Talent shortage in Syariah banking

| Friday, September 30, 2011

MALAYSIA requires more professionals and skilled talents with dual knowledge in conventional and Syariah banking services as the country moves towards becoming an Islamic financial hub, said the Mentri Besar.
Datuk Seri Dr Zambry Abdul Kadir said the current shortage of qualified Islamic finance professionals was not only a challenge but posed as a serious threat to the growth and development of the banking industry.
“The talent shortage may be an impediment to growth if not addressed immediately,” he told reporters after opening the latest branch of HSBC Amanah Malaysia in Gunung Rapat, Ipoh, last Thursday.
Big potential: HSBC branch at Gunung Rapat officially launched for its Amanah Malaysia services.
Dr Zambry said statistics by the International Islamic University of Malaysia showed that two million finance professionals were required to fill up various positions in Islamic financial institutions worldwide by the year 2020.
“This is a stark contrast to the estimated 92,000 finance professionals that were recorded as working in the Islamic finance industry in 2007.
“In Malaysia we will need some 12,000 such professionals, almost double the 7,826 currently employed by Islamic banks,” he added.
The Gunung Rapat branch is the ninth to be set up by HSBC Amanah, the Islamic financial banking arm of HSBC Bank.
Its chief executive officer Rafe Haneef said in his speech that the branch was the latest addition to HSBC Amanah, which was currently expanding its network in the country.
HSBC Amanah, he added, had grown considerably with seven branches in the Klang Valley and Selangor, and one each in Penang and Johor Baru, since its incorporation in 2008.
Auspicious number : Dr Zambry and Rafe looking at the bank’s opening display.
“This branch in Ipoh is among the latest to be launched in the country and is the fourth HSBC branch in the state of Perak,” he said.
Noting that Ipoh was the epicentre of economic development for Perak, Rafe said the state had attracted a lot of investments.
“There is tourism, education and advance technology in the state, and banks like HSBC can help the state government grow further,” he said.

Global Islamic funds assets grow to $58 billion in 2010

| Tuesday, September 27, 2011
Global Islamic fund assets under management (AuM) grew by 7.6 per cent to $58 billion in 2010, up from $53.9 billion in 2009, according to Ernst & Young Islamic Funds & Investments Report.
The growth was largely due to market performance and partially on account of new money inflows, said the report, which was released on Monday at the World Islamic Funds and Capital Markets Conference in Bahrain. “Concentration in equities remains, as they account for 39 per cent of the $58 billion assets under management, or AuM. But bringing new money into equities is challenging. Fixed income, commodities and alternatives did well in 2010, which was a record year for Sukuk with issuance of $ 50 billion.”
According to Ernst & Young  report, 23 new Islamic funds were launched in 2010 while 46 were liquidated as   the industry continued to realign itself.  The Islamic funds universe comprises some 100 fund managers and 800 Islamic funds but represents only 5.6 per cent of the $1 trillion Islamic financial services industry.
The addressable universe for Islamic fund managers is in excess of $500 billion, growing by 10-15 per cent annually. In the GCC, liquid wealth of Shariah sensitive investors is expected to add more than $70 billion to Islamic funds by 2013.
Ashar Nazim, MENA Head of Ernst & Young’s Islamic Finance Services, said given the industry’s flat performance since 2007, a growth in 2010 was welcome development.
“Looking ahead, the challenging times are by no means over. There are serious concerns about the increasing likelihood of sovereign debt crisis in Europe and a double dip recession in the US. Both these factors will continue to influence conventional and Islamic asset managers through 2012.”
The seventh Annual World Islamic Funds and Financial Markets Conference   which opened at the Gulf Hotel, Bahrain, saw more than 400 leaders in the international Shariah-compliant funds and investments industry engage in critical discussions that focused on developing forward-thinking strategies to get the industry back on the high-growth track, achieve critical mass, and adapt to the new global economic landscape.  Abdul Rahman Mohammed Al Baker, Executive Director – Financial Institutions Supervision at the Central Bank of Bahrain, inaugurated the event with a special opening keynote address.
Addressing the media at the event, David McLean, Managing Director of the World Islamic Funds and Financial Markets Conference said that “Financial centres across the globe are vying to become ‘domiciles of choice’ for Islamic funds. With many new international markets now opening their doors to Islamic finance and investments combined with the increasing internationalisation of large-scale transactions, it is essential to understand the rapid development of the most dynamic regions and build a deeper relationship between the key markets - so that leading institutions are better placed to compete on a global scale.”
Dr Jarmo Kotilaine, Chief Economist at the National Commercial Bank, said that after a brief setback in 2010, the GCC region is witnessing increased activity in the sukuk market.
“Driven by favorable demography and infrastructure development needs, economic activity is rising again in the GCC economies and major investments and fund raising are done through sukuk issuance. Funds raised through sukuk in GCC in 2011 has reached 38 per cent ($17 billion) of global issuance till September 2011, which was only 28 per cent ($7.6 billion) and 22 per cent ($6.1 billion) in 2009 and 2010, respectively.”
He also said that the corporate sukuk issuance revived in 2011 accounted for around 87 per cent ($14. billion) of total issuance as compared to 77 per cent ($4.6 billion) of total issue in 2010.”issacjohn@khaleejtimes.com

