laxman  |  Email|Print

Renewed focus on interest-free finance sees one of the world’s banking giants hire Ethica to deliver Islamic finance e-learning to thousands of its bankers. At a time in history when people are beginning to question the viability of interest-based banking - banks having triggered the entire financial mess - there is renewed focus on interest-free banking. Enter Islamic finance.
In a hotly contested bid to deliver Islamic finance e-learning at one of the world’s largest global banks, Dubai-based Ethica won the final mandate to train thousands of the bank’s employees. The name of the banking giant remained under wraps but sources close to the deal said that bankers from 8 countries were slated to receive Ethica’s training. (Press Release)

Standard & Poor’s sees active year ahead for Islamic finance

Posted on 05 March 2013 by Laxman  |  Email|Print

Banks are expected to continue tapping Islamic debt facilities to keep sukuk markets active in the year ahead, according to a new report from Standard & Poor’s, amid mounting cynicism that the asset class is falling out of favour with investors. But the credit ratings agency warned that the pipeline of new bond sales could become jammed if investors’ demands for higher yields on sukuk and longer-dated debts head too high.
“In view of supportive debt capital market conditions, we forecast banks’ issuance levels to remain elevated in 2013,” the report said. “We expect most of the impetus to come from banks in the United Arab Emirates, the largest issuers in 2012, and Qatar, where issuance has been steadily increasing.”……………………………………….Full Article: Source

Singapore’s Islamic finance dream is fading fast

Posted on 05 March 2013 by Laxman  |  Email|Print

While Malaysia continues powering ahead in Islamic finance, which is based on ethical principles and bans interest, Singapore seems to have given up the ghost.
At least one leading player has already exited the retail Islamic finance market here to focus on Malaysia. Even headhunters have been relocating from Singapore to Kuala Lumpur to help international banks set up Islamic finance teams there. And now a key tax incentive for the business in Singapore has been allowed to lapse………………………………………..Full Article: Source

Billionaire seeks Sukuk for Istanbul finance hub

Posted on 05 March 2013 by Laxman  |  Email|Print

Agaoglu Group, a Turkish company with interests in the building industry, energy and tourism, plans to raise $2 billion in Islamic debt to finance the construction of Istanbul’s financial district.
The company hired investment bank Aktif Bank to manage the sale in April, Agaoglu Chairman Ali Agaoglu said in an interview yesterday in Dubai, where he opened an office to lure Persian Gulf wealth to Turkey’s construction industry. The fundraising would also include Murabaha facilities, he said………………………………………..Full Article: Source

Can Islamic finance save us from the Banksters?

Posted on 05 March 2013 by Laxman  |  Email|Print

The governments of the world lurch from crisis to crisis as they try to prop up the corrupt, debt-based money system, but there is a positive alternative if they have the courage to take it. PAY THE BANK TO HOLD YOUR CASH was the headline in the February 27 issue of City A.M. That may not sound like an attractive proposition, nor may the suggestion that we should adopt negative interest rates, but there is a positive side to it.
On page 17, the overpaid so-called experts disagreed: Ross Walker, an economist with the Royal Bank of Scotland voted yes; Philip Booth of the Institute of Economic Affairs voted no. We’ve been here before, but imagine you were diagnosed with a serious illness and half the doctors recommended antibiotics while the other half said you needed no treatment at all. What would that do for your opinion of the medical profession?……………………………………….Full Article: Source

Global popularity of Islamic banking

Posted on 04 March 2013 by Laxman  |  Email|Print

Islamic banking is gaining popularity across the world as the global financial turmoil seems to have had limited impact on it, according to recent media reports. The Islami banking system is based on Islamic Shari’ah and not on ‘predictions’ which give it the advantage of having less external shocks like the recent global financial meltdown.
The total GDP of the world is around $30 trillion where as the total credit market is $64 trillion. The gap is ‘prediction’. Islami finance industry has been in an expansionary phase in recent years and even the Vatican says banks should look at the rules of Islami finance to restore confidence among their clients at the time of global economic crisis………………………………………..Full Article: Source

