IslamicFinance.de

Malaysian financial services firms have an excellent opportunity to play a role in the growth of Islamic finance in the Gulf region, said Mohammed Ayman Al Tajer, director of financial institutions supervision directorate in Bahrain. Vast opportunities in the Gulf are helped by strong economic growth and demand for more sophisticated financial services. There are also opportunities in areas such as insurance and fund management as the financial sector in the Gulf continues to diversify. He added that standardisation remains the key challenge in the industry, as well as lack of trained professionals and scholars and awareness of Islamic finance.

In recent years, international financial centers (IFCs) such as the British Virgin Islands (BVI) and the Cayman Islands (Cayman) have faced unprecedented political and regulatory pressure from governments and international organizations to open up and become more transparent in their business practices. The impression is that these jurisdictions are secret tax havens. However, IFCs are more compliant with international regulatory requirements than they are portrayed to be. The benefits of using an entity incorporated in an IFC are such that they will remain vital components of international structures, even in the face of mounting pressure from onshore governments.

While the Gulf Arab states increased market penetration with Takaful, Malaysia continues to lead the global Takaful industry, said the 2nd Takaful report by consultancy Deloitte released here on Sunday. However, Takaful operators face the problem of over-regulation and resource scarcity. The lack of resources such as qualified staff, missing research capabilities and low demand for life insurance products, in the Middle East in particular, have slowed down the growth of Takaful. Oversupply is another obstacle. In Kuwait alone, there are 30 Takaful operators which means many can't generate sufficient profits simply because the market is too small.

Indonesia's Islamic banks say new rules acknowledging the lower risk of profit-sharing loans will help revive industry growth from the slowest pace on record. The Financial Services Authority (FSA) is introducing reserves ratios that will vary depending on banks’ risk profiles and setting more flexible guidelines for assessing the quality of syariah-compliant assets. While the rules will mean higher ratios for some lenders, the overall impact is positive as loans that use profit-sharing structures will be deemed less risky. Lenders have until 2016 to comply with the new capital-adequacy ratios that will range from eight to 14 per cent.

Muslims in Nigeria have canvassed a good government policy that would promote affordable housing for the citizenry.ome group of Muslim businessmen and other professionals who gathered at the 2014 National Conference organised by The Companion, in Ibadan recently, advised Muslim organizations to join hands in tackling their peculiar challenges and assist members to secure affordable shelters. The gathering resolved that Nigeria’s massive housing deficit may further degenerate until governments and real estate private developers turn their focus to mass housing as a sector priority rather than the present proliferation of luxury estates.

Minister of Economic and Finance Ali Tayebnia called for cooperation of the Islamic Solidarity Fund to remove poverty and unemployment in OIC member states. He made the remarks in the 30th session of the OIC Standing Committee on Economic and Commercial Cooperation General Assembly held in Istanbul, Turkey on November 27. Tayebnia said that OIC member states are facing structural labor market challenges such as low rate of women economic participation, high rate of unemployment among young adults, low rate of efficiency and ability to compete and in this concern an initiative job creation could be as a solution.

Bahrain's Gulf Finance House (GFH) plans to up its stake in Khaleeji Commercial Bank (KCB) to gain majority ownership, its chairman Ahmed al-Mutawa said. The investment firm will increase its stake in KCB to between 52 percent and 54 percent once it has received regulatory approval from the Bahraini authorities. GFH currently owns 47 percent of KCB. Increasing its stake to the range indicated by Mutawa would cost GFH between 2.65 million dinars and 3.72 million dinars ($7.03 million-$9.87 million). KCB and unlisted Bahraini lender Bank Al Khair dropped merger plans in March after they failed to agree terms for the tie-up.

This insight aims to highlight new rules governing the Islamic finance sector in Indonesia and the enhanced role of the National Shariah Board, to set out the current state of the market including opportunities for foreign investment and to trace the roots of the industry in the country with the world’s largest Muslim population. Driven by government influence and foreign investor interest, Islamic finance looks set to become a more meaningful part of Indonesia’s financial industry. The Islamic finance model that is developed in Indonesia is likely to be a hybrid between the Malaysian and Middle Eastern approaches.

Elvira Nabiullina, the chairman of the Central Bank of Russia, stated in the Federation Council that they are exploring the subject of Islamic banking regulation. Previously, the Association of Russian Banks (ARB) offered to issue a different license for Islamic banking. Russian banks note the rising demand for Islamic financial tools.

Bahrain’s role in expanding the global reach of sharia-compliant financing looks set to broaden further through three developments firmed up recently. In July, a joint venture was formed between the kingdom’s Economic Development Board (EDB) and the Islamic Corporation for the Development of the Private Sector (ICD), to promote the sector by offering training, software and sharia-compliant financing. Moreover, a second partnership offering training programmes and research was announced between the UK-based consultancy Islamic Finance Advisory and Assurance Services (IFAAS) and the Bahrain Institute of Banking and Finance (BIBF). Finally, the International Islamic Financial Market (IIFM) is working on a contract template for sukuk, due in early 2015.

