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Thursday, 29 August 2013

Oman: Islamic banking to aid local bank growth

Muscat: The opening up of Islamic banking sector is credit positive for the local banks, as expansion into Islamic banking has the potential to strengthen their franchises and diversify revenue generation, said Moody's Investors Service in a new report published yesterday. The industry, however, will still need to manage various challenges to deliver the anticipated growth, added Moody's. 

The rating agency released the report, entitled 'Islamic Banking in Oman: Solid Growth Prospects Moderated by Industry Challenges, yesterday 

"We believe that Islamic banking operations in Oman could capture a 6 per cent to 8 per cent share of system assets within the next three to five years. This share will stem primarily from the 'conversion' of customers from conventional to Islamic banking services," said Khalid Howladar, Senior Credit Officer and co-author of the report.

"The balance will come from Islamic operations capturing a disproportionate share of the anticipated total system annual growth of around 8 per cent to 10 per cent over the next three to five years," added Howladar.

Moody's bases its projections on Oman's solid operating environment, which will increase general credit demand; and the appeal of Islamic banking to a largely Muslim population.
The demand for Islamic banking services has been demonstrated clearly in the other Gulf Cooperation Council (GCC) countries, where Islamic assets currently account for between 15 per cent and 50 per cent of total banking system assets. 

Various challenges
Despite these solid growth prospects, the industry will need to manage various challenges over the next three to five year period to deliver this growth. In particular, Moody's anticipates that Islamic financial institutions (IFIs) will face sizable costs to establish brand new Islamic banking franchises and build operational risk management infrastructures that ensure Sharia-compliance; risks related to the management of potential real-estate concentrations; and constraints in liquidity management given the lack of domestic Islamic instruments. 

Moody's expects that the IFIs will manage to address these challenges over the medium-term and build solid franchises and diversify revenues through the provision of additional services to customers in Oman and regionally. "While we expect that competition will intensify as new Islamic banks come into the market, we do not anticipate any substantial changes in the Omani banking landscape," noted Elena Panayiotou, Assistant Vice President and co-author of the report. "The new Islamic windows of the existing conventional banks will be well-positioned to capture a significant share of the Islamic banking market given their ability to leverage their existing customer bases and infrastructure," explained Panayiotou. 

(Times Of Oman / 27 Aug 2013)

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Emirates Mulls Sukuk for $4.5 Billion in Planes: Islamic Finance

Emirates, the world’s biggest airline by international passenger traffic, is considering the sale of Islamic bonds as it seeks to raise $4.5 billion in the financial year starting April 2014 to pay for planes.
The Dubai-based carrier will need an average of $5.34 billion a year over the next five years, including 2013, to finance 119 aircraft deliveries, Brian Jeffery, senior vice president for corporate treasury, said in an interview at the airline’s headquarters, which overlook Dubai International Airport. Among financing options the company could tap the sukuk or non-Shariah-compliant bond market early next year, he said.
Emirates last sold $1 billion of Islamic bonds in March, before speculation that the U.S. Federal Reserve will reduce its bond purchasing program prompted an emerging-market debt selloff and sent yields higher. The state-owned airline is undergoing a period of rapid growth as its home base Dubai recovers from the 2008 global financial crisis. Passenger traffic through Dubai airport jumped 17 percent in the first half to 32.6 million and hotel occupancy reached 84.6 percent.
The debt market is currently volatile, “and that is not ideal for us, but volatility has not stopped us from issuing bonds in the past,” Jeffery said last week. “I’m pretty confident that, given the brand and the credit story of Emirates, sufficient funding will be available.”

