Latest from GIFC

Saturday, 18 April 2015

Islamic finance & management events in Kuala Lumpur Malaysia



Date: 17-18 March 2015
Event: KL Conference on Islamic Finance
Event site: www.islamic-finance-conference.net
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Date: 21-22 April 2015
Event: KL Conference on Islamic Wealth Management
Event site: www.islamic-wealth-management.net
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Date: 9-10 June 2015
Event: KL Conference on Shariah & Legal Aspects of Islamic Finance 2015
Event site: www.shariah-legal-islamic-finance.blogspot.com
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To register or reserve a seat online, please go to:

Organizer: Alfalah Consulting
www.alfalahconsulting.com

Malaysia's Successful Sukuk Issuance Reflects Its Position As Leading Islamic Finance Hub

KUALA LUMPUR, April 17 (Bernama) -- The success of Malaysia's US$1.5 billion sukuk issuance on Wednesday not only boosted investor sentiment but also reflects the country's position as the world's leading Islamic financial hub.


Affin Hwang Investment Bank Vice-President/Head of Retail Research Datuk Dr Nazri Khan Adam Khan said the bond was sold at a very reasonable rate and was well absorbed by global investors after the last issuance in 2011.

"Despite the 1MDB (1Malaysia Development Bhd) concerns, weakening ringgit and other uncertainties, we were still able to sell the sukuk with a very good yield," he told Bernama today.

The fact that the sukuk was able to attract global investors, particularly from the Middle East has suggested that the government's economic fundamentals remained healthy despite the ringgit trading at around 3.65 against the greenback.

On a possible downgrade, Nazri said it was not a consensus among the three main rating agencies, namely, Moody's Investors Service, S&P Ratings and Fitch Ratings.

Despite saying that Fitch was entitled to its own opinion on a possible downgrade, Nazri hoped it would not materialise as palm oil offtake were improving, the ringgit was strengthening and the government's tax restructuring plan was expected to boost the export sector.

The success of Malaysia's sukuk issuance, after a lapse of almost four years, has drawn positive response from international investors who have reaffirmed their confidence in the country's long-term economic fundamentals.


(Bernama.Com / 17 April 2015)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Babacan promotes Islamic finance in US

Economic risks that arose after the crisis in 2008 were better managed under Islamic finance models when compared to other schemes, as they offered additional financial instruments with shared risks and less uncertainty, Deputy Prime MinisterAli Babacan said in Washington on Friday.


Speaking on the sidelines of annual spring meetings held jointly by the International Monetary Fund (IMF) and the World Bank, Babacan stressed that Islamic finance models are compatible with other financial models used across the world.

Highlighting that Turkey, as the rotating chair of the G20 group, appreciates the virtues of the Islamic finance models, Babacan also pointed to the inclusiveness of these models, referring to the millions of people in Muslim countries who are sensitive to Islamic rules but who avoid entering the global financial system due to a lack of options.

Previewing the G-20 discussions, Babacan told reporters on Thursday that the G-20 countries needed to do more to carry out commitments they made last year to jumpstart growth by investing in infrastructure projects and removing barriers to trade. "Growth is there, but it is weak ... and uneven," he said.

The finance ministers will produce a plan of action to be discussed by US President Barack Obama and other G-20 leaders at a scheduled summit in Turkey in November, as they attempt to boost global economic output by more than $2 trillion over the next five years. These finance officials from the world's major economies are searching for a mix of policies that will bolster a still-weak global recovery, nearly six years after a recession, while confronting a range of new threats from a soaring US dollar to a big drop in oil prices. The financial officials from the group of 20 nations also expressed concerns regarding potential market instability once the US Federal Reserve starts increasing a key interest rate which has been at a record low, near zero, since late 2008.

The discussions were being held among finance ministers and central bank presidents representing traditional economic powers such as the United States, Japan and Germany, as well as emerging countries such as China, India and Brazil. Treasury Secretary Jacob Lew and Federal Reserve Chair Janet Yellen represented the United States at the meetings, which began with a dinner on Thursday night and concluded with a news conference on Friday afternoon. Ali Babacan will sum up the group's discussions.