Kazakh hub of Islamic finance

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 There are many chances of investment in Kazakhstan regarding International Islamic Banking and financial institutions are in looking on different options for investments in Kazakhstan because the world sees the Kazakhstan a central hub for Islamic banking and finance for CIS countries. These are the views of Zubair Mughal, the Chief executive officer of Al-Huda centre of Islamic banking and economics, which he expressed in his speech in the International finance forum that is held in the Astana the capital of Kazakhstan in this week. In which the Finance minister Mr. Zhamishev Bolat of republic of Kazakhstan, the vice member of the chancellor of Prime Minister Mr. Tolevkhanov Dauren, the member of the area of department of strategic progress and research of President Administration Mr. Sadvawasov Darmen, the senator of the Kazakhstan Parliament Mr. Yensegenov Sarsenbag, the chairman of the committee of national bank of republic of Kazakhstan Mr. Nurpeissov Darkhan, the executive director of Zakat fund Mr. Alpysbay Edige and include International experts. 
The theme of the conference was to make fruitful plan and procedures for the development and expansion of Islamic finance in Kazakhstan. 
By addressing to the forum, Zubair Mughal presented the origin and starting of Islamic banking and finance in Pakistan in the form of case study that how Pakistan make fast success in Islamic banking in a short period of time. 
They said that Kazakhstan while doing Islamic banking and Sukuk should also utilize and use the Takaful, Islamic fund, Islamic microfinance and Islamic Reits side by side and for the development of infrastructure the government and Kazakhstan should issue Sukuk in International market so that the Kazakhstan is recognized as the Islamic Financial state in the international market. 
He said Kazakhstan is one of the ninth biggest countries of world which holds the 70 percent population of Muslims from the 16.5 million populations, that is the sign of huge market of Islamic banking and finance. Due to which by making the Kazakhstan the model of Islamic Finance for the rest of CIS countries so that the implementation of Islamic banks and finance their can easily be done.


http://nation.com.pk

‘Learn from others on Islamic banking' - Oman

| Friday, September 23, 2011
Panel of international Islamic finance experts yesterday said Oman’s banking and finance sector can learn from other countries’ experiences in Islamic banking, which is a new field here. 







Hatim Tahir: Deloitte


At a seminar hosted by Deloitte at the Intercontinental Hotel, the experts gave advice to local members of the finance industry on way of implementing Sharia-compliant banking in the Sultanate. 

They noted that Oman can use existing models, thus develop the sector quickly. “Oman has a very unique opportunity. It can take lessons from abroad when it takes on Islamic finance within its own borders,” said Dawood Ahmedji, from Deloitte’s Islamic Finance Knowledge Center (IFKC). 

Ahmedji said there are lessons on government support, Sharia confidences, Sharia-compliant products and market education. Instead of starting from scratch, Oman can adapt existing frameworks and policies to suit its needs. 

The IFKC can help the regulators and banks have a better understanding of Islamic finance, said Alfred Strolla, from Deloitte’s Oman offices. 

“There are a lot of opportunities but there are also challenges and we’d like to bring these challenges into light,” Strolla said. 

Procedures and guidelines 
Local challenges include ensuring correct procedures and guidelines implemented by the local banks, he added. 

Abdullah Salem Al Salmi, executive vice-president of the Capital Market Authority, the market regulator, said it’s a mixed blessing that Islamic finance is just being introduced here. 

“The bad thing is that we have to learn a lot in a very short time, and the good thing is that we’re starting from where others have reached,” Al Salmi explained. 

There is a strong and growing demand for Islamic banking in Oman, Al Salmi said, and it has to be introduced so that customers don’t have to look outside the Sultanate for their Sharia- compliant banking services. It will also provide new opportunities for companies to invest here, he added. 

Hatim Tahir, director of the IFKC, said it will take a few years for Islamic banking to be up and running in Oman, but once it is here, there will be the possibility of more Sharia-compliant investments in the Sultanate. 

