IslamicFinance.de

A strategy centre that was tasked to implement a strategy for Dubai to become a global hub for the Islamic economy can report that progress was made on about 75 % of its initiatives to this date.
The Dubai Islamic Economy Development Centre, that was set up in 2013, stated yesterday it had held a board meeting on Tuesday which was attended by Sultan Al ¬Mansouri, the Minister of Economy as well as the chairman of the centre, to discuss these achievements.
The centre identified key sectors for developing three segments of Dubai‘s Islamic economy: Islamic finance, halal products and Islamic lifestyle including culture, art, fashion and family tourism.
The minister said: "Dubai and the UAE are instrumental in raising awareness about the culture of Islamic economy worldwide and boosting global interest in adopting its principles. The Islamic economy ¬strategy adopted by Dubai and the wider UAE is truly unique in its ability to foresee economic changes, offer secure investment options and utilise bonds to finance major projects across the globe."

The latest OECD Programme for International Student Assessment (PISA) test shows that around one in four students are unable to make financial decisions. Some 48,000 15-year-olds took part in the test, which evaluated teenagers' personal finance skills. OECD Secretary-General Angel Gurria said young people often lack the education, training and tools to make informed decisions on financial matters. Beijing had the highest average score, followed by the Flemish Community of Belgium, Canada, the Russian Federation, the Netherlands and Australia. Students who do well in financial literacy are also likely to perform well in the PISA reading and mathematics assessment. The survey also revealed that, on average, 56% of students hold a bank account, but two out of three students do not have the skills to manage an account.

Low oil revenues are prompting the government of Oman to sell $2 billion in Islamic bonds to raise funds for the national budget. The hole in Oman’s national budget will measure 12% of gross domestic product (GDP) this year, though forecasts predict the shortfall will decrease in coming years. Oman is also considering forging public-private partnerships to balance the cost burdens of nationalized industries. The country announced earlier that it would sell stakes in state-owned oil and gas downstream companies, but no concrete action has been taken. S&P Global Ratings lowered the monarchy’s credit rating from BBB- to BB+. As a response, finance minister Darwish Al Balushi said that Oman was confident of its economy and the country's reserves were still in a comfortable position.

The Islamic Development Bank signed an agreement with Jordan to provide the Kingdom with US$100 million in loans and grants. Jordan's Minister of Planning and International Cooperation Imad Fakhoury said that the deal included a US$79 million loan and a US$21 million grant, adding that the amount would be used to finance projects in the field of health. The minister also highlighted pressure on Jordan in various fields of energy, education and infrastructure since the start of the Syrian crisis in 2011. The minister urged all countries to provide further support to Jordan to help it cope with the challenges, noting that such support is vital for Jordan. Between 1975 and 2017, the bank provided Jordan with US$975.6 million in loans and grants to support projects in various fields.

The Islamic Financial Services Board (IFSB) has released the fifth edition of its annual Islamic Financial Services Industry Stability Report 2017. The Report finds that despite subdued growth conditions, the global IFSI has been able to sustain its total assets value at approximately $1.9 trillion in 2016. The Report illustrates areas that could be further strengthened across all sectors of the IFSI (banking, capital markets and Takaful), many of which will require measured efforts by the national authorities to address the emerging risks. Secretary-General of the IFSB, Zahid ur Rehman Khokher, stated that Islamic financial services industry withstood the challenging operating environment. However, it moved away from the double digit growth trajectory witnessed in the previous years. He added that this slowdown underscores the importance of strengthening the resilience of the Islamic financial system.

On the occasion of the Islamic Development Bank Group 42nd annual meeting, the Islamic Corporation for the Development of the Private Sector (ICD) organized a side event entitled ICD Clients Day. During the event, ICD seized the opportunity to meet with potential clients and stakeholders from private sectors. In addition, ICD presented its achievements in 2016 and awarded its Best Clients for 2016, namely Coris Bank International, Vitamed Medical Diagnostic Center and Al-Qadi Specialty Hospital. ICD general manager Khaled Al-Aboodi opened the session welcoming all the participants. Later on, Thomson Reuters presented the last edition of the Islamic Finance Development report. The event was a chance to share knowledge, to assess new opportunities and to network with the decision-makers, industry leaders and experts.

