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Tuesday, 30 June 2015

Malaysia set to double sukuk sales

Islamic bond sales in Malaysia are set for the best quarter in more than a year as infrastructure firms take advantage of the lowest borrowing costs in 16 months.


State-owned DanaInfra Nasional Bhd. led companies in raising RM17.9 billion since March 31, compared with RM8 billion in the first three months, data compiled by Bloomberg show. The yield on Malaysia’s top-rated 10-year debt sank to 4.59% on June 5, the lowest since February 2014, and was at 4.61% as of June 19.
Sales this year in the world’s biggest sukuk market will probably climb to the highest level since 2012 as Malaysian companies tap a record RM625 billion of Islamic banking assets to fund Prime Minister Datuk Seri Najib Razak’s plans for more railways and roads, according to CIMB Group Holdings Bhd.
The top sukuk arranger in 2014 says companies will bring forward issuance to lock-in low rates before the Federal Reserve raises interest rates.
“The window to sell is between now and the end of the year,” said Badlisyah Abdul Ghani, the Kuala Lumpur-based chief executive officer at the Islamic banking unit of CIMB Group.
“We have a healthy pipeline of companies looking to tap the market this year.”
DanaInfra, formed to finance the country’s MRT project, asked bankers to submit proposals for a RM40 billion Islamic debt programme this month. SapuraKencana Petroleum Bhd plans to sell RM7 billion of such notes.
Najib, who is pushing for higher spending to help Malaysia achieve its goal of attaining developed-nation status by 2020, said in his October budget work will start in 2015 on projects valued at RM75 billion.
This year’s sukuk issuance could surpass RM70 billion, the highest since a record RM109.5 billion in 2012, according to CIMB and and AmInvestment Bank Bhd, Malaysia’s fourth-biggest arranger of Islamic notes.
RHB Capital Bhd., the top arranger this year, expects sales to be similar to last year’s total of RM65.1 billion as a slowing economy prompts companies to review their spending plans.
(The Malaysian Insider / 30 June 2015)
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What happened to Islamic banking in Malta?

In the budget speech, the Government had announced the introduction of Islamic Banking in Malta. A year has nearly passed but there has been no word from Government about this initiative. In the wake of the terrorist attacks in Tunisia, Somalia, Kuwait and France, does our Government still intend to introduce this sort of financing? Does it still see it as beneficial or is it now perceived as a threat? Without any doubt the introduction of Islamic Banking will be a challenge to our young democracy.  

To my knowledge, there was no legislation in this regard, even if, one cannot exclude that it is being quietly carried out by one of the private banks. Introducing formally such a new financial service is going to be a challenge for Malta and this is irrespective of IS terrorists attacks or not. The budget speech lacked information about this financial mechanism, which is highly provocative in structure. No one was expecting details during such a speech, as budgets are there to outline policy. But nothing else was heard, at least, in the open.
Definitely, my assessment about the introduction of Islamic Banking is that should this happen, it is going to be a challenge to both Government and the Opposition. There can be no doubt that the Government looked at the matter from a purely commercial point of view without paying any attention to certain core values. These were simply ignored as is only too often happening these days. But the attacks by ISIS are bringing the issue of core values to the fore again. This is not only relevant to Islam but also to the Western world.
Possibly, the Opposition thought that if it decided to oppose it and question Government, it risked being faced with an accusation of being negative and of hindering Malta’s further expansion as a Financial Centre. One needs to remember that Malta’s development as an International Finance Centre had never been the source of political controversy and the PN received all the support from the then Labour Opposition. At least, this was a point, which both John Dalli and the late Lino Spiteri agreed on.
I am sure that any negative approach by the PN to Islamic Banking once it is implemented would provoke an easy spin for Government to put the PN on an off course. The simple argument would be that if Islamic Banking is acceptable in the UK, then what's wrong with Malta? Well, maybe we ought not to compare Malta with the UK but even the UK is starting to question a number of core values and accommodating policies to Islam.
But do we need to take the UK as a model? One needs only to remember that the Muslim community in the UK is now 4.2% of the population. There are streets in the UK where Sharia law reigns ‘unofficially’ supreme. It has been unceremoniously introduced by Muslim residents. British, non-Muslims and moderate Muslims now fear to enter a number of Muslim areas.
The UK is now starting to debate whether it is time for the introduction of the Islamic inheritance system, which bluntly discriminates against women, and is all in favour of men. In other words, if this is done, the UK will be going back to the Middle Ages, when the feudal system reigned supreme. In Quebec, Muslims are also demanding the introduction of Sharia Law and the secular state is in difficulties not due to principle but as those protesting are being financed by America’s Arab friends.   
On the other hand, should the PN publically endorse Government’s proposal, would it be seen by the rank and file of the Party to be compromising its core values and principles? Perhaps this explains its silence on this issue. It is here, where Government and Opposition need to tread with care but it is about these points that the PN Opposition should be pressing and concentrating. Allow me to explain this by making a few observations.
Currently Malta is seen as one of the top countries in the fight against money laundering and terrorism funding (see for example the Basle AML index). With the introduction of Islamic Banking, the biggest preoccupation would be whether such a position would be negatively affected. Definitely, if Islamic Banking is introduced, we (as a country) must put in place strong safeguards against financing terrorism. Is the Government really ready to take up such a challenge? Has it got the means?
As a Financial Centre and following the introduction of Islamic Banking, does Malta run the risk of being downgraded in the perception of the international community? Perhaps one would argue that England has introduced Islamic Banking and apparently, it remains a world centre of Finance, but the way that Cameron is reacting to migration points to a change of policy. 
My other concern is on the role of the Regulator. I am still at a loss on this. Despite a long Budget Speech, such an essential issue was not tackled by the Minister of Finance. I do not consider that I will be throwing any bad light on the institution if I say that MFSA is far from being prepared for such a proposal. But there again, should MFSA be the Regulator? The recent controversies into which MFSA was dragged in relation to money funds that had gone astray and the answers given by the same MFSA leave much to be desired as well as to the reality of how well equipped and well prepared is such an Authority to act as Regulator. Can this institution guarantee that our good reputation in the banking sector does not go amok thanks to the introduction of Islamic Banking? I have some misgivings on the matter.  
(Malta Independent / 29 June 2015)
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Monday, 29 June 2015