“The Sultanate of Oman has a growing manufacturing industry and has links with other parts of the world, so definitely corporations will see the benefits of Sharia compliance here,” Tahir noted. 

The panel also pushed the importance of having local Sharia scholars involved in Islamic banking and finance here. Knowledge of Sharia is key, because for many customers the religious aspect of Islamic banking is the biggest draw, not the financial benefits, Ahmedji noted. 

Attendees at the seminar were eager to learn how to implement Islamic banking locally. Ali Al Lawati, assistant manager at the Central Bank of Oman, said he attended the seminar to gain more knowledge and find out how his institution can develop Islamic banking. 

“We are here to understand. We want to provide something genuine, not marketing,” the Central Bank of Oman official said



http://www.timesofoman.com

Agrobank on track to be first regional Islamic agriculture bank

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AGROBANK is on track to become probably the first fully-fledged Islamic agriculture bank in the region by 2015.



Chief executive officer Wan Mohd Fadzmi Wan Othman said the bank, which has been corporatised since 2008, has embarked on a restructuring exercise within the organisation.

"Our focus will still remain in the agriculture sector. We're in the midst of a `find and shine' process to tap our employees' talents and capabilities,” he said, when met at the bank's Hari Raya open house celebrations yesterday.

Agrobank has set up eight regions, combining several states under one region. Each region will also have a business centre which will help expedite loans and other services.

The bank has 175 retail centres in the country, consisting of 125 branches, apart from kiosks and agro centres.

Wan Mohd Fadzmi explained that the restructuring exercise is to strategise the financial institution towards the government's Economic Transformation Programme (ETP).

"We are also collaborating with the East Coast Economic Corridor, Northern Corridor Economic Region, Padiberas Nasional Bhd and the Federal Agriculture Marketing Authority (FAMA) in our capacity as a development financial institution,” he said.

Islamic banking transactions are available currently under its Islamic banking window since its corporatisation.

Under its personal banking portfolio, Agrobank offers five types of loan/financing namely AgroCash (Wawasan Tani), AgroCash-i (Bai' Al-Inah), INSANI Educational Loan, Hartani-i and Ar-Rahn.

For deposits, besides the choice of its conventional banking, under the Islamic banking category, the bank offers AgroSavings-i with AgroMuda-i and AgroTani-i.

http://www.btimes.com.my

Action on lack of Islamic expertise

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Bahraini group that sets standards for Islamic finance in 45 countries is helping universities start courses in Sharia-compliant business practices to avert a shortage of experts in the US$1 trillion (Dh3.67tn) market.
The industry will need 15 per cent more personnel over the next five years and 25 per cent more in a decade, said Khairul Nizam, the deputy secretary general of the Accounting and Auditing Organisation for Islamic Financial Institutions. Pakistan is offering its first doctorate in Sharia banking, while the UAE has introduced an Islamic Masters of Business Administration.
"There is a shortage of people in the industry at the entry level," Mr Nizam said. "We will need to make sure there are enough heads in the future."
Sharia-compliant bonds returned 6.9 per cent this year, according to the HSBC/Nasdaq Dubai US Dollar Sukuk Index, outpacing the 5.9 per cent jump in emerging-market debt, data compiled by JPMorgan Chase shows. Countries including Nigeria, Thailand, Australia and France plan to introduce legislation to facilitate Islamic financing, moves that will boost demand for scholars to certify that the products meet requirements on no interest payments.
"If you don't have quality people, then growth in the industry won't be sustainable," said Azahari Kamil, the chief executive of the Asian Finance Bank based in Kuala Lumpur. "Governments and central banks should encourage universities to come up with more professional courses."
The Canadian University of Dubai is offering a UAE-accredited MBA in Islamic banking, while the International Islamic University in Islamabad, Pakistan, started its doctorate course in Sharia banking to compliment its Masters programme in August.
Experts in Singapore are also setting up an association focused on Sharia-compliant investments to foster links between bankers, lawyers and investors in the Gulf and Asia, Raj Mohamad, the managing director at Five Pillars, a consulting firm in the city-state, said on Wednesday. Mr Mohamad will be the secretary of the new body.
The Accounting and Auditing Organisation, known as AAOIFI, has more than 200 members and its standards are used in Islamic finance in Bahrain, Jordan, Lebanon, Qatar, Sudan and Syria, according to its website. The organisation may issue 35 Sharia standards for Islamic institutions next year, according to a September 7 statement, citing Mohamed Nedal Alchaar, the secretary general.
Under Islamic law, the charging or receiving of interest on a loan or bond is banned and investment in businesses that deal in tobacco, gaming or alcohol are prohibited, making conventional stock and bond indexes off limits to those wanting to invest in accordance with Islamic principles.
"We have been speaking with a few universities to help them introduce some courses on Islamic finance and we are helping other universities to improve the courses they offer," Mr Nizam said. "We are also offering our own courses."
Assets that are Sharia compliant are estimated to almost triple by 2015 to $2.8tn, according to the Islamic Financial Services Board, a standards-setting body based in Kuala Lumpur.
Global sales of sukuk have risen to $17.4 billion this year, from $10.7bn in the same period last year, according to data compiled by Bloomberg News. Issuance reached a record $31bn in 2007.
Islamic banking assets in Malaysia, which pioneered financing along religious guidelines 30 years ago, have grown an average 20 per cent annually since 2006 to 350.8 billion ringgit (Dh350.7bn) last year. The South East Asian nation accounts for 66 per cent of global sukuk outstanding, according to the central bank's annual report issued in March.
Australia and Thailand are pushing through legislation to remove tax barriers on Sharia-compliant products that would pave the way for issuance of Islamic bonds. Nigeria's Stanbic IBTC Bank, a unit of South Africa's Standard Bank Group, has been issued with a preliminary licence to offer Islamic banking services. Stanbic would be the African nation's second lender to gain approval.
The International Islamic University of Malaysia offers postgraduate and PhD courses in Sharia-compliant banking and finance, according to its website. The UK's Durham University also offers Islamic finance courses, while Harvard University in Massachusetts runs an Islamic legal studies programme through its law school, according to data on their websites.
The French Institute for Islamic Finance, based in Paris, in partnership with the French Institute for Management, is providing vocational training in Sharia-compliant finance through 15 programmes.

