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Analysts expect to see some consolidation in Malaysia's takaful sector as a result of the Financial Services Act and the Islamic Financial Services Act. Under the new rules, composite insurers and takaful players are required to operate their life and nonlife units under separate licenses and have until 2018 to meet the requirement. Industry observers said that those affected should start looking for mergers and acquisitions instead of waiting for four more years to split their businesses.

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Bank Islam Malaysia Bhd is targeting to achieve a total of 140,000 savings and investment accounts with total deposits of RM500 million in its next Al-Awfar campaign. The campaign will likely be held in the second half of this year until year-end. Following this, the bank would have a total of one million Al-Awfar accounts with total deposits of RM2.5 billion. For the next Al-Awfar campaign, more than half a million ringgit is planned to be spent on advertising and promotion. To participate, new customers are required to open accounts with a minimum deposit of RM1,000 while existing Al-Awfar account holders can top up with a minimum deposit of RM1,000. Depositors have to maintain a minimum balance of RM1,000 in their accounts at all times for a four-month period to entitle them to take part in the campaign.

Bank Islam Malaysia Bhd will spend more than RM5 million this year on its corporate social responsibility (CSR) programmes to cater for various segments of society nationwide. The CSR programmes planned this year include housing projects for the needy in Johor, which involved the rehabilitation and construction of houses for 22 families costing more than RM4 million. So far, the bank has built or rehabilitated houses for more than 151 improverished families in Kelantan, Terengganu, Kedah, Pahang, Perak and Sarawak. The bank is also looking to extend its CSR activities in Sabah as there is still a need for houses for the poor as well as basic infrastructure like surau and others.

Over the last two years, M&As in the Malaysian insurance sector have mainly involved conventional insurers, and analysts foresee some consolidation taking shape in the takaful sector in view of the Financial Services Act (FSA) and the Islamic Financial Services Act (IFSA). Among the candidates for potential M&As are Takaful Ikhlas Sdn Bhd, a unit of MNRB Holdings Bhd, and Syarikat Takaful Malaysia Bhd (STMB). The IFSA may prompt MNRB to sell its stake in Takaful Ikhlas to a strategic partner, as further internal capital injections could be complicated. In the next few years, the main thrust for M&As is expected to be on the general insurance and general takaful industry. The life insurance sector sees to have consolidated somewhat for the time being.

When mentioning waqaf, the benefaction for religious or public purpose, the general perception is that one has to donate land to build surau (prayer hall) or to be used as burial ground. However, there is more than this to waqaf as it could also serve as a mechanism or instrument to restructure or develop a community. In Malaysia, the properties donated under waqaf is administered by trustees, namely the state religious and customary councils. They later develop the properties for the benefit of Muslims. Although today the waqaf concept has been expanded to include donating cash and shares apart from land, the concept remains limited. Therefore, there's a need for information campaigns, better understanding and transparent waqaf institutions that carry out their duties in the right manner.

Dubai Islamic Bank (DIB) will purchase a 25 percent stake in Indonesian Islamic lender Bank Panin Syariah. Under the agreement, DIB will jointly manage and operate Bank Panin Syariah along with parent Bank Pan Indonesia, which will remain a controlling shareholder. No purchase price was given for the deal, which will be subject to regulatory approval. The investment will involve DIB accumulating around a 25 percent stake in Bank Panin Syariah in the initial phase, with a view to subsequently increasing its shareholding in the bank to 40 percent. Bank Panin Syariah has a network of 10 branches and held assets worth 4.3 trillion rupiah ($376.8 million) at March 31.

Religious investors, in economic terms the third largest group to invest on the world’s stock markets, can post high placement profits and remain faithful to their religious creed. This is the message of the third biennial world report on religious investors, the only report of its kind.

