IslamicFinance.de

#Malaysia-based firm HelloGold has received a Syariah-compliant certification for its gold-backed cryptocurrency and plans to launch its online gold platform in Thailand. HelloGold's chief marketing officer Manuel Ho said the cryptocurrency product was named GOLDX and received certification from Amanie Advisors. GOLDX involves the issuance of a token backed by physical gold stored in a Singapore vault and transactions must be completed within a defined time period. Over the past year, the firm has also rolled out a mobile app in Malaysia that is based on blockchain. The mobile app, which allows users to buy and sell physical investment grade gold, was also certified by Amanie Advisors. Manuel Ho added that HelloGold would expand its gold platform into Thailand in coming months, while potentially adding a third market by the end of the year.

Investment Corporation of Dubai (ICD) is seeking to raise a $1 billion loan to refinance its existing debt. The state-owned holding company aims to raise a five-year loan to partly repay a $2.55 billion facility that matures in June. ICD owns stakes in some of Dubai’s biggest companies including Emirates, Emaar Properties and Emirates NBD. The company raised the loan in 2013 and it includes a $875 million facility and a 6.15 billion dirham ($1.7 billion) portion. HSBC Holdings, Citigroup, Standard Chartered, Emirates NBD and Dubai Islamic Bank were among lenders that provided the original loan.

Here’s a round up of recent fintech news from the MENA region. Saudi Arabia’s central bank has signed a deal with Ripple to use distributed ledger technology to settle payments. Dubai Multi Commodities Centre (DMCC) reports that gold trader Regal RA DMCC is the first company in MENA to gain a licence to trade cryptocurrencies. Honeywell launches Middle East industrial cybersecurity center. International Data Corporation reports that MENA spending on blockchain technology will grow to $80 million this year compared to $39 million in 2017. By 2021, regional blockchain spending is expected to reach $307 million. Monami Tech introduces digital payment service, Lendme, while Monetary Authority of Singapore and Central Bank of Egypt forge fintech partnership.

The Securities and Exchange Commission of Pakistan (SECP) introduced three new international auditing and accounting standards. According to the commission, the AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) shariah standards have been notified after a thorough consultative process. The adopted standards include Shariah Standard No 17-Investment Sukuk, Shariah Standard No 18-Possession (Qabd) as well as Shariah Standard No 23-Agency and the Act of an un-commissioned agent (Fodooli). The commission said it has been playing a proactive role in providing an enabling regulatory environment for the growth of Islamic finance in the country.

The next phase of growth in Islamic banking will be driven by differentiation driven by innovation. There has been a remarkable 11% growth in global Islamic banking assets over the last 5 years. The opening up of a regulated Islamic banking market has allowed for banks to serve an untapped segment. Islamic banking drove innovation through a new set products and services that were Shari’ah compliant. In the future, developing a distinctive customer segment such as age groups or focus groups will be critical. A part of the customer base is quite indifferent to the Shari’ah angle, but more sensitive to the overall experience and the value proposition offered. While customer segmentation, product positioning and partnerships are all helpful, the piece that can make a significant impact is the technology-driven innovation, that is the right omni-channel experience for the customer.

According to a survey by Bloomberg Intelligence, the UAE is ranked third in an analysis of Islamic Fintech start-ups. The analysis finds that tailored regulation and clarity on rules could aid the small and medium-sized Fintech outlook. Crowdfunding and peer-to-peer (P2P) financing could be a game-changer in Islamic finance, giving potential to close the gap for small and medium enterprises. The analysis suggests that new opportunities to invest in gold, integrated by Islamic Fintech blockchain technology, may revive its appeal and lift demand. Development of Shariah-complaint, gold-backed products following the introduction of the Shariah Gold Standard, may encourage investors to place their money in gold. The analysis also noted that the Islamic Financial Services Board has predicted that Shariah-complaint assets will expand by 261% compared to the 2015 figure, to represent US$ 6.5 trillion by 2020.

Saudi nationals have been warned against embarking on hazardous investments in cryptocurrencies. According to the Capital Market Authority, there is no monetary oversight inside Saudi Arabia over digital currencies which involve high risks. It warned that digital currencies expose investors to speculative bubbles, loss of capital, fraud, high market volatility, cyber hacking and lack of transparent evaluative regulations. The Capital Market Authority also said that it would be difficult to protect investors as Saudi Arabia has no oversight on the digital currency.