YIELDS RISE

Average yields on global corporate sukuk have risen 46 basis points to 4.62 percent since the Fed said June 19 it might taper its asset-purchase program as early as this year, according to the HSBC/Nasdaq Dubai Corporate US Dollar Sukuk Index. The yield on Emirates’ $1 billion sukuk, which carries a 3.875 percent profit rate, increased 40 basis points, or 0.4 of a percentage point, in the period to 5.1 percent at 4:03 p.m. in Dubai. The so-called amortizing notes have a final maturity date of March 2023 and a weighted average life of five years.
Emirates’ decision on whether to sell bonds will depend “on pricing and an acceptable structure,” Jeffery said. Other options for funding are commercial debt, operating leases and export credits, which are typically restricted to 20 percent of the deliveries, he said.
Cash raised for next year will finance the delivery of 21 aircraft including 10 Airbus SAS A380s, nine Boeing Co. 777-300 ER and two Boeing 777 freighters, Jeffery said.
Emirates is established as a major global carrier, serving 134 destinations in 76 countries. Its fleet of Airbus A380 double-deckers has turned Dubai into an international aviation crossroads, stripping business from veteran carriers such as Air France-KLM Group and Deutsche Lufthansa AG of Germany.

KEEPING ‘AWAKE’

Emirates, which begins its fiscal year on April 1, needed $5.5 billion this year to finance 25 aircraft deliveries, Jeffery said. Of this, it raised $2.9 billion from an enhanced equipment trust certificate issued in June 2013 through Doric, vanilla finance leases and export credits, and pure operating leases for two freighter aircraft. It also issued $750 million in non-Shariah compliant bonds in January.
Of the 25 aircraft, financing for 21 has been arranged. Emirates is now evaluating offers for the remaining four aircraft for U.S. and European export credits, Jeffery said.
“The availability of funding generally, and the factors that influence that, are what keep me awake,” said Jeffery. “If the banks are having their own problems or the bond markets collapse that will affect us.”

IPO

Net income at Emirates soared 34 percent to 3.1 billion dirhams ($845 million) in the last fiscal year. The same year presented the company with its “real test” as it received 35 aircraft and had to raise $7 billion, Jeffery said. On average the airline takes delivery of 24 planes a year.
The carrier’s ability to raise funds proves it has no need for a credit rating, Jeffery said. Emirates boasts a fleet of 201 aircraft and has 192 on order worth more than $71 billion at list prices, according to the airline’s fact sheet.
Jeffery said he is “not too concerned” that runway repairs at Dubai International Airport starting May 2014 would affect the airline’s financing capabilities, and said it is being dealt with at “the commercial and operational level.”
Meanwhile Emirates has no plans for an IPO, as far as Jeffery is aware. The decision rests with the Dubai government, the airline’s owners, he said.
(Bloomberg / 28 Aug 2013)

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Monday, 26 August 2013

Malaysia exposes Shariah scholars to jail for breaches

The Malaysian law that exposes Shariah scholars to jail terms for rule breaches will ensure tighter compliance, in a market where the regulator has already made progress in unifying standards.

Under the Islamic Financial Services Act 2013, which took effect June 30, scholars may be jailed for up to eight years or fined as much as 25mn ringgit ($7.6mn) if they fail to comply with central bank rules. It is the first time Shariah advisers have been expressly made accountable, according to Lee Hishammuddin Allen & Gledhill, a Kuala Lumpur-based law firm.

Malaysia set up a dedicated system in the 1990s to avoid disputes over the financing methods that comply with the Shariah. Goldman Sachs Group was criticised by some advisers in 2011 for not ensuring its debut sukuk, approved by Ireland’s central bank, would be traded at par value as mandated by Islamic law. Some lenders are appointing scholars who don’t have a thorough understanding of financial products due to a shortage of experts, according to consultancy Amanie Advisors in Kuala Lumpur.

“It’s a very good move to stress the accountability of Shariah boards,” Said Bouheraoua, a scholar who advises Affin Islamic Bank Bhd, said in an August 16 interview in Kuala Lumpur. “A doctor who goes against the fundamental rules of medicine is accountable. The same goes for Shariah scholars.”

Religious experts advise companies on whether their products and services comply with Shariah laws. Under Bank Negara Malaysia regulations, a Shariah scholar can only sit on one board for each type of Islamic financial institution, meaning they can only advise one bank or insurer.

In most countries there is no limit to the number of companies an expert can assist. One Syrian scholar was advising 101 financial institutions, standard-setting bodies and other entities, according to a 2011 report by Funds@Work AG, an investment research company based near Frankfurt.