The report highlights the profile of religious investors who respect this balance and thus can have a major influence on company ethics:
- Their principles of faith can serve as a road map for investment choices;
- By nature, these investors have a long-term view which is key to the notion of responsible investment;
- They can call on the support of what is often a worldwide community;
- They have set up networks that offer the chance to work together on stakeholder actions and therefore increase their impact.

Even though a certain number of religious organisations invest responsibly and use their role as shareholder-activists to promote change this sort of profile is far from the majority.

Dubai Islamic Bank is to purchase a 25 percent stake in Indonesian Islamic lender Bank Panin Syariah, it said in a statement on Monday, adding it could ultimately increase the holding up to 40 percent. No purchase price was given in the statement, which said the transaction was still subject to regulatory approval. Bank Panin Syariah, which was listed in Indonesia in January, is the Islamic subsidiary of Bank Pan Indonesia .

Sukuk sales by Malaysian lenders seeking to comply with Basel III rules are drawing strong demand, prompting arrangers to predict a rush of offers. CIMB Islamic Bank Bhd has reportedly submitted a proposal to the Securities Commission for a RM5 billion (S$1.9 billion) programme. Moreover, Public Islamic Bank Bhd received approval for a similar-sized programme, an April 23 stock exchange filing shows. AmIslamic Bank Bhd, Maybank Islamic Bank Bhd and RHB Islamic Bank Bhd have sold a combined RM2.2 billion of Basel III sukuk since late February.

Contents
Revised Shariah Screening Methodology: 1
Expands ICM’s Global Reach
SHARIAH
New Shariah Advisory Council Resolutions 3
DEVELOPMENT
Region’s First Structured Covered Sukuk 7
Royal Award for Islamic Finance Calls for Global 9
Nominations
SC and Autoriti Monetari Brunei to Strengthen 9
Efforts in Greater Cross-border Activities
SC Leads Islamic Finance Taskforce to Publish a 10
Report on Enhancing Infrastructure for ICM
REGULATORY
IFSB-IOSCO-SC Collaborate on Disclosure 11
Requirements for ICM Products
SC Revises Equity Guidelines for SPACS 12
Technical Note on the Application of SC’s 13
Guidelines In Relation to Non-Tradable and
Non-Transferable PDS and Sukuk
FEATURES
2013: Another Resilient Year for the Global 14
Islamic Finance Industry
Global Islamic Funds Industry: Achieving 18
Growth Under Challenging Times
Harmonisation of Shariah Rulings 22
in Islamic Finance
News Round-up 29
STATISTICAL UPDATES
Malaysian ICM – Facts and Figures 32
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The Islamic Development Bank's (IDB) Board of Executive Directors has approved new fundings totalling $670.9 million for development projects in member and non-member countries. The Executive Directors approved $312.8 million to finance electricity projects in Egypt and Senegal; $110 million to fund the development of a major road in Uganda; $48 million to fund pearl preservation and economic revival projects in Bahrain; $44 million for an underwater communications cable in Bangladesh; and $12.4 million to finance fish farms in Mozambique. Moreover, the executive directors gave their approval for four donations for Muslim communities in non-member Bosnia-Herzegovina, Cambodia, India and Thailand while funds will also be channelled into development projects in Africa.

The participants and honor guests of KazanSummit will be able to visit one of the most important national festivals of the people of the Volga river basin - the Sabantuy. The KazanSummit Organizing Committee allows the guests of Russia and Tatarstan to get to know the cultural and spiritual component of the life in the Republic. On June 7, there will be the excursion on the national festival Sabantuy for the participants and official delegates of KazanSummit. The Sabantuy is the largest national, multiethnic festival of the people of the Volga river basin and Russia, which is on the list of the masterpieces of the cultural heritage of the UNESCO.

