IslamicFinance.de

Dubai Multi Commodities Centre (DMCC) has announced the inaugural Commodity Murabaha transaction on its DMCC Tradeflow platform. The transaction took place between Noor Islamic Bank and Commercial Bank of Dubai, marking the official launch of the DMCC Tradeflow Islamic product portfolio. According to Ahmed Bin Sulayem, Executive Chairman, DMCC, the DMCC Tradeflow pioneered the use of an electronic central registry of commodity ownership in Dubai. The commodities available on DMCC Tradeflow include oil products, foodstuffs and base metals and if required these goods can be inspected easily by Shari’ah scholars.

Although there are some Islamic venture capital (VC) associations, VC funds and VC Banks, there's a lack of VC conferences, articles and high profile funds and investments in information, technology and communication or bio-technology. An opportunity exists for Islamic banks to deploy part of excessive proprietary risk capital to venture capital in financing some of the major concerns of the región, e.g. desert farming or alternative energy. Islamic finance must think about financing ventures beyond simple returns to depositors and shareholders, to include important local healthcare and the stewardship of the environment. In this manner, it can actually lead conventional finance in the region for invention and innovation.

By the end of this year, the Islamic Economy Higher Committee will come out with a unified Islamic legislation to help encourage and support Islamic products in the emirate. The committee will also work on creating bodies or committees authorised to certify and check on the Islamic products. However this will be left optional, the Committee’s member and Director General of Dubai Department of Economic Development, Sami Al Qamzi said.

Islamic endowments, known as awqaf, receive donations from Muslims to operate specific social projects, such as mosques, schools and welfare schemes. Over the past few decades, awqaf have amassed a vast array of assets, from real estate to cash holdings, equities and even valuable books. However, the management of these assets has failed to keep up with their expansion. Basic changes in asset management methods could improve awqaf yields globally by between 1.5 and 2 percentage points. It can therefore be a source of long-term liabilities that the industry is desperately seeking.

Investment Corporation of Dubai (ICD) has launched the syndication of its new $2 billion conventional and Islamic financing facilities. The purpose of the facilities is to refinance the $2 billion five year tranche of the original $6 billion three and five year facilities signed on August 21, 2008. The new facilities will have a tenor of five years. The $4 billion tranche which was due in August 2011 was repaid in full. ICD will be hosting a bank meeting in Dubai during the week commencing March 24, 2013.

Ministry of Finance's Assistant Undersecretary for Economic Affairs, Mr. Yusuf Abdullah Humood said that the Bahraini private sector should benefit from the services provided by the Islamic Corporation for Insurance of Investment and Export Credit (ICIEC). The corporation's benefits include support of exports and provision of services to exporters, banks, investors and other economic establishments. Moreover, the influx of overseas investments is increased and the necessary insurance for new projects and exports of goods is provided. Last year, the ICIEC approved to cover 6 projects of Bahraini investors and banks at the value of USD 273 million.

Many advocates of Islamic banking suggest using gold as a replacement for the money created through the interest rate mechanism. While Islamic banks could be allowed to use gold deposits (by way of selling gold for cash), they must return the depositors’ gold or keep it for safe custody. Furthermore, Islamic banks can not extend credit to their customers as they will not be able to use the depositors’ gold (by selling it for cash) to offer financing to those who may need it. This will, in turn, have implications for economic growth. It is important that the governments take a proactive role in implementing this proposal. As the government of Malaysia is developing tools for liquidity management for Islamic banks, gold dinar may not be an entirely abstruse concept.

The real-estate arm of Qinvest, the Qatari investment bank will focus on the United States and its home market and avoid Europe this year. This is because competition makes the European market tougher. With targeted returns of up to 6 percent and over, the bank's plan is to focus on assets in U.S. retail - such as single-tenant units on New York City's Fifth Avenue - and in the less liquid and less crowded Qatari market. Qinvest is in the process of taking over Egyptian investment bank EFG Hermes , though regulators have yet to approve the deal.

In 2009 and 2010, one survey found that 97 percent of people in Russia who were mainly Muslim or from an Islamic background were interested in using an Islamic bank. Of that 97 percent, 40 reside in Moscow. Though not formally allowed to be practiced in America or Russia, it's still growing at an annual rate of around 15 to 20 percent. However, there are still a few roadblocks to clear before Islamic finance can achieve its true potential in Russia. Islamic banking regulations and laws have to be introduced, then job creation, investment diversification, and foreign investment could serve to give the Russian economy a boost.

