IslamicFinance.de

Indonesia's capital market regulator is preparing a five-year roadmap for Islamic finance in an effort to expand the industry. The plan will help to boost the number of Islamic capital market products and expand the industry's investor base, Otoritas Jasa Keuangan (OJK), the financial services authority, said in a statement. The OJK said it was seeking market input for the roadmap and would set up discussion groups with stakeholders including the central bank, the finance ministry, the stock exchange and the country's national sharia board. It also said it was refining rules for the issuance of Islamic securities, which it expected to be completed this year. These would include details on the settlement of Islamic financial transactions, disclosure requirements for sukuk (Islamic bonds), and guidelines for sukuk trustees.

The Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) said on Thursday secretary general Khaled Al Fakih had left the organisation to pursue other opportunities. Al Fakih, a Lebanese-born commercial banker, had been secretary general since February 2012. Deputy secretary general Khairul Nizam will take over his duties while AAOIFI looks for a new secretary general, the organisation said. Set up in 1990, AAOIFI has issued a total of 88 standards for Islamic finance. Its membership includes more than 200 institutions from 40 countries, including central banks and regulatory agencies.

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QInvest sees Turkey as being a key driver is Islamic finance growth worldwide and will be exploring the opportunity at the 9th Turkish-Arab Economic Forum, takingplace in Istanbul on 28th and 29th May 2014. QInvest has an office in Istanbul and offers cross-border services to clients from its presence in Qatar, Turkey and Saudi Arabia.The bank has been involved in a number of high profile sukuk issuances in Turkey. Besides, QInvesthas also been active in other areas of Islamic finance in the country, including Murabaha, and mezzanine and equity finance. The Bank is active in the Turkish asset management industry and is in talks with a leading portfolio management company to advise on sharia'a-compliant asset management.

ISFIN has agreed on a MoU partnership with the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC). This Agreement established between ISFIN and the organisation of Islamic countries (OIC), through the ICIEC and the Islamic Development Bank, provides Islamic Insurance and credit risk operating under Shariah principles. The driving ambition behind the Agreement is to strengthen the economic relations between member countries of the OIC. ISFIN professional firms present in some 65 countries will be able to assist ICIEC on legal and accounting issues. ISFIN wants to encourage exports from ICIEC Member Countries to the ISFIN partners countries and to encourage the flow of capital and investments from ISFIN partners countries to the markets where ICIEC is active.

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.

Thomson Reuters released a country report on Islamic Finance in Morocco in collaboration with the Islamic Research and Training Institute (IRTI) and the General Council for Islamic Banks and Financial Institutions (CIBAFI). Based on exclusive retail consumer and corporate surveys, the report estimates that Islamic banking assets could potentially reach US$8.6 billion by 2018, with a profit pool of between US$67 million and US$112 million for Islamic finance providers. The national retail consumer survey indicates Moroccan Islamic banking assets could potentially reach up to 5% of total banking assets by 2018. However, Moroccans know very little about Islamic financial products, the report adds. Islamic banking and Takaful laws are expected to be passed by the Moroccan parliament this year.

Les actifs financiers islamiques devraient peser entre 5,2 et 8,6 milliards de dollars au Maroc en 2018, selon le rapport intitulé «The Islamic Finance country reports». Ce rapport, réalisé par Thomsom Reuters en collaboration avec l’Institut islamique de recherche et de formation (IIRF) et le Conseil général des banques et institutions financières islamiques (CGBIFI), estime que les actifs financiers islamiques devraient représenter ainsi entre 3 et 5% du total des actifs bancaires au Maroc en 2018. Le rapport énumère, cependant, un certain nombre de faiblesses qui doivent être surmontées afin de libérer le potentiel de la finance islamique au Maroc. En plus, le parlement marocain devrait adopter prochainement une loi régissant les activités des banques islamiques dans le royaume.

Iranian businessman Mahafarid Amir Khosravi, convicted of masterminding a $2.6 billion banking scam, was hanged on Saturday in Tehran''s Evin prison. He was sentenced to death after being convicted of corruption on earth through bribery and money laundering. Revelations about the scandal swept Iran in 2011 when prosecutors uncovered a private umbrella group, led by Amir Khosravi and his brothers. Over the space of two years, Amir Mansour Aria Development Co bought 40 companies with forged letters of credit obtained from several major banks whose managers they had bribed. In addition to Amir Khosravi, three others have reportedly been sentenced to death.