A guide to Islamic finance

| Tuesday, September 20, 2011

Mufti Talha Ahmad Azami, associate Sharia manager BMB Islamic, a global player in the Shariah advisory sector, outlines the guiding principles of Islamic finance.

The basic function that underlines all economic activity in the finance arena -both Islamic and conventional - is that of allocating finite resources to its most productive use. In Islamic finance, this allocation is inextricably bound by concepts of religion, law and ethics; also known as the Sharia.

The Sharia is an embodiment of teachings derived from the Quran and Sunnah- established traditions of the Prophet Muhammad.

While a codified set of laws as such does not exist for Islamic finance, and interpretations may vary from one school of thought to the other; what remains consistent is the Sharia’s unwavering emphasis on two guiding principles- ‘La darar wala dirar’ and ‘La tufzi ilal munaza’a. One is not to exploit others or be exploited; and the second is to prevent potential conflict occurring.

This article will examine the practical guidelines laid down by the Sharia, which facilitate the manifestation of these two guiding principles.
Guidelines
The first practical guideline relates to the prohibition of interest. Since the Islamic belief is that money itself has no intrinsic value, hence charging for its use is immoral. This is because the lender becomes unfairly enriched, without necessarily providing anything of value to the borrower. Such unjust enrichment could be a source of conflict, and detrimental to society, and hence it is prohibited.

The second practical guideline relates to the prohibition of gharar- contractual uncertainty in a contract- whether this uncertainty is in relation to the object of sale or the nature of the sale itself.

Classical textbook examples include the selling of: birds in the air, an unspecified fruit tree in an orchard, milk in an animal’s udder, wool on the back of a sheep, a pearl in its shell, unborn animals in the womb.
Similarly, examples where gharar is intrinsic to the language of the sale include: two sales in one, or a sale and a condition combined. These types of sales are prohibited because there is an uncertainty with regards to either the quantity of the purchase item, or its price. Since this can lead to potential disputes between the transacting parties, it has been prohibited.

Fraud 
The third practical guideline relates to the prohibition of fraud. An example might include a seller (or buyer) communicating to the counterparty that an item is worth much more (or less) elsewhere, hence “buy (or sell) it here”.

A classical textbook example would be: a city merchant meeting a trade caravan outside the city, and purchasing goods from them at a price that the caravan merchants are led to believe is equal, or more than the price in the market.

Similarly, the fraud involved in price hiking, or what is referred to in the classical books of jurisprudence as al-najash. This practice refers to a third party intentionally bidding–up the price of an object with no intention of buying it.

Another fraud is the concealment of defect in an object. For example, rearranging low grade items behind good quality ones, and selling the lot as ‘good quality’.

The prevention of fraud is fundamental to the Sharia’s efforts to promote harmony in a society. In the event of a fraud, the deceived party is given the right (khiyar) to void the contract, to remove the unjust loss he or she may have suffered.

