Islamic finance training course launched in London

The growing influence and practice of Islamic finance has been recognised through the creation of a London-based training programme for industry professionals.

The programme, which was launched by the Lord Mayor of the City of London, Ian Luder, on Wednesday (May 27th), is being run the Islamic Banking Finance Centre UK (IBFC-UK). 

The aim of the course is to enable financial services centres such as London to better cater for the requirements of Islamic finance, which is guided by Shariah, or Islamic law, principles. 

The Lord Mayor of the City of London said: “Despite the current global financial crisis, Islamic finance continues its growth as an increasingly viable alternative banking system for both Muslims and non-Muslims. It will be a vital component of the new global financial infrastructure.” 

IBFC-UK has been established in partnership with the Islamic Banking & Finance Institute in Malaysia (IBFIM) and Cardiff University’s Business School and Centre of Islam. Its role is to provide research and training for private and public organisations and clients include insurance companies, banks, non-financial businesses and academic institutions.

Akmal Hanuk, chief executive of IBFC-UK, said: “The Islamic finance sector is expanding at an exponential rate and is now estimated to be worth $1.2 trillion globally and growing faster than any of the conventional banks, between 15-20%. This is due to its strong financial principles and ethical values, which prohibits the charging or paying of interest and encourages mutual risk and profit sharing between parties.” 

The UK Programme has been launched in conjunction with International Business Wales (IBW), the Welsh Assembly Government’s trade and investment arm and will be rolled out in Wales initially before other areas of the UK and the rest of the world are targeted.

There are three main components of the course, covering training for finance industry professionals, finance regulators and those in educational roles who want to become accredited in Islamic finance training.

Link: http://www.international-adviser.com/lwm/article/374

Financial crisis offers Islamic banks a chance to flourish

The rules are simple, no dealing in alchohol, pornography or anything deemed morally harmful coupled with no interest and you have the foundation for an Islamic financial system, which has been able to withstand the current economic meltdown, presenting Islamic banks with a unique opportunity to flourish.

The rules are simple, no dealing in alchohol, pornography or anything deemed morally harmful coupled with no interest and you have the foundation for an Islamic financial system, which has been able to withstand the current economic meltdown, presenting Islamic banks with a unique opportunity to flourish. Unlike banks in Western economies, Islamic banks have been delt less of a blow by the financial crisis and experts believe it is because the laws followed are based on those set out in Islam's Holy book, the Quran, which for Muslims is the word of God. No interest and risk sharing  " There has been much questioning of the values underpinning the conventional financial system, and the search for alternatives means that Islamic banks are likely to receive more attention, especially as their raison d'être is morality in financial transactions, based on religious teachings " Professor Rodney Wilsonز Islamic banks do not borrow in interbank markets as their funds are from their own deposits and they do not hold toxic collateralized debt obligations. Furthermore Islamic law forbids interest and encourages risk sharing, which means that any investment, profit or loss, is shared by both the bank and its clients. The fact that Islamic banks have seen minimal adverse effects from the crisis has made them more attractive to investors, especially in the Gulf Cooperation Council (GCC), who watched the value of their investments in conventional banks plummet, according to a new report, named The development of Islamic finance in the GCC, from the London School of Economics and Political Science (LSE). "There has been much questioning of the values underpinning the conventional financial system, and the search for alternatives means that Islamic banks are likely to receive more attention, especially as their raison d'être is morality in financial transactions, based on religious teachings," said author of the report Professor Rodney Wilson, who wrote the report for LSE’s Kuwait Program on Development, Governance and Globalization in the Gulf States. The demand from the world's 1.3 billion Muslims for investments that comply with their beliefs means assets that comply with Islamic law range between $700 million and $1 trillion, with some estimates seeing assets growing to $1.6 trillion by 2012. The value of Shariah-compliant assets in the GCC, which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, amounts to more than $262 billion. "The increasing international respect for Islamic finance has been noted in the GCC, and this should encourage local acceptance by both governments and bank customers, not least because no Islamic bank has failed in the crisis and required a substantial government bail-out," Wilson said. Linking the West with Shariah " Despite the current global financial crisis, Islamic finance continues its growth as an increasingly viable alternative banking system for both Muslims and non-Muslims. It will be a vital component of the new global financial infrastructure " Lord Mayor of the City of London Wilson said the GCC's position in the heart of the Muslim world made the area a strategic hub that could link Islamic finance to Europe, Asia and Africa and argued the spread of subsidiaries of GCC-based Islamic banks was an indication that it was already happening. However, regulatory differences and harmonization among different schools of thought, are just some of the main obstacles of Islamic banking as it looks to grow into a cross-border system, mainly targetting European countries with large Muslim communities. As the industry expands into non-Muslim or secular states, the need to educate others about the sector has become greater. In a sign that cultural barriers may be coming down, this week a London-based training program was launched by the Lord Mayor of the City of London, Ian Luder, to enable the European financial hub to better cater to the requirements of Islamic finance. "Despite the current global financial crisis, Islamic finance continues its growth as an increasingly viable alternative banking system for both Muslims and non-Muslims. It will be a vital component of the new global financial infrastructure," Luder said. The program, which will be run by the Islamic Banking Finance Center U.K., was established to provide research and training for private and public organizations such as insurance companies, banks, non-financial businesses and academic institutions. "The Islamic finance sector is expanding at an exponential rate…due to its strong financial principles and ethical values, which prohibits the charging or paying of interest and encourages mutual risk and profit sharing between parties,” Akmal Hanuk, chief executive of IBFC-U.K., said. Link: http://www.cibafi.org/NewsCenter/English/Details.aspx?Id=3583&Cat=0

Islamic banks survive crisis: IFSB official

Islamic banks have demonstrated relative resilience to the global financial crisis but they can be affected like any other financial institution if the crisis continues, according to an Islamic finance expert.