Islamic banking in Uganda

It was not making sense that Ugandans were denied this option to access financing under a different culture.

The most striking thing about strict Islamic banking is the sharing in profit and loss. The customer is never made to feel that they have been victimised in any way.
There is also the Arabic concept of Musharaka and Mudaraba in that the banks share in the risk and future profits of a promising project. This means they stick with you all the way.
I am not saying the western style commercial banks are bad. Simply that in this day and age, having as much options to choose from is good for business people. With Islamic banking, Uganda can now hopefully be of more interest to the larger banking names in the Middle East and Gulf States.
I suspect that there are those who have concerns about Islamic banking due to its roots in the Shari’ah law. It is true that some terms are stricter compared to conventional banking, but this is so that no one is unecessarily penalised. It all boils down to  removing the burden of interest or Riba and reducing uncertainty (Gharar) to promote economic activity. It sounds confusing, it is a worthwhile alternative to explore.
(Business Week / 28 June 2015)
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Iran to raise stake in Islamic finance body as it prepares for possible sanctions relief

Iran plans to raise its stake in the International Islamic Trade Finance Corp (ITFC), becoming its third largest shareholder, as it prepares for a possible easing of sanctions on its foreign trade in exchange for curbing its nuclear programme.


The Jeddah-based ITFC promotes Islamic trade financing, which follows religious principles such as a ban on interest payments. With 56 shareholders including about 31 member countries, it extends direct financing and cooperates with other providers to support sharia-compliant trade.
A bigger role in the ITFC could help Iran rebuild its international trading links if the sanctions are eased. This depends on whether negotiations between Tehran and world powers can reach agreement on its disputed nuclear programme. An agreement looks possible as soon as this week, although both sides say major obstacles remain.
The ITFC's annual general assembly this month approved an increase of Iran's subscription by 8,500 shares, a resolution by the body said. Its annual report says each share is worth $10,000, implying Iran would pay $85 million to lift its stake.
At the end of 2013, Iran's subscription was just $1.92 million, which made it the 22nd largest shareholder in the ITFC, behind Bangladesh and just ahead of Bahrain, according to the latest data on the body's website.
At present, the Islamic Development Bank is the largest shareholder in the ITFC with a stake worth $266 million; Saudi Arabia holds second spot at $120 million. The ITFC has total paid-up capital of $701.9 million.
The ITFC resolution said Iran would increase its stake via three equal and consecutive installments. The first installment is due in six months time, but Iran could opt to pay any or all of the installments before the due date.
Islamic trade finance still serves only a tiny fraction of global trade, partly because Islamic banks are relatively small and lack the expertise and large international networks of mainstream Western banks.
The ITFC approved transactions worth $5.2 billion in 2014, up from $3.4 billion in 2013, with over three-quarters of the money going to finance trade in the energy sector.