The G-20 talks came ahead of the spring meetings of the 188-nation IMF and its sister lending organization, the World Bank.
In addition to concerns about boosting global growth, the meetings were also to address issues including a plea for more aid to fight the Ebola outbreak in the West African nations of Liberia, Guinea and Sierra Leone. The presidents of those three nations were scheduled to meet with World Bank President Jim Yong Kim and UN Secretary-General Ban Ki-moon on Friday.

The meetings took place when much of the global economy remains stuck in a prolonged period of sluggish growth following the 2008 financial crisis and a recession that was the worst in seven decades. IMF Managing Director Christine Lagarde told reporters on Thursday: "The good news is that the global recovery continues. The not-so-good news is that growth remains moderate and uneven." She said the goal of this week's talks was to produce a revamped plan of action that will "prevent this new mediocre [growth] from becoming the new reality.”

The IMF's latest economic forecast predicted only modest overall growth and downgraded the prospects for some nations, including the United States, forecasting US growth of just 3.1 percent this year, a half-point lower than its January estimate. The reason: IMF economists believe the sharp rise in the value of the dollar will hurt American companies trying to export goods overseas. Growth prospects in oil-exporting nations are being hurt by the big drop in oil prices over the past year, but those declines are expected to boost prospects in many oil-importing countries.

This week the IMF also raised new concerns that severe volatility in financial markets could be triggered if the Federal Reserve moves, as is widely expected, to start raising interest rates later this year. If the Fed's rate hikes after a prolonged period of ultra-low rates, causing investors to rush for the exits, it could cause stock prices to tumble and interest rates to rise sharply.

(Todays Zaman / 17 April 2015)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Friday, 17 April 2015

Malaysia successfully prices US$1.5bil global sukuk

KUALA LUMPUR: Malaysia has successfully priced US$1 billion of 10-year and US$500 million of 30-year benchmark Trust Certificates  (Sukuk) for a total deal size of US$1.5 billion.


The Ministry of Finance, in a statement, said, the 30-year tranche was the governments inaugural sukuk issuance which is the longest tenured sukuk ever by a sovereign. 

The deal was oversubscribed, attracting an aggregate interest of over US$9 billion from a combined investor base of over 450 accounts, it said.

The 10-year tranche was oversubscribed by almost seven times and the 30-year tranche was oversubscribed by approximately six times.

The sukuk, issued via a special purpose entity, Malaysia Sovereign Sukuk Bhd, employed a structure utilising Shariah-compliant commodities, leasable assets and non-physical income-generating assets (in the form of rights to participate in the provision of services), a world first for a sovereign sukuk. 

The ministry added that the offering marked the country's fourth US dollar-denominated sovereign global sukuk issuance, following its successful global sukuk issuances in 2002, 2010 and 2011.

Proceeds from the offering would be used by Malaysia for Shariah compliant general purposes, specifically for the redemption of 1Malaysia Sukuk Global Bhds US$1.25 billion Trust Certificates due in June 2015, as well as, to finance development expenditures.

"We are delighted to bring this ground-breaking Sukuk to the growing Islamic finance market. We are extremely pleased with the success of this deal and the confidence of the global investors in the Malaysian credit story", said  Treasury Secretary-General Tan Sri Dr Mohd Irwan Serigar Abdullah.

The 10-year tranche was allocated to investors in the Middle-East (24 per cent), Asia (50 per cent), Europe (16 per cent) and the United States (10 per cent), while the 30-year tranche was allocated to investors in the Middle-East (2 per cent), Asia (50 per cent), Europe (19 per cent) and the United States (29 per cent).

The deal was priced at the tighter end of the revised price guidance reflecting investors confidence, strong external position, monetary flexibility, fiscal sustainability, as well as, diversified and competitive Malaysian economy.

The sukuk are expected to be assigned ratings of A- by Standard and Poors Ratings Services and A3 by Moodys Investors Services Limited.

The deal was successfully priced following a global investor road show across key financial centres, comprising Kuala Lumpur, Hong Kong, Singapore, Abu Dhabi, Dubai, London and New York.

