IslamicFinance.de

Saudi Arabia is joining forces with Japanese telecom firm Softbank (SFTBF) to form a tech investment fund worth as much as $100 billion, making it one of the largest on the planet. Softbank CEO Masayoshi Son said that over the next decade the fund would be the biggest investor in the technology sector. Saudi Arabia's sovereign wealth fund will put up as much as $45 billion of the money, with Softbank throwing in at least $25 billion. Neither partner appears to be deterred by warnings of potential bubbles in the valuations of big startups and established tech companies in the US. Funding for startups has also plunged recently in India. Earlier this year, Saudi Arabia announced an ambitious plan to create a huge sovereign wealth fund that would be worth 7 trillion riyals ($1.9 trillion) by 2030, which would make it by far the biggest in the world.

The Saudi Capital Market Authority (CMA) has been recently accepted as an institutional member of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). The official signing ceremony was held at the CMA’s headquarters in Riyadh on 13 October 2016. The membership agreement was signed by Mohammad Bin Abdulla Al Jadaan, Chairman of CMA, and Hamed Hassan Merah, Secretary General of AAOIFI. Al Jadaan said the CMA was pleased to forge such a professional relationship with AAOFI, as their cooperation had always been successful. They had several joint activities and events, including a major international conference at al-Madinah al-Munawwarah and several training programs on essentials of Islamic finance and economics.

UAE-based telecommunications provider 'du' has been selected by Abu Dhabi Islamic Bank (ADIB) to deliver opex-driven co-location services in the UAE. ADIB will be able to develop its operations with a foundation in secure data centre infrastructure as well as flexible and scalable network options. Fahad Al Hassawi, CEO of du, said the company's Data Centre and Managed Services are designed to enable rapid growth. ADIB will drive new cost-efficiencies while benefiting from infrastructure that is ready to scale and adapt as its business grows. du provides an ecosystem of network infrastructure to give customers easy access to Cloud service providers and markets across the MENA region. du’s data centre services won the best Enterprise Service award at Telecoms World Awards 2016.

In #India Jammu and Kashmir Bank said it was ready to offer Islamic banking, if the Reserve Bank of India approved the move. The bank's newly-appointed chairman Parvez Ahmad said there was a strong demand for such banking service in Kashmir but RBI would need to examine the proposal. RBI has recently suggested to explore the modalities of introducing interest-free banking products in the country in consultation with the government.

The Indonesian Financial Services Authority (OJK) notes that there are currently 71 active fintech startups in the country. These startups provide diverse products and services, including payment gateways, lending, banking services, insurance services, pawn shops, or online financial advisory. This has also led the OJK to pay more attention to the sector, with hopes of developing appropriate regulation. The regulations that will be issued by OJK should not be too rigid, so as to provide a balanced climate. Some regulatory concerns include business licensing, business operation, governance, supervision and inspection, reporting obligations, and equities. All in all, the seriousness of OJK and other relevant parties to provide supportive regulations will hopefully bring strategic action.

According to leading expert on Islamic Finance, Mehmet Asutay, Brexit may have some effect on real estate investments in the UK but London will continue to remain the centre for Islamic investments. Asutay noted that if Islamic finance continues to invest in real estate in the UK, they might find another hub in Europe rather than the UK. He said that having a large amount of liquidity, the Gulf region has contributed to expansion of Islamic financing and he called for expansion of Islamic financing in other developing countries. Professor Asutay said that in Europe, the UK and Luxembourg have been developing strategies to become important centres for Islamic finance. But the UK is also aiming to become an important centre for teaching and learning Islamic Economics and Finance.

The International Islamic Liquidity Management Corporation (IILM) has conducted an auction of US$1.11bil (RM4.63bil) three-month tenor sukuk priced at 1.35389% profit rate. The IILM said the 11 primary dealers that participated in the Sukuk offering were Abu Dhabi Islamic Bank, Al Baraka Turk, Barwa Bank, Boubyan Bank, CIMB Islamic Bank, Kuwait Finance House, Maybank Islamic, National Bank of Abu Dhabi, Qatar Islamic Bank, Qatar National Bank and Standard Chartered Bank. The IILM Sukuk is rated A-1 by Standard & Poor's Rating Services and the 29th series brings the total cumulative amount of the IILM Sukuk that were issued and reissued to US$21.14bil (RM88.14bil).