Islamic finance in 2013: Beyond the growth

Posted on 04 March 2013 by Laxman  |  Email|Print

Year upon year, the Islamic finance industry posts stellar growth figures. However, as large Western lenders withdraw from the sector, is Islamic finance in as healthy a shape as the figures suggest? The Banker asks a number of experts in the field what the future holds for sharia-compliant banking.
There has been no shortage of articles written about how Islamic finance is growing at a galloping pace, with its estimated 15% to 20% annual growth rate considerably outstripping that seen in the conventional banking industry. Global Islamic assets held by commercial banks stood at $1.3bn in 2011, but the industry’s forecast growth of some 40% over two years will see this figure rise to $1.8bn in 2013, according to research by Ernst & Young………………………………………..Full Article: Source

Dubai can become Islamic finance hub

Posted on 04 March 2013 by Laxman  |  Email|Print

In the wake of the global economic crisis, investors are looking for well-governed financial products and centres to safely put their money. In many ways this is behind the growing international appeal for Islamic financial products, like sukuk (islamic bonds).
Islamic finance refers to economic practices that comply with Sharia, which generally prohibits interest, short-selling and certain forms of financial trading. It was this type of opaque, even fraudulent, financial transactions — driven by a desire for short-term, unsustainable profits — that were at the root of the global financial crisis. As a result, investors are turning to products that are well-governed and run to the highest ethical standards………………………………………..Full Article: Source

Egypt: As governments push to sell Islamic finance, are consumers really buying it?

Posted on 01 March 2013 by Laxman  |  Email|Print

Finally, one of the most obvious markets for Islamic finance is opening for business. Egypt’s Government is currently inundated with applications for banking licences as foreign banks rush to take advantage of its potential. It’s also launched an Islamic index and is hoping to plug a $1 billion hole in its finances with a Sukuk issuance this year.
Surely Egypt, with an economy dependent on agriculture, a 90 per cent Muslim population and a claim to being the birthplace of Islamic finance is the perfect country for Islamic finance to thrive. Its devoutly religious population – 84 per cent of which support the death penalty for those who leave Islam, according to a 2010 Pew Global Attitude Survey – must welcome the chance to bank without violating their strict faith………………………………………..Full Article: Source

The exciting future of non-interest banking in Nigeria

Posted on 01 March 2013 by Laxman  |  Email|Print

Non-interest banking - There may not be a direct link between the growth of non-interest banking (a.k.a. Islamic Banking) around the world and the credit crunch financial crisis that almost brought down the world financial system in 2008.
It cannot be claimed, either, that Islamic Finance is growing out of the ruins of the Western interest-based financial system that has been suffering one set back or another since the 1980s with the rate of banks’ failure rising steadily. But, there is no denying the fact that, Islamic banking is providing an alternative model or at least redefining the conceptual approach to banking and finance……………………………………….Full Article: Source

Abu Dhabi: Banking mounts comeback

Posted on 01 March 2013 by Laxman  |  Email|Print

The banking sector in Abu Dhabi showed consistent increases in liquidity and net profits throughout 2012, largely aided by net-interest earnings and bigger profits from Islamic finance. Fourth-quarter results and a strong performance by many banks’ shares - the strongest in five years - have led many analysts to conclude that the sector is firmly on the path to recovery.
Indeed, Reuters reported on February 6 that the Abu Dhabi bank index was up by 11.4%, outperforming a 10.1% increase in the overall market, though from an admittedly low base. October 2012 was as a major turning point for the UAE’s banks, when outstanding provisions - which banks set aside for bad loans - decreased for the first time since 2008………………………………………..Full Article: Source