CIMB Investment Bank Bhd, The Hongkong and Shanghai Banking Corporation Limited and Standard Chartered Bank acted as the joint bookrunners and joint lead managers for the global Sukuk offering.

(The Star Online / 16 April 2015)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Malaysia exports Islamic Finance Expertise to Drive Russian Islamic Finance Ambitions

A rising domestic Muslim population estimated at 17 million, as well as ambitions to tap alternative sources of investment and funding is driving a Russian push to develop its expertise in Islamic finance.


Recent developments include a draft law supported by Russian banks who lobbied the central bank on allowing Islamic finance institutions to enter the Russian market, as well as a recent agreement between Russia’s National Rating and the Islamic International Rating Agency to jointly rate sharia-compliant products.
To provide a further push Russia is looking to Malaysia to assist and build its knowledge and human capital within the sector. In February a delegation from Malaysia, consisting of representatives of the state corporation MATRADE, a subdivision of the Central Bank of Malaysia for development of Islamic finance IBFIM and one of the leading universities University Tun Adbul Razak visited Russia. The legal and economic environment in Russia was assessed, with a view for the development of a feasibility study for opening Islamic windows and launching Islamic banking products in the Russian Federation.

KAZAN FEDERAL UNIVERSITY AND UNIVERSITY TUN ADBUL RAZAK SIGN AGREEMENT

A more recent development has seen one of the oldest universities in Russia, the Kazan Federal University, located in Kazan, Tatarstan this week sign a Memorandum of Understanding with University Tun Adbul Razak to develop cooperation in the field of Islamic banking law.
A delegation from Malaysia visited several Kazan Federal University units including the Institute of Management, Economics and Finance, and the Faculty of Law.

MALAYSIA EXPORTS ISLAMIC FINANCE EXPERTISE

Malaysia has developed considerable expertise in Islamic finance being a pioneer in modern Islamic Banking boasting the world’s biggest sukuk market. It is looking to export its Islamic finance expertise and its banks have successfully assisted in Singapore and the Hong Kong government to issue sukuk.
A planned 2011 sukuk issuance by the Tatarstan Republic was postponed due to “technical difficulties” Bloomberg reported in 2014, and Vnesheconombank, Russia’s state development bank, is seeking advice from lenders in the Middle East on how to sell its first Islamic bonds, the RIA Novosti state-news service reported Dec. 16.
Malaysia was instrumental in the first sovereign Sukuk in the Russian Commonwealth with the issuance in 2012 of the Development Bank of Kazakhstan sukuk for 240 Million Malaysian Ringgit, which was issued in Malaysia.

(Islamic Finance.Com / 16 April 2015)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Thursday, 16 April 2015

Malaysia: MBSB priority to become full-fledged Islamic bank in 5 years

KUALA LUMPUR: The priority for Malaysia Building Society Bhd (MBSB) in the near term is to continue to close its gap in becoming a full-fledged Islamic bank – something it aspires to achieve in the next five years.