Islamic banks have demonstrated relative resilience to the global financial crisis but they can be affected like any other financial institution if the crisis continues, according to an Islamic finance expert. Talking to The Peninsula on the sidelines of the Qatar Law Forum on May 30, 2009, Professor Refaat Abdel Karim, Secretary-General of the Islamic Financial Services Board (IFSB) based in Malaysia said, “Islamic banks have survived the crisis because they prohibited to participate in toxic assets. However, since the financial crisis have transformed into an economic crisis, these banks can also be affected, like any other financial institution.” He said there was an increased demand for Islamic financing after the global crisis. However to present itself as a global alternative, Islamic financing need to develop a legal infrastructure and liquidity infrastructure. He added that the IFSB had been working towards achieving this goal. The IFSB serves as an international standard-setting body of regulatory and supervisory agencies in Islamic financial services industry that include banking, capital market and insurance. The Board promotes the development of a prudent and transparent Islamic financial services industry through introducing new, or adapting existing international standards consistent with Shari’ah principles, and recommend them for adoption. The 178 members of the IFSB include 42 regulatory and supervisory authorities as well as International Monetary Fund, World Bank, Bank for International Settlements, Islamic Development Bank, Asian Development Bank and the Islamic Corporation for the Development of Private Sector, Saudi Arabia, and 130 market players and professional firms operating in 34 jurisdictions. Malaysia, the host country of the IFSB, has enacted a law known as the Islamic Financial Services Board Act 2002, which gives the IFSB the immunities and privilege  The IFSB is actively involved in the promotion of awareness of issues that are relevant or have an impact on the regulation and supervision of the Islamic financial services industry. This mainly takes the form of international conferences, seminars, workshops, trainings, meetings and dialogues staged in many countries. Link: http://www.cibafi.org/NewsCenter/English/Details.aspx?Id=3590&Cat=0

The Future Of Islamic Finance Is Positive

The future of Islamic finance is positive, says group chief executive of CIMB Group Datuk Seri Nazir Razak.

The future of Islamic finance is positive, says group chief executive of CIMB Group Datuk Seri Nazir Razak. However, there is still room for further improvement especially in terms of rules and regulations in the global front, he said. Malaysia meanwhile has been successful in the sector and have clear rules and regulations on the matter, he said. "When you deposit money with CIMB Islamic, there are very clear rules and regulations about how CIMB Islamic must use that money," he said at a dialogue session in conjunction with the grand finale of the Malaysia Future Leadership Program 2008/2009 Business Challenge on May 30, 2009. At the global level however, when somebody deposits their money in a bank which says its product is syariah-compliant, there is really nobody governing what the bank does with the money, he said. Nobody will know where or on what the money is being invested, Nazir said. "That is why we are pushing for stronger overall consistent governing framework for global Islamic finance," he added. The Malaysia Future Leadership Program 2008/2009 Business Challenge was jointly organized by CIMB Group and The Wall Street Journal Asia. Nine higher-learning institutions participated in the challenge. Link: http://www.cibafi.org/NewsCenter/English/Details.aspx?Id=3597&Cat=0

In these times of financial turbulence, Shariah-compliant banking and finance is being endorsed for its stability and is evolving as the best choice on the road to economic recovery.

According to Imtiazz Sarfaraz Khan, Head of Retail Banking and Finance Department at Abu Dhabi National Islamic Finance, Shariah-compliant finance has always been an appropriate and relatively risk-free route for financial dealings but was downplayed for quite some time mainly due to political considerations across the globe.

Khan said the definitions of Shariah-compliant or Islamic banking were endless.

"Some non-Shariah-compliant banks and financial institutions may choose to call it 'interest-free banking', while others are comfortable with 'zero interest on asset-backed finance'," Khan added.

"If one looks from the customers' point of view, the key attributes that drive consumer confidence are trust and transparency - not just quick-fix solutions."

He added that these positive attributes are considered "honesty of purpose" or "neeyah" in Arabic.

"Recently, there has been a very visible trend in Shariah-compliant banking and finance, which is here to stay - somewhat like a revolution of sorts, with a strong social message and a positive contribution to the individual and the economy as a whole. Shariah-compliant finance helps in filtering funds away from non-social, non-ethical areas, while promoting thrift," he said.

Khan said easy access to money through personal loans and a variety of credit products such as conventional credit cards and overdrafts have tempted the common man. People leveraged on their accounts and borrowed more than what they were eligible 

during the economic boom. In the downturn, it has been difficult for them to arrange their payment installments and has backfired on their saving plans. In traditional financial services, this short-term benefit has opened a Pandora's box.

This is due to the fact that money is not treated as a commodity in Islamic finance, but as a means of exchange to facilitate the flow of goods and services. A sharp eye on trust and transparency is maintained by the Shariah controllers of each bank, but implemented by the entire team policymakers, managers and front-end sales and service personnel.

Link: http://www.zawya.com/Story.cfm/sidZAWYA20090524034305/Shariah-compliant%20finance%20is%20the%20best%20choice

IslamicAdvisory.com launches first islamic finance training portal

(MENAFN Press) The Islamic finance industry gets its first dedicated training portal: IslamicAdvisory.com, Islamic Finance Training, Online. Certified by leading scholars, the portal is the first to provide streamable, interactive Islamic finance training modules "ideal for training across large-scale institutions," as one prominent user, Yusuf Jha, Shariah Controller at Abu Dhabi Islamic Bank, describes it. 

Commenting on the launch, IslamicAdvisory's MD Atif Khan said, "So far the Islamic finance industry has relied on 2 day crash courses to get by. But bankers are frustrated with paying thousands of dollars for theory and coffee. What is needed is practical, bank-wide training throughout the year, with case studies, quizzes, and in-house testing." 

IslamicAdvisory memberships start at $49/month for individuals and $6,995/month for entire banks. All training content is based on the latest AAOIFI (Accounting and Auditing Organization of Islamic Financial Institutions) Shariah Standards, the leading standard-setting body in Islamic finance. While meeting these global standards, the training modules also address individual bank needs as an outsourced tool for their training departments. In fact, one major Islamic bank recently conducted a Shariah review and found IslamicAdvisory's modules to effectively complement their existing in-house training. 

The website has an impressive array of training modules ranging from introductory level, such as "Understanding Sukuk," to the practical and customer-facing, like "How Is A Murabaha Different From A Conventional Loan?" and even the advanced, like "How To Calculate An Ijarah (Islamic Lease) Schedule." The site offers dozens of interactive online quizzes and exercises and a 90-minute certification exam. New training modules are added every week. 