Shariah funds lure Middle East LPs to Southeast Asia

Posted on 28 February 2013 by Laxman  |  Email|Print

Asian managers, joining a trend from the bond markets, have begun launching Islamic private equity funds in response to interest from investors in the Middle East. For those investors, the new vehicles are a way to capitalize on fast-growing economies in the region, sometimes with more flexibility and attractive terms than are available via local Middle East funds.
Navis Capital Partners in Malaysia and Korea’s STIC Investments are two of the few general partners that manage Shariah-compliant private equity funds across Asia. Kuala Lumpur-based Navis first raised money to invest in Shariah-compliant deals in 2003, while STIC started in 2004………………………………………..Full Article: Source

Interest rises in Islamic bonds

Posted on 28 February 2013 by Laxman  |  Email|Print

Islamic bonds, or sukuk, have long been popular with investors in the Middle East. Now they are being discovered in Europe and the United States. When the Dubai government issued a $500 million, 10-year sovereign Islamic bond, last month, 38 percent of it was snapped up by Western investors, according to research by Standard & Poor’s.
“European problems helped fuel demand for alternative products like sukuk in emerging markets, which is why we’re seeing a strong wave of interest coming in from Western investors lately,” said Mohammed Dawood, managing director of debt capital markets for HSBC’s Islamic banking division………………………………………..Full Article: Source

Thailand: For SME and Islamic banks, what went awry?

Posted on 28 February 2013 by Laxman  |  Email|Print

Plainly speaking, it’s been a complete management failure, both inside and out. How else can one frame the fact that two state-controlled banks, the SME Bank and the Islamic Bank of Thailand, are now wrestling with bad loans in excess of 80 billion baht, or over one-quarter of their total outstanding loans?
When we consider the fact that their peers in the private sector count their own non-performing loans in the low single digits, and that Thai bank profitability overall is at record highs, the performance of these two institutions looks even worse………………………………………..Full Article: Source

Abu Dhabi: Banking mounts comeback

Posted on 28 February 2013 by Laxman  |  Email|Print

The banking sector in Abu Dhabi showed consistent increases in liquidity and net profits throughout 2012, largely aided by net-interest earnings and bigger profits from Islamic finance. Fourth-quarter results and a strong performance by many banks’ shares – the strongest in five years – have led many analysts to conclude that the sector is firmly on the path to recovery.
Indeed, Reuters reported on February 6 that the Abu Dhabi bank index was up by 11.4%, outperforming a 10.1% increase in the overall market, though from an admittedly low base. October 2012 was as a major turning point for the UAE’s banks, when outstanding provisions – which banks set aside for bad loans – decreased for the first time since 2008………………………………………..Full Article: Source

Dewa issues price guidance for sukuk

Posted on 27 February 2013 by Laxman  |  Email|Print

Dubai Electricity and Water Authority has issued initial price guidance for a five-year, benchmark-sized Islamic bond, or sukuk, a document from lead arrangers said on Tuesday. The emirate’s sole utility provider is aiming to sell the dollar-denominated sukuk in the low 3 per cent area, the document said.
Benchmark-sized is typically understood to mean at least $500 million. Dewa is meeting fixed income investors in London and Asia this week ahead of the possible sukuk sale, which is due to price this week………………………………………..Full Article: Source

Oman seeks consolidation in financial sector

Posted on 26 February 2013 by Laxman  |  Email|Print

Oman’s financial regulator, the Capital Market Authority (CMA), is encouraging consolidation in the country’s crowded financial sector, aiming in the long term for local banks to build a regional presence in the Gulf region.
“Maybe we are overbanked in a way, so limiting the number of banks would be better for the market, especially for banks starting from scratch,” Abdullah Salem Al Salmi, CMA’s executive president, said in an interview. “We would like to see some consolidation.”……………………………………….Full Article: Source