The move from being a non-conventional bank to an Islamic bank is to prepare itself for any potential corporate exercise.
“Any form of corporate exercise of a financial institution will require Bank Negara’s blessing but this is something in the future,” MBSB chief executive officer Datuk Ahmad Zaini Othman told reporters after its AGM yesterday.
He said that any possible merger would require the Employees Provident Fund’s (EPF) approval and laborious study by the board.
Asked if the company was in talks with any other banks to achieve the goal, he said: “Not at this stage.”
But this was up to the major shareholders to push to the regulators should there be something that they thought was worthwhile, he said.
Asked whether MBSB would be merging with an Islamic bank, he said: “It would be, logically.”
It has been previously speculated that Bank Islam Malaysia Bhd was an ideal merger candidate for MBSB that was supposed to be turned into a mega-Islamic bank under a merger exercise that also involved CIMB Group and RHB Capital Bhd.
Currently, about 80% of MBSB’s assets are Islamic assets.
In terms of timeline, Zaini hinted that it could happen this year or next but pointed out that the critical part was to close its gap to being a full-fledged bank that met the regulators’ requirements.
MBSB would align its operations, processes and systems in line with the regulatory framework of the central bank, he said.
“Then, the timeline will just fall in place,” he said.
Zaini also said that becoming an Islamic Bank was part of its business plan.
For the past two years, measures and processes had been put in place so that it ran like a bank, he said.
“It’s a must. If you look at the business environment, we need to transform to move to that new environment,” he said.
Zaini said MBSB had wanted to start the five-year plan earlier but the mega bank merger which involved CIMB Group and RHB Capital proposed in June last year made the management put the the plan on hold. The mega merger was called off in January this year.
He also said the capital requirement for it to move towards that vision had been there.
On whether it would apply for a new banking licence, he said yes, but noted that it would be a longer journey and that there would be more pressure on its major shareholder to get the required capital.
Looking ahead, it aims to grow its loans from 3% last year to between 7% and 8% this year.
Its focus would be on quality loan growth rather from a pure number perspective.
“Last year was a unique year… we were distracted by eight months of hibernation,” he said, referring to the mega deal.
Now, it will “re-activate” its original business plan.
Among the improvements it’s looking at include its continual effort to reduce its non-performing loans to below 3%. It also targets to grow its corporate segment from 12% to 20%.
The shift to emphasise on business financing is to mitigate the decline of its personal financing segment, which has been its bread and butter.
Going forward, it would streamline its resources and could embark on a rightsizing programme involving about 10% of its 1,500-strong workforce.

(The Star Online / 16 April 2015)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

QIIB and QNB Capital in deal to promote Islamic finance in China

QIIB and QNB Capital have joined hands with Southwest Securities (SWSC) to promote Islamic financing and investments in China.


Chinese brokerage Southwest Securities is based in Chongqing, one of the five “listed central cities” in China. Southwest Securities is also Chongqing’s first listed financial institution.

The agreement was signed yesterday in Doha on the sidelines of an event held to formally open the Middle East’s first centre for clearing transactions in the Chinese yuan. QIIB chief executive officer Abdulbasit A al-Shaibei told Gulf Times yesterday the “partnership would help create a framework for Islamic financing” in China. 

Besides helping Southwest Securities to access investor markets in Qatar and the Middle East, the agreement also aims to open the Chinese market for both QIIB and QNB Capital. 
“We are looking to access the Chinese market for financing and investments, either directly or indirectly,” al-Shaibei said. 

He said the agreement was the first one of its kind in both China and Qatar.

Al-Shaibei said there was a “clear appetite” for Islamic financial instruments in China. “Chongqing is among the five top Chinese cities and they are looking to promote Islamic banking not just in the other provinces in China, but beyond their borders to surrounding Asian countries,” he said.

Al-Shaibei said an agreement between the two countries called for Qatari banks’ presence in China.

“As HE the QCB Governor Sheikh Abdulla bin Saud al-Thani mentioned today (Tuesday), the agreement encouraged Qatari banks to have a presence in China.”

He said it was part of “QIIB’s vision to invest in China”.

“We have clearly seen from the Chinese side an interest for Islamic instruments. China is a huge economy and their neighbouring countries in Asia have a huge population of Muslims. Clearly, there are prospects for developing Islamic financing in China and the surrounding countries,” he said. 

“Through this agreement, QIIB and QNB Capital will work together with SWSC to reach the targeted goals and support Chongqing in the development of its economic blueprint to develop Islamic financial instruments,” al-Shaibei said. 

The agreement, the QIIB chief executive officer said, was “open and not time-bound.”
A Reuters dispatch said currently there was very little Islamic finance activity in China, but the country’s population of Muslims was estimated at more than 20mn. The agency said some bankers saw room for the Islamic finance industry to develop in China.

China’s AVIC Capital Co said in late December that its unit AVIC Securities had signed an agreement to advise the government of the country’s Ningxia Hui Autonomous Region, which has a large population of Muslims, on the global issue of up to $1.5bn worth of instruments such as Islamic bonds and US dollar bonds, with maturities of up to five years. Since then, no concrete progress towards an issue has been announced. 

(Gulf Times / 14 April 2015)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Wednesday, 15 April 2015

MBSB plans RM900mil covered sukuk issuance

KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) plans its third issuance of covered sukuk worth RM900mil, according to a regulatory filing by credit rating agency RAM Ratings Bhd.