Nearly 5% of the UAE'S population is struggling with depression and it is expats that are hit the hardest. One of the most common side effects of stress incurred by debt was headaches. A study by The Priory Group found that young adults were suffering significantly from aches and pains caused by debt. The cost of buying or renting property, divorce, commuting and holiday costs, childcare, school fees and the rising cost of living generally can easily overwhelm, leaving people stressed out about money. According to psychologist Tanya Dharamshi, debt can arise from impulse control problems that can result in excessive behaviours, such as shopping, especially when it's online. Because there are creditors involved, money issues can exacerbate the symptoms of depression or anxiety. This may lead to alcohol or drug misuse and further abuse of the impulse control problem. Breaking that vicious circle is a major challenge in recovery.

In this interview HE Younis Haji Al Khoori, Undersecretary of the UAE Ministry of Finance (MoF), talks about the country's innovation strategy and fintech environment. Through this strategy, MoF aspires to showcase its innovation projects like the Mohammed bin Rashid Innovation Fund, which grants access to affordable financing solutions. In addition, MoF offers its employees comprehensive skills-building and training programmes. 2017 has seen fintech enter the popular consciousness. The rise of Bitcoin, developments in mobile payment technology and the introduction of Blockchain have pushed the sector’s growth. The UAE can consolidate its leading position in the fintech sector by developing cutting edge business infrastructure and providing accessible funding through funds and incubators.

The Islamic Development Bank (IDB) and the World Bank will engage in public-private partnerships (PPP) for infrastructure development projects. Representatives of both institutions met recently and discussed issues included in IDB’s report "Mobilising Islamic Finance for Infrastructure-Public Private Partnership". IDB spokesperson Dr. Abdul-Hakim Elwaer said these partnerships fall in line with the new development orientations of IDB member countries including Saudi Arabia, whose ambitious 2030 plan is targeting to increase the private sector’s contribution to the GDP from 40-60%. Elwaer added that Saudi Arabia is hoping to achieve these goals by seeking out PPPs and promoting the privatization of government entities.

Indonesian President Joko Widodo (Jokowi) sees great potential in Islamic finance, considering that the country has the largest Muslim population in the world. According to the President, sharia banking assets continued to increase in 2017 and amounted to Rp435 trillion (about US$32.2 billion) or about 5.8% of the total assets of Indonesian banks. In addition, the sharia capital market in Indonesia also continues to improve with sukuk reaching a 19% market share. The government also noted that non-bank Islamic finance industry assets have doubled since 2013. Jokowi explained that the potential of sharia industry and trade can be immediately developed in the Muslim fashion industry, halal food industry, pharmaceutical industry and tourism industry. He urged all people to become the driving force of the sharia economy.

CIMB Group Holdings expects sovereigns to issue 'green' Islamic bonds for the first time this year. CEO Rafe Haneef said about 3 to 5 sovereign sukuk issues are exptected to come to market this year and some of them will be green issuances. Corporates are also eyeing green sukuk issuances. Green bonds are a growing category of fixed-income securities, raising capital for projects with environmental benefits. Rafe says more and more investors are allocating funds for socially responsible investments (SRI) and Islamic bond issuers could benefit from that. He expects the total number of Islamic bond issuances this year to be slightly higher than last year, driven mainly by infrastructure bonds in Southeast Asia. He expects some new issuers to enter the sukuk market, saying state-owned enterprises from the United Arab Emirates and Qatar were possibilities.

Dubai's Ilyas & Mustafa Galadari Group (IMG) is in talks with banks to restructure a 1.2 billion-dirham ($326.7 million) syndicated loan. The group is now looking to upsize its existing loan facility due to cost overruns. The loan taken in 2014 was used for corporate debt and to build the Worlds of Adventure theme park. IMG opened it in August 2016, with a total area in excess of 1.5 million square feet and the capacity to accommodate more than 20,000 visitors every day. According to IMG, the upsizing of the facility was linked to a cost overrun on the pre-opening of the theme park and not due to visitor numbers. However, bankers said one reason for the talks was low footfalls. The company is close to reaching an agreement with creditors and extending the loan maturity. In return, additional covenants would be put in place to allow banks to monitor the company’s financial situation better.