In the free access area of the website, IslamicAdvisory offers a community experience with discussion forums, podcasts, live webinars, member profiles, and the largest Islamic finance Q&A database available online.

Link: http://www.menafn.com/qn_news_story_s.asp?StoryId=1093250858

Islamic finance training course launched in London

The growing influence and practice of Islamic finance has been recognized through the creation of a London-based training program for industry professionals.

The growing influence and practice of Islamic finance has been recognized through the creation of a London-based training program for industry professionals. The program, which was launched by the Lord Mayor of the City of London, Ian Luder, on Wednesday (May 27th, 2009), is being run the Islamic Banking Finance Centre UK (IBFC-UK). The aim of the course is to enable financial services centers such as London to better cater for the requirements of Islamic finance, which is guided by Shariah, or Islamic law, principles. The Lord Mayor of the City of London said: “Despite the current global financial crisis, Islamic finance continues its growth as an increasingly viable alternative banking system for both Muslims and non-Muslims. It will be a vital component of the new global financial infrastructure.” IBFC-UK has been established in partnership with the Islamic Banking & Finance Institute in Malaysia (IBFIM) and Cardiff University’s Business School and Centre of Islam. Its role is to provide research and training for private and public organizations and clients include insurance companies, banks, non-financial businesses and academic institutions. Akmal Hanuk, chief executive of IBFC-UK, said: “The Islamic finance sector is expanding at an exponential rate and is now estimated to be worth $1.2 trillion globally and growing faster than any of the conventional banks, between 15-20%. This is due to its strong financial principles and ethical values, which prohibits the charging or paying of interest and encourages mutual risk and profit sharing between parties.” The UK Program has been launched in conjunction with International Business Wales (IBW), the Welsh Assembly Government’s trade and investment arm and will be rolled out in Wales initially before other areas of the UK and the rest of the world are targeted. There are three main components of the course, covering training for finance industry professionals, finance regulators and those in educational roles who want to become accredited in Islamic finance training. Link: http://www.cibafi.org/NewsCenter/English/Details.aspx?Id=3577&Cat=0

Financial crisis presents opportunity for Islamic banks

The financial crisis presents an opportunity for Islamic banks based in some of the Gulf States according to a new report from the London School of Economics and Political Science (LSE) released on May 28, 2009.

The financial crisis presents an opportunity for Islamic banks based in some of the Gulf States according to a new report from the London School of Economics and Political Science (LSE) released on May 28, 2009. The report The development of Islamic finance in the GCC, authored by Professor Rodney Wilson, points out that the Islamic banks have been less adversely affected than the major international banks by the 2008-9 crisis, making them more attractive to investors. Gulf Cooperation Council - based investors in conventional banks have seen the value of their investments plummet. These include Prince Waleed's Kingdom Holdings in Saudi Arabia, which holds 5% of Citibank, and the Abu Dhabi and Qatar Investment Authorities, which hold significant stakes in Barclays. In contrast, the value of the Saudi Al Rajhi Bank and Kuwait Finance House (KFH) investments in retail Islamic banking affiliates in Asia has been much more resilient. Professor Wilson, who wrote the report for LSE's Kuwait Program on Development, Governance and Globalization in the Gulf States said, 'There has been much questioning of the values underpinning the conventional financial system, and the search for alternatives means that Islamic banks are likely to receive more attention, especially as their raison d'être is morality in financial transactions, based on religious teachings. The increasing international respect for Islamic finance has been noted in the GCC, and this should encourage local acceptance by both governments and bank customers, not least because no Islamic bank has failed in the crisis and required a substantial government bail-out.' Islamic banks have been somewhat insulated from the current financial crisis because, in contrast to their conventional counterparts, they do not borrow in interbank markets, their funds coming instead from their own deposits. They also did not hold toxic collateralized debt obligations because they are not allowed to hold interest bearing securities. According to the report the GCC is well positioned at the heart of the Muslim world to serve as an Islamic finance hub linking Europe, Asia and Africa. The spread of subsidiaries of GCC-based Islamic banks illustrates that this is starting to happen. Furthermore a global economic recovery is likely to benefit the GCC as oil and gas prices rebound, resulting in fresh liquidity being pumped into Islamic banks to fuel further expansion. Despite being a reluctant supporter of Islamic banking to date, the report argues that Saudi Arabia could become the global leader in the Islamic finance industry worldwide if the Saudi Arabian Monetary Agency (SAMA) and the Capital Markets Authority become more proactive in promoting the industry. This would bring significant benefits to its economy including employment creation in the King Abdullah Financial District where, for example, although a grand mosque is included in the plans, there is no mention of Islamic finance in the vision. The value of shariah-compliant assets in the GCC is over $262.6bn when the figures for Saudi Arabia, Kuwait, the United Arab Emirates, Bahrain and Qatar are aggregated. With total shariah-compliant assets worldwide amounting to around $640bn at the end of 2007, this implies that the GCC countries accounted for around 41% of the total. The Islamic finance industry encompasses retail and investment banking, insurance, fund management and the issuance and trading of shariah (consistent with the principles of Islamic law) compliant securities. Shariah prohibits the payment of interest on loans (Riba or usury), as well as investing in businesses that provide goods or services considered contrary to its principles (Haram or forbidden) such as pork, alcohol or gambling. Link: http://www.cibafi.org/NewsCenter/English/Details.aspx?Id=3575&Cat=0

Jovian to Partner with UM Financial to Launch Shariah-Compliant Product

Jovian Capital Corporation ("Jovian") (TSX: JOV) is pleased to announce an agreement with UM Financial Inc. ("UM"), Canada's premier Islamic financial services company, to explore the launch of a co-branded, Shariah-compliant investment product (the "Shariah Product").

