IslamicFinance.de

There is an ample scope of Islamic banking and finance in western Africa and Senegal can play a vital role in elevating it through the countries. This was said by Muhammad Zubair Mughal, Chief Executive Officer AlHuda Centre of Islamic Banking and Economics (CIBE) while attending an international seminar on Takaful. Delegates from Senegal, Mali, Ivory Coast, Mauritania, Guinea and other countries of western Africa participated in the stated seminar. Mr. Mughal added that AlHuda CIBE has chalked down a robust strategy to promote Islamic banking and finance in West African countries. He announced that AlHuda CIBE with its strategic partner AAMAS Africa will organize an international conference on Islamic banking and finance in Dakar in December 2015.

Middle East fund managers have on balance become bearish on the region’s biggest stock market, Saudi Arabia, after oil’s rally ran out of steam and the Kingdom confirmed strict rules on foreign investment, a monthly Reuters survey shows. The survey of 15 leading investment firms, conducted over the past 10 days, shows none expects to raise its equity allocation to the Middle East in the next three months — the first time this has been recorded since the survey was launched in September 2013. The proportion intending to cut equity allocations has risen to 20 percent from 7 percent. Also, falling trading volumes and thin corporate news flow indicate that markets are already slipping into a summer lull.

Burgeoning youth populations across the developing world emphasize the importance of achieving sustainable economic growth and providing widespread employment opportunities. Economic inclusion refers to equality of opportunity for all members of society to participate in the economic life of their country as employers, entrepreneurs, consumers and citizens — and the private sector is a central partner in fostering economic growth. CIPE’s latest Economic Reform Feature Service article outlines strategies to build a more inclusive entrepreneurial ecosystem by engaging traditionally under-represented groups in economic and political life.

Herman Gref, the head of Russia’s largest bank Sberbank, welcomed the introduction of Islamic banking in the country’s traditionally Muslim regions, saying it would help attract capital from Arab countries. The rapid growth of the Muslim population in Russia contributes to a sharp increase in demand for Islamic banking tools expected in the coming years, said Samir Tagiyev, manager for business development in the CIS and Europe, the Islamic Corporation for the Development of the Private Sector (ICD). The Russian government has to elaborate a legal framework that will integrate Islamic banking into Russia's financial system.

London-based Islamic finance advisory firm, Edbiz Consulting, has partnered with Labuan International Business and Financial Centre (Labuan IBFC) to produce an Islamic Wealth Management Report (IWMR) to be published in the last quarter of 2015. The report will explore the growth and Islamic wealth, highlighting its concentration in different regions, providing crucial business intelligence to supply-side leaders and potential clients of the Islamic wealth management industry. In addition, different Islamic wealth management solutions will be analysed, with a focus on Islamic philanthropy and social responsibility.

As Saudi Arabian authorities prepare to open the stock market to direct foreign investment this month, they're laying plans for a fresh set of reforms: measures to expand and energise the corporate debt market. The Capital Market Authority wants to change things under a five-year strategy that would encourage issuance of sukuk and conventional bonds as alternatives to bank loans, which currently dominate corporate fund-raising. This would spread corporate risk beyond the banking system, making the financial sector more healthy, and provide more channels for Saudi Arabia's growing investment industry. The CMA plans to introduce rules for credit rating agencies in September and is developing guidance for special purpose vehicles.

Denying any political motives, Turkey Prime Minister Ahmet Davutoglu says regulators’ action purely based on “technical, fiscal and financial” evaluation. Turkish regulators on Friday seized remaining shares in Bank Asya. Appeals process is open on Bank Asya seizure: Bank Asya went beyond “normal banking” due to ties with "parallel state,” Davutoglu says in reference to supporters of Islamic preacher Fethullah Gulen, accused of plotting to overthrow the government.

Tengku Razaleigh Hamzah says we should not fall prey to over-optimism and entertain the illusion that Islamic banking and finance is immune from the effects of any great shift or turn in the forces and currents that shape the world— culturally, politically, socially or economically. Thus, we must continuously make the effort to monitor and understand the happenings in the world as well as the apparent and hidden forces giving rise to them. These include the civilizational crisis, globalization, the shift from the real economy to the financial economy and the rise of the global Occupy movement and the Arab Spring uprisings. In the mission to empower the global ummah economically, it is now quite obvious that the system of choice is the Islamic economic system.

A new report from JPMorgan Chase’s research arm examined the deposit and spending patterns of 100,000 of its 27 million accounts during 2013 and 2014. It found that almost all the customers in the sample experienced changes in income and spending of 5 percent or more a month — not a tremendous fluctuation by any measure. But over the course of the year, 26 percent experienced income changes of 30 percent or more —10 percent suffered declines, while16 enjoyed increases. Income and consumption changes didn’t move in tandem. Just 28 percent of the survey subjects spent more money when they had more, and less when they had less.

Islamic Corporation for the Development of the Private Sector (ICD) CEO Khaled Al-Aboodi speaks out on the work he does around the world to bolster the private sector in accordance with the principles of Shari’ah law, and harnessing the Islamic economy’s vast potential. He says that all of the Halal activities need to be focused and there needs to be an established link between Islamic finance and the Halal activities, and make sure they are served by Islamic finance. The more links, the more demand there will be for Islamic finance, so these forces will work together to make both bigger. However, there are also weak links, like he lack of unified regulation for Islamic finance.

Upside for sovereign Sukuk issuance in countries in the Gulf Cooperation Council is limited in 2015, in Standard & Poor's Ratings Services' opinion. The rating agency expects that lower oil prices will lead to fiscal deficits in some countries in the GCC, but nonetheless most governments' net asset positions will likely remain strong enough to enable their financing. Most sovereign Sukuk issues will relate to essential infrastructure projects and refinancing needs. Government-related entities' (GREs) financing activity, the availability of large government assets, and healthy liquidity in the banking sector all limit the linkage between changes in oil prices and the potential for sovereign Sukuk issuance, according to S&P.