The Malaysian single board rule has led to a shortage of scholars, according to Baiza Bain, the Kuala Lumpur-based managing director at Amanie. Demand for advice has increased as the nation’s Islamic banking assets climbed 6.3% to $162bn in May from the end of last year, figures from the Malaysia International Islamic Financial Centre show.

“What the liability that’s presented by the Act does is to actually put more emphasis on training or retraining of experts,” Baiza said in an interview yesterday. “Financial institutions would have to put a higher standard of care because they know that the Shariah advisers are not going to just sit there and stamp whatever they have produced.”

Worldwide sales of sukuk, which pay returns on assets to comply with Islam’s ban on interest, have declined 35% to $21bn so far in 2013 from the same period in 2012, data compiled by Bloomberg show. Issuance totalled a record $46.5bn for the whole of last year.

Goldman Sachs set up a sukuk programme based on a so-called commodity Murabaha structure, or a cost plus mark-up transaction, that was approved for listing on the Irish Stock Exchange by the Central Bank of Ireland in October 2011. Goldman declined to provide any more details on the debt, it said in an e-mailed response to Bloomberg.

In 2007, BLOM Development Bank of Lebanon signed a contract with Investment Dar Co to place a Wakalah deposit, where capital is raised to acquire assets that are entrusted to an agent. BLOM sued Investment Dar after the Kuwaiti company missed a payment on its deposit. Investment Dar contradicted its own scholars’ assessment and argued the financing from BLOM breached Shariah principles because Dar “was taking deposits at interest,” according to a court document.

The new Malaysian regulation would raise the standard of advice and level of services dispensed by religious experts, according to Mohamad Akram Laldin, a member of the Malaysian central bank’s Shariah Advisory Council.

“People will be more aware of their duties and responsibilities,” Akram said in an August. 15 interview in Kuala Lumpur. “This means that before they sign off on certain things, they will think twice.

(Gulf Times / 24 Aug 2013)

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Malaysia: Bank Islam confident of over 15% growth in profit before tax, zakat

KUALA LUMPUR (Aug 23, 2013): Bank Islam Malaysia Bhd is confident of achieving more than 15% growth in profit before tax and zakat this year from RM600.3 million last year.
Managing director Datuk Seri Zukri Samat said consumer banking would continue to be the main contributor to achieve the target.
"We target 70% of the financing portfolio to be contributed by consumer banking and the balance of 30% from corporate and commercial banking.
"For the first quarter of this year, the bank raked in profit before tax and zakat of RM151.5 million, and looking at the achievement for the first-half year, we can achieve more than 15% growth that has been set," he said to reporters after the handing over of fund sponsorship for mosques in Malaysia here yesterday.
Zukri said the economic growth which is somewhat slow currently and the new guidelines on responsible lending might affect the bank's financing growth.
"For the moment, as far as Bank Islam is concerned, we are still able to achieve the target that we have set, that is, a financing growth of 20%-25% this year, better than last year.
"I think the new guidelines will affect most of the banks but for Bank Islam we have not see the effects and at this juncture, we are still confident that we are able to show respectable financing growth for this year," Zukri said.

(The Sun Daily / 23 Aug 2013)

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PM Najib Launches International Islamic University of Malaysia (IIUM) Islamic City

KUALA LUMPUR, Aug 23 (Bernama) -- Datuk Seri Najib Tun Razak Friday launched the International Islamic University of Malaysia (IIUM) Islamic City which is set to reflect the university's success qualities on a multi-faceted scale.

The prime minister said the Islamic City, with its unique design and functions, would propel the university to be among the global league of premier universities in the 21st century.

"I believe the Islamic City will boost the IIUM efforts to become the central player in recapturing the historical and central role that Islam had once played in all fields of knowledge to benefit all of mankind.

"This city will bear witness to the progress of Malaysia as a modern state that truthfully embodies the values of moderate Islam," he said at the launch of the Islamic City in conjunction with IIUM's 30th anniversary at its Gombak Campus, near Kuala Lumpur.

Also present were IIUM president and advisor to the government on social and cultural affairs, Tan Sri Dr Rais Yatim, and IIUM rector Prof Datuk Seri Dr Zaleha Kamaruddin.

