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In response to the slow growth of Islamic banking and finance, OJK organized the seventh Islamic Finance Research Forum. It was held from Oct. 14 to 16 at the IPB campus, and brought together students, scholars and practitioners of Islamic finance industry to exchange new ideas to help propel the sector’s performance. Among the causes of Islamic finance’s slow growth are the lack of capitalization driven by a paucity of high-quality human capital and a shortage of innovation and creativity. The OJK disclosed that the root problems can be solved by, inter alia, sound research and development activities, which are still lacking in the Islamic finance industry.

There has been a significant growth in Islamic financing in recent years, and yet there is still strong potential for further growth, particularly through crowdfunding. This was debated during an expert panel on the final day of the 10th World Islamic Economic Forum (WIEF) in Dubai. The relationship between the markets and the people has been demonstrated in detailed research which shows that, in the long run, a 30 per cent growth in equity markets can lead to 20 per cent growth in GDP per capita. The panel agreed that Islamic capital markets are more efficient at mobilising funds to support sustainable growth that traditional markets. The experts however, also called for standardisation.

The scope of Britain's Islamic finance market is widening with several initiatives from the government and private sector, although the country is about to lose European Islamic Investment Bank, one of its six full-fledged Islamic banks. Last week a government official said the central bank would look into developing a liquidity management tool for use by Islamic banks, while Britain's export credit agency expects to guarantee sukuk for the first time next year, an issue by a customer of European plane maker Airbus. Taken together, the new official initiatives seem likely to create a more benign environment for Islamic finance, allowing banks to operate more flexibly and efficiently, and therefore more cheaply.

Luxembourg is poised to test demand for Islamic bonds as the issuer of the lowest-yielding sovereign sukuk on record plans to become a regular borrower. The country has been “encouraged” by investor feedback and the market’s readiness and will begin working on its next sukuk, Finance Minister Pierre Gramegna said. Luxembourg sold 200 million euros ($254 million) of five-year Islamic bonds in September priced two basis points below midswaps. That compared with 10 basis points above the swaps for notes of similarly rated Islamic Development Bank. However, Luxembourg’s sukuk isn’t for everyone, least of all those looking for yields, an expert said. The reason why it’s so tight is because there are still Islamic investors that are looking for very conservative assets.

Mohammed Amin is Chairman of the Conservative Muslim Forum. He says that one particularly successful UK micro-policy is the country’s approach to Islamic finance. Gordon Brown and Ed Balls deserve credit for promoting Islamic finance and changes to UK tax law to facilitate it. Sadly, their efforts eventually ran out of steam in 2008, due to the combined effects of the global financial crisis and excessively frequent changes in the ministerial responsibility for the subject. Promoting Islamic finance as the government has done is clearly in the best interests of the economy and therefore of all British citizens and taxpayers. However, it is also good politics, since it should increase the Conservative party’s appeal to Muslim voters.

Bank Islam Brunei Darussalam (BIBD) is helping to arrange a benchmark-sized Islamic syndicated loan which it hopes to close later this year for a petrochemical project in the oil-rich sultanate. Currency and tenor are being finalised for the deal, said Javed Ahmad, BIBD's managing director. The new syndicated loan could open a much wider pipeline of deals in Brunei, which might be denominated in both local and foreign currencies, Ahmad said. Besides, in the medium term BIBD will consider establishing a regional footprint across Asia to enhance its growth prospects, with Malaysia and Indonesia offering the greatest opportunities, Ahmad said.

Dubai Islamic Bank CEO Adnan Chilwan has no doubt that Dubai is well-poised to become the global capital of Islamic economy. The key sectors such as real estate, travel, tourism, hospitality, healthcare, and education are equally poised for future growth. Keeping this in mind, there's an overwhelming support from the government as the setting up of Dubai's Islamic Economic Development Center has just shown, he said. However, there are challenges like skill, efficiency and investor confidence. And most of these challenges can be overcome just by pure innovation, Chilwan believes. About Dubai Islamic Bank, he said that service and innovation are a very integral part of its strategy.