Jovian Capital Corporation ("Jovian") (TSX: JOV) is pleased to announce an agreement with UM Financial Inc. ("UM"), Canada's premier Islamic financial services company, to explore the launch of a co-branded, Shariah-compliant investment product (the "Shariah Product"). The Shariah Product would be geared toward Canada's approximately 1 million strong Muslim population, as well as foreign investors looking for a uniquely Canadian, Shariah-compliant investment. Toronto-based UM was founded by Omar Kalair in 2004 and is the only Canadian entry on The Banker magazine's Top 500 Islamic Financial Institutions. Among other things, UM has previously secured a $120 million Shariah-compliant residential mortgage investment facility from a regulated Canadian financial institution, and has developed Shariah-compliant investment and deposit products with other financial institutions in Canada.     "We are very excited to be partnering with Jovian on a product that would provide Muslims in Canada with a much-needed, Canadian-based and Shariah-compliant investment product which avoids such industries as gambling, alcohol and tobacco, and enables active review of financial ratios and leveraging," said Omar Kalair, President and C.E.O. of UM. "Canada is well regarded internationally and the introduction of a Canadian-based,Shariah-compliant product would provide a vehicle through which overseas investors can gain Shariah-compliant exposure to Canada's markets," he added. "We are very pleased to partner with UM Financial on this exciting new venture," said Philip Armstrong, C.E.O. of Jovian. "We feel that a product designed for Muslim investors will have broad appeal in Canada and elsewhere," he added.  Shariah is Islamic religious law, which observant Muslims adhere to in their daily lives. Shariah has certain restraints regarding finance and commercial activities permitted for Muslims. Link: http://www.cibafi.org/NewsCenter/English/Details.aspx?Id=3566&Cat=0

Sharjah Islamic Bank wins the Sharjah Economic Excellence Award 2008

Mohammed Abdullah, CEO of Sharjah Islamic Bank, assured that winning the Sharjah Economic Excellence Award for the third time reflect quality performance, and the effective role played by the Bank in the financial sector in the Emirate of Sharjah, and this award will be added to the series of consecutive successes of SIB, which form a great incentive to continue and develop.

Mohammed Abdullah, CEO of Sharjah Islamic Bank, assured that winning the Sharjah Economic Excellence Award for the third time reflect quality performance, and the effective role played by the Bank in the financial sector in the Emirate of Sharjah, and this award will be added to the series of consecutive successes of SIB, which form a great incentive to continue and develop. This came during a ceremony honoring the winners of the Sharjah Economic Excellence Award 2008 held on Wednesday (May 27, 2009) at the main building of the Sharjah Chamber of Commerce and Industry, as SIB received the award for the finance sector of large enterprises. After receiving the award, Mohammed Abdullah mentioned that achieving the Sharjah Economic Excellence Award for the third time after 2003 and 2005 is the result of the ambitious strategy set by the Board of Directors of Sharjah Islamic Bank, which is based on the vision of H.H Sheikh Dr. Sultan bin Mohammed Al Qasimi, Member of the Supreme Council and Ruler of Sharjah, and the directives of Sheikh Sultan bin Mohammed bin Sultan Al Qasimi, Crown Prince and Deputy Ruler of Sharjah, Chairman of the Sharjah Islamic Bank. This strategy supports ongoing efforts to achieve excellence and the highest levels of quality and efficiency in banking, to establish a bank based on customer service, able to achieve beyond expectations through experienced workforce that strives for excellence. The CEO of SIB added:  'It is a great achievement to receive this prestigious award as a compliment to our efforts, and we can only offer our sincere gratitude and deep appreciation to the Government of Sharjah and the Chamber of Commerce and Industry for their continuous support for the financial sector in the emirate. This support, which played a vital role in the growth of our business.' On this occasion, I would also like to thank all bank employees for their tireless efforts and commitment to teamwork, which has had a great impact on the achievement of these successes, as we continue to achieve success after another, and we look forward to further achievements in the future in light of the expansions of SIB and the growth of its business.' Link: http://www.cibafi.org/NewsCenter/English/Details.aspx?Id=3571&Cat=0

The Potential - Islamic Finance

Italy

Malta may be primarily used by Islamic Finance Institutions to reach the Islamic community in Italy. Around 1.4 million Muslims live in Italy and there are 70 thousand companies set up by citizens coming from Arab countries. However, an Islamic bank is far from appearing in Italy, despite the fact that investors are saying they are ready for it. Analysts are of the opinion that Italy does not have the tax and regulatory framework to deal with the basic products of Shariah Finance.

In this despite, Italy has seen the first Murabahah deal which has been conclded in Pavia. It featured the acquisition of an industrial building by a special purpose vehicle and its disposal to a local Muslim Association for its use as a cultural center. It seems that this will be followed by an Ijarah wa iqtina transaction. However, the double stamp issue made this transaction very costly

Malta may offer the solution to mitigate such double taxation. Given the jurisdictional rules that Malta has together with its Double Taxation agreement in Italy, the above mentioned Murabahah deal could have avoided the double stamp rules in Italy. This may have been achieved through a holding company in Malta that has a 100 percent subsidiary in Italy. Henceforth, Islamic Financing is possible in Italy through the use of Special Purpose Vehicles in Malta. It must be emphasised that the costs of maintaining special purposes vehicles in Malta is considered to be highly cost efficient.

North Africa

After years of watching from the sidelines, North Africa has begun to embrace Islamic finance. Growth could be far slower than in the Middle East given resistance from political and business elites and more flexible views on which loans and investments qualify as Islamic, analysts predict.

As previously stated, Malta has a Double Taxation Agreement with Libya. This allows Malta to act as channel for Shariah Financing in Libya. The Malta and Libya relations have been traditionally very strong with a clear mutual political sympathy and understanding. In fact Malta, has acted as a strong base for conventional banks to reap the opportunities offered by Libya. Evidence of this is the strong presence of Turkish Banks and Austrian Banks in Malta as well as the representation offices in Libya of Malta banks.

Malta can in this sense assist Islamic Finance Institutions to reap the benefits that Libya offers. Furthermore, through this opportunity Malta may be also giving a social contribution to various North Africans that do not have access to financing.

Apart from Libya, Malta is also an ideal location to reach other North African Countries such as Tunisia.