Covered sukuk are rare in Islamic finance but work in much the same way as conventional covered bonds, where investors are entitled to claims not only on the issuer but also on assets backing the structure, giving them two layers of security.

MBSB has raised a combined RM1.2bil worth of covered sukuk in the past two years, under a RM3bil programme.

The third tranche has a tenor of 10 years and has been assigned a preliminary rating of AA1 by RAM Ratings.

The transaction uses a portfolio of personal-financing receivables, which have a weighted-average tenor of 13 years, to provide the additional security.

MBSB was part of a proposed three-way merger of Malaysian lenders, which was called off in January.

It is aiming to double its corporate loan book by 2020 and has plans to convert itself into a full-fledged Islamic lender.

(The Star Online / 14 April 2015)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Zakat takes the spotlight

Although it predated official development assistance, zakat — the Muslim practice of social giving and one of the pillars of Quran — has only gotten ample attention lately. And it has much to do with the need to find new sources of financing for humanitarian aid and development.


Zakat is equivalent to 2.5 percent of a Muslim’s wealth; this goes to certain categories of people, including the needy, the poor and those in debt.
The role of zakat in financing humanitarian action has taken the spotlight ahead of the World Humanitarian Summit, which is slated for 2016. It’s in fact one of the areas the WHS secretariat is “studying in more detail” and discussing with a range of stakeholders, its chief, Jemilah Mahmood, noted in a gathering in London.
“I wouldn't be at all surprised to see it in the 2016 recommendations,” Chloe Stirk, program adviser for the Global Humanitarian Assistance program of Development Initiatives, told Devex.

MAGNITUDE OF ZAKAT

Stirk authored a recently launched report exploring the magnitude of zakat. Actual numbers on the global volume of zakat can’t be determined but it’s estimated to be in the tens of billions of dollars per year.
“One big takeaway for me is the scope and potential of zakat as a resource, and yet despite it's clearly huge potential, there’s a lack of really credible evidence or data on just how much is raised, collected and how it's being used and where it's being used,” Stirk said.
Stirk and her team were however able to get figures from Indonesia, Malaysia, Qatar, Saudi Arabia and Yemen — where 17 percent of the world’s Muslim population resides — and funds raised through zakat from these countries currently total $5.7 billion each year.
In these countries, the state collects and distributes zakat, and it gets paid for administering the funds. In cases where neither the state nor a governing entity administers zakat, Muslims can choose who to hand funds to, like nonprofits such as the Islamic Relief Worldwide.
(Devex / 10 April 2015)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Tuesday, 14 April 2015

Oman: Bank Nizwa chief executive highlights Islamic banking potential


Bank Nizwa participated in the College of Banking and Financial Studies (CBFS) Symposium, discussing the emerging challenges and future growth of the Islamic banking industry in the Sultanate.

In addition to sitting on a panel discussion on the 'Prospects and Challenges Facing Islamic Banking in Oman', the CEO of Bank Nizwa, Dr Jamil El Jaroudi, delivered the sole presentation of the symposium shedding light on the journey of Islamic banking to date in Oman, its current status and future projections. 

Addressing government policy makers, research scholars, industry professionals and students, El Jaroudi said, "Islamic banking saw  33 per cent and 27 per cent in financing and deposits respectively in 2014 incremental increase of the entire banking sector."

"In order to maintain this momentum, we need to focus on overcoming both internal and industry challenges, including constraints in liquidity management, the lack of standardisation in products and services, the availability of qualified professionals, as well as the limitations posed by the relatively low levels of customer awareness on Islamic banking and the added-value it brings to individuals, local communities and the national economy," he added.

Explaining the banking landscape in Oman, El Jaroudi highlighted the competitive edge that conventional banks enjoy in comparison to Islamic banks, given their well-established networks, brand visibility and operational scales of efficiency.

He further outlined how these propositions support the operations and growth of Islamic windows as they leverage on the existing customer base and infrastructure of their parent organisation; while fully-fledged Islamic banks require time to build their network and promote their products, services and name. 