The role of Islamic endowments need to be further streamlined and redefined to unlock their true potential, experts said during a panel discussion on ‘Mobilising Capital from Waqf, Pension Funds and Unit Trusts’ at the the 10th World Islamic Economic Forum (WIEF) in Dubai. Abdullah M Al Fouzan, Founder and Chairman of the Investor for Securities Company in Saudi Arabia, called endowments 'a sleeping giant', which suffer from a state of negligence with annual returns at less than 3 per cent. He called for tapping the true potential of endowments through a structured and concerted effort. The panelists were unanimous on the role of Islamic endowments in driving social growth and urged to explore innovative, Shariah complaint ways to further build asset base and value.

There has been a surge in UAE's Islamic banking and capital market activities, but more government support at policy level could help speedy growth of the industry, said Hussain Al Qemzi, Group CEO, Noor Investment Group and CEO Noor Bank. Data suggests that Islamic banks’ asset growth is outstripping their conventional peers in the Gulf region especially in Saudi Arabia and Qatar due to government support. As the biggest borrowers, government entities in the Gulf need to push Islamic structures. Going forward, more Islamic issuances, especially by players who have already transacted conventional issuances, will provide greater depth to the market and confidence to investors who are yet to invest in Islamic instruments.

The Muslim world must focus on efforts to rediscover Islamic principles and promote regional cooperation in order to successfully overcome economic challenges, The Hon. Dato' Sri Mustapa Mohamed, Minister of International Trade and Industry, Malaysia, stated during a panel discussion on the opening day of the 10th World Islamic Economic Forum in Dubai yesterday. The minister added that Malaysia is ready to share its experiences in economic prosperity with other countries. The 10th World Islamic Economic Forum, which runs until Thursday, October 30, is being organised by the WIEF Foundation in collaboration with Dubai Chamber.

Jadwa Investment’s Head of Research, Dr. Fahad M. Alturki, and Saudi-US Trade Group President Richard Wilson spoke about the Saudi economy and investment in the Kingdom as well as the planned opening of the Saudi stock market to qualified foreign investors. Dr. Fahad said that the average growth in the Saudi economy is going well, with a growth rate of around six percent per annum on average. All the economic or macro indicators like interest rate, fiscal accounts and monetary policy, point to a very strong macro picture in the Saudi economy. However, there is difficulty for SMEs to access banking credit. He considers it a positive development to open the market, and allowing foreign investors’ access to bonds and Sukuk issued by local companies in domestic currency.

The third Turk-Arab Youth Congress started on Oct. 24 and was hosted by the Istanbul Youth Assembly Foreign Affairs Commission at the Istanbul Congress Center to create a platform for Turkish and Arab youth to discuss a vision for the region's future. A team of well-educated youth from around the world gathered at the three-day program titled "How to Lead the Future." Several sessions were held on the first day of the congress, discussing different issues of the region. On the second and third day, workshops were held under the subsidiary bodies of the congress and they published a final declaration with the remarks of the participants.

Economic strategist James Rickards, pointing to another collapse of the international monetary system will reveal to global financial experts in Dubai next month how new "rules of the game" will be written to prevent disaster. The American lawyer, economist, investment banker and author, says investors should not be surprised if another collapse happens soon, following previous breakdowns of the system in 1914, 1939 and 1971. His presentation will show what those new rules of the game might look like, and helps investors understand what they can do today in their portfolios to preserve wealth in the collapse and prosper in the new system. Rickards is one of the speakers at the ICA Conference taking place in Dubai from 6-9 November.

