Why is Islamic finance important for MBAs?

There are a number of business schools now introducing Islamic Finance in their curriculums. For some, the reasoning is to open MBA students up to different cultural realities, but for many schools, it just makes business sense.

We can identify three main reasons why it is important to include Islamic Finance in the curricula of an MBA student.

Islamic finance has a niche hold on the market, and it is growing at a tremendous rate

Islamic finance has developed into a solid industry that complements conventional banking, only a fraction of the available liquidity is actually invested in the sector, (2 per cent of global banking assets) though it does offer great potential and further growth prospects (is growing more than 20 per cent annually.) Some of the most active countries in Islamic finance (Saudi Arabia and the UAE for example) represent the highest level of liquidity in today’s global market, a market hungry for liquidity.

On the other hand, out of the 1.6 billion Muslims in the world, only 14 per cent use traditional banks, compared to 92 per cent of US households and 95 per cent UK, and a large number might find Islamic finance as an attractive option for their savings and/or financial needs.

The Islamic market demands a specific expertise that combines solid financial knowledge with that of Islamic finance market. MBAs can fill that role

The origins of the Islamic modern banking movement first developed in the 1950s and 60s, but its full development occurred in mid 70s after the oil crises of 1973, coinciding with the emergence of Islamic movements.

During the 90s, Islamic financial institutions became increasingly innovative and developed more complex instruments and structures to meet the demands of modern day business. Today they cover a wide product range, from corporate finance to asset management; and future development is likely to be in the area of derivatives liquidity management.

In recent years, driven by the oil financial liquidity and an increase demand, the industry witnessed a large expansion, both in terms of its side, as well as in the financial innovation of the new developed products. Today, most conventional players are active, like Deutsche Bank, HSBC, BNP, Citi, UBS, or Barclays in the offer side but also companies like general electric in the demand side. Therefore, it is becoming a global industry that needs global expertise.

Because the industry is so new, there is still much room for people willing and capable of providing the needed innovations to move the industry further. Thus, MBAs not only need to learn about the Islamic finance world because it can shed light on other finance markets, but because it invites innovation and offers job growth.

MBA students have a solid training in finance and finance innovation, that can be easily transfer to the Islamic finance sector, provided that they understand enough the Islamic finance market. Therefore, for MBA students looking into new career possibilities, Islamic Finance Industry can definitely be something for them to explore.

A deeper understanding of Islamic finance will help MBAs shape the debate on the new financial order

There is a popular saying: There is nothing like a good crisis to reassess your options and look for new alternatives.

Islamic finance can offer some food for thought in the financial crisis. For example, the industry was less effected by the crisis because its intrinsic features help the stabilization of credit growth, promote an asset-based investment, foster economic productive transactions and thus a reduction of systemic risk, and for the most part help to have a balanced leverage.

In general, the principles of avoiding speculation and fostering instead the real economy provide interesting insight on how to avoid some of the causes of financial crisis.

In short, the market for Islamic finance has developed itself as a serious alternative for conventional banking and covers a wide product range, experiencing state of the art education- and research regarding the Islamic Finance Industry is interesting for international students.

A deeper knowledge of Islamic finance can improve the competitiveness of MBA students on the international financial market stage – for their personal career possibilities and also in shaping a new financial order that is in the coming.

Celia de Anca is the professor of Islamic Finance and director of Scief at IE Business School.

http://www.independent.co.uk/student/postgraduate/mbas-guide/why-is-islamic-finance-important-for-mbas-8009567.html

More graduates needed in local Islamic finance sector: expert

Brunei needs to encourage more Syariah graduates to enter the finance sector if it wants to become a legitimate player in the Islamic finance industry, said an expert here yesterday.

Executive Director of Malaysia-based International Syariah Research Academy for Islamic Finance Dr Mohamad Akram Laldin said building human capacity is the key to developing Brunei's niche in the market.

"The challenges are integrating the Syariah knowledge and market knowledge. We need to have more Syariah graduates to go into the area and understand the market."

"We need people who are able to run the business, who are capable, and can plan. I believe with the establishment of Centre for Islamic Banking, Finance and Management (CIBFM), Brunei has taken a very good step," Dr Akram said on the sidelines of yesterday's International Conference on Islamic Finance held in the capital.