External Sharia audits are gaining support in Islamic finance as consumers and regulators seek more transparency and accountability. Pressure for more external oversight has been building in several countries that have major Islamic finance industries, and this year Bahrain’s central bank proposed new governance rules that would require Islamic banks there to conduct external Sharia audits. The study, published by the Malaysia-based International Sharia Research Academy for Islamic Finance and Britain’s UK Islamic Finance Council (UKIFC), said external Sharia audits should become mandatory globally. Omar Shaikh, advisory board member of the UKIFC, said external Sharia audit would play an important role towards providing reassurance to scholars, financial institutions and customers. The study suggested that to help national regulators introduce external Sharia audits, the scope of the audits should be made clear, results should be publicly disclosed and there should be conflict resolution mechanisms.

According to Samba Financial Group, GCC sovereigns have raised $87bn in both domestic and international bonds and sukuks since January 2015. The largest international issuance so far is the $9bn offering from Qatar in late May. Abu Dhabi also issued eurobonds worth $5bn in May in both five and 10 year tenors, while Oman issued $2.5bn of bonds in May. The markets are waiting on a Saudi issuance, which Samba thinks will be around $15bn later this year, though the government has already secured a syndicated loan worth $10bn. Corporate international debt issuance is also on the rise, with the majority of offerings coming from financial institutions. Since January 2015, UAE banks have issued $10.9bn in bonds. According to Samba, GCC stock markets suffered large losses at the beginning of the year, owing to the general risk-off sentiment and a further decline in oil prices.

The Dubai Center for Islamic Banking and Finance (DCIBF), a joint initiative of Hamdan Bin Mohammed Smart University (HBMSU) and the Dubai Islamic Economy Development Centre, has formally released its second annual report on Islamic economy. The report titled 'Islamic Banking: Growth, Efficiency and Stability' focuses on the efficiency performance of 131 Islamic banks operating globally and other key aspects of Islamic banking. The Kuwait Finance House (KFH) received the highest efficiency score, followed by Al Inma Bank from Saudi Arabia, which obtained the top score in terms of the most cost-efficient Islamic bank in the world. The top 20 most efficient Islamic banks come from seven countries, including the UAE, Qatar, Malaysia, and Bahrain in addition to Kuwait and Saudi Arabia. Outside the GCC region, it is only Malaysia that made it to the top 20 list. Mansoor Al Awar, HBMSU Chancellor, said the results would positively impact the entire global Islamic economy, as more essential reforms will be implemented to improve competitiveness.

Dubai has announced it is in advanced discussions to set up the Shari'a compliant Emirates Trade Bank which will specialise in international trade and commodity financing. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and chairman of the Executive Council, has nominated a founding committee for the establishment of the bank. Emirates Trade Bank will be the first of its kind global Shari’a compliant bank exclusively offering integrated trade solutions, through mobilising the infrastructure and logistics ecosystem of the UAE. Sami Al Qamzi, vice chairman of the Dubai Islamic Economy Development Centre (DIEDC), said the Emirates Trade Bank is set to reap synergies from Dubai's strategic positioning. On Tuesday, Sheikh Hamdan said Dubai is set to launch ambitious projects as part of a plan to transform the city into the capital of the Islamic economy by 2021.

#Indonesia's state-owned infrastructure financing company Sarana Multi Infrastruktur (SMI) will establish a sharia business unit to meet demand for Islamic infrastructure financing. SMI president Emma Sri Martini said the documentation and legal matters had been completed, but the company had to wait for the appointment of a sharia supervisory board by the government. SMI will inject Rp 500 billion (US$38.42 million) into the business unit. All of the money will come from internal funds. Currently, SMI's assets total Rp 35 trillion. Before year-end, the business unit will structure some sharia products from direct placement to sukuk.

The 'Innovation 4 Impact' Competition took centre stage at the 2016 Global Islamic Economy Summit (GIES 2016) as one of the Summit’s special programs. The competition is organised by Dubai Silicon Oasis Authority (DSOA), and the Dubai Islamic Economy Development Centre (DIEDC), in strategic partnership with Thomson Reuters. Five distinguished finalists from around the world presented a five-minute pitch towards supporting Islamic digital economy, followed by a seven-minute Q&A from a panel of expert judges. The winner, selected through the votes of the jury and the audience, is announced on October 12. The five finalists are: Alem Health, represented by Aschkan Abdul Malek from Singapore; Divine Connect, represented by Mohamed Pazhoor from USA; iGrow, represented by Muhaimin Iqbal from Indonesia; Intuition Intelligence Inc., represented Arif Ansari from USA and Kwn Education, represented by Hala AlTurki from UAE.

The plenary session 'Philanthropy in the Muslim world: Harnessing the abundance of underutilised capital for social development' was held at the Global Islamic Economy Summit in Dubai. Tayeb Al Rais, secretary-general of the Awqaf and Minors Affairs Foundation, highlighted that Waqf was in decline and overlooked in modern Islamic societies. Clare Woodcraft, CEO of Emirates Foundation, said that foundations could benefit from narrowing their focus. Maysa Jalbout, CEO of the Abdulla Al Ghurair Foundation for Education, agreed that focus was key and added that charities and foundations need to be more innovative if they are to maximise impact. Woodcraft said that Western foundations have much to learn from Islamic finance with its focus on ethical investment.

