IslamicFinance.de

Following is a list of events in Malaysia as well as news stories and press reports which may influence financial markets.

Indonesia is seeking to further develop its Islamic banking sector, looking to tap into the growing market for sharia-compliant financial instruments, though it still has some way to go before being able to match the major players in the segment.

Bank Negara Malaysia will host the Second Global Islamic Finance Forum (GIFF 2010) from Oct 25 to 28 with the theme "Islamic Finance: Opportunities for Tomorrow".

The finance ministry is considering a new category of non-banking finance companies (NBFCs) that will offer Islamic banking products in India.

Islamic finance has revitalised the economic ties and strengthened the financial linkages between Asia and the Middle East, says Bank Negara Governor, Tan Sri Dr Zeti Akhtar Aziz.

Islamic financial markets heaved a sigh of relief after dodging the securitisation crisis which hit traditional banks, but the fallout may spark a global regulatory overhaul that could stifle the $1 trillion industry.

Central Bank of Nigeria (CBN) confirmed that the two institutions signed a Memorandum of Understanding (MoU) to share expertise and exchange relevant information in the areas of banking supervision, Small and Medium Enterprises (SMEs), Microfinance and Islamic Finance, Monetary Policy and Development Finance Institutions. The MoU was signed at the headquarters of the Malaysian Central Bank, the Bank Negara in Kuala Lumpur.

Indonesia's finance ministry raised 620 billion rupiah ($68.24 million) in a sukuk auction on Tuesday, well below target, as investors demanded high yields to compensate for a lack of trading liquidity in the paper.

Malaysia's offshore financial center in Labuan i.e. the Labuan Offshore Financial Services Authority (Labuan FSA) has been put in the "white listing" by the Organization for Economic Cooperation and Development (OECD) due to compliance with its standards for transparency and exchange of information between countries. This is a significant contribution of Labuan FSA in supporting the Malaysian government's agenda toward promoting Malaysia as a major hub for international Islamic finance.

Malaysia’s competitive advantage in Islamic finance will strengthen as the country evolves into an international hub for Islamic finance.

Press Release

The report provides investors with an in-depth overview of the various asset classes in Islamic wealth management along with a synopsis of the market scenario during the past 18 months. The report also explores the concept of estate and succession planning, which Sarasin believes is insufficiently addressed in the Islamic finance industry and is a key element of Sarasin’s Islamic wealth management offering. Finally, the report provides an insight into the bank’s economic outlook for 2010.

The key issues and challenges addressed in the report are:

• how Sharia screening reduced the downside in volatile markets and how it affects the finance industry and investors,
• the behaviour of direct real estate investments in comparison with real estate funds and Sharia-compliant real estate investment trusts,
• the income-related role of Sukuk within Islamic balanced portfolios and the probability of defaults,
• a comparison between various Islamic investment funds ranging from income-oriented to commodity, real estate and equity funds,
• the size and future of the Islamic private equity and venture capital industry,
  

On March 1, 2010 after many months of work, ISDA (the International Swaps and Derivatives Association) and IIFM (International Islamic Financial Market) jointly issued the first Shari'ah-compliant master agreement for over-the-counter (OTC) derivatives.[1] Styled the "ISDA / IIFM Ta'Hawwut Master Agreement" (ta'hawwut signifies "hedging" in Arabic), the new template master agreement (the "Ta'Hawwut Agreement") provides a framework for the expansion of derivatives activity in the Middle East, South Asia and many regions throughout the world where hedging is not currently standard practice due to ethical concerns. While based on the 2002 ISDA Master Agreement (the "2002 Master Agreement") and with many terms familiar to participants in swap markets, the Ta'Hawwut Agreement has been developed under the guidance and approval of the IIFM Shari'ah Advisory Panel. The Ta'Hawwut Agreement is therefore expected to be used as a reference for market participants where they or their customers need to hedge risks in line with Shari'ah principles.

For Immediate Release

March 8, 2010–CGAP, Deutsche Bank, Grameen-Jameel and Islamic Development Bank have joined forces to challenge the Islamic microfinance industry to develop new ideas for business models in the Islamic Microfinance Challenge 2010: Innovating Sustainable, Scalable, and Market-Driven Models. Islamic microfinance has gained some traction over the past few years, with a swift rise in the number of institutions offering microfinance products in compliance with Islamic principles. But the fundamental challenge for the Islamic microfinance industry remains meeting client demand with affordable, authentic, profitable, and market-driven products.

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Dr Saad, who presented his working paper during the 2010 International Conference on Islamic Finance at Rizqun International Hotel in Gadong yesterday, explained how Islamic micro-financing could help alleviate poverty by giving a small amount of financing to those who want to start up a business.

The following borrowers are expected to sell Islamic bonds, which use asset returns to pay investors to comply with the religion’s ban on paying interest:

CAGAMAS BHD
LEBANON
WAHA CAPITAL PJSC
KUVEYT TURK KATILIM BANKASI AS
SAUDI ARABIAN OIL CO
LAFARGE MALAYAN CEMENT BHD
QATAR ISLAMIC BANK SAQ
PAKISTAN
TAIBA HOLDING CO
THAILAND
DEVELOPMENT BANK OF KAZAKHSTAN
KHAZANAH NASIONAL BHD

Fitch Ratings has affirmed Abu Dhabi Islamic Bank's (ADIB) rating at 'A+' with a Stable Outlook.

The global economy is facing a deep downturn as a result of the crisis. It was due to excessive
ability to create money and credit for earning increasing profits without creating anything of
value for use by the mankind. The system needs radical change in the approach, principles and
the operation of economic and financial systems. Creation of money, and lending it on interest –
interest based debts and financial obligations leading to undue receivables for the lenders, is
the biggest and primary problem of the conventional system. Islamic principles of finance
provide checks for the factors that have distorted the system. Enhanced supply of risk-related
capital, restricted risk taking, balanced return rate structure based on the real sector economic
activities, and supply of money commensurate with prospects of growth in an economy, provide
a sound basis for sustainable development. Hence, Islamic financial institutions and markets
have better ability to sustain in the hard times. Islamic banking industry should not only have
escaped unharmed during the crisis, it should also have availed the opportunity of developing

The country’s existing Islamic banking players remain unfazed by the upcoming competition in the form of more licences to be issued for world-class Islamic banks and takaful operators. CIMB Islamic Bank Bhd executive director and chief executive officer Badlisyah Abdul Ghani said the move would result in a greater variety of syariah-based financial services and products being offered to the public.

Najib said the 1MDB Foundation would also consider offering scholarships for students wanting to pursue other strategic and important fields like Islamic finance and banking.