The Islamic City, to be built on 17.6 acres (7.1 hectares) at an estimated cost of RM800 million, would comprise an Islamic Centre, a medical centre, serviced apartments, a convention centre, a hotel, a shopping mall and a food court.

The project, which would use water as its underlying concept, was expected to be fully completed within five to seven years.

Najib said that with the implementation of the contemporary findings of modern architecture through the model of Madinah Al-Munawarah, Damascus, Baghdad and Cordoba, the prism of the Islamic civilisation model would allow the Islamic City to be set as a new benchmark for excellence in Islamic architecture.

The prime minister noted that the innovative city would be built on the basis of endowment, which would provide for government funds to be saved for the new requirements of IIUM to achieve research university status.

"The Islamic City will be a commercial hub for IIUM and I hope that many will generously contribute towards making this project a success," he said.

On IIUM's anniversary, Najib said he hoped that as a premier international Islamic university, it would play its part as a platform for all Islamic leaders to find solutions to problems in the Islamic world.

"I hope IIUM could provide the intellectual basis or intellectual impetus for world Islamic leaders to come together to resolve conflicts in the Islamic world.

"Do not allow other considerations to separate us in efforts to resolve the ummah's problems," he said.


(National news Agency Of Malaysia / 23 Aug 2013)

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Monday, 19 August 2013

Islamic finance courses create a buzz in Malabar

KOZHIKODE: Islamic finance is yet to take roots in the financial landscape of the country, but several Muslim management-run educational institutions in Malabar have gone a step ahead and have started offering specialized courses anticipating huge requirements for qualified personnel to man the future Sharia-compliant finance sector.

Courses on Islamic finance and banking have found many takers in the region ever since the state government set in motion its plan to start an Islamic financing institution two years ago. The growing student interest has been fuelled by hopes that the niche sector would offer job opportunities for those well versed in Riba-free Islamic financial and economic system.

The Sullamussalam Science College at Areekode, affiliated to the Calicut University, has become the first college in the state to offer a three year degree course in BA Islamic Finance from this academic year onwards.

"With the state government itself leading the state's foray into Islamic finance, the sector is bound to throw open numerous employment opportunities for people who can manage Islamic financial institutions," said Prof N V Abdurahiman, manager of Sullamussalam Science College, adding that the proposal submitted by the college for starting the BA course in Islamic Finance was accepted for funding by the UGC under 'innovative programmes for teaching and research in interdisciplinary and emerging areas'.

The course, which is the first formal degree level programme in the state, has seen over 100 applicants for the 25 seats on offer this year. The formal inauguration of the programme is expected soon.

Dr A I Rahmathullah, chairman of the board of studies in Arabic said that the university, in another first, has also approved the proposal for starting an MA Course in Islamic Economics and Finance.

"Already several institutions had approached the varsity to start PG course in the field that prompted the board to consider the programme. We will draft the syllabus and curriculum as soon as we get the nod from the academic council," he said.

Institutions like Al Jamia Al Islamiya, a religious college, at Santhapuram have also been seeing growing interest for its postgraduate diploma in Islamic economics and finance (PGDIEF) course. It also offers IGNOU diploma courses in Islamic banking, Islamic finance and Islamic insurance.

"Already many graduates in the state have got lucrative job offers at MNCs in the Gulf offering sharia-compliant mutual funds and venture capital funds. Now with the sector taking roots in the state, the students can look forward to opportunities at home," said Mohammed Pallath, coordinator of the course at the institution.

The Elijah Institute of Management Studies in Thrissur is also offering a postgraduate diploma course in Islamic banking and management as an add-on course for their MBA students. There are many other institutions in Malappuram and Kozhikode which have recently started offering similar courses sensing the growing interest in the field.

Kozhikode: Islamic finance is yet to take roots in the financial landscape of the country, but several Muslim management run educational institutions in Malabar have gone a step ahead and have started offering specialized courses anticipating huge requirements for qualified personnel to man the future Sharia compliant finance sector.

Courses on Islamic finance and banking have been finding many takers in the region ever since the state government set in motion its plan to start an Islamic financing institution two years back. The growing student interest has been fuelled by hopes that the niche sector would offer job opportunities for those well versed in Riba-free Islamic financial and economic system.