Turkey is going to establish an organized industrial zone in the Palestinian city of Jenin in the West Bank, according to a memorandum of understanding co-signed on Wednesday. The memorandum was signed by Turkey's Science, Industry and Technology Minister Fikri Isik, and Palestine's Deputy Prime Minister and National Economy Minister, Mohammed Mostafa. Investors will not pay any taxes. The goods produced in the zone will be able to be exported to world markets including Germany, France, Saudi Arabia and the US without any duties or quotas. Moreover, the businesses will be insured by the World Bank. The goal is to bring the legal framework and corporate capacity in Palestine to international standards.

The private sector arm of the Jeddah-based Islamic Development Bank plans to tap Islamic capital markets to raise as much as $1.2 billion in long-term funds during its current financial year, its chief executive Khaled Al-Aboodi said. The Islamic Corporation for the Development of the Private Sector (ICD) will also explore a capital increase as it expands its economic development activities, with a proposal to be presented to shareholders in June 2015. Fitch Ratings has assigned an AA credit rating to the ICD, which has a low level of leverage but which is expected to grow as the institution increases its lending activities. The ICD will consider both syndicated Islamic loans as well as issuance of sukuk, or Islamic bonds, Al-Aboodi added.

Dubai Trade, the cross-border trade facilitator, has signed an agreement with Noor Takaful that will give Dubai Trade customers access to an Islamic insurer for the first time, and an even wider choice of marine and cargo insurance providers online through its Tradeshield platform. Tradeshield allows customers to complete the end-to-end process of purchasing cargo insurance online through the dedicated website www.tradeshield.ae. Noor Takaful will go live on the site for customers in the New Year.

The International Finance Facility for Immunisation (IFFI), for which the World Bank acts as treasury manager, plans to sell a dollar-denominated Islamic bond on November 27. IFFI will look to sell a three-year sukuk of benchmark size and pay an interest rate between 15 basis points and 17 basis points over Libor. Qatar's Barwa Bank, Malaysia's CIMB , National Bank of Abu Dhabi , the investment banking arm of Saudi Arabia's National Commercial Bank and Standard Chartered are arranging the transaction. IFFI is rated AA by Standard and Poor's and AA+ by Fitch.

FlyDubai's debut Islamic bonds are signalling growing appetite for sukuk from aviation companies in the Gulf as they spend on airports and fleet expansion. The budget carrier raised $500 million this month in the first sale of the debt by a regional airline after Emirates. The issue received bids for more than six times the amount offered. Boeing forecasts Middle East airlines will need more than 2,600 new aircraft over the next 20 years, worth $550 billion. Sukuk is exptected to be part of the financing mix. FlyDubai's five-year sukuk pays a profit rate of 3.776 per cent, or 200 basis points above the five-year mid swap rate.

atuk Seri Abdul Hamidy Abdul Hafiz, the chief executive officer (CEO) of Kuwait Finance House (M) Bhd (KFH), has tendered his resignation. According to officials, the bank’s board had considered Hamidy’s request to resign. Pending approval by Bank Negara on the appointment of a new CEO, KFH said its board had appointed Datuk Mohamad Aslam Khan Gulam Hassan, who is currently the chief recovery officer, as the acting CEO, effective November 27. KFH also said it had appointed Mohammed Nasser Al Fouzan as chairman of the board of directors, effective November 26.

Pakistan raised $1 billion from the international Islamic bond market on Wednesday by selling its Sukuk papers at 6.75 per cent profit rate. The government received a subscription of $2.3bn, which was nearly five times the targeted amount. With the proceeds, the country’s foreign exchange reserves are estimated to touch $14.1bn on Dec 1. And after the disbursement of $1.1bn by the International Monetary Fund (IMF) expected in the second week next month, the country is set to cross the $15bn reserves barrier and will be eligible to benefit from the concessionary development lending window of the World Bank — International Bank for Reconstruction and Development.

"The Oman Islamic Finance 2014: Building on a Strong Start" is written and produced by Thomson Reuters, Islamic Research and Training Institute (IRTI), and the General Council for Islamic Banks and Financial Institutions (CIBAFI). The report provides substantive due diligence on the opportunities for Islamic financial services in Oman.

This report is an annual barometer of the health and development of the Islamic Finance industry worldwide, based on the ICD Thomson Reuters Islamic Finance Development Indicator.

"The Morocco Islamic Finance 2014: Unlocking The kingdom's Potential" is written and produced by Thomson Reuters, Islamic Research and Training Institute (IRTI), and the General Council for Islamic Banks and Financial Institutions (CIBAFI). The report provides substantive due diligence on the opportunities for Islamic financial services in Morocco. There are a lot of expectations of Islamic finance in the Kingdom of Morocco, and the Morocco report breaks these down and presents a forward-looking analysis of potential Islamic banking assets and investment opportunities. The national retail consumer survey indicates Moroccan Islamic banking assets could potentially reach up to 5% of total banking assets by 2018.