Since its inception in 2008, the ITFC has extended $594 million worth of financing approvals for Iran, all of that before 2012, when the sanctions were tightened and effectively froze Tehran out of the global banking system.
(Reuters / 28 June 2015)
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Friday, 26 June 2015

Saudi Arabia's National Commercial Bank raises one billion riyal sukuk

The sukuk will strengthen the bank's capital base in accordance with the Basel III framework, the bank said. It will help the bank to grow while keeping capital adequacy levels healthy, it said.


"The sukuk will also extend the maturity profile of NCB's liabilities while continuing to diversify its sources of funding," NCB said.
The sukuk has no set redemption date, although NCB has the right to call on it at an unnamed predefined date, it said.
Amir Ahmad, a Dubai-based banking expert at Pinsent Masons, the law firm behind Out-Law.com, said: "This issuance shows the depth of liquidity available on the Islamic markets for banks like NCB."
Sources told Reuters that Riyad Bank, Saudi Arabia's fourth-largest lender by assets, has completed a sukuk worth 4 billion riyals which would enhance its Tier 2, or supplementary, capital. 

Saudi British Bank, an associated company of the HSBC group and the kingdom's sixth-largest lender, privately placed a 1.5 billion riyal subordinated Tier 2 sukuk last month, Reuters said.

Islamic banking and finance is projected to exceed $2.5 trillion of assets in 2015as the industry extends its reach into new international markets, according to the Dubai-based AlHuda Centre of Islamic Banking and Economics (CIBE).
(Out-Law.Com / 24 June 2015)
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Islamic finance aviation ‘benchmark’ set by Saudia’s mega-deal

A financier behind a leasing agreement that will see Saudi national airline Saudia almost double its existing fleet - the largest deal ever signed by the carrier - has hailed the contract as a “benchmark” in the history of Islamic aviation financing.


The deal, arranged by two Dubai-based lenders, QuantumnInvestment Bank and Palma Capital, will see Saudia acquiring through Shariah- (Islamic) compliant debt and equity financing 30 Airbus widebody A330-300 jets and 20 Airbus A320-200 narrow-body aircraft, according to a press release.
“This is not only the largest transaction in Saudi Arabian airlines’ history, but in terms of an Islamic aviation deal, this is the largest one in history,” Idriss Ghodbane, CEO of Quantum Investment Bank, told Al Arabiya News.
The deal’s price of $7.7 billion far exceeds the $5.8 billion raised globally since 2006 through Shariah-compliant aviationloans, Bloomberg reported.
“This will set the benchmark. Within the industry, we already started seeing a lot of similar initiatives taking place in the market, of course, people are somehow just discovering Islamic finance in aviation, so we’re proud that we’ve set the path for that,” Ghodbane added.
The deal shows a growing trend of Shariah-compliant financing in the aviation industry. Airbus previously helped establish a fund and the UK has backed an Emirates sukuk (Islamic bond-issuing) from Dubai-based Emirates Airline.
The aviation industry, which is heavily assets-based, is seen as a good fit for Islamic financing, with the deals more easily avoiding banned interest.
The first batch of the new fleet will arrive in the kingdom in less than a year. The carrier will receive 14 new Airbus planes in 2016, 18 in 2017 and 18 in 2018.
But how do these kinds of deals work?
The financier works with both the manufacturer and the carrier, and attempts to add a competitive advantage against other lessors. “It’s really a teamwork between the airline, the manufacturer, and the fund,” said Ghodbane.
In addition to being Saudi’s largest deal, the agreement is an achievement for Ghodbane’s firm, which launched the Shariah-compliant fund last year, had a target only to arrange the leasing of “between 10 to 15” aircraft.
“So now we are at 55, and we’ve just delivered two, so I think this makes it really quite exceptional,” he added.
The deal was one of many finalized during the 2015 Paris Air Show, where Airbus won $57 billion worth of business for a total of 421 aircraft, the aircraft manufacturer said in a press release.
Trailing was arch-rival Boeing, which announced in the same period orders and commitments for a total of 331 aeroplanes, valued at around $50 billion.
(Al-Arabiya News / 24 June 2015)
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Wednesday, 24 June 2015

Use zakat money to promote modern education

MUMBAI: Carrying a small bag in one hand and an umbrella in the other, Maulana Kalimullah Qasmi roams the rain-swept streets of Mumbai. His bag holds several receipt books and a list of past and potential donors of zakat -the 2.5% share of annual savings and rental income that Muslim families give to charity. 