The Domestic Market
There is a tremendous demand in Malta for project financing that Islamic Financial Institutions may tap into. This is particularly so in the Real Estate as well as other Shariah Compliant projects. IFIs that are looking for investment opportunities should look to Malta as opportunities are guaranteed. In this sense, Malta can be used as a test market in the EU. Given its size IFIs can start testing the waters through smaller investments which would have the required profits and the social contribution necessary.
Malta - The Opportunity

Apart from being in the ideal strategic location Malta offers various other advantages. Given Malta’s Tax Regime, Islamic Financial Institutions establishing in Malta shall be at an advantage with respect to achieving tax efficiency as opposed to those establishing in other EU member states. This is not only with respect to various special purpose vehicles as aforementioned but also for example with respect to the registration of Islamic Funds in Malta.

Establishing in Malta also means the possibility of accessing the other 26 EU member states. Through the integration of financial markets in the EU this is becoming all the more possible. The so called EU passporting where an institution authorised in an EU country may offer products throughout the EU without the need to have a separate authorization renders Malta an even more attractive place for Islamic Financing.

Malta offers an efficient cost structure with highly trained multi-lingual professionals in financial services. The Malta Institute of Management is also training professionals in Islamic Finance to ensure that the necessary resources are available in Malta. This is being done in collaboration with International organisations.


Shariah Funds – The Malta Financial Services Authority (MFSA) is of the opinion that Shariah funds may be set up immediately as there are no major changes necessary to Maltese legislation The MFSA in its analyses has considered various types of funds including Ijarah Funds, Murabaha Funds and Commodity Funds. Particular structures through the use of special purpose vehicles or the use of mixed funds are also possible. Even in these cases the Malta tax system puts certain Islamic Funds at a level playing field.

Islamic Banking - With respect to Islamic Banking as opposed to Shariah Funds the Maltese Legislation will be going through some legislative changes in order to ensure that they accommodate the operational structure of a Shariah Compliant Bank and hence granting a fully fletched licence. Changes in the Banking Act and the Financial Institutions Act are expected shortly. Furthermore, there are Income Tax Act, Duty on Documents and Transfers Act and VAT Act changes that are being proposed in order to ensure that Shariah Institutions are not at a disadvantage.

The analysis engaged into so far by the MFSA includes various types of contracts including Musharaka, Mudaraba, Murabaha, Bai’muajjal, Ijara, Bai’Salam. The various types of bank accounts have also been analysed. The MFSA seems to see no difficulty in adapting the current legislation to enable the functionality of these contracts. The Financial Services Industry has proposed evaluation and analysis of other types of contracts as well.


Takaful and Sukuk - These are not new concepts to Malta particularly Takaful. A similar concept existed in Malta with the co-fraternities. The origins of the APS Bank (the bank owned by the Church in Malta) are actually based on similar principles as Takaful. No major changes to the legislation are expected. It is the opinion of the author that both Takaful and Sukuk are already possible in Malta. There might be certain tax implications with respect to certain structures which may be dealt with directly with the Commissioner for Inland Revenue.
Conclusion
As the legislation stands there are various Islamic Finance Transactions that can take place in Malta both in the domestic market as well as in the Euromed region. On the other hand the Maltese Authorities are actively working in order to ensure that more Shariah Compliant transactions are facilitated.

Islamic Financial Institutions establishing now may benefit of the professional enthusiasm that currently exists towards the sector in Malta and its neighbouring partners. There are various structures already possible and there will be more to come.

Malta is an advantageous location for Islamic Finance in the Mediterranean and Islamic Financial Institutions are encouraged to benefit from the opportunities this country in the Mediterranean provides.

Thanks: Reuben M Buttigieg

Malta – The Mediterranean centre for Trade

Throughout the years Malta has always resulted to be the centre for trade in the Mediterranean. Its geo strategic position renders it unique for international trade. This position has led to Malta also developing as a geopolitical country. In fact Malta has been in various historical moments the location of reconciliation between cultures and nations.

Malta has kept its identity in this sense and today various cultures and religions respect each other on the island. This facilitates international business whereby Europeans, Arabs and Americans find Malta as the ideal platform to perform business.

This culture and mentality is reflected also in its international political relations. Malta currently has 48 Double Taxation Agreements (DTAs)which is a significant portfolio of DTAs. Significant are the ones with Libya as Malta is the only European Union Member state that has such an agreement. In fact Malta is constantly used by Libyan investors to penetrate the European Market and vice versa by Europeans to tap into the opportunities offered by Libya.

Islamic Finance in Malta
The discussion on Islamic Finance in Malta originated by the Financial Services Sector in Malta following a number of queries from Islamic Financial Institutions on the potential of Malta acting as an Islamic Financial Services Centre. The discussion was spearheaded by the Malta Institute of Management, the Malta Union of Bank Employees and the Malta Employers Association.

Apart from the aforementioned geostrategic position Malta has the advantage that it has one regulator which is in constant discussion with the financial services industry. This ensures that Malta is constantly at the forefront in the developments within the financial services sector. In fact, following a period of discussions, the Malta Financial Services Authority (MFSA) has published a consultation document on “Islamic Finance in Malta – Banking and Securities”. This document had the aim to analyse the necessary changes required in the Malta Legislation in order that Islamic finance is not discouraged but possibly encouraged in Malta. Another consultation document is expected shortly on Takaful and Sukuk.

The Financial Services Industry including the social partners have provided the MFSA with their feedback and comments on Islamic Finance in Malta. Government is expected to shortly make the necessary changes in the Maltese Legislation.

With the existent legislation, Malta offers substantial opportunities for Islamic Financial Institutions as its current legislation puts IFIs at a level playing field with the conventional institutions as it is further elaborated hereunder. Further changes will allow even more Islamic Finance Transactions.

Thanks: Reuben M Buttigieg

SET UP PANEL TO STUDY USE OF IFRS FOR ISLAMIC FINANCE

A committee should be set up to study whether the International Financial Reporting Standards (IFRS) could also be used for Islamic finance.

Malaysian Institute of Accountants (MIA) president, Nik Mohd Hasyudeen Yusoff, said the proposed committee could identify gaps between the IFRS and the characteristics of Islamic finance and share them with the International Accounting Standards Board (IASB).