CIBFM was officially launched earlier this year and offers a range of short courses for banking and finance staff to acquaint them the tenets of Islamic finance.

"We have started seeing more and more people who are trained in Islamic finance coming up. This is a very good sign... The majority (of the) population of Brunei are Muslims, so that is another encouraging factor to improve manpower," he said.

However, working in the English language medium has proven difficult for Syariah graduates and remains a barrier to them entering the finance sector, said Dr Akram.

Accustomed to using Malay and Arabic in their professional lives, graduates will need to become proficient in English as it remains the language medium of finance globally.

"Syariah graduates sometimes feel very uncomfortable using English. I believe we can slowly overcome this."

The need for staff well-versed in Islamic finance becomes more pressing with non-Islamic banks entering the fray.

Dr Akram, who also acts as a consultant for HSBC Brunei, said the bank is also entering the "Islamic window" by drawing up Syariah-compliant financial products.

"In most jurisdictions this is allowed, only in some places such as Qatar they do not allow (conventional banks to offer Islamic finance products). They will have what they call an Islamic window."

Southeast Asia can capitalise on the growing Islamic finance sector, projected to be valued at US$2 trillion by 2017, he added.

"In Southeast Asia, each and every country has their own strength... From what I can see, in Brunei, maybe wealth management, in Malaysia, we have sukuk, in Singapore corporate and investment banking, Indonesia, because of the huge population base retail banking."

http://business.asiaone.com/Business/News/Story/A1Story20120516-346245.html

Singapore to use Waqf to promote Islamic Education

The Singaporean government is planning an endowment fund to promote Islamic education in the south-eastern Asian country, The Straits Times newspaper reported.

“I am confident that MUIS’s move to create new waqf will pave the way to revive the philanthropic spirit in the community,” Yaacob Ibrahim, Minister-in-charge of Muslim Affairs, told parliament on Thursday, March 8.

“It is a progressive move to keep pace with evolving giving trends and the growing complexity of our financial environment", he added.

The three-million-dollar fund will be created by the Islamic Religious Council of Singapore (MUIS). It will be used to promote Islamic education in the south-eastern Asian country.

Waqf is a permanent dedication of movable or immovable properties by a Muslim for purposes recognized by Islamic Sharia. MUIS handles and develops 200 waqfs properties in Singapore, with a total asset value of S$250 million. These properties, held in trust, yield an annual rental income of millions of dollars, makes Singapore the region’s most advanced country in the development of waqfs.

MUIS is the largest body that caters for the needs of Muslims, who are estimated at between 450,000 to 500,000, making around 15 percent of Singapore’s population.

Yaacob said that he hopes the new waqf fund will revive the philanthropic spirit among Singaporean Muslims.

Over the past years, Muslim philanthropists have created waqfs, whose annual funds are used in funding religious and charitable programs.

He expressed pleasure that more Muslims nowadays are doing financial planning and drawing up wills in accordance with Islamic inheritance law.

As a form of “planned giving”, he suggested that Muslims could pledge up to one third of their estates for the new waqf fund.

The minister gave tribute to the role played by waqfs in Singapore.

He cited the example of a mosque which created a new waqf through the purchase of two properties to sustain the mosque operations.

The minister also called on MUIS to find an appropriate way to promote and adapt waqfs to the modern context.

He said he expects many well-to-do Muslims would like to contribute to the community.

http://www.ummid.com 

UK bids to remain West's top Islamic finance hub UK bids to remain West's top Islamic finance hub

By Charlotte Kan

 

London has been providing Islamic financial services for 30 years, but in recent years the industry has started to attain a greater profile.

The United Kingdom ranks ninth globally amongst countries providing Islamic finance services, according to a May 2011 CityUK report. That makes it the leading Western country and Europe's premier Islamic finance center with USD 19 billion of reported assets. London has been providing Islamic financial services for 30 years, but in recent years the industry has started to attain a greater profile.

Omar Shaikh, board member of the Islamic Finance Council (IFC) in Britain, thinks that this higher profile results from four main factors.

"The first is leadership, demonstrated by the UK government being the first mover in the West to create a conducive fiscal and regulatory framework to enable Islamic finance, by introducing legislation that gives a level playing field for Islamic finance," Shaikh told Zawya.