Given the practical nature of Islamic finance, observers will discover that Islamic methods can be quite compatible with western practices, resulting in almost identical financial instruments and procedures.

This is to be expected, as both systems are dealing with the same problem of efficient resource allocation. The similarity should not be misconstrued to a “play of words”- What may seem identical to the uninformed may in fact be quite different; and what may seem different to the uninformed, may actually be quite similar.

The onus is upon Sharia scholars and reputable Islamic finance consultancies like BMB Islamic, to structure products that are both financially viable, and religiously faithful.

http://www.international-adviser.com

Malaysia eyes 25 pct share in Islamic banking

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Malaysia aims to capture 25 percent of the market share in the Islamic banking and finance sectors by 2012, according to an expert speaking in Istanbul.
“Islamic banking and finance has experienced substantial and unprecedented growth in recent years, growing at a rate of 10-15 percent annually,” Mehmet Asutay, the director of the Durham Centre for Islamic Economics and Finance at British-based Durham University, said Monday in his opening speech at the Durham Islamic Finance Autumn School 2011 in Istanbul.
Malaysia aims to capture a quarter of the market share in the Islamic banking and finance sector in terms of assets owned by 2012, while it is expected that Islamic finance will become the mainstream financing method in the Gulf region within the next decade, Asutay said.
More than 500 Islamic banking and finance, or IBF, institutions operate worldwide and are estimated to manage assets worth at least $1.2 trillion, compared to less than $10 billion in 1985, Asutay said. Amid the current financial crisis, which has engulfed the entire global economy, the IBF industry has shown relative resilience without undergoing major difficulties despite the fact that it is very much integrated with the global finance worldwide, according to him.
The Durham Centre for Islamic Economics and Finance has contributed to the field of Islamic economics, banking, finance and management through teaching and research over 25 years, Asutay said.
The Durham center is holding the Islamic Finance Autumn School 2011 between Monday and Thursday in Istanbul in cooperation with the Istanbul Foundation for Research and Education and the International Technological, Economic and Social Research Foundation. The gathering is supported by Istanbul Commerce University, the Participation Banks Associations for Turkey and the Alliance of Civilizations Institute of Fatih Sultan Mehmet University.
http://www.hurriyetdailynews.com

Brunei is 'speed boat' in Islamic Finance dev't

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Oz Ahmed, Associate Director, Wholesale Banking, HSBC Amanah Malaysia giving a hypothetical scenario on the future of banking during The 2011 Brunei Business Forum "Promising Opportunities, Sustainable Approaches" held at Radisson Hotel last week. Picture: BT/ Raul Padernal
IN TERMS of Islamic Finance, Brunei is a speed boat while other economies are like oil tankers, which means the Sultanate has the ability to move faster than any other country if it desires to, putting the country in a prime position to be the industry leader.

Kuala Lumpur based Arsalaan "Oz" Ahmed, associate director of HSBC Amanah's Wholesale Banking, told The Brunei Times that other economies, compared to Brunei, can move and make waves, but their movement will be slower because of the size of their economy, what they have to integrate to make sure things go accordingly, and so on.

"In my view, Brunei is certainly not at an infant stage, but you're not at an advanced stage either. From looking at specific opportunities around wealth management and investment capabilities of Islamic Finance, I feel that within the next five to 10 years, a jurisdiction could capitalise on that and become a leader," Arsalaan said.

He added: "Brunei having the infrastructure that it has, a financial centre syariah advisory board, keen people in the business, and banking institutions that is compliant, is in the position to take on that mantle and be the leader."

In terms of converging standards on Islamic Finance, Arsalaan said that Brunei should focus on a niche area and develop a holistic set up in terms of concepts, its pronouncements and a clear integration within regulatory and frameworks of those jurisdictions. Basically, the world-class regulatory framework should instills confidence with regards to Shariah standards.

"Standards (around the world) are starting to converge, but it's not happening fast enough. The industry is growing at a huge pace, and there is a role for someone to play in doing that," he said.

Arsalaan believes that if done right, it would lead to diversification in the sector and will create and important chapter for the economy.

However, he warned that any other economy can do it if it wants to do it, which means Brunei has to move fast if it wants to take advantage of the situation. "When you have petro-dollars, looking to invest in a syariah compliant way, markets have to respond," he said.

Arsalaan gave an example of an investment by a Saudi telco, looking to invest in Indonesia's Axis (also a telco). "The Saudi telco wanted to make sure that the financing was syariah compliant and it became the largest syariah compliant transaction in Indonesia. So when you have petro-dollars, Brunei will play a role in investing in that way," he said.