The Sullamussalam Science College at Areacode, affiliated to the Calicut University, has become the first college in the state to offer a three year degree course in BA Islamic Finance from this academic year onwards.

"With the state government itself leading the state's foray into Islamic finance, the sector is bound to throw open numerous employment opportunities for people who can manage Islamic financial institutions," Prof. N V Abdurahiman, Manager of the Sullamussalam Science College.

He said that the proposal submitted by the college for starting BA in Islamic Finance was accepted for funding by the UGC under the 'innovative programmes for teaching and research in interdisciplinary and emerging areas'.

The course, which is the first formal degree level programme in the state, has seen over 100 applicants for the 25 seats which were on offer this year. The formal inauguration of the programme is expected soon.

Dr. A I Rahmathullah, Chairman of the Board of Studies in Arabic at the Calicut University, said that the university, in another first, has also approved the proposal for starting a MA Course in Islamic Economics and Finance

"Already several institutions have approached the varsity with interest to start PG course in the field which prompted the Board of Studies to consider the programme. We will draft the syllabus and curriculum as soon as we get the nod from the Academic Council," he said.

Institutions like Al Jamia Al Islamiya, a religious college, at Santhapuram have also been seeing growing interest for its postgraduate diploma in Islamic economics and finance (PGDIEF) course. It also offers diploma courses of IGNOU in Islamic banking, Islamic finance and Islamic insurance.

"Already many graduates in the state have got lucrative job offers at MNCs in Gulf offering Shariah-compliant mutual funds and venture capital funds. Now with the sector taking roots in the state, the students can look forward to opportunities in the home front as well," Mohammed Pallath, coordinator of the course at the institution said.

The Elijah Institute of Management Studies in Thrissur is also offering a postgraduate diploma course in Islamic banking and management as an add-on course for their MBA students.

There are many other institutions in Malappuram and Kozhikode which have recently started offering similar courses sensing the growing interest in the field.

(The Times Of India / 19 Aug 2013)

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Australia:Embrace halal growth

HALAL foods will constitute one-third of the world's marketplace in 10 years, Agribusiness Gippsland director Brian Norwood says.
Mr Norwood, who is also a halal consultant, discussed the topic at a forum in Warragul last week. 
He said exporters need to secure accreditation now to share in the demand. 
“While Australia’s Muslim population numbers are around 500,000, there are much greater Muslim populations to Australia’s north,” Mr Norwood said. 
He was addressing a forum attended by 30 people and organised by Agribusiness Gippsland and Export Gippsland.
Adam Moore, who runs Traralgon-based company, Baby Royale, which supplies Malaysia with organic baby food, also spoke at the forum. 
Mr Moore explained the process of accreditation, saying it was easier than gaining organic certification. 
He said there were many advantages in doing business with Malaysia. 
“There’s a lot of commonality that makes it easy for us,” he said. 
Mr Moore listed some of the positives which included a lack of tariffs due to the recent Free Trade Agreement, the use of English on packaging and a government keen to lift Malaysia to first-world status, such as Singapore, in 10 years.
He suggested companies intending to export foods to do customer surveys to establish what the marketplace was seeking. 
He also stressed the advantages in joining State Government export trade missions.
Agribusiness Gippsland and Baby Royale, were participants in the recent State Government trade mission to south-east Asia.
The next mission in October, will be visiting China. 
(Weekly Times Now / 19 Aug 2013)

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Saturday, 17 August 2013

India: Islamic banking gets RBI approval

KOCHI: The Kerala government has got the go-ahead from the Reserve Bank of India ( RBI) to launch a financial institution following the principles of Islamic finance.

Cheraman Financial Services Limited (CFSL) will be floated by Kerala State Industrial Development Corporation to function as a non-banking finance company (NBFC).

A formal announcement on CFSL, the latest incarnation of Al Baraka Financial Services, is expected on Saturday. Counting on the state's traditional Gulf links, the previous government had hoped to raise Rs 40,000 crore.

CFSL will have a paid-up capital of about Rs 100 crore but intends to raise about Rs 250 crore as alternative investment fund.

The Shariah-compliant institution will desist from charging interest on loans or give interests on deposits.