Islamic parties at an impasse, need reform to avoid the worst

Posted on 26 February 2013 by Laxman  |  Email|Print

There are two interesting facts about Islam in Indonesia. First, more than 87.18 percent of the country’s total population is Muslim. Second, there has been an escalation of Islamic expression since the 1990s, such as women wearing veils, laws and bylaws influenced by Islam, the publication of Islamic books and the proliferation of Islamic banking, clinics, housing complexes and dormitories.
But these facts are not reflected in the political orientation of voters. For example, all Islamic parties won less votes and received less of the national vote than all secular-nationalist parties in three consecutive general elections after the New Order era………………………………………..Full Article: Source

More African countries considering sukuk

Posted on 25 February 2013 by Laxman  |  Email|Print

An increasing number of African countries are considering issuing sukuk, or Islamic bonds, in a push to fund their huge infrastructure needs and to diversify their investor base, Standard and Poor’s has said in a report. South Africa, Nigeria, Senegal, and Mauritania have all announced in recent years their intention to issue sukuk bonds.
Standard and Poor’s said in a report that following the Arab spring and the rising influence of Islamist parties in some countries has put the development of Islamic finance on their governments’ agendas. Egypt for example, has recently presented a law allowing sovereign sukuk issuance, which would help finance the country’s high fiscal deficits and also provide funding for the current account deficit, while Tunisia’s 2013 budget law expects to finance its fiscal deficit partly by sukuk issuance, said the ratings company………………………………………..Full Article: Source

Qatar has potential to become major Islamic finance platform, says QIIB CEO

Posted on 25 February 2013 by Laxman  |  Email|Print

Qatar can become a major global platform for Islamic finance in view of its resources, expertise in Shariah-compliant products and services, and world class regulatory framework, said International Islamic (QIIB) chief executive officer, Abdulbasit A al-Shaibei.
Qatar, he said, is significantly active in the major global Islamic centres such as Malaysia. Also, Islamic finance has growing demand in Qatar and the region………………………………………..Full Article: Source

Malaysia to continue leading global sukuk market growth

Posted on 25 February 2013 by Laxman  |  Email|Print

With strong per­formance seen in 2012 and an optimistic outlook on the horizon for 2013, Malaysia will continue to dominate the global sukuk market with various issuances to mainly fund infrastructure devel­opment within the country.
Besides the PLUS issuance, RAM Ratings Services Bhd (RAM) in a special report on the subject said regular issues were made by the Malaysian govern­ment and central bank, amount­ing to a total of US$63 billion. “Overall, Malaysia issued US$97.1 billion of sukuk last year, accounting for 69.7 per cent of the total,” it said. “As with the global scene, Malaysian sukuk issu­ances have hit a record high………………………………………..Full Article: Source

Hong Kong: One step forward in developing Islamic finance

Posted on 25 February 2013 by Laxman  |  Email|Print

In order to consolidate Hong Kong’s position as an international financial centre and tap the fast growing market of Islamic finance, the HKSAR Government indicated in the 2009/10 Hong Kong Budget that it would work on improving Hong Kong’s regime to facilitate the development of Islamic finance in Hong Kong.
In March 2012, the HKSAR Government launched a two-month public consultation on the proposed legislative amendments to facilitate the development of the Islamic bonds (i.e. sukuk) market in Hong Kong………………………………………..Full Article: Source

Covered Sukuk to offer investors greater security

Posted on 22 February 2013 by Laxman  |  Email|Print

A new type of sukuk, introduced by a British unit of a Kuwaiti firm, could make inroads in the market by offering greater security to investors through a structure similar to conventional covered bonds. Providing recourse to a pool of assets if the originator becomes insolvent, covered bonds found a new lease of life in Europe and the United States during the global financial crisis as investors sought liquid and safe investments.
The structure could now play a role in Islamic finance, if tax and pricing issues can be resolved to the satisfaction of investors. It was used for the first time by London-based Gatehouse Bank, a subsidiary of Kuwaiti firm Securities House, through a private placement in December………………………………….Full Article: Source