Arsalaan, who was one of the speakers at the Asia Inc Forum's Brunei Business Forum last week, in his presentation, credited His Majesty's vision in 1990, on Islamic Finance, where His Majesty called on Brunei to look for external assistance on the matter.

"In 1990, His Majesty said, if we are not able to do something it does not mean we should sit still and do nothing. If we are unable because we have no skilled labour or expertise, and if we are in dire need to meet demands of, example, fardu kifayah, then is it wrong (to follow) international practice or tradition of nations by mutual exchange of information or undergo training, or if necessary, hire experts for temporary employment to help us meet our needs and desires," Arsaalan quoted.

Since 1990, Arsalaan said: "We've come a long way, and the industry itself, in a very insightful way, works exactly like that."

Currently 800 financial institutions offer Islamic products, of which 350 are Islamic financial institutions. Over 750 funds comply to syariah regulations and in Brunei the market penetration is an "astounding" 50 per cent.

Arsalaan said that the industry, within the next decade or two, is moving towards $4.4 trillion, growing an enormous $3 trillion from where it is at. "This screams opportunity that is coming and can be captured," he said.

The associate director said that every country wants to become a hub in Islamic Finance, but how can Brunei do it? "There is a difference between ambition and rights. Brunei has the right to it. That right has foundations within the affinity to Islamic Finance, within itself and the population and spirit of the country itself. Also, within the infrastructure established. Because of this, Brunei has the right to win," he said.

He added: "Brunei is the abode of peace, the peace that is from Islam. That in itself is an area where Brunei can have a right to win."

Brunei has to rely on its strengths, as Islamic Finance is not just sukuk, it's much more about equity, about where you are as a country.

"It's about developing the local talent pool. People in Brunei I dealt with, are some of the most engaged individuals and have world views. Now, the Sultan's words resonate now as much as they did then. Staying true to those words, reflecting on them, can assure Brunei fulfil the promise and not just have promising opportunities," he said.

As for the possibility of HSBC Amanah's entrance to Brunei, Arsalaan said that they have ambitions to reach as many markets as possible. "Where we can, we will. And it's important to HSBC and Amanah to develop in all key jurisdictions. It'll be a miss to say that Brunei isn't one of them," he said

The Brunei Times

Post titleUniversities offer Islamic finance as master's

| Monday, September 19, 2011

Two universities will launch master's degrees in Islamic finance tomorrow, hoping to fill a void in a market desperate for qualified professionals.
The Canadian University in Dubai and Hamdan Bin Mohammed e-University have introduced the specialist master's of business administration (MBA), geared towards one of the fastest growing financial sectors, to meet demand at home and abroad.
Dr Muhammed Kabir, the vice president for academic affairs at the Canadian University of Dubai, hopes it will give the university an advantage over competitors when classes start tomorrow, in an emirate where 20 institutions offer 25 MBAs.
"We're trying to develop a competitive edge by doing market relevant degrees and we know that this is a job market relevant degree," Dr Kabir said. "Locally and globally, we're responding to market demands."
He said Islamic banking was a more "sympathetic" system where banks took more care to monitor how loans were spent and invested, thereby reducing the possibility of a debtor defaulting.
Dr Narimane Hadj-Hamou, the assistant chancellor at Hamdan Bin Mohammed e-University where students study through virtual classrooms and online teaching, says financial institutions are taking up the Islamic model all over the world.
"It has been growing for the past two decades," Dr Narimane Hadj-Hamou said. "It's worth around US$1 trillion (Dh3.67tn) now and there are estimates that it is set to grow to $4tn by 2020."
There are no bachelor's degrees in the subject, with graduate and executive education courses focusing on those already in the industry.
Dr Hadj-Hamou said her university would be looking for candidates with "significant years of professional experience" for the research-driven course. The degree course costs Dh72,000, compared with Dh85,000 for the programme at the Canadian University in Dubai.
Afaq Khan, the chief executive of Standard Chartered's Islamic banking division, has lectured at the Cass Business School at the Dubai International Financial Centre (DIFC), which has offered Islamic finance on its MBA since 2007.
Mr Khan said most people in the UAE had to be trained on the job, taking up time and manpower.
"It's a developing industry every day," he said. "It takes time to master and even I'm always learning."
Middlesex University's Dubai campus also offers a course in Islamic finance as an optional part of its MBA.
"Considering that the Islamic finance industry is now worth over $1tn globally, it is becoming an increasingly important area of study," said Dr Raed Awamleh, the director of the campus.
"We foresee an increased demand for Islamic finance courses and we will localise our MBA finance curriculum to reflect this trend, and its impact on the international financial markets, in the future."
Universities overseas, including Harvard Business School, University of California, Los Angeles and Trinity College in Dublin, are also introducing courses in the subject.
Dr Mohamed Belkhir, a specialist from UAE University, said the region's liquidity and oil revenues made it attractive for business.
"There has been a lot of talk since the crisis that Islamic finance is less risky than conventional finance," Dr Belkhir said.
"The share of Islamic finance in the market will increase significantly over coming years and we hear a lot of talk from executives and banks in the UAE saying they need many more people specialised in this area."