It will target sectors like infrastructure, services and manufacturing sectors and keep off taboo areas including liquor, tobacco and gambling or speculation.

Financing start-up projects is one of its pilot programmes. There are also plans to set up a commercial complex in Kannur and operate seaplane services.

"We've received many concept papers. We will select a feasible few to start with," sources said.

(The Times Of India / 17 Aug 2013)

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Bahrain: Sukuk issue a big success

MANAMA: The Central Bank of Bahrain (CBB) has announced that the monthly issue of the short-term Islamic leasing bonds, Sukuk Al Ijara, has been oversubscribed by 270 per cent.
Subscriptions worth BD54 million were received for the BD20m issue, which carries a maturity of 182 days.
The expected return on the issue, which begins today and matures on February 13, is 0.87pc compared with 0.85pc for the previous issue on July 18.
The Sukuk Al Ijara are issued by the CBB on behalf of the Bahrain government.
(Gulf Daily News / 15 Aug 2013)
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Friday, 16 August 2013

Malaysia: Axis REIT issues RM155mil sukuk

KUALA LUMPUR: Axis REIT Sukuk Bhd had on Thursday successfully issued sukuk of RM155mil with a blended annual financing rate of 4.13% and 4.18% per annum for its five-year and seven-year sukuk.
In a Bursa filing, it said the RM155mil sukuk has a total of five tranches, with the first two being rated AAA.
The first tranche of RM70mil would be issued at seven-year tenure while the RM60mil would be issued at five-year tenure.
Axis said the proceed from the second sukuk issue would be used to refinance the fund’s existing financing facilities.
“With this second sukuk issue, Axis Real Estate Investment Trust has successfully increased its weighted average debt maturity to 4.2 years matching the fund’s assets portfolio’s weighted average lease expiry of 4.34 years (by area),” it said.
(Business News / 15 Aug 2013)

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Malaysia Airports plans RM1bil sukuk

KUALA LUMPUR: The operator of Malaysia’s international airport plans to sell RM1bil of Islamic bonds to finance the construction of a budget terminal that’s costing more than initial estimates.
Malaysia Airports Holdings Bhd (MAHB) was considering selling sukuk without a set maturity to ensure its debt didn’t exceed shareholders’ funds, chief financial officer Faizal Mansor said in an interview from Sepang. The perpetual notes are treated as equity rather than debt on a company’s balance sheet.
Completion of the terminal is lagging behind the March 2012 deadline after work began in 2010. It had been delayed several times as plans became more ambitious, Aireen Omar, chief executive officer of AirAsia Bhd, the nation’s biggest low-cost carrier, said in an e-mailed statement in June. The building must be ready by April 30, 2014, acting Transport Minister Datuk Seri Hishammuddin Hussein told reporters on July 5.
“Originally, the cost for the budget terminal was RM3.1bil, and now, it’s estimated at RM4bil,” Faizal said.
The sale was part of a RM2.5bil Islamic bond programme, said two people familiar with the matter, who asked not to be named as the information was private. MAHB had hired HSBC Holdings Plc, Citigroup Inc, Malayan Banking Bhd and CIMB Group Holdings Bhd to arrange the offering, they added.
The company sold RM600mil of sukuk maturing in 2024 in December at a coupon rate of 4.15%. The notes last yielded 4.2%, prices from Bursa Malaysia show. MAHB’s debt totalled RM3.1bil, according to data compiled by Bloomberg.
“Investors may demand a higher yield, given current challenging market conditions and some concerns over the project delay,” said Michael Chang, head of fixed income at MCIS Zurich Insurance Bhd in Kuala Lumpur. “I would only consider buying when I get more details on the repayment profile.”
The debt is rated AAA, the highest investment grade at RAM Rating Services Bhd, the bigger of the country’s two credit assessors.
Sales of syariah-compliant notes from Malaysian companies dropped 64% in 2013 to RM21.8bil from a year earlier, after reaching an unprecedented RM95.8bil in 2012, data compiled showed.
(Business News / 16 Aug 2013)