Qasmi is one among hundreds of zakat collectors who visit Mumbai once in a year during Ramzan. The city is home to some of the wealthiest Muslims in the country . "The community isn't doing me any favour. In fact, it's the other way around. Someone who can afford to give zakat but doesn't will be held accountable by Allah," says Qasmi, who collects the money on behalf of a madrassa in Sitamarhi, Bihar. 

One of the five pillars of Islam (other four pillars are shahdah or declaration that God is one and Muhammad is his prophet, namaz, roza or fasting in Ramzan and haj or pilgrimage to Mecca), zakat is meant to help in the economic uplifting of the community. But unorganized collection and under-utilization of the funds have hampered the cause. Nearly 60% of the total zakat money collected in India is reportedly being cornered by madrassas, including fake ones. Now there's a rising clamour within the community to reduce the contribution to Islamic seminaries. There is a demand to instead use the funds to facilitate self-employment and modern education of members.

"Zakat should be aimed at eradicating poverty , not perpetuating it.The same individuals or madrassas keep grabbing a huge chunk of zakat money year after year," says Amir Idrisi, president of Association of Muslim Professionals (AMP). At a meeting held last week on "proper utilization of zakat money", held by AMP, speakers articulated the growing feeling that a substantial portion of the total zakat money goes to madrassa which educate just a fraction of the Muslim population. "The Sachar report said only 4% of the Muslim children go to madrassas. So the community should be really worried about how to educate the 96% who attend schools," said activist Saeed Khan. 

Zakat is considered obligatory for every Muslim who is `sahebe nisaab', one whose annual saving equals not less than the value of 77 gm gold (around Rs 1.92 lakh) or 520 gm silver (Rs 18120). Most Muslims give zakat according to the value of gold, not silver. According to AMP's math, if there are around 18.75 crore Muslims in India and each family has on an average five members, there would be 3.75 crore Muslim families. Out of this, even if 20% are zakat givers, it makes for 75 lakh families. At 2.5% of the minimum eligible annual wealth, the total zakat money would amount to approximately Rs 3,600 crore. However, many experts believe this is a highly "faulty" figure. "The economic condition of Indian Muslims has improved and at least 50% of the Muslim families give zakat. There are many big businessmen who give zakat in crores. The total zakat money would be anything between Rs 45,000 crore to 50,000 crore," says economist Dr Rahmatullah who is familiar with the pattern of zakat and whose organization All India Council of Muslim Upliftment (AICMU) collects and distributes zakat money through its wing called Baitul Zakat (House of Zakat). He also said that an authentic survey of zakat needs to be done. 

Why do madrassas corner a lion's share of all this money? Islamic scholar Maulana Wahiduddin Khan says the trend can be traced to the Quranic verse (9:60) which describes the kind of people eligible to seek zakat.The verse, as translated by Maulana Khan, says: "Alms are only for the poor and the destitute, for those who collect zakat, for conciliating people's hearts, for freeing slaves, for those in debt, for spending for God's cause, and for travellers in need. It is a legal obligation enjoined by God. God is all-knowing and wise." Although the verse does not provide for zakat money to be spent on religious education, those who run madrassas seek the funds in the name of poor children attending the schools, says Khan. 

Collection of zakat and its distribution remain messy as there is no central zakat fund. Former civil servant Zafar Mahmood who established Zakat Foundation of India in 1998 says: "My foundation's main aims include organized collection and institutionalized distribution of zakat. We use zakat fund to run orphanages and educationally empower the Muslim youths." 

Many also question the trend of giving zakat only in the month of Ramzan though it can be given anytime in the year. Since it is believed that every good deed done in Ramzan brings blessings 70 times more than in any other month, most Muslims give zakat in this month. "While it is true that Ramzan brings boundless divine bounties, collection and distribution of zakat should not be confined to just one month," says senior cleric Maulana Shoeb Koti who calls those who seek zakat year after year "professional beggars." "These beggars are a bane and must be discouraged," advocates Maulana Koti. "Once you have taken zakat, you should be zakat giver not seeker." The likes of Maulana Qasmi who travel long distances to collect zakat will disagree.

(Times Of India / 24 June 2015)
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OAB’s Islamic banking arm gets nod for new products

MUSCAT: New products and services that Al Yusr, the Islamic banking arm of Oman Arab Bank (OAB), will launch have been reviewed and approved at the seventh Sharia Supervisory Board (SSB) meeting held recently.