International banking group BNP Paribas, in partnership with startup accelerator Plug and Play, is searching for the brightest minds to develop innovative banking solutions. From June 9 to 11, the bank will host 36-hour hackathons across Berlin, Brussels, Istanbul, Luxembourg, Nanjing, Paris, Rome, San Francisco, Singapore, and Warsaw, open to startups with various fields of expertise. The Singapore hackathon is looking for startups focused on AI chatbots, natural language processing, data aggregation, and analytics. The hackathon will culminate in a pitching event where startups will demonstrate and present their solutions to fintech experts. The winners will get an opportunity to engage in a 5-month co-working phase with BNP Paribas and S$10,000 prize money. At the end of the co-working phase, selected startups will go on a final pitch event in Paris. The final winning team will be announced in December 2017 and will win a cash prize of 10,000 euros.

A total of $453 million worth of infrastructure projects for five member states has been approved by the Islamic Development Bank (IDB). The approval was given ahead of its annual meeting of the Board of Governors on 17-18 May 2017 in Jeddah, Saudi Arabia. IDB also approved three special assistance projects worth $580,000 for Bosnia and Herzegovina, Kenya and Rwanda. The President of IDB, Dr. Bandar Hajjar, underlined the role of infrastructure projects in order to accelerate development activities. He notied that the meeting addressed in detail youth economic empowerment and the significant opportunities created for youth through infrastructure projects.

The government of #Indonesia recently offered retail sukuk to the public to raise funds to help plug a gap in the state budget. From 2008 to 2017, the Indonesian government issued retail sukuk to tap into the country's growing middle class. In 2017, Indonesian retail sukuk became the highest sukuk issuance in the world, with a total value of Rp 31.5 billion (US $2.37 million). Despite its success, the total value of retail sukuk, corporate sukuk and conventional bonds is still considered small compared to the amount needed to finance priority infrastructure development projects. With the lack of a government budget, specified portfolios need to be explored. Green sukuk is a subset of sukuk that finances green assets. As green projects are relatively new in Indonesia, they need time to set up and engage with the nation's development plans.

Fintech has become a buzzword in the Islamic finance industry. Fintech has the potential to play a major role, primarily to improve processes and cost effectiveness while maintaining Sharia compliance. The need for more agile and simpler financial services, the growing usage of mobile devices and the shift towards technological and mobile financial services could underpin growth in the industry. However, there are also challenges. The principal challenge could be the regulatory environment. Regulatory limitations and concerns could hinder the ability of Islamic finance institutions to forge ahead. Fintech has its own cost and integration requirements to consider as well. This could push fintech to the backburner, which in time could turn into a significant hindrance to growth. Regulators and institutions have a significant challenge ahead in balancing the use of new technology to provide better services while controlling new operational risks.

China has become a major financier to the world. Last year its outward direct investment (ODI) totaled $170 billion and the overseas lending from its two policy banks added another $100 billion. One aspect of the overseas financing is China’s "One Belt, One Road" (OBOR) initiative. This is President Xi Jinping’s idea of supporting infrastructure development in countries west and south of China. Beijing is hosting a belt-and-road summit on May 14 and 15, which 28 heads of state will attend. There are two main types of capital outflow that are relevant for OBOR: ODI, and lending by China’s policy banks, China Development Bank (CDB) and the Export-Import Bank of China (EXIM). The top 10 destinations of ODI were: the Cayman Islands, the Virgin Islands, the United States, Singapore, Australia, the Netherlands, the United Kingdom, Russia, Canada, and Indonesia. Of these, only Russia and Indonesia are along the belt and road. China is a very significant funder of infrastructure in the developing world, but it is happening everywhere, not just along the belt and road.

This paper provides a first analysis of the extent to which firms in the Arab region use capital markets to obtain financing and grow. It addresses two questions: First, how many and which firms issue equity, bonds, and syndicated loans in the Arab region? Second, how do these firms perform relative to non-issuing firms? Two main findings emerge from the analysis. Over the last two decades, the amounts raised in equity, bond, and syndicated loan markets have considerably increased. The typical issuing firm is larger, grows faster, is more leveraged, and holds more long-term debt relative to the typical non-issuer. The firm size distribution of issuers lies to the right and shifts more rightwards over time, indicating a divergence in firm size among listed firms.