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Wednesday, 14 August 2013

Zakat is central to Islam’s concept of humanity

Zakat (alms) is one of the five pillars of Islam. Its importance can be realized from the fact that in 82 verses of the Qur’an, Zakat is associated with prayer (Salah), such as: “Establish regular prayer and give Zakat; and obey Allah and His Messenger.” (Qur’an, 33:33)
If social justice and compassion to fellow humans who are disadvantaged is one of the central themes in the message of Allah to humanity, then it is no wonder that Zakat, like prayer and fasting, was also enjoined upon the people of the past messengers: “And We made them (descendants of Abraham) leaders, guiding by Our command, and We sent them inspiration to do good deeds, to establish regular Prayers and to practise Zakat; and they constantly served Us.” (Qur’an, 21:73)
The wisdom of giving Zakat:
It purifies your wealth as Allah Almighty says in the Qur’an: “Take alms from their wealth in order to purify them and sanctify them with it and pray for them.” (Qur’an, 9:103)

It reminds Muslims of the fact that whatever wealth they may possess is due to the blessings of Allah and as such it is to be spent according to the His commands.

Zakat functions as a social security for all. Those who have enough money today pay for what they have. If they need money tomorrow they will get what is necessary to help them live decently. Zakat payer pays his dues to Allah as an act of worship, a token of submission and an acknowledgment of gratitude. The receiver of Zakat receives it as a grant from Allah out of His bounty, a favor for which he is thankful to Allah.

Economically, Zakat is the best check against hoarding. Those who do not invest their wealth but prefer to save or hoard it would see their wealth dwindling year after year due to inflation etc. Zakat helps increase production and stimulates supply because it is a redistribution of income that enhances the demand by putting more real purchasing power in the hands of poor.
It keeps one away from sin and saves the giver from the moral ill arising from the love and greed of wealth.
Through Zakat, the poor are cared for, these include widows, orphans, the disabled, the needy and the destitute.
Zakat is the right of the poor. Zakat is not considered a favor that is given to the poor by the rich. It is the right of the poor on the wealth of the rich. Allah says: “(In their) wealth there is a known share for the beggars and the destitute” (Qur’an, 70:24-25)
Zakat, therefore, is unlike charity that is given to the needy voluntarily. Withholding Zakat is considered depriving the poor of their due share. Thus one who pays Zakat actually “purifies” his wealth by separating from it the portion that belongs to the poor.
Virtues of Zakat:
Allah says in the Qur’an: “The parable of those who spend their wealth in the way of Allah is that of a grain of corn. It grows seven ears and each ear has hundred grains. Allah increases manifold to whom He pleases.” (Qur’an, 2:261) :
The beloved Messenger of Allah (peace be upon him) is reported to have said about Zakat:

• Zakat is a (great and strong) bridge of Islam.
• If a man pays the Zakat due on his property, it causes its evil influence to vanish.

• Gains the pleasure of Allah.

• Increases wealth and protects from losses.

• Causes Allah’s forgiveness and blessings.

• Protection from the wrath of Allah and from a bad death.

• A shelter on the Day of Judgment.

• Security from seventy misfortunes.

Alqamah (may Allah be pleased with him) says that when a group of people visited the Prophet (peace be upon him) he said to them, “Verily you can make your Islam perfect by your payment of the Zakat due on your property.”

The Prophet (peace be upon him) said, “He who observes three things will taste the sweetness of Iman (faith): One who worships Allah alone and believes (from his heart) that there is no one to be worshipped but Allah and one who pays the Zakat on his property, willingly, every year. In Zakat on the animals, one should not give an aged animal or one suffering from itch or any other ailment, or an inferior one, but should give animals of average quality. Allah Almighty does not demand from you the best of your animals, nor does He command you to give animals of the worst quality.”

Do I have to give Zakat?
Zakat is obligatory on an adult sane Muslim who has wealth that reaches or exceeds a certain level called the nisab for a lunar year. (You may contact your local scholars about the exact amount of nisab in your local currency). Unlike tax, however, Zakat is an act of worship for which one receives reward from Allah Almighty.

Ignoring to pay Zakat, on the other hand, is a major sin.
How much do I have to give?