Post titleGabon courts Islamic finance

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The government of Gabon is to change its financial laws to authorize Islamic finance, in order to attract Shari'ah compliant FDI as part of the economic reforms it is currently implementing.

Gabon, one of the most sparsely populated African countries, with only 1.7m people, boasts rich oil reserves, significant forestry resources and major gold, diamond and manganese deposits. The government this week inaugurated its first Special Economic Zone, an initiative that has already attracted investments of $1.8bn and now has an eye on SWFs and MENA government money.
An official from the Export Promotion Agency, who requested to remain anonymous, confirmed that the reform of the financial laws was expected soon.
Gabon is located in Central Africa and less than 2% of its population is Muslim. The focus of the government of President Ali-Ben Bongo Ondimba is to become a regional investment hub. The country is currently engaged in a fast-track investment drive to industrialization by encouraging the processing of its natural resources in the country rather than just exporting raw material, something it's done for the last 50 years.




Part of the reason for encouraging Islamic finance is so that the country can issue instruments like sovereign Sukuk in the international capital markets to help finance its infrastructure projects.

As part of the planned reforms in the financial law, the country recently hosted a conference to find out how Islamic finance can be rolled out across the Economic Community of Central African States (CEMAC). The region uses a common central bank and common currency known as CFA.

http://www.zawya.com/story.cfm/sidZAWYA20110918085235/Gabon_courts_Islamic_finance


Focus on Islamic banking

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Sarasin-Alpen (Oman) LLC, a subsidiary of Bank Sarasin (Switzerland), says it has developed an entire suite of Wealth Management solutions based on guidelines in Quran. “The bank is targeting high net worth individuals in Oman,” Fares Mourad, Head of Islamic Finance, Bank Sarasin, said in an exclusive interview with the Observer.

The Islamic Wealth Management suite provides a full spectrum of Shariah-compliant banking products and services, estate and succession planning, financing and asset management, offering money market and structured products such as Wakala, Murabaha and Maraya, he added. Bank Sarasin has established a Shariah Advisory Board in Switzerland, comprising three members, namely Dr Mohamed Ali Elgari,
Dr Muhammad Imran Ashraf Usmani and Dr Monzer Kahf. Fares said “the board ensures that the offerings are in line with principles enshrined in Quran.” The Islamic wealth management industry remains one of the fastest growing sectors in the Middle East and last year sparked high interest outside the region with global fund assets reaching over $1 trillion during 2010. Fares said in its recently released annual Islamic Wealth Management Report-II, the bank provides a stronger focus on Islamic Financial Planning.
Islamic Financial Planning, an obligation outlined in Quran, involves the acquisition, preservation and philanthropic distribution of wealth. Since Muslims must have a will, a proper estate planning is required, often including a trust structure.

Islamic estate planning has two major instruments — an irrevocable gift during a lifetime, which can be personal or in the form of Waqf (endowment of a public or private cause) and a will allowing for a maximum of one-third of the estate to be passed on to any designated charitable entity or person.
The elements of such a will and testament (wasiyah, regarding the transferable third), include distribution to charities and to persons who are not ordained to inherit, such as the grandchildren of surviving children (parents are first in line to receive, rather than grandchildren, unless the parent is deceased) and friends.