Michael Gassner, Editor of IslamicFinance.de presented on the 3ème Congrès International de la Finance Islamique “Les Banques Islamiques et le Financement des Entreprises: Pratiques et enjeux théoriques” en Marrakech, 25/26 Mai 2015.

The presentation discussed that exponential growth of debt in Islamic finance is ruled out, nevertheless, debt and equity finance exists. The specific significance of equity finance (musharaka, mudaraba) lies in need for solid debt/equity ratio, as Muslims shall never die being in debt. Still Islamic banks barely provide any equity finance and the reason often given are moral hazard costs. This is denied as debt as well as equity has specific moral hazard problems, and if anything, even conventional banks would offer a mixture of debt and equity. Rather the assumed reason appears to be in the regulation (capital weight) and taxation (interest deductibility), which makes equity financing from a bank 2-4 times at least more expensive than debt finance, and thus not worth being offered.

The attached presentation is in French.

Comprehensive reforms in Turkey’s capital markets over recent years have exceeded EU standards and bred confidence among investors, says the Chairman of the Capital Markets Board Vahdettin Erta?. The Turkish government has a plan to develop the participation banking sector and also the instruments we provide under Islamic principles. The sukuk regulation was renewed in 2013 and also a new regulation was made after the reform on the private pension system which allows for the establishment of Sharia-compliant pension funds. The government also has a plan to develop the Islamic insurance (takaful) industry.

Saudia Arabia’s Al Khozoma Management Company is conducting a feasibility study to develop a Sharia-compliant resort in the Maldives. Some 4,120 holidaymakers from the Middle East visited the Maldives this year, representing a market share of 3.7 percent. In January 2014, the ADK company in association with Turkish hotel giant Caprice Gold announced plans to build the first Islamic resort in the Maldives. The five-star, 673-room resort was to be built on Shaviyani Atoll Gaakoshibee. However, the two companies reportedly cancelled the agreement late last year.

Over the years, there have been a number of cases involving suicides due to the inability to settle debts. Defaulters can end up in jail over bounced cheques, lose their jobs, have their visas blocked, and taken to criminal and civil court. In the face of the impending consequences, the defaulters sometimes resort to extreme measures. Many debtors who are stuck in a rut are nevertheless determined to settle their dues. Their biggest concern is that due to the rigid bank rules, they are effectively unable to find a middle road till the time their issue is resolved. Many who have little financial literally and lived a credit card swipe-happy life end up in a continuous state of shock, weighed down by interest and other charges.

Indonesia will become a founding member of a cross-border sharia-compliant infrastructure bank to help boost infrastructure development in various countries. The bank, named Islamic Investment Infrastructure Bank, will be cofounded with Turkey and the Saudi-based Islamic Development Bank (IDB), according to Finance Minister Bambang Brodjonegoro. To qualify as a founding member, Indonesia must contribute more than US$300 million. The sharia infrastructure bank is expected to be established in the second half of this year, following Indonesia’s announcement to join as one of the founding members in the upcoming China-led Asian Infrastructure Investment Bank (AIIB), which is also expected to help finance the country’s infrastructure projects.

Indonesia is set to co-found a new cross-border Islamic (sharia-compliant) infrastructure bank together with Turkey and Saudi-based Islamic Development Bank (IDB). Indonesian Finance Minister Bambang Brodjonegoro said that Indonesia will contribute more than USD $300 million as start-up capital for the establishment of the new bank, named Islamic Investment Infrastructure Bank (IIIB), which aims to boost infrastructure development in various countries. The bank is set to be established in the second half of 2015. Muliaman D, Chairman of the Financial Services Authority (OJK), recently stated that Indonesia and Turkey are competing to become host of the Islamic Investment Infrastructure Bank’s headquarters.

The world is sinking under too much debt and an ageing global population means countries' debt piles are in danger of growing out of control, the European chief executive of Goldman Sachs Asset Management has warned. Andrew Wilson, head of Europe, Middle East and Africa (EMEA), said growing debt piles around the world posed one of the biggest threats to the global economy. The Organisation of Economic Co-operation and Development (OECD) has also sounded out a warning about Japan's growing debt pile. The Goldman chief also said that warnings about liquidity shortages in the market were being "overplayed", especially with regards to the corporate bond market.

Prime Minister Datuk Seri Najib Razak today urged Japan to partner Malaysia in engaging in Islamic finance-related activities and tap the huge global market. With Japanese industrial expertise and technology, and Malaysia’s technical expertise in Islamic finance, he said there was an opportunity to establish a formidable alliance. On a much larger scale, he said that in late 2013, China announced the plan to establish the Asian Infrastructure Investment Bank or AIIB, and currently has 57 charter members and a paid-up capital of US$50 billion.He added that Malaysia understands and respects that Japan has reservations over the AIIB, but regardless of the vehicle, it is apparent that Asian countries need to invest in tangible infrastructure assets.

The International Shari'ah Research Academy for Islamic Finance (ISRA) and the Securities Commission Malaysia (SC) have launched a joint publication on "Islamic Capital Markets: Principles and Practices." The textbook serves as a vital source of reference to academicians, students and practitioners on the key principles underlying the Islamic capital market operations and its practices. It covers a variety of topics related to Islamic capital markets, including Shari'ah, regulatory and corporate governance frameworks, risk management, accounting and taxation, sukuk, the equity market, unit trust funds, ETFs, REITs, private equity and venture capital, derivatives and structured products. As the co-publisher and co-sponsor of the textbook, the SC is confident that the textbook will enhance the skills of the Islamic capital market talent pool.