Qatar Islamic Insurance Company ( QIIC ) Chairman Sheikh Abdulla bin Thani Al Thani has said that his firm would pursue its strategic plans for the Years 2013-2015 to ensure its continued growth. The company recorded good results in 2012 by generating a premium of QR206m and aggregate net profit of QR74m. The shareholders' profit reached QR58m, constituting earnings per share of QR3.5. The general assembly on Sunday approved the company's nine-point agenda, including its financial statements for the year 2012 and election of two people in the current QIIC Board of Directors.

The Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, has described China as a major contributor to the de-industrialisation as well as underdevelopment of Africa. He warned that with the growing interest of China in the continent, Africa was opening itself up to a new form of imperialism. Sanusi explained that China is no longer a fellow underdeveloped economy but an economic giant capable of the same forms of exploitation as the West. Trade between China and Africa was worth more than $200 billion in 2012. There has also been strong growth partly as a result of Asian demand for African resources.

The UK government launched on Monday the first Islamic finance task-force to help to cement London's status as the western hub for Islamic finance. It will support development of the UK's Islamic finance sector, increasing inward investment and strengthening the economy. The Task Force will include major industry figures to ensure that the UK's offer is promoted at home and abroad by both the public and private sector. The Islamic finance Task Force will be co-chaired by Financial Secretary to the Treasury, Greg Clark and Baroness Warsi, Senior Minister of State at the Foreign and Commonwealth Office.

In order to achieve achieve economic outcomes which are similar to the economic outcomes achieved by conventional finance, transactions that are undertaken in Islamic finance typically require more component steps. These additional transactions are at risk of being subject to transfer taxes or to taxes on income or gains. The tax treatment of four common Islamic finance structures, commodity murabaha, sukuk, salaam and istisna in eight MENA region countries: Egypt, Jordan, Kuwait, Libya, Oman, Qatar, Saudi Arabia, Turkey and in the Qatar Financial Centre were reviewed in this report.

The European Central Bank and the Malaysia-based Islamic Financial Services Board (IFSB) are conducting a joint study on policies affecting Islamic finance in Europe. European scholars and regulators are going to examine a broad set of policy and regulatory issues in relation to Islamic finance in Europe. An expected release date was not given. The study will be complemented on April 9 by the IFSB's annual forum, which will be hosted by the Bank of Italy in Rome.

Albaraka Turk mandated four banks to secure a $200 million subordinated loan from international sukuk markets. Albaraka Turk is the Turkish subsidiary of Bahraini lender Al Baraka Bank.

Abu Dhabi Islamic Bank (ADIB) has signed an agreement to provide financing facilities for AED 500 million to Dubai Airport Freezone (DAFZA). The financing will be used to expand DAFZA's key offices buildings, business centre and food court which are due to be completed in 2015. The agreement was signed at DAFZA's headquarters by Dr. Mohammed Al Zarooni, Director General of DAFZA and Tirad- Al Mahmoud, CEO of ADIB. The project is in line with HH Sheikh Mohammed Bin Rashed Al Maktoum's initiative to make Dubai the Global Capital of Islamic economy.

The Egyptian government has signed a $250m leasing agreement with the Islamic Development Bank (IDB) to purchase equipment for a power plant to generate electricity in South Helwan. The deal will be finalised after presidential approval. The Minister of Planning Ashraf ElAraby signed the agreement in mid-January with the IDB president Ahmed Mohamed Ali. The project aims to meet the growing demand for energy in Egypt.

A company is sharia-compliant if it conducts its business according to sharia stipulations, and accommodates Islamic principles and disciplines in its business structures, setups, and operations. There are several stipulations, that a business should comply with in order to follow shariah principles. These include full disclosure and honesty with customers, quality customer service and finding ways to serve social, developmental or environmental causes conducive to your direct business lines. Prohibited activities for sharia-compliant companies are among others borrowing and lending with interest, investment in alcohol, gambling, weapons and pork as well as activities that harm the environment.

Ernst & Young signed a working agreement with Accounting and Auditing Organization for Islamic Financial Institutions ( AAOIFI ) to assist in Sharia certification of Core Banking Systems (CBS) used by Islamic banks. On the back of this mandate, Ernst & Young is launching its new Advisory Solution, CBS Sharia Assessment, to assist international and regional technology firms. The certification programme will assess CBS services to ensure that they conform to the approved global Sharia and accounting standards.

Islamic banks say their small scale and a lack of risk-management products makes it harder for them to compete. The average return on equity at Shariah-compliant lenders was 11.6 percent in 2011, compared with 15.3 percent at their non-Islamic counterparts. Moreover, Shariah banks had an average $17 billion of assets in 2011, less than the $65 billion for non-Islamic lenders, resulting in operating costs as a proportion of holdings that were 50 percent higher. This is due to the fact that most Islamic banks have very basic risk infrastructure and most of these institutions operate in domestic markets which are highly competitive. Therefore, growth is becoming more challenging to achieve.