As of December 2014, the market in Oman includes two full-fledged Islamic banks and six Islamic windows of conventional banks, with a network of 46 branches in total. In light of the recent formation of the High Sharia Supervisory Authority, Dr El Jaroudi highlighted four key areas to consider in order to inspire organic growth within the industry, including products, people, market place and the regulatory environment. 

According to El Jaroudi, the first area focuses on the introduction of products that can compete with their conventional counterparts, such as equity financing, liquidity management and Sukuk. As for people, this area is centred on attracting qualified and experienced professionals and retaining them.

He characterised the market place, as a catalyst for attracting investors to utilise Islamic banking products and services to sustainably grow their businesses. As for the regulatory environment, it emphasises the need to have common ground between Sharia and civil regulations in order to achieve the industry's long-term goals.

Joining Dr El Jaroudi in representing Bank Nizwa during the symposium was Dr Ashraf Al Nabhani, General Manager Corporate Support, who took part in a panel discussion entitled 'Impact of Islamic Finance on Economic Growth'.

The panel also featured Prof. Abbas Mirakhor, a distinguished scholar who is the First Holder of the International Centre for Education in Islamic Finance (INCEIF) Chair of Islamic Finance.

Based in Malaysia, INCEIF is the only university globally dedicated to offering academic and professional qualifications in Islamic finance.

Bank Nizwa's participation in the symposium came as part of its ongoing strategy to continue raising awareness on Islamic banking across the Sultanate. The Bank has been collaborating with CBFS, supporting its program in Islamic banking through workshops for first year students, introducing them to the industry, its impact on the economy and most importantly highlighting available career opportunities.


(Times Of Oman / 13 April 2015)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Monday, 13 April 2015

New liquidity initiatives benefit Bahrain, UAE Islamic banks

Dubai: The recent launch of one-week Sharia-compliant contracts with the central bank will benefit Bahrain’s Islamic banks because they broaden the range of options available for short-term liquidity management, said Bashar Al Natoor, Global Head of Islamic Finance at Fitch Ratings.


In a recent move the UAE Central Bank started accepting a wide range of sukuk as collateral for banks to access its special lending facility from April 1, 2015. “This will help the UAE’s Islamic banks, which often hold these securities,” said Al Natoor.
Bahrain’s one-week facility is based on a wakalah contract, where the regulator invests cash on behalf of the lender.
Most Islamic Bank liquidity management instruments consist of low-profitability assets, such as cash and central bank deposits. Sukuks are primarily offered as over-the-counter instruments and only a limited amount of them are listed on developed and liquid exchanges.
It is widely expected that the implementation of Basel III and its new liquidity coverage ratio LCR will increase offerings of liquidity management instruments while issuers are likely to list more of their sukuk on exchanges and that some regulators will start to accept sukuk as collateral for liquidity provisions.
Bahrain and UAE-based Islamic banks have so far held excess liquidity either in cash or monthly offerings of central bank sukuk, with maturities between three and six months. This placed them at a disadvantage to conventional banks, which have a wide range of interest-earning liquidity management options available.
“Efforts to develop Sharia-compliant liquidity tools are picking up in several Gulf countries, notably Oman. These tools will be important for Islamic banks to boost their competitive positions, all the more so as the pace of growth in Islamic financial services is outstripping conventional banking growth in the region,” said Al Natoor.
Islamic finance is set to expand as large numbers of relatively under-banked Muslims seek banking services in line with economic development in their home countries, and some countries with large Muslim populations seek to invest their wealth in Sharia-compliant instruments.
The UAE’s Islamic banking assets total $100 billion, the fourth-biggest in the world after Iran, Malaysia and Saudi Arabia, according to Dubai government data. Bahrain has $43 billion. In the UAE, the central bank has expanded the list of eligible collateral for its Sharia-compliant overnight facility to include assets other than the regulator’s Islamic certificates of deposit.
“Regulatory and tax limitations could hold back the development of Islamic banking, as could a lack of workable tools that accommodate Sharia rules. Bahrain and the UAE’s introduction of new liquidity management tools marks a small but important step towards overcoming some of these challenges,” he said.
(Gulf News Banking / 13 April 2015)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

AAOIFI and IASB held outreach meeting with international Islamic finance industry

During the outreach meeting, AAOIFI and IASB, the body that develops and issues International Financial Reporting Standards (IFRS), exhanged views with the international Islamic finance industry on issues relating to application of international accounting standards for Islamic finance. The meeting also discussed issued that Islamic financial institutions might need to address in applying IFRS 9Financial Instrument for their financial reporting, if they are required to adopt the same. IFRS 9 is a standard issued by IASB that deals with, amongst others, classification and measurement of financial assets.