Of the 30 listed banks in Bangladesh, 13 declared higher dividends than in the previous year, eight announced lower dividends, and eight the same, according to Dhaka Stock Exchange. Dutch-Bangla Bank came up with the highest amount of dividends—40 percent cash—for its general shareholders. ICB Islamic Bank gave no dividends. With the mixed trend in dividend declaration, the banking shares were unable to draw the investors' attention in the last couple of months, as corporate declarations from the sector could not fulfil retail investors' expectations. The banks' income from lending business declined in 2013 than the previous year due mainly to the political volatility. But thanks to the central bank's move of relaxing loan provisioning rules at the yearend, the banks could recover losses.

Licensing and the implementation of sharia often cause investors to reconsider investing in Aceh. The Aceh provincial administration, through the Aceh Promotion and Investment Board (BIPA), has made strenuous efforts to convince investors to invest capital. BIPA has coordinated with various stakeholders, including city administrations and district level administrations, to help spur economic growth in Aceh. It also initiated a joint commitment to improve the image of Aceh and inputting data on impediments and issues faced by the business world to seek immediate solutions. However, uncertain regulations and licensing as well as an unfriendly attitude towards foreign investors are issues yet to be solved.

The International Islamic Financial Market ( IIFM ) held its 30th Board of Directors meeting at Bank Indonesia's headquarters in Jakarta. The Board commended IIFM efforts in holding two successful industry consultative meetings on Sukuk standardization requirements from documentation, structures and guidelines point of view which were very well attended by industry stakeholders. Moreover, IIFM aims is to come up with more standards as per its well established comprehensive development process, some of which will be issued during 2014 and in the next year. On the sidelines of the Board meeting, a specialized industry seminar on "Islamic Capital & Money Market" was also organized, discussing the technical aspects of Sukuk, Islamic hedging and liquidity management tools.

ndonesian airline Garuda Indonesia Tbk has secured US$100 million in financing from a unit of Malaysia's Maybank to fund its operations and expansion. The Musyarakah-based loan has a tenure of three years and will be issued through Maybank's Indonesian unit, PT Bank Internasional Indonesia Tbk. Garuda Indonesia posted a net loss of $163.9 million in its first quarter ended March, compared with a loss of $33.75 million in the same period a year earlier, as the airline continued to struggle with rising competition.

Amid talk of merging banks in the country to boost size and competitiveness in the region, the Financial Services Authority (OJK) has said that consolidation of sharia banks is also needed. At the moment, however, many sharia lenders are units that operate within conventional banks. OJK expects the consolidation to take place after all existing sharia business units (UUS) had been spun off from their parent banks. At the moment, there are 11 sharia lenders and 23 UUS operating in the country. After the spin-off, there would be more than 34, but the OJK would like to fix the number at between 25 and 30. One sharia business unit of a commercial bank is reportedly ready to be spun off in 2014.

Etiqa Takaful Bhd, a unit of Malayan Banking, plans to issue 300 million ringgit ($92.2 million) in sukuk as early as this month, its chief executive Ahmad Rizlan Azman said. Last month, Etiqa Takaful set up its maiden sukuk programme, rated AA1 by RAM ratings, designed to qualify as Tier 2 capital in the company's balance sheet. The sukuk would be a one-off transaction classified as Etiqa's liabilities, carrying a 10-year tenor and a non-call provision in the first five years, said Azman. Etiqa would use a musharaka structure and the proceeds of the sukuk would be used for general business operations, working capital and other purposes. Maybank Investment Bank is the advisor for the sukuk.

In some countries such as Indonesia, creating shariah-compliant insurance products can touch the lower middle income people. However, awareness for micro insurance, in general, and Islamic micro insurance in particular is still very low. This will affect SME's decision to buy Takaful products, although the affordable premiums and significant benefit are the main determinant of preference between conventional insurance and Islamic insurance. In order to rise the awareness of Islamic micro insurance among BMT and insurance companies, the Islamic Economic Society (MES) held business matching events which were attended by dozens of BMT. Through these efforts, MES hopes to lead Indonesian BMT opinion that Islamic micro insurance is very important as one of the risk mitigation strategy for business customers.