One such key product deliberated at the Sharia board meeting was ‘Al Yusr Running Musharakah product’, a Sharia-compliant solution to cater to business requirements of regular operating and overhead expenses and to fulfil the cash-flow demand of the customers.

As part of the commitment to contribute to the growth of the Islamic banking industry in the Oman, Al Yusr always comes up with innovative and value-added products and services that are being developed, keeping in mind the unique individual and business needs of the people in the Sultanate, said the bank.

In order to ensure full compliance with Sharia, the Sharia Supervisory Board reviewed the ‘Post product implementation’ of Al Yusr products and services to ensure that they are in line with the Sharia rules and principles. The Sharia Board also reviewed and approved the Sharia audit plan for 2015.

The meeting was held at the bank’s corporate office presided over by Dr Essam Al Enezi, head of the Al Yusr Sharia Supervisory Board, and attended by Abdul Qader Shir Al Bulushi, general manager, Al Yusr and other senior officers.

Abdul Qader Shir Al Bulushi, while appreciating the Sharia Supervisory Board members, said that such regular meetings with the Sharia Board scholars who have vast knowledge of Islamic banking and finance, is pivotal in expanding the Islamic banking concepts and knowledge among the management, staff and clients.

Overall, it will create awareness among the public in the Sultanate, he added.

In the past, the Al Yusr Sharia Supervisory Board members have conducted several presentations and seminars on Islamic banking and finance in Muscat and Salalah.

(Times Of Oman / 23 June 2015)
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Tuesday, 23 June 2015

Islamic Finance Gateway Daily Briefing

The Islamic Finance Gateway (IFG) Briefing, published from Sunday to Thursday, carries the latest market-moving news and data for institutions offering Islamic financial services. You can view the full IFG briefing http://tmsnrt.rs/1I8LnSf under IFG Briefings Subject. TOP STORIES World Bank's IFC plans sukuk saleafter Gulf summer

The International Finance Corp (IFC), the World Bank's lender to the private sector, has started work on a return to the market for Islamic bonds, or sukuk, with plans to issue sharia-compliant debt after summer in the Gulf region.
The Islamic Finance Briefings cover all the latest news, data, quotes and industry announcements you need. They also include Islamic Interbank Benchmark Rates, major FX and equity market movements and indicators for all sharia-compliant asset classes. To subscribe to the IFG Briefings use this link: http://online.thomsonreuters.com/ifg To subscribe to the IFG Community, use this link: https://www.zawya.com/zawya-islamic-community We value your feedback, contact us at IFG@thomsonreuters.com (Prepared by Tina Kwan) A service of Thomson Reuters and Zawya Islamic Finance Gateway. The contents of this Briefing are independently compiled by the Thomson Reuters and Zawya Islamic Finance Gateway Service, a business of the Global Growth and Operations Division. While material is drawn from Reuters News and other sources, Reuters has not participated in the selection of these articles.
(Yahoo News / 22 June 2015)
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Monday, 22 June 2015

Government to boost Saudi sukuk issuance

Dubai: A return to debt issuance by the Saudi Arabian government could encourage growth in the country’s corporate sukuk market, according to analysts.