Le directeur général de la Banque islamique du Sénégal (BIS), Babacar Ndoye, soutient que la finance islamique est assez efficace pour financer les grands projets des Etats. Les autorités ont, à travers les sukuk, un instrument capable de satisfaire les besoins de financement des infrastructures et du développement, selon M. Ndoye. Le Sénégal, pays majoritairement musulman, peut aussi mobiliser beaucoup d’argent par "la zakat". Babacar Ndoye estime que les possibilités pour le monde musulman de lutter contre la pauvreté et de se développer, au moyen de la zakat, sont extraordinaires. Appliquée à la banque, la "zakat" peut même créer des emplois, a-t-il assuré. Pour toutes ces raisons, la finance islamique et la finance classique doivent être considérées comme deux entités complémentaires.

14 Iranian banks are involved in the famous 2011 $3-billion embezzlement case. Iran's prosecutor general Gholam Hossein Mohseni Ejei said that state-run Bank Saderat and Bank Melli were the main banks involved in the case. The prosecutor general went on to say that seven MPs who were accused of involvement in the case acquitted due to lack of evidences. Thirty-nine persons were accused of involvement in the case, and several high-ranking officials including certain persons in judiciary, parliament and presidential administration were persecuted or arrested. In addition to death and life sentences, some defendants banned from government jobs.

Islamic finance has been one of the fastest-growing sectors in global finance but the industry has yet to shake off perceptions about high costs and complexity that are holding back some issuers. Britain, Luxembourg, Hong Kong and South Africa all are keen to make maiden sukuk issues, to diversify their funding sources and tap liquidity sources. However, these and other plans have been delayed by factors including double-taxation on some sukuk structures and a difficulty in identifying assets to underpin the transactions. Increased clarity on sukuk structures has helped: the design and approval process has become generic. Moreover, some jurisdictions have enacted legislation in the past few years to remove double or even triple tax duties on sukuk.

Two key growth areas for international capital markets are set come together in the first green and socially responsible sukuk offerings, writes Dan Alderson. The World Bank is endorsing the product through involvement in two new projects due this year. The Washington supranational’s ambition of issuing its own dollar sukuk is hampered by its mostly conventional asset base. But its UK-based affiliate the International Finance Facility for Immunisation (IFFIm) is looking to do a debut sukuk to fund vaccinations in 53 of the world’s poorest countries.

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.

Bahrain-based Gulf International Bank (GIB) has announced the successful completion of a senior unsecured two billion Saudi riyal ($533 million) five-year floating rate notes issuance. The notes were issued at a spread of 72.5 basis points above three-month Saudi Arabia Interbank Offered Rate (SAIBOR). The order book was more than 1.7 times oversubscribed, reaching more than 3.4bn riyals from investors. The joint lead managers and book runners for the offering were GIB Capital, NCB Capital Company, Samba Capital and Investment Management Company and Saudi Fransi Capital. The primary shareholder in GIB is the Public Investment Fund of Saudi Arabia.

Bahrain's central bank is finalising rules for the supervision of sharia-compliant advisory firms. The rules will help small Islamic finance institutions and fund managers to outsource the process of reviewing whether their activities are compliant with Islamic principles. This will enhance their operation and reduce the costs of such services. The central bank is also set to release a new regulatory framework for Islamic insurance, and is studying changes to rules for sharia-compliant financing arrangements which can be offered to accredited investors. In December, the central bank formally combined existing rules for issuing and listing financial securities, including sukuk, in an effort to make the process more efficient.

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.

Bahrain-based Gulf Finance House (GFH) expects to complete a proposed capital reduction by the end of the second quarter. Under the proposal, which still requires regulatory approval, GFH will reduce the nominal value of its shares by 13.8 per cent to $0.265 per share from $0.3075. As a result, paid-up capital will be cut to $837 million from $972m. The cash reduction will not involve any cash transfer and will not change the bank's net equity. However, under accountancy rules, it will help remove accumulated losses from GFH's balance sheet.

Islamic finance, banking, and takaful has a large potential in the US and Canada despite several setbacks and various obstacles and hurdles. In terms of the United States, a 100% truly Shariáh compliant takaful company may not be possible at this time in the USA as many states have limited investment of collected premiums to non-Shariáh compliant investment grade rated bonds. However, the US has seen two major sukuk issuances and there is a large potential for further sukuk. In terms of Canada, there have been no sukuk issuances and there are no Islamic banks. The only positive ruling for Islamic finance in Canada thus far has been the permission of Islamic mortgages under Canadian law. Aside from constitutional hurdles and the lack of regulations and laws, which permit Islamic banking in North America, many people have a fear of Islam and the words Shariáh and Islamic.

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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