"The consolidation of resources between standard-setting bodies and those of the education and research institutions can further enhance the understanding of the proposal," he said at the International Centre for Education in Islamic Finance (INCEIF) intellectual discourse series here today.

He said Malaysia could play a role in further facilitating this suggestion and influence the acceptance of the values and principles promoted by Islamic finance into the IFRS.

"Malaysia should position itself as one of the key stakeholders in the IASB when dealing with Islamic finance matters," he said.

IASB is the developer of the IFRS, a single set of high quality and internationally-recognised financial reporting standards, mandatory for all domestic entities in 85 countries and encouraged in 113 countries.

It was recently reported that the proponents of the IFRS would hold talks with Islamic finance authorities to modify the existing system to accommodate the Islamic financial services industry.

He said as one of the leaders in Islamic banking and finance in the world, Malaysia should take the opportunity to be involved to ensure proper standards were adopted.

Nik Mohd said the IFRS concept and operational model demonstrated the ability of syariah-compliant structures to co-exist with the conventional framework.

He is one of the three speakers at the INCEIF series.

They discussed the issues of the applicability of the IFRS on Islamic financial institutions.

Nik Mohd also talked on efforts by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) to develop an alternative set of financial reporting standards to accommodate the needs of the Islamic financial services industry.

To date, the AAOIFI standards merely cover the standards and transactions which IFRS does not.

However, IASB's refusal to recognise the AAOIFI standards has resulted in Islamic financial institutions in countries such as Bahrain, which adopted the latter's standard, having to have their financial statements qualified by auditors who are affiliated to IASB. -- BERNAMA

Link: http://malaysia.news.yahoo.com/bnm/20090522/tbs-standard-islamic-ceeeaba.html

Middle East leading region for Islamic banking & finance

JEDDAH - A recent research conducted by Shariah-Fortune screened around 810 companies in 50 countries worldwide offering Shariah compliant financial services. 

The Middle East covers more than half (around 56 percent ) of the Islamic Finance market. Around 450 companies are located in this region. Leading countries are the UAE, Bahrain, Kuwait, Iran and Saudi Arabia.

Asian companies compound to a market share of about 20 percent. In particular, Malaysia is one of the key players, not only in Asia, but also globally. 

Some 114 companies have been screened in Europe, which accounts for around 14 percent of the global market share. 

On top position in Europe is the UK. – Agencies

Link: http://www.saudigazette.com.sa/index.cfm?method=home.regcon&contentID=2009052238649

Islamic finance is now the buzz

While the financial meltdown may have painted a universal picture of gloom and doom in the conventional banking arena, on the fast growing Islamic finance (IF) front the mood is one of cautious optimism.

It is generally felt that Islamic banks adhering to the sharia banking code have weathered the financial crisis with commendable fortitude because of its practice of staying away from investing in toxic assets that have taken such a heavy toll on the global banking system.

While Islamic banks have emerged from the crisis virtually unscathed, conventional banks in the US, UK and Europe are bleeding losses of more than US$500 billion with some predicting losses to reach US$2 trillion from the financial market collapse.

The prudence practiced by Islamic banks is believed to have placed IF in good stead with investors looking for safe havens, while at the same time highlighting the strength of Islamic banking and financial methods.

A good indicator of the optimism garnered by the IF sector is the fact that Malaysia is wooing foreign players to create mega Islamic banks capitalized at US$1 billion each, while Kuwait has declared itself keen to be a major player in the IF arena by launching a global expansion drive.

Elsewhere, Singapore and Indonesia are expected to issue about US$900 million of sovereign Sukuk (the Islamic equivalent of bonds) in the first half of this year, while the Standard Chartered Bank—one of the world’s leading banking institutions with a significant presence in Asia and the Middle East—is predicting sales of Sukuk to reach US$10 billion by the end of 2009.

In the Philippines, our banking sources tell us their is gathering interest in Islamic banking, with at least two major banks looking seriously into IF ventures.

So while advocates of IF are not making it out that it is an alternative to conventional banking, it is nonetheless gaining ground as a model for financial institutions, especially in the field of risk management.

However, one concern, which remains a pressing issue and a challenge facing the industry is the lack of critical mass of professionals and expertise with in-dept knowledge and experience in Islamic finance.

The shortage of experienced accounting and finance professionals continues to beleaguer both corporate employers and those in the Islamic finance and banking industry around the world including those who are now aggressively seeking to secure Islamic fund management licenses. This includes experts to interpret shariah law and legal issues in the Islamic finance field.

Filling this breech admirably is the UK based Chartered Institute of Management Accountants (CIMA)—an organization with a reputation for being at the leading edge of business developments—which is the first chartered accountancy body to offer a global qualification in Islamic finance.

Making as pitch for this innovative offering in Manila recently was CIMA President Glynn Lowth who pointed out that the self-study qualification, leading to a “CIMA Certificate in Islamic finance” has been developed in collaboration with the International Institute of Islamic Finance (IIIF) and including input from selected world scholars, advisors and other industry practitioners who have developed and authored the study modules and learning material.

With interest in, and recognition of, Islamic banking fast gathering pace, CIMA (which recently set up a Middle East office in Dubai) is also teaming up with the Monetary Authority of Singapore (MAS) to forge a relationship toward developing the human capital training and development required to tap the Islamic finance global phenomenon.

With the rising demand for shariah-compliant products globally, Singapore is already strategically positioned with existing advantages to capitalize and leverage its financial and banking sectors to a prominent position in Islamic finance.

In another regional tie-up following a successful first year of partnership, CIMA and global banking giant HSBC have agreed to continue their worldwide partnership to promote CIMA’s Certificate in Islamic finance which is available in both English and Arabic.

Link: http://www.manilatimes.net/national/2009/may/21/yehey/opinion/20090521opi5.html

Experts say sectors to focus on include Islamic finance, green solutions

 Economists said two sectors which Singapore should focus on as it gears up for a global economic recovery are Islamic Finance and the green sector. 

They said the country should also look to regions like the Middle East and Africa for new opportunities. 

They were responding to queries from Channel NewsAsia following President S R Nathan's call for the country to review some of its strategies for economic growth. 

Economists said that areas where Singapore could have an advantage include the Islamic finance sector and environmentally friendly solutions in manufacturing and the planning of eco-cities. 