The outreach meeting was attended by over 50 participants, comprising senior representatives of AAOIFI, IASB, central banks and regulatory authorities, national accounting standards boards from a number of countries including Saudi Arabia, United Arab Emirates, Indonesia, Malaysia, and Turkey, in addition to financial experts from Islamic financial institutions, accounting and auditing firms, academics and other Islamic finance industry stakeholders from over 15 countries across the major Islamic finance markets.
Dr. Hamed Hassan Merah, Secretary General of AAOIFI, said "the meeting was extremely helpful in strenghthening cooperation between AAOIFI and the IASB towards better understanding of issues relating to accounting standards for the Islamic finance industry. It also reflected the increasing global role of AAOIFI in all areas pertaining to Islamic finance".
In addition to its role in developing standards for the international Islamic finance industry, AAOIFI is also a member of the IASB's Consultative Group on Shariah-Compliant Instruments and Transactions.
(Zawya / 12 April 2015)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Friday, 10 April 2015

A bigger role for zakat in development

Paying alms is one of the Five Pillars of Islam. Adults must regularly give zakat, or alms, if their wealth exceeds a certain amount according to Muslim teachings.

Indonesia, the world’s largest Muslim-majority country, has seen the amount of alms given by its expanding middle class grow in recent years — and the government has been keen to redirect alms from simple charity to improving public services by using the money to finance government programs and development projects.

The National Alms Agency (Baznas), which records the how much money is raised by regional alms agencies (Bazis) and private foundations, has reported that 
Rp 3.2 trillion in alms was collected in 2014, up from Rp 68.4 billion (US$5.3 million) in 2002. 

However, the amount of alms raised last year was equal to only 1.5 percent of a potential Rp 217 trillion that could be raised in Indonesia, according to a report from Baznas, the Bogor Institute of Agriculture (IPB) and the Islamic Development Bank (IDB).

 “Zakat fund [management] and government development programs actually share a similar purpose: to help distribute welfare payment to society,” Baznas executive director Teten Kustiawan told The Jakarta Post in a recent interview. 

Raising more alms will make it easier for government-sanctioned alms agencies (BAZ) and independent zakat foundations (LAZ) to support the government’s economic, education, public health, religious and welfare programs, according to Teten.

According to the 2011 Alms Management Law, Baznas supervises national zakat collection and distribution. The law also stipulates that zakat management must be directly managed by Baznas, licensed mass organizations or legal entities endorsed by Baznas and local authorities. 

If the amount of zakat collected continues to increase, Baznas expects the government to start integrating alms as an alternative source to finance the country’s development program, Teten says, specifically by including zakat as a non-state-budget source in the country’s National Mid-term Development Plan (RPJMN).

The absence of a formal financing model, however, does not prevent alms-management agencies from contributing to government social safety net programs, such as the new national health insurance (JKN) program managed by the Healthcare and Social Security Agency (BPJS Kesehatan).

Several major alms-management agencies, including Baznas and the privately run Dompet Dhuafa (Wallet of the Poor), have helped the BPJS cover premiums for thousands of poor people after validating their identity and eligibility. 

 “After their [BPJS] premiums are covered by zakat funds, these poor people are able to visit BPJS facilities near their homes instead of travelling to our facilities. It will help them save time and money,” Dompet Dhuafa’s Rumah Sehat Terpadu (RST) hospital medical services director Kukun Masykur said.

Located in the West Java city of Bogor, the 100-bed RST hospital was established in 2012 and currently provides free medical services for poor patients.