A key change to the fiscal and regulatory framework in 2003 was the removal of double taxation on Islamic mortgages and an extension of tax relief on Islamic mortgages to companies and individuals, making investing in real estate more attractive. This has helped broaden the market for Islamic products for both Shariah-compliant institutions and firms with 'Islamic windows'.

"The second factor is the strong basis of education, training and thought leadership originating from the UK, with a variety of qualifications and courses run by the Islamic Institute of Banking and Insurance, the Chartered Institute for Securities and Investment and others. The Islamic Finance Council itself offers a unique global course exclusively for Shariah scholars," Shaikh said.

There is a profusion of Islamic finance qualifications available in the UK. Courses in Islamic finance are also offered by the Chartered Institute of Management Accountants, the Association of International Accountants, the Cass Business School and Reading University, among others. A total of 55 colleges and professional institutions offer education in Islamic finance in Britain - more than anywhere else in the world.

"On the commercial side, there is a host of Islamic banks and institutions providing retail, investment banking, and real estate and broader asset management services. London has quality assets which have historically provided a home for Gulf liquidity," Shaikh said. According to a 2009 report by CityUK, Britain's Islamic banking sector is now bigger than that of Pakistan. A total of 22 banks, five of which are fully Shariah-compliant (Bank of London and The Middle East European Islamic Investment Bank, Gatehouse Bank, Islamic Bank of Britain, QIB UK) serve the local market. Another 17 leading institutions including Barclays, RBS and Lloyds Banking Group have set up special branches or subsidiary firms for Islamic finance clients. That's the largest number of banks for Muslims of any western country.

"Fourth, London itself is a global financial centre with a strong capital market which has attracted a number of global sukuk to list on the LSE platform," Shaikh said. Four major listing platforms are currently battling for dominance of the lucrative and fast-growing sukuk market - London (London Stock Exchange), Kuala Lumpur (Bursa Malaysia), Dubai (Nasdaq Dubai), and Luxembourg (Luxembourg Stock Exchange). The LSE is currently leading the game globally as it offers listing as well as trading, whereas other domiciles like Luxembourg are primary listing domiciles with no trading. Reduced costs are also part of the attraction.

"In addition to the prestige of admitting securities to trading on a truly international and globally respected exchange, allowing companies to raise their profile with investors worldwide and access a deep pool of capital, London offers the benefit of competitive admission and listing costs as London is the only major listing venue which does not charge an annual fee to issuers," the LSE says.

In January 2012, the LSE attracted the listing of another two sukuk bringing the total number of sukuk which have listed on the exchange to 42 and the total money raised to over USD 23.75 billion. The two latest issuances to list on the LSE include EIB Sukuk Company's issue of five-year USD 500 million Islamic Trust Certificates on behalf of Dubai-based Emirates Islamic Bank. The other listing was the FGB Sukuk Company's five-year USD 500 million Islamic Trust Certificates on behalf of Abu Dhabi-based First Gulf Bank.

The LSE is confident it can capture similar interest in the future. "The two new recent listings show that appetite from investors and issuers is strong. London's long tradition of financial innovation along with the commitment of the UK Government to developing Islamic financial markets means the UK will remain a popular destination," it says.

Beyond the LSE, the London Metal Exchange also has a role to play, as it currently offers commodity-based contracts traded off-exchange, such as Treasury murabaha.

Shaikh said that "underpinning all this activity is the significant talent pool of top-quality professionals across various fields including accounting, banking and finance, legal, tax, etc." Admittedly, the UK capital has a well-established base of specialists in the legal field: The Legal 500 cites 16 major London law firms with specialist Islamic finance expertise and experience.

There are other factors which should further support the development of Islamic finance in the UK, such as the demographics of the local Muslim population. The 2011 National Census figures to be unveiled later this year are expected to show the UK Muslim population has reached 2.2 million. In 2030, the figure will be closer to 5.6 million, US think-tank The Pew Forum estimates. Muslims in the UK have a combined spending power of GBP 21 billion and save about GBP 1 billion a year, which shows the significant potential for the market.

So the prospects of Islamic finance in the UK look good, but the industry-wide context seems hardly favorable.

Shaikh remains optimistic. "The global finance industry is in trouble but Islamic finance has for the past few years registered double-digit growth, specifically here in the UK. It will continue to grow, though it will be more challenging on the retail side. In the wholesale market, we will continue to see investments and growth. The sukuk and corporate sukuk market is very young but I can see it picking up in the next few years," he said.