Last year, Saudi Arabia was the second-largest Sukuk issuer with 15 issuances worth $12.1 billion (Dh44.4 billion), yet in terms of value the issuances declined by 20.5 per cent year on year. According to Saudi bank NCB There are few issuances in the pipeline such as the National Shipping Company of Saudi Arabia with an announced value of 3.9 billion Saudi riyals over a 10-year tenor denominated in riyal.
“The economic moderation has largely affected debt markets, however, the possibility of the government resorting to debt to plug the significant fiscal shortfalls can provide a boost to sukuk issuances going forward. On a medium-term note, opening Saudi sukuk to foreign investment similar to the domestic stock market will likely jump-start sukuk trading in the secondary market that is currently negligible,” NCB said in a recent note.
In 2014, sukuk trading amounted to a mere 108.1 million riyals and by the end of the first quarter of 2015 a single deal was done amounting to 213.5 million riyals, a weak showing for a market that has listed issuances worth 25.5 billion riyals.
Analysts see an imminent government borrowing programme could absorb a significant portion of iquidity in the banking system which could eventually apply pressure on their ability to lend to the private sector.
Much of the government debt is likely to be bought by the country’s banks, which would consume some of the plentiful liquidity that has helped make bank lending the primary source of funding for Saudi corporates, rating agency Fitch said in recent note.
Capex programmes
According to the rating agency, even without sovereign issuance lower oil prices may affect banks’ lending appetite, which could reduce the cost difference between loans and sukuk or bonds for issuers.
“We believe corporates will largely maintain their capex programmes and some funding for these plans may therefore move to the sukuk market. Sovereign debt issuance would create another benefit for potential corporate issuers by helping create a pricing benchmark. We believe Saudi corporates are more likely to issue sukuk than bonds because of the wider local investor base for sukuk and because some are restricted to Sharia-compliant borrowing by their own rules,” said Bashar Al Natoor, Global Head of Islamic Finance at Fitch.
Regional and international investors are also increasingly happy to invest in sukuk. This view is supported by the absence of conventional corporate bond issues in Saudi Arabia since 2013, while sukuk issuance was $7.8 billion in 2014.
Another factor that is likely to spur Saudi sukuk issuance in the medium term is the Capital Market Authority’s plan to reform the corporate debt market, including measures to make regulatory approval of debt products easier. Little detail is available, but the authority has reportedly said it will announce an initiative by the end of the year.
(Gulf News Banking / 22 June 2015)
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Digital services offer huge potential for Islamic economy initiatives

Dubai: A growing global Muslim population with a dominant youth demographic, besides high consumption and expenditure patterns coupled with a rising level of technology readiness, are creating a largely untapped need for Digital Islamic services, according to a recent study by Deloitte and Noor Telecom, a Kuwait-based, Sharia-compliant closed-shareholding company, in association with Dubai Islamic Economy Development Centre (DIEDC).


“The Digital Islamic Economy is a key pillar and area of focus for DIEDC and the Islamic world. The report underscores the criticality of building a sound digital infrastructure and ecosystem to foster the development of online services for the Islamic economy,” said Abdullah Mohammad Al Awar, CEO, DIEDC.
The study, a serious effort in studying and assessing the global Digital Islamic Economy points to a wealth of opportunities that could be tapped into by investors, as well as governments and non-profit organisations.
“Technology is arming us with tools that are far more powerful and effective than anything in the past — the impact of which is fully evident in the Muslim community. By observing and following this trend, we have identified a strong need for Digital Islamic Services” said Ayman Al Bannaw, Chairman and CEO, Noor Telecom.
The study builds and expands on Deloitte’s previous report ‘Defining the Digital Services landscape for the Middle East’, which identified digital services under social needs, specifically hobbies, education, health and religion as emerging categories with unique niches for the Arab world. Of these, religion was identified as the category with the greatest prospects that could surge with continued activity and development.
“Although the prospects are noteworthy, our findings reveal that very few Islamic internet platforms have achieved a significant scale. Some verticals are being catered to, but monetisation remains a challenge,” said Santino Saguto, Partner and Technology, Media and Telecommunications Leader, Deloitte Middle East.
Experts say funding remains a key challenge in developing the digital Islamic opportunities. “Currently there are no venture capital funds in the Middle East that specifically target Islamic needs, signifying a huge gap that could and should be filled,” said Saguto.
The study defines the Digital Islamic Services landscape under nine key industry verticals and areas, such as Halal Food, travel, Islamic finance, modest fashion, Islamic art and design, Islamic economy education, Smart Mosques, Islamic media and Islamic standards and certification.
Among these verticals, notably, the Islamic finance industry has made significant progress over the past decades but the sector has still to mature. This is evident when comparing the total asset size per capita of all Islamic banks globally, $750 per capita, against conventional banks in key economies, each larger by a factor of 100 or more. The study estimates that least two decades will be needed to bridge this gap.
Given ample room for growth and development, populous OIC countries — most notably Turkey, Pakistan and Indonesia — are also now emerging as high growth Islamic finance markets. But low asset penetration and GDP per capita in these countries is driving the need for access to digital Islamic funding services, especially those that can open up access to financing for the wider rural population through via micro-financing, crowd funding and mobile payments.
“The report findings indicate that the Islamic online services will continue to proliferate across the Middle East and the world at large over the next few years,” said Dr Hatim Al Tahir, Director, Deloitte Islamic Finance Knowledge Centre in the Middle East. “In some areas we can expect to see the region following global trends whereas in others we will see a unique, homegrown approach. We expect these developments to create interest for global, regional and local players and stakeholders alike.
(Gulf News Banking / 22 June 2015)
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