Saudi Arabia is watching the cryptocurrency market closely. According to Mohammed ElKuwaiz, chairman of Saudi Arabia's Capital Markets Authority, the authority is still evaluating the appropriate response and some regulations might be coming soon. However, the regulator comments indicate we should not expect any ban on cryptocurrencies. This is because the local Bitcoin craze has not reached the proportions seen in China or South Korea. There are several cryptocurrency-oriented companies that provide services in the kingdom. Before imposing any regulations, Saudi Arabia would like to see how the new markets behave, so it has left the door open for pilot projects from startups that operate with emerging technologies. Local regulators have initiated a sandbox program to facilitate such activities.

Unicom Formation, which specializes in professional training, is to organise Algeria's first trade fair dedicated to Islamic financing in partnership with the Sahel Chamber of Commerce and Industry and the wilaya of Boumerdes.

According to Luo Nan, China country head at The Principles for Responsible Investment (PRI), the country faces immense challenges in pushing the environmental, social and governance (ESG) programme. Still, ESG is fast becoming a well-known concept. 2016 was a big turning point, when China released the "Guidelines for Establishing the Green Financial System". The China Securities Regulatory Commission has set out a timetable which will require all listed companies to mandatorily disclose environmental information by 2020. There is increased awareness and interest from investors in relation to the Principles for Responsible Investment. There is also an increasing volume of jobs available in China relating to ESG. Luo Nan believes that communication to the public and broader education among investors are key to developing the broad ESG programme in China. Evidence on risk and consequent implications for investors need to be much better developed and communicated.

As international leaders gather for the World Economic Forum Annual Meeting in Davos, the world should be paying more attention to the United Nations Sustainable Development Goal number 17, which is global partnership for sustainable development. First, private wealth managers need to work more closely with the Multilateral Development Banks (MDB) engaged in sustainable development. Second, wealth managers should educate private clients about potential advantages of multilateral development banks. Third, new fixed income benchmarks would encourage higher institutional investment in MDB bonds. Global household wealth is $280tn, according to Credit Suisse. Just a 1% additional investment in the top 10 emerging market development-focused MDBs could increase their amount of outstanding nominal bonds from $1.1tn to $3.9tn.

Pope Francis is urging political and business leaders at the World Economic Forum in Davos to create the conditions for building inclusive, just and supportive societies. In his opinion, we cannot continue to move forward as if the spread of poverty and justice had no cause. Selfish lifestyles full of opulence have boosted unemployment, increased poverty, created new forms of slavery and widened the socio-economic gap in many places. By rejecting "throwaway" culture and a "mentality of indifference," entrepreneurs have the potential to effect substantial changes such as creating new jobs, respecting labor laws, fighting against public and private corruption and promoting social justice.

The Dubai Islamic Economy Development Centre (DIEDC) has enrolled as an observer member of the Responsible Finance & Investment (RFI) Foundation. DIEDC and the RFI Foundation will collaborate towards the common goal of shifting the focus of the financial sector from accumulating wealth to supporting equitable, inclusive, and sustainable growth. As a member, DIEDC gains access to the RFI Foundation’s research and its diverse network. Abdulla Mohammed Al Awar, CEO of DIEDC, said by joining the RFI Foundation, the efforts of the two entities integrate to identify universal principles that guide responsible finance. Blake Goud, CEO of the RFI Foundation, welcomed DIEDC as an observer member. He added that DIEDC was a valuable addition to the RFI Foundation’s member community that includes multilaterals organisations, commercial banks and asset managers.

2018 may prove to be a pivotal year for Islamic finance stakeholders and their approach to FinTech. Potential areas where FinTech is likely to have an impact on Islamic finance are remittances, takaful, investment advisory services and online trading. Commentators see FinTech as an opportunity to provide genuine Islamic-compliant alternatives to the traditional banking model. In December 2017, KFH Bahrain, Al Baraka Banking Group and Bahrain Development Bank announced the establishment of a company dedicated to research and development in the Islamic-compliant FinTech sector. Operated by the Bahraini bank consortium, ALGO Bahrain will open in February 2018 and will be the largest dedicated FinTech hub in the Middle East and Africa. Bahrain FinTech Bay is operated by Singapore-based fintech incubator FinTech Consortium.