They also feel the services industry is one which takes advantage of the country's key resources and also allow for its natural limitations. 

Cheung Tai Hui, regional head of research, Southeast Asia, Standard Chartered Bank, said: "I think a sensible strategy will be to continue to look at the service sector, which actually takes advantage of Singapore's human resources, as well as its limitations on land space." 

Another strategy that has been identified by the Singapore Business Federation (SBF) is focusing more on helping companies break into new markets. It believes that the country should look to new markets such as China, India, the Middle East and Africa. 

It feels the Singapore brand name is well regarded in many overseas markets and this is a strength that companies should exploit. 

The SBF has established several business platforms, such as the Middle East Business Group, that helps members explore business opportunities in that region. 

In order for Singapore to fully maximise its opportunities, the Singapore International Chamber of Commerce believes that an important underlying factor is the investment in education and upgrading of the workforce. 

Experts also said that continued investment in education and upgrading of the workforce will be key to success in the fast-changing global economy. 

Song Seng-Wun, regional economist, CIMB-GK Research, said: "There are new industries that are always popping up that can forever be taken advantage of if the Singapore government is nimble enough. At the end of the day, it is to be as close to the frontier of technology changes as possible in order for Singaporeans to ride on that change that may develop quite quickly." 

Market watchers also said that another key area to focus on is the creation of new jobs as hiring is likely to lag behind a wider economic recovery. - CNA/vm 

Link: http://www.channelnewsasia.com/stories/singaporebusinessnews/view/430356/1/.html

RichWeb launches IslamicFundsFinder.com

First website specialised in Shari'ah-compliant investment funds provides fund managers with the ability to list their funds with three confidentiality levels or viewing options (public, registered investors and selected investors), and at the same time, allows investors to search for investment or placement opportunities based on search criteria such as fund type, asset class, industry and country.

UAE-based RichWeb - a member of Tharaa Holding said it has launched IslamicFundsFinder.com, which it claims is the first specialised website in the world that highlights the Shari'ah-compliant investment funds sector and lists fund management companies and consultants.

“The website aims to actively contribute to the development of the Islamic investment funds  sector through providing information and updating investors on new investment opportunities, and forming a database for Islamic fund management companies and related companies  thus to become one of the best references in the field,” the company said in a statement.

Shabeer Mohammed the Managing Director of RichWeb said, "Fund Managers worldwide have been affected by the global financial crisis, and the market dynamics have created new challenges for them.  One of the key new challenges is the ability to attract investors and conduct placement activities targeting existing and new investors. IslamicFundsFinder.com comes as one of the solutions for this new challenge by allowing Islamic fund managers worldwide to list their funds and reach investors from around the world. The portal provides fund managers with the ability to list their funds with three confidentiality levels or viewing options (public, registered investors and selected investors), and at the same time, allows investors to search for investment or placement opportunities based on search criteria such as fund type, asset class, industry and country.  The portal also allows for listing funds that are launching soon, which allows registered investors to receive notices on relevant opportunities once they are listed"

The launch of IslamicFundsFinder.com comes after the launch of two other portals by RichWeb BusinessBuyAndSell.me and PrivateEquities.me over the past five months.  All portals have been launched in BETA (trial) status and will be officially launched in September this year.

Link: http://www.cpifinancial.net/v2/News.aspx?v=1&aid=2400&sec=Islamic%20Finance

Shariah-compliant finance is the best choice

In these times of financial turbulence, Shariah-compliant banking and finance is being endorsed for its stability and is evolving as the best choice on the road to economic recovery.

According to Imtiazz Sarfaraz Khan, Head of Retail Banking and Finance Department at Abu Dhabi National Islamic Finance, Shariah-compliant finance has always been an appropriate and relatively risk-free route for financial dealings but was downplayed for quite some time mainly due to political considerations across the globe.

Khan said the definitions of Shariah-compliant or Islamic banking were endless.

"Some non-Shariah-compliant banks and financial institutions may choose to call it 'interest-free banking', while others are comfortable with 'zero interest on asset-backed finance'," Khan added.

"If one looks from the customers' point of view, the key attributes that drive consumer confidence are trust and transparency - not just quick-fix solutions."

He added that these positive attributes are considered "honesty of purpose" or "neeyah" in Arabic.

"Recently, there has been a very visible trend in Shariah-compliant banking and finance, which is here to stay - somewhat like a revolution of sorts, with a strong social message and a positive contribution to the individual and the economy as a whole. Shariah-compliant finance helps in filtering funds away from non-social, non-ethical areas, while promoting thrift," he said.

Khan said easy access to money through personal loans and a variety of credit products such as conventional credit cards and overdrafts have tempted the common man. People leveraged on their accounts and borrowed more than what they were eligible 

during the economic boom. In the downturn, it has been difficult for them to arrange their payment installments and has backfired on their saving plans. In traditional financial services, this short-term benefit has opened a Pandora's box.

This is due to the fact that money is not treated as a commodity in Islamic finance, but as a means of exchange to facilitate the flow of goods and services. A sharp eye on trust and transparency is maintained by the Shariah controllers of each bank, but implemented by the entire team policymakers, managers and front-end sales and service personnel.

Link: http://www.zawya.com/Story.cfm/sidZAWYA20090524034305/Shariah-compliant%20finance%20is%20the%20best%20choice

S&P: Outlook for Islamic finance remains strong

STANDARD & Poor’s believes the outlook for Islamic finance remains strong despite the sharp fall in global sukuk issuance to US$14.9 billion (RM52.89 billion) in 2008 from US$34 billion (RM120.7 billion) in 2007.