The Islamic Development Bank (IDB) dedicates special concern for promoting waqf in line with its objective of boosting social and economic development of Islamic nations. The eighth forum on fiqh issues was held in Great Britain, at the Oxford Center for Islamic Studies. Dr. Abdullah Mohammad, IDB's representative of the Islamic Institute for Research and Training stated that IDB has always sought to innovate mechanisms to benefit from the waqf institutions. Dr. Farhan Nethami, the center chair, lauded the Kuwaiti General Secretariat for Aqwaf for promoting waqf in all parts of the world, through funding philanthropic projects. He called for following the example of Kuwait and establishing coordination with non-Muslim communities in the social and economic domains, noting such an approach boosts understanding and mutual respect.

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) will develop a package of standards covering Islamic endowments or awqaf. AAOIFI did not give a time frame for the completion of its awqaf standards, but said its board had discussed and approved specifications regarding the accounting standards. The plans are part of wider industry efforts to modernise awqaf, which receive donations to operate specific social projects, such as mosques, schools and welfare schemes. Most awqaf do not disclose full financial figures, although their underperformance is believed to be considerable. In India, awqaf are estimated to own 490,000 properties but their estimated annual income is just 1.63 billion rupees ($25.22 million.)

Indonesian banks are expected to be cautious boosting credit disbursement because the non-performing loan (NPL) ratio is currently high with the gross NPL ratio hovering above 3% since mid-2016. Banks are now more selective in terms of credit disbursement, but this undermines the pace of the nation's macroeconomic growth. Although Indonesia managed to end the five-year economic slowdown in 2016, it is still far away from Indonesian President Joko Widodo's ambitious 7% GDP growth pledge. In fact, he revised his projection for Indonesia's 2018 GDP growth to 5.6% from a previous projection of a 5.4 - 6.1%. Thus, it should basically be impossible to see a 7% growth rate by 2017.

The secretary general of the IFSB will retire next week, according to a statement. Jaseem Ahmed will step down middle of April after leading the IFSB 6 years.
The process for the selection of a new secretary general has begun. Zahid ur Rehman Khokher acting as interim secretary general.

To meet the SDGs by 2030, more data is needed and collecting it can be time-consuming and expensive. Governments can select the data collection methods and analytical tools that will best help them reach their SDG targets.
Fortunately, there are several approaches to this. Longitudinal data on household expenditure can be a better way of measuring poverty and income inequality in Asia and the Pacific compared to the cross-sectional data analysis currently used across the region. Longitudinal data tracks the same kinds of data over long periods of time. Cross-sectional data is collected from many subjects at a single point in time.

Al Hilal Bank announced appointment of Alex Coelho as new chief executive officer.
With more than two decades of experience in the global financial industry, he will be responsible for reinforcing the Al Hilal Bank’s position as a leading Islamic bank in the UAE and Kazakhstan.
In the past, Coelho had leadership roles between the Middle East and New York, and co-led global financial institutions coverage in the US, Canada, Latin America, Asia and Europe, according to a statement.

A #Kenyan college yesterday signed a three-year memorandum of Understanding (MoU) with Malaysian training university to develop curriculum on Islamic Finance. Coast International College (CIC) also signed a letter of collaboration with the Inceif, the global University for Islamic Finance owned by the Central Bank of Malaysia. The MoU was signed by college principal Loise Gichuki, Inceif president and chief executive Daud Vicary Abdullah. The programme will offer Diploma in Islamic finance. The Malaysia University will provide curriculum, course materials and lectures related to Islamic jurisprudence, Islamic Law of contract, financial accounting and fundamentals of Islamic Banking.

According to panellists speaking at the Finnovasia 2017 Conference, Shariah contracts' greater regulatory complexity can be eased by fintech solutions. Raja Teh Maimunah, CEO of Aminvestment Bank in Kuala Lumpur, stressed that the complex nature of Sharia instruments requires bankers take a different approach. Raja and her bank had wanted to digitise their banking transaction processes by introducing a new type of contract for current and savings accounts. It was eventually addressed with a fintech solution developed by one of her staff. Dato’ Yasmin Mahmood, CEO of Malaysia Digital Economy Corporation, pointed out that the growth of Malaysia’s digital economy currently stands at 17.8% of the country’s total GDP of $296.3 billion, and is expected to meet or exceed the 18.2% target set by the government for 2020.