Hussein Ibrahim: Islamic bonds innovative Instrument for Egypt economy advancement

Posted on 22 February 2013 by Laxman  |  Email|Print

Egypt legislative is preparing a new law for issuance of Islamic Bonds hailed as an important financial instrument that should attract investment funds to take Egypt well out of its long-standing economic crisis.
Hussein Ibrahim, Freedom and Justice Party (FJP) Secretary-General, said “The Islamic Bonds law – being prepared in cooperation with the Nour Party, Watan Party and many other political parties and economic authorities – is the real beginning of serious attempts to attract huge investments that should contribute to the establishment of a genuine renaissance, as a good alternative to loans………………………………….Full Article: Source

Malaysia banks on reforms to spur Islamic finance growth

Posted on 22 February 2013 by Laxman  |  Email|Print

Regulatory reforms are underway to help Malaysia’s Islamic banking industry expand further, but for government plans to succeed, they will need to be matched by action from some reluctant banks. The government originally aimed for 20 per cent market share for Islamic banks by 2010, but despite double-digit growth in both lending and assets, the sector has fallen shy of this mark.
Islamic banks have added RM111.6 billion in assets over the past two years, bringing their share of total banking assets in Malaysia to 19.6 per cent in December 2012, central bank data shows. Their share of loan business crossed the 20 per cent mark in January 2012, reaching 21.3 per cent last December………………………………….Full Article: Source

Scotland ‘could be Islamic and ethical bank hub’

Posted on 22 February 2013 by Laxman  |  Email|Print

Scotland has the opportunity to become a global “ethical finance hub”, says the expert panel convened in Edinburgh by law firm Tods Murray and the Islamic Finance Council UK. The IFC Ethical Finance Round Table, which has attracted senior representatives from government, financial services, academia and the voluntary sector, aims to “bring together Islamic and ethical banking as the bedrock to a systemically stable and prudent banking sector”.
Islamic finance seeks to avoid the payment of interest on loans, preferring partnership, profit and risk sharing, and it also shuns certain types of investment………………………………….Full Article: Source

Bahrain hangs on as banking hub despite political turmoil

Posted on 22 February 2013 by Laxman  |  Email|Print

When Ahli United Bank, Bahrain’s largest lender by market value, announced this week a rise in profits for 2012, it was more than good news for the bank alone. It was a sign that the island kingdom is surviving as a regional financial center.
Two years after pro-democracy protesters inspired by the Arab Spring uprisings blockaded Bahrain’s financial district, political tensions still weigh on its banking industry. This is deterring some investment and inflows of money, and making it harder for Bahrain to compete with other centers such as Dubai………………………………….Full Article: Source

Dubai could learn from London to build Islamic finance hub

Posted on 21 February 2013 by Laxman  |  Email|Print

Dubai is aiming to become a global capital of the Islamic economy. But, while a great deal of Islamic finance business is done in Dubai and the wider UAE, the industry is very much in its infancy and needs to look to partners in other financial centres to help it to develop.
Malaysia and Indonesia are the obvious world leaders in the field and are already working closely with the growing number of Islamic institutions that have set up in the UAE………………………………….Full Article: Source

Qatar has the most Islamic finance friendly tax systems

Posted on 21 February 2013 by Laxman  |  Email|Print

The Qatar Financial Centre (QFC) has the most Islamic finance friendly tax systems out of eight countries in the MENA region, reviewed in a study conducted by three leading experts, Mohammed Amin, Salah Gueydi and Hafiz Choudhury, and sponsored by Qatar Financial Centre Authority in partnership with the International Tax and Investment Center, based in Washington DC.
The study, Cross Border Taxation of Islamic Finance in the MENA region - Phase One, shows that while simpler Islamic finance transactions can be carried out in some countries without prohibitive tax costs, of the countries reviewed only Turkey and the QFC have a tax system that enables sukuk transactions to be carried out without excessive tax costs………………………………….Full Article: Source

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