Separately, while IPB Islamic finance expert Irfan Syauqi Beik said he was optimistic about the potential for using alms to support government’s development programs, he wants Baznas to consolidate the operation of alms-management agencies across the nation to reduce inefficiencies and avoid overlapping distribution programs.

“If necessary, Baznas should merge several smaller alms-management agencies to improve management systems and accelerate zakat funds collection in a particular region,” he said.

Abdul Djamil, the Religious Affairs Ministry’s director general of haj and umrah (minor pilgrimages), was the chairman of the committee choosing candidates for Baznas’ commissioners.

He said that state involvement in national zakat management was “permissible”, if it was in the public interest.

“The simplification of our national zakat management operation will encourage alms agencies to work harder to gain and maintain the trust of both zakat payers and zakat recipients.


(The Jakarta Post / 05 April 2015)
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Thursday, 9 April 2015

A bigger role for zakat in development

Paying alms is one of the Five Pillars of Islam. Adults must regularly give zakat, or alms, if their wealth exceeds a certain amount according to Muslim teachings.

Indonesia, the world’s largest Muslim-majority country, has seen the amount of alms given by its expanding middle class grow in recent years — and the government has been keen to redirect alms from simple charity to improving public services by using the money to finance government programs and development projects.

The National Alms Agency (Baznas), which records the how much money is raised by regional alms agencies (Bazis) and private foundations, has reported that 
Rp 3.2 trillion in alms was collected in 2014, up from Rp 68.4 billion (US$5.3 million) in 2002. 

However, the amount of alms raised last year was equal to only 1.5 percent of a potential Rp 217 trillion that could be raised in Indonesia, according to a report from Baznas, the Bogor Institute of Agriculture (IPB) and the Islamic Development Bank (IDB).

 “Zakat fund [management] and government development programs actually share a similar purpose: to help distribute welfare payment to society,” Baznas executive director Teten Kustiawan told The Jakarta Post in a recent interview. 

Raising more alms will make it easier for government-sanctioned alms agencies (BAZ) and independent zakat foundations (LAZ) to support the government’s economic, education, public health, religious and welfare programs, according to Teten.

According to the 2011 Alms Management Law, Baznas supervises national zakat collection and distribution. The law also stipulates that zakat management must be directly managed by Baznas, licensed mass organizations or legal entities endorsed by Baznas and local authorities. 

If the amount of zakat collected continues to increase, Baznas expects the government to start integrating alms as an alternative source to finance the country’s development program, Teten says, specifically by including zakat as a non-state-budget source in the country’s National Mid-term Development Plan (RPJMN).

The absence of a formal financing model, however, does not prevent alms-management agencies from contributing to government social safety net programs, such as the new national health insurance (JKN) program managed by the Healthcare and Social Security Agency (BPJS Kesehatan).

Several major alms-management agencies, including Baznas and the privately run Dompet Dhuafa (Wallet of the Poor), have helped the BPJS cover premiums for thousands of poor people after validating their identity and eligibility. 

 “After their [BPJS] premiums are covered by zakat funds, these poor people are able to visit BPJS facilities near their homes instead of travelling to our facilities. It will help them save time and money,” Dompet Dhuafa’s Rumah Sehat Terpadu (RST) hospital medical services director Kukun Masykur said.

Located in the West Java city of Bogor, the 100-bed RST hospital was established in 2012 and currently provides free medical services for poor patients.

Separately, while IPB Islamic finance expert Irfan Syauqi Beik said he was optimistic about the potential for using alms to support government’s development programs, he wants Baznas to consolidate the operation of alms-management agencies across the nation to reduce inefficiencies and avoid overlapping distribution programs.

“If necessary, Baznas should merge several smaller alms-management agencies to improve management systems and accelerate zakat funds collection in a particular region,” he said.

Abdul Djamil, the Religious Affairs Ministry’s director general of haj and umrah (minor pilgrimages), was the chairman of the committee choosing candidates for Baznas’ commissioners.

He said that state involvement in national zakat management was “permissible”, if it was in the public interest.

“The simplification of our national zakat management operation will encourage alms agencies to work harder to gain and maintain the trust of both zakat payers and zakat recipients,” Abdul said.

(The Jakarta Post / 05 April 2015)
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