Islamic finance spreads in Nigeria

| Thursday, September 8, 2011

Home to some 70 million Muslims, Nigeria is stepping up efforts to capitalize on the growing popularity of the one of the world's fastest-growing financial sectors: Islamic banking.
Earlier this year the Central Bank of Nigeria announced a final set of regulations which introduced Islamic banking to the country.
CNN's Christian Purefoy discussed the sector's potential with Hajara Adeola, managing director of Lotus Capital, one of the groups helping to pave the way for Islamic finance in Nigeria.
Adeola says there is a growing appetite for this form of banking.
"It is working in Nigeria and there is a lot of interest in doing Islamic banking, in West Africa in particular," she says.
Spread across the Middle East and other parts of the world, a slew of Islamic financial institutions have been offering interest-free services that advocates say can provide a more sustainable alternative to conventional banking practices.
The industry, which exists in more than 50 countries, is estimated to be worth around $1 trillion and has the potential to eventually be worth $5 trillion, according to ratings agency Moody's.
Charging and paying interest is not allowed in Islamic finance because it is prohibited under Sharia law. Instead, if a bank is providing finance for an infrastructure project, for example, the bank and customer agree to share the risk of investment and divide any earnings.
You would have to somehow employ that money into productive use and then you can earn a return on that money.
Hajara Adeola, Lotus Capital
"One of the most well known (principles) is the lack of interest or usury, so you can't own a return simply for having money -- which is what interest is," Adeola says. "You would have to somehow employ that money into productive use and then you can earn a return on that money."
Islamic banks are not allowed to trade in financial risk areas or deal in mortgage-backed securities or credit-default swaps. Investing in Islamically unacceptable businesses such as alcohol and cigarette makers, casinos and adult-entertainment companies is also forbidden.
In June, Jaiz Bank International became the first group to be allowed to open a Shariah-compliant bank in Nigeria after gaining an approval in principal from the country's Central Bank.
Adeola believes Nigeria has the potential to become one of the largest Islamic banking sectors in the world.
"It is a huge market," she says. "There's about 70 million Muslims in Nigeria. Research shows approximately 30% of the Muslim population typically would be interested in Islamic finance and if you look at the projection they made for the size of the market, it is really quite tremendous -- and that's just the domestic."
But the Central Bank's decision has met opposition from some Christian leaders in Nigeria, who argue that the move could increase religious violence in a country whose population is almost evenly divided between Muslims and Christians.
According to a VOA news report in mid-July, the Christian Association of Nigeria said the introduction of Islamic banking could stir up religious tensions at a time when security forces are fightingIslamic fundamentalists who want an independent state in northern Nigeria ruled by Islamic law.
But Adeola says that Islamic finance is not a threat and can appeal to the country's Christian community as well its Muslims.
"Islamic finance is universal," she says. "There is nothing about it that offends anyone or offends their faith or their principles. If anything, there are many Christians who like to invest with us because it's also in line with their own ethical values."

S&P :International links may help Turkey's Islamic bank sector

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(The following statement was released by the rating agency)
Sept 07 - Turkey's Islamic banks could continue their recent strong growth if they can cultivate stronger ties with their international owners and create a sustainable brand image, in Standard & Poor's Ratings Services' view.
The country's Islamic banking sector has grown strongly over the past five years, with total sector assets accounting for about 5% of total system assets as of year-end 2010 compared with 2.8% five years earlier.
Other developments in this sector over the past 18 months have included;
-- A law conferring tax neutrality on sukuk products;
-- A $100 million debut sukuk by Kuveyt Turk (GOLDPf.IS) (not rated);
-- The launch of several Sharia-compliant funds; and
-- The creation of a domestic index of Sharia-compliant banks and companies by the Istanbul Stock Exchange.
However, the sector remains small in a domestic context and in our opinion there is a lack of public awareness of its products. At present, there are only four players, namely Bank Asya (not rated), Albaraka Turk (BB/Negative/B), Turkiye Finans (not rated), and Kuveyt Turk --in descending order of asset size as of year-end 2010.
Additional drawbacks, in Standard & Poor's view, include a scarcity of Sharia-compliant domestic investable asset classes, as well as no near-term likelihood of sovereign sukuk issuance. Moreover there are few options for Islamic banks to access liquidity at the central bank. Specifically, there is no Sharia-compliant mechanism replicating the repurchase agreements routinely available to conventional banks, as is increasingly the case in some Gulf countries.
"In our opinion, the Turkish Islamic banking industry has reached a stage at which it will be increasingly difficult to rely on its own momentum to sustain growth," said Standard & Poor's credit analyst Paul-Henri Pruvost.
"We believe that a global Islamic banking template would give Islamic banks in their respective domestic markets a chance of greater success. This would, for instance, require a basic set of commonly agreed standardized products to smooth out operational differences, central bank liquidity mechanisms, and reporting and regulatory requirements."
One route to such a global template could, in our view, lie in stronger ties between domestic players and their larger, foreign parents. Already three of Turkey's four Islamic banks have large and well-respected Islamic banks as majority shareholders. Kuwait Finance House (A-/Negative/A-2) owns 62.0% of Kuveyt Turk, Al Baraka Banking Group (BBB-/Negative/A-3) owns 56.6% of Albaraka Turk, and National Commercial Bank (A+/Stable/A-1) owns 64.7% of Turkiye Finans.
"Such relationships, in our view, are beneficial, and may help to spread common practices through which the Turkish Islamic banking sector may reach a new level of maturity," said Mr. Pruvost.