The Board of the Islamic Development Bank approved an operation plan for the new fiscal year 2014-2015 at its 300th meeting held on 19 -22 October in Jeddah. According to the Bank, the plan has a budget of US$ 5.1 billion not including the administrative budget for the Bank and its Funds and Programs. The Bank also approved US$ 814.2 million for development financing. Amongst the approvals of the Board was US$ 230.2 million for Development of Sharm El –Sheikh International Airport Project (Phase-II) – Egypt. IDB has already contributed US$ 226.8 million to the project and with the new approval IDB contribution to the project reaches US$ 457 million.

As part of efforts to ensure that the ecosystem was preserved, the Central Bank of Nigeria (CBN) about two years ago rolled out guidelines on the Nigerian Sustainable Banking Principles (NSBP). The central bank had directed that sustainability reporting would commence in June 2014 with the submission of the one-off report (first quarter) not later than July 7, 2014. The CBN also instrcted that the second quarter one-off report should be submitted to it, not later than October 7, 2014, while the third quarter report should reach the CBN not later than January 7, 2015. Nonetheless, there are indications that some banks are having challenge complying with the reporting template because they are required to implement a sustainable banking principles and the respective management approach.

AAOIFI was invited to and took part as a member of the External Advisory Group of the International Monetary Fund (IMF). Over the course of 8- 14 October 2014 in Washington and New York AAOIFI held a number of successful top-level meetings with relevant departments from the IMF and World Bank, the International Federation of Accountants and with senior representatives of central banks, monetary authorities, and financial institutions. AAOIFI represents shari’a scholars industry-wide on its boards, hailing from more than 14 nationalities and across various schools of thought. In addition, AAOIFI has more than 24 years of experience, during which the institution has issued 88 standards so far.

Caspian International Investment Company CJSC (CIIC) is a private equity investment firm founded in March 2008. CIIC's shareholders are Azerbaijan Investment Company OJSC;Aref Investment Group; Al-Ahmar Group for Trading, Industrial and General Agencies; as well as The Islamic Corporation For The Development of The Private Sector and Islamic Development Bank. The main goal of CIIC is to serve as an investment vehicle in order to receive exposure to the growing Azerbaijani economy. Orkhan Aghalarov, the acting General Manager of CIIC, said that investments into the private sector is CIIC's primary goal, and thus, the company is one of the main supporters of realization of the President's economic policy.

Almost a decade since the Islamic world’s first exchange-traded fund started operating, assets account for less than one percent of the total $2.3 trillion ETF market, according to Falah Capital LLC. The U.S. fund manager set up its inaugural Shariah-compliant ETF this month. While the Philippines is set to become the latest nation to start an index of Shariah-compliant stocks this year, a lack of investment options in equities and bonds that comply with religious tenets is hindering growth in ETFs, Falah Capital’s CEO Thom Polson said. The Falah Russell-Ideal Ratings U.S. Large Cap exchange-traded fund has a market capitalization of $2.4 million and covers Shariah-compliant American companies.

The Muslim world needs to develop a revolutionary method in Islamic finance to allow entrepreneurs and financiers to leverage each other to contribute to the nation's economic growth sustainability, Datuk Seri Najib Abdul Razak said. The prime minister said Islamic countries had made remarkable progress and became a significant group in the global economy as the total gross domestic products of the Organisation of Islamic Cooperation (OIC) countries had grown to US$9.4 trillion in 2012 from US$7.5 trillion. Moreover, he said as an Islamic finance pioneer, Malaysia could and must play an influential role in ensuring the sector's future development. The government aimed to increase the SME macroeconomic contribution to 41% of the GDP, 62% of employment and 25% of exports by 2020, he added.

The year in Islamic finance 16/10/2014 Banking & Finance analysis: As we head towards the start of the new Islamic year, we ask a panel of experts to consider the development of Islamic finance and the future of this growing sector. They were asked about important developments within Islamic finance during the past year, as well as commonly used Islamic finance structures. Moreover, they gave their opinion about the development of the sector in the next 12 months. Another question concerned the international standard setting bodies and their divergences in applying Shariah law.