The recent announcement of Abu Dhabi Islamic Bank (ADIB) to enter the #fintech era through a partnership with a digital-only bank is a good example how the times in the banking industry are changing. ADIB partnered with Fidor Bank to launch what it calls the GCC’s first 'community based digital bank', targeting the region’s 'millennials', or 'Generation Y', who are looking for digital banking offerings matching their life- and working style needs. Tirad al-Mahmoud, CEO of ADIB, said the bank's proposition would allow users to completely change the way they bank and manage their finances using digital technology to serve all their banking needs. For every financial transaction there are new digital services in development and the Islamic finance industry will have to follow suit. According to EY consultancy, it is not enough for Islamic banks to introduce new digital channels, they must completely reinvent their customer processes to offer technology-enabled, simple end-to-end experiences.

The third plenary session of the first day of the Global Islamic Economy Summit 2016 examined whether blended finance is the answer to funding sustainable development. The session explored the role of wealthy Muslim governments, sovereign wealth funds and Islamic financial institutions in achieving sustainable development goals within a realistic timeframe. Dr. Mohammed Yousef Al Hashel, Governor of the Central Bank of Kuwait, examined whether the sheer scale of sustainable development goals (SDGs) was responsible for a funding gap, as well as the best ways to address such obstacles. Investments in SDGs are not attractive to investors, he said, adding that the very nature of Islamic economy may offer a solution to these challenges. According to Dr Al Hashel, we need to progress from Shariah-compliant products to a Shariah-based system that doesn’t just mimic traditional banking, but rather innovates and creates new products and solutions.

Dubai Islamic Bank #Pakistan Limited (DIBPL) and 1-Link signed historic agreement for the issuance of PayPak cards in Pakistan. In line with State Bank of Pakistan (SBP) Vision 2020 to enhance and promote Financial Inclusion, 1LINK introduced Pakistan’s First Domestic Payment Scheme 'PayPak' which is aimed to provide efficient, cost-effective, and robust payments solutions. DIBPL remains committed to SBP vision to enhance and promote financial inclusion of unbanked population nationwide. PayPak’s strategic objective includes offering Domestic Payment Scheme to provide low cost payment services to every citizen of Pakistan.

A group of Islamic endowments, or awqaf, and the Dubai government have launched an international organization tasked with improving investments made in the sector. The Awqaf International Organization (AIO) aims to coordinate commercial efforts of sharia-compliant charitable foundations from around the globe. They have amassed huge holdings of real estate, commercial enterprises and other assets, which according to a Dubai government estimate total $1 trillion globally. Management of some awqaf assets has been criticised as inefficient. Now AIO has also been tasked with recommending unified templates for legal frameworks and overseeing applications of sharia standards in accounting, reviewing, and governance, said Husain Benyounis, secretary general of Awqaf New Zealand. The founding members of AIO include awqaf from South Africa, Canada, New Zealand, Australia, the U.S., and the emirates of Dubai and Sharjah.

More than 100 participants participated in the World Bank-Islamic Financial Services Board (IFSB) High-Level Seminar on Islamic Finance and the Sustainable Development Goals (SDGs) on October 6. The Seminar was highlighted by a keynote address by his Royal Highness Muhammadu Sanusi II, the Emir of Kano and former Governor of the Central Bank of Nigeria. The Emir stressed the potential of Islamic finance to mobilise much needed capital to achieve the SDGs. Ms. Arunma Oteh, the Vice President and Treasurer of the World Bank, similarly stressed the importance of Islamic finance as an agent for financial inclusion and for mobilising private investment in infrastructure. The panel discussion examined how countries are increasingly using Islamic finance to support developmental goals, and innovative sukuk structures supporting both physical and social infrastructure.

deVere Mortgages and Al Rayan Bank have announced that they have entered into a strategic partnership to offer Sharia-compliant mortgage alternatives. The alliance follows deVere Mortgages’ reporting of an average 55% increase in mortgage enquiries since the UK’s EU referendum, with the majority of these applications from people living in Qatar, the United Arab Emirates, Saudi Arabia, Kuwait, Bahrain, and Oman. Mike Coady, Managing Director of deVere Mortgages said the tie-up with Al Rayan Bank would add real value to their core market, which is Muslim and non-Muslim buyers based overseas who are looking to purchase property in Britain. Sultan Choudhury, CEO of Al Rayan Bank added that deVere Mortgages would help to reach an even wider group of people who are looking for ethical, Sharia compliant home and property finance.