If you are in possession of money, gold, silver, stock in trade or shares that amount to more than the value of nisab (at current market rates) then you are obliged to pay Zakat. What amounts are owed by you should be deducted from the capital amount before Zakat is calculated. The rate of Zakat is 2.5%.

The Prophet (peace be upon him said: “The upper hand is better than the lower hand (i.e. he who gives in charity is better than him who takes it).” (Bukhari)

(Arab News / 14 Aug 2013)

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Malaysia: Kokitab To Invest RM6 Million In Two Islamic Pawnbroking Shops In Dungun, Kemaman

KUALA TERENGGANU, Aug 13 (Bernama) -- Koperasi Kakitangan Kerajaan Terengganu Berhad (Kokitab) will invest RM6 million to open two Islamic pawnbroking shops in Dungun and Kemaman, its Chairman Alias Mustafa said today.

He said they are now looking for strategically-located buildings to open the shops.

"We will be actively engaged in Islamic pawnbroking business as it is a profitable business. It is also a new source of revenue for us besides existing projects," he told Bernama.

Alias said Kokitab has been operating an Islamic pawnbroking shop in Kuala Terengganu town since last year and the outlet has been making good profit since the first year.

He said RM3 million was invested in that shop and the investment has benefited some 10,000 Kokitab members and non-members, particularly petty traders.

"Islamic pawnbroking business received good response from the people as the interest charged was very low vis-a-vis the conventional system," he said.

Alias said Kokitab was also actively involved in the property sector to build shophouses and residential homes for its members.

"If anyone wants to sell land, they can contact us. We will see the land and buy it if it is commercially viable to be developed," he said.

Currently, Kokitab has five units of four-storey buildings worth about RM4 million and the latest building to be built will be in Gong Badak.

"We will build eight units of four-storey buildings costing RM8 million," he said.

The buildings would be built early next year and would be sold at RM1.5 million a unit, he said.

Alias also said Kokitab made RM1.8 million profit last year, the highest in 10 years.

Of the total, RM1.2 million was paid out as dividend to members a week before the May 5 general election.


(National News Agency Of Malaysia / 13 Aug 2013)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
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India: Rahman Khan urges Rahul to bring Islamic banking on 2014 agenda

NEW DELHI: Making perhaps the strongest-ever pitch for the introduction of Islamic banking , minority affairs minister Rahman Khan has told the Congress leadership that Muslims were increasingly viewing Centre's continuing resistance to the introduction of Shariah-compliant banking as interference in the affairs of the community. 

The minister said interest-free banking, better known as Islamic banking, would prove to be a boon by mobilizing vast capital from Muslims that can be used for welfare activities of the community while helping them to practice the religion as laid down by the tenets of Islam

Khan's request to Congress vice-president Rahul Gandhi, as part of welfare proposals to woo Muslims, marks a renewed as well as , possibly the strongest bid to lift the bar on Islamic banking that has riled community principals for some time. 
The RBI had earlier said that Islamic banking would require amendment to banking regulations since not charging or paying interest would violate present norms. 

Khan argued that Islamic banking could be done within the constitutional framework, with government needed to set up a separate "regulatory authority" to bring the proposal to life. 

Congress appears unlikely to accept the request but the lobbying is significant. Khan has called it part of future vision to renew the confidence of the key social group in the ruling party. He has flagged three steps - Islamic banking, mechanism to review terror cases against Muslim youth and making scholarships open-ended - as "new ideas" to woo Muslims. 

Adding urgency to the proposals, Khan suggested they be executed before the 2014 elections. 

Sources said Khan has submitted a detailed note to Rahul in which he suggested measures to step up the party's post-Sachar Muslim welfare agenda. The suggestions are his feedback from interaction with Muslim leaders, intellectuals and social activists, he said. 

According to the minister, Islam prohibits receipt or payment of interest, a reason why many countries have initiated financial institutions based on Shariah principles. He said while India has the second largest Muslim population in the world and guarantees freedom of religion, the bar on Islamic banking curtails this freedom for Muslims. 

"This (Islamic banking) will enable Muslims of India to invest their savings in accordance with their religious faith and the savings invested in such an institution will help in the economic development of the Muslim community in the country," the proposal said. 

(The Times Of India / 13 Aug 2013)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
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