STANDARD & Poor’s believes the outlook for Islamic finance remains strong despite the sharp fall in global sukuk issuance to US$14.9 billion (RM52.89 billion) in 2008 from US$34 billion (RM120.7 billion) in 2007. In its Islamic Finance Outlook 2009, Standard & Poor’s Ratings Services credit analyst, Mohamed Damak said the sukuk market suffered heavily in 2008 but the outlook for asset-backed sukuk remained positive, despite the doubts raised by the disruption in global financial markets and in structured finance.  ”When economies begin pulling out of the downturn, we expect Islamic finance to resume its rapid growth,” Damak said.  “The long term pipeline for sukuk issuance is healthy, and the market is attracting interest from an increasing number of issuers both Muslim and non-Muslim countries,” Damak added.  Link: http://www.cibafi.org/NewsCenter/English/Details.aspx?Id=3492&Cat=0

The Malaysian Govt wants more investment from Islamic venture capital firms

The Malaysian Government hopes more Islamic venture capital companies will be set up to support Malaysia’s aims of becoming the regional hub for Islamic finance.

The Malaysian Government hopes more Islamic venture capital companies will be set up to support Malaysia’s aims of becoming the regional hub for Islamic finance. The Malaysian Deputy Finance Minister Datuk Dr Awang Adek Hussin said Islamic venture capital was a new area in which the Government sought more investment. “This is in line with the Government’s aspiration to promote Islamic finance, banking and capital markets as well as their related products such as Islamic venture capital and private equity,” he told a press conference after delivering the keynote address at the Islamic Venture Capital and Private Equity Conference 2009 on May 20, 2009 organized by Malaysian Venture Capital and Private Equity Association (MVCA) and Islamic Banking and Finance Institute Malaysia (IBFIM). He added that given the contracting global credit markets, the promotion of Islamic venture capital and private equity was both appropriate and timely. To date, only one Islamic venture capital fund has been set up in Malaysia which is managed by Musharaka Venture Management Sdn Bhd, with a fund of RM35mil. Musharaka was launched in July 2009 by Malaysia Venture Capital Management Bhd, the venture capital arm of Ministry of Finance, as part of its Second Outsource Partners Program. According to MVCA vice-chairman Shaik Taufik Shaik Yusoff, Musharaka which had not made any investment yet, expected to find suitable companies to invest in 2009 as it is looking at a few deals currently. “The fund will primarily lean towards companies involved in information and communications technology as well as high-tech businesses,” he said. On Islamic banking in Malaysia, Awang Adek said in his keynote address that the sector had registered double-digit growth in the last eight years with an average annual growth of 20% in terms of assets. “The share of Islamic banking assets in the total banking sector expanded to 16.7% in 2008 compared with 6.9% in 2000. “And about 60% of the world’s sukuk issuance originated from Malaysia last year. In the first quarter of this year, another RM6.4bil was issued that has made Malaysia a leader in the global sukuk market,” he said.  Link: http://www.cibafi.org/NewsCenter/English/Details.aspx?Id=3487&Cat=0

FTSE, Thailand bourse launch Islamic index

Global index complier FTSE and the Thailand stock exchange have launched a sharia stock index to meet demand for Islamic assets, FTSE said on May 21, 2009. Global index complier FTSE and the Thailand stock exchange have launched a sharia stock index to meet demand for Islamic assets, FTSE said on May 21, 2009. The index uses asset-based debt screening, resulting in a less speculative methodology and ensures companies do not pass the criteria due to market cap fluctuations, FTSE said in a statement. The index is screened by sharia consultancy Yasaar Limited, it said. "This new index will serve both domestic and international investors looking to invest in a transparent and sharia-compliant manner, as well as help issuers create structured investment products tailored to the global Islamic market," Stock Exchange of Thailand President Patareeya Benjapolchai said. Apart from avoiding sectors such as weapons, alcohol, tobacco and pork-related products, a company's debt must be less than 33 percent of assets and cash and interest bearing items must be less than 33 percent of assets to qualify, FTSE said. Accounts receivable and cash must be less than 50 percent of total assets and total interest and non compliant activities income should not exceed 5 percent of total revenue. The stock exchanges of Malaysia, Indonesia and Singapore have established Islamic equity indexes.  Link: http://www.cibafi.org/NewsCenter/English/Details.aspx?Id=3486&Cat=0

State Street new report on Islamic finance

Report spotlights trends in Islamic finance and the reasons for its growing popularity, Says, “The tenets of Islamic finance - lower leverage, transparency and no speculation - make it an attractive investment option in any market environment, especially today's.”

State Street has released what it calls its Vision Report on Islamic Finance, citing a market that is growing by as much as 20 per cent a year since 2003. The seventh paper in State Street's series of Vision Reports estimates that total assets under management by Islamic financial institutions now exceeds $600 billion.

Rod Ringrow, Senior Vice President of State Street based in Doha, Qatar said, "Against a backdrop of a challenging global environment, Islamic finance is emerging as a competitive form of intermediation in the international financial system and it has a key role to play in restoring confidence in the markets.  Opening the door to additional forms of investing, particularly ones that emphasise the sharing of risk and reward, will certainly help to facilitate this goal."

State Street says that the Islamic finance industry has become a growing option for investors and a competitive form of financing for commercial enterprises.  It is also allowing for the further diversification of risks and is contributing to an efficient international allocation of resources across borders.

While the selection of products at large Islamic financial institutions remains relatively narrow, some newly created Shari’ah-compliant instruments are beginning to rival those of conventional banks.  The principles of Shari’ah, the moral and legal code that governs the industry's development, impacts the underlying structure of its products and services, and ultimately serves as one its biggest selling points to investors. 

At its core, Shari’ah specifies that money has no intrinsic value of its own and should be used as a tool for measuring the value of assets.  On the deposit side, these instruments include profit sharing investment accounts (PSIAs), which give depositors the right to share in Islamic banks' profits and losses.  In addition, several money market, equity, real estate, private equity and infrastructure funds are now being offered.

Ringrow added, "To date, the global financial crisis has had a limited direct effect on Islamic finance as investors seek out asset classes and markets they hope will provide stability. The tenets of Islamic finance - lower leverage, transparency and no speculation - make it an attractive investment option in any market environment, especially today's.  In fact, demand for Islamic finance products and services in the global market may be exceeding current availability.  Islamic finance will attract an increasingly global group of investors in the years ahead, and we believe the industry as a whole will respond with new products that will offer greater variety and sophistication for a host of complex, cross-border transactions."     

Link: http://www.cpifinancial.net/v2/News.aspx?v=1&aid=2334&sec=Islamic%20Finance