IslamicFinance.de

The launch of MyETF-AGRI, the firm’s second Islamic ETF issued this year, brings the number of Shari’ah compliant ETFs in Malaysia to four and 18 in total in the world.
The global ETF market has closed in on the $3 trillion mark with Shari’ah-compliant ETFs only registering about $320 million of that total. In Malaysia, Shari’ah-compliant ETFs make up of over 30 % of the ETF market.
Malaysia does lead the pack, however, with the most Shari’ah-compliant ETF products in the world. Malaysia’s four Shari’ah-compliant ETFs account for some $75 million or 23 % of the global Shari’ah-Compliant ETF segment.
The launch of this landmark Fund represents many firsts for the industry including being the first agricultural-related Islamic ETF globally and the first sectoral Islamic ETF in the region while reinforcing Malaysia’s position as the global hub for Islamic finance and investment products.
MyETF-AGRI will look to invest in the 30 constituent companies that make up the Thomson Reuters Asia Pacific ex-Japan Islamic Agribusiness Index and in substantially the same weightings as they appear on the benchmark index.

Ten executives from six banking organisations in Korea recently participated in a training course on Islamic finance in collaboration with Qatar Central Bank (QCB). It was intended to enhance the understanding of Islamic finance so that it could be applied in Korea. The trainees had a deeper look at the financial industry in the Middle East, including Qatar, licensing systems, main principles of Islamic finance, basic contracts and case studies on Islamic financial products. They visited Qatar Islamic Bank, Qatar Financial Centre, Qatar Islamic Insurance Company, Barwa Bank, Masraf Al Rayan and others. The training was part of an agreement signed by the Middle East-Korea Financial Co-operation delegation and QCB last January.

The government faces an uphill battle to legislate tax benefits for Islamic bond investors at a parliamentary session starting Friday amid sturdy objections from opposition politicians and churches.
The Finance Ministry is pushing for a bill on Islamic bonds, or sukuk, that would grant tax exemption on profits earned by bondholders in a bid to widen Korea’s access to increasing Middle Eastern oil money.

Many jurisdictions are interested in Islamic finance and have taken initiatives to develop the industry through reviewing their legal framework to facilitate the introduction of a range of Islamic financial products, including more recently France, Ireland, Australia, Jordan, Japan, Hong Kong, Korea and Lebanon.
One of the key determinants for the successful development of Islamic finance in any jurisdiction is the existence of a conducive legal framework that supports the operations and growth of the industry.

Korea is hoping to attract funds from oil-rich Middle East countries by setting up a local Islamic bank in the country, but the effort is still facing many challenges.
Al Amir Bank would be based on the principles of Islamic Shariah law, which bans charging interest on financial transactions.
But the committee has had problems finding Islamic investors, preferably from the Gulf region.
One problem Korea is confronting is that one of the most prominent banks from the Middle East in operation here is Iran’s Bank Mellat, whose operations were recently suspended as part of Korea’s sanctions against Iran for its suspected nuclear weapons program.

Korea's plan to tap into the Islamic finance market faces a setback as a parliamentary committee failed to approve a bill aimed at relieving tax burdens that have virtually blocked local companies from selling Sukuk. It will be discussed, however, in the February session.

According to a Press Release on 9 February, Standard & Poor's Ratings Services said it had assigned its 'A' rating to Export-Import Bank of Korea's (Kexim; foreign currency A/Stable/A-1; local currency --/--/A-1) three-year, Malaysian ringgit (MRY) 220 million, 4.75%, fixed-rate senior unsecured bonds, priced on Feb. 4, 2009. The notes are to be drawn down from a MRY3 billion multi-currency Islamic and conventional medium-term program.

Yoon Ja-young reported on 7 April that Korea regulators plan to revise laws to support banks to reach out to the markets of Islamic countries.
The Financial Services Commission (FSC) plans to revise laws through a revision this year. FSC Chairman Jun Kwang-woo sees bankers requests in this regard very positive. Steps should include opportunities for Sukuk.

Source: http://www.koreatimes.co.kr/www/news/biz/2008/04/123_22065.html