Sultan Choudhury, managing director of the Islamic Bank of Britain, thinks the UK Islamic finance industry "has achieved a huge amount in a short while, both in the retail and corporate sectors".

"With continued product development and market education, I am confident the UK will maintain its leadership position as the Western hub for Islamic finance, achieving continued growth and success," he told Zawya.

© Zawya 2012

Centre for Islamic Banking, Finance & Management launched

Her Royal Highness Princess Hajah Hafizah Sururul Bolkiah yesterday attended the official launching of the Centre for Islamic Banking, Finance and Management (CIBFM) and its first flagship, the Fiqh Mu’amalat Professional programme.

Held at the Indera Kayangan Ballroom of The Empire Hotel and Country Club, the launch opened with recitations of surah al-Fatihah and doa led by Pehin Orang Kaya Paduka Seri Raja Dato Paduka Seri Setia Ustaz Hj Awg Suhaili Hj Mohiddin.

On hand to officiate the launch of the centre and the programme was Acting Minister of Finance II at the Prime Minister’s Office Dato Paduka Awg Hj Bahrin Abdullah.

In his opening remarks, Permanent Secretary (Policy) at the Ministry of Finance cum Chairman of the Board of Directors for the Centre for Islamic Banking, Finance and Management Hj Shahbudin Hj Musa, in his capacity as chairman of the event, highlighted the objective of the establishment, function and roles of CIBFM, as well as the unique features of the Fiqh Mu’amalat Professional programme.

He emphasised on the centre’s role towards providing continuous learning and development programmes through a balanced mix of Islamic and conventional focus including the required soft skills.

He also shared future plans of the centre, which expects to offer and conduct some 50 programmes targeted for about 800 participants this year.

The launch saw the attendance of members of the Syariah Financial Supervisory Board, senior government officials, CEOs, managing directors and representatives of financial institutions and the first batch of the flagship.

In conjunction with the launching, a seminar in the form of special presentations and penal discussions by both local and well-known Syariah scholars and speakers were also held.

Following the opening ceremony, a special presentation was presented on Syariah Advisors for Islamic Financial Institutions – ‘Expectations and Challenges’ by a leading shariah scholar in Islamic Finance, Dr Mohamed Ali Elgari.

This was then followed by panel discussions on ‘Effective Human Capital Development – Mitigating the Gap on Applied Syariah Knowledge and Finance’ and another special presentation on ‘Value Propositions of Syariah Board in Contemporary Islamic Financial Market.’

The presentation delivered by founder and chairman of Amanie Advisors (Kuala Lumpur, Dubai, Luxembourg and Cairo), Dr Mohd Daud Bakar, concluded the morning event.

Later in the afternoon the event saw a continuation of panel discussions on Development of Islamic Investment Products and Services – A Local and Global Perspective and ‘Syariah Compliance Review – An Art or Science?’

http://news.brunei.fm/

Nigeria launches Islamic finance institute

The Governing Council of Bayero University, Kano-Nigeria has approved the establishment of an International Institute of Islamic Banking and Finance (IIIBF) in the University.

The Vice Chancellor Bayero University, Kano-Nigeria, Prof. Abubakar Rasheed has appointed Prof. Shehu Usman Rano Aliyu as the Director of the International Institute of IIIBF. Also appointed were the assistant directors training and linkages, research and publications and academic programmes, in the persons of Associate Professor Binta Tijjani Jibril, Dr. Nasir Ahmad and Dr. Mansur Idris, respectively.

The institute is currently advertising three postgraduate programmes which are due to commence in the 2012 academic session. The Institute is also inviting quality research papers for its forthcoming international conference in May this year.

http://www.cpifinancial.net

Al-Mulla Obtains PhD In Islamic Financial Ops

Al-Mulla Offering A Copy To Al-Omar

Al-Mulla Obtains PhD In Islamic Financial Ops

Kuwait Finance House (KFH) CEO Mohammed Al-Omar asserted that the development of skills of KFH employees has no ceiling, and noted that all employees are aware of the importance of improving and upgrading their skills. It is worth noting that the Development and Research Manager Unit at KFH Adnan Al-Mulla has obtained a PhD degree in his field of work, which prompted Al-Omar to receive him and take a copy of his studies. He went on to say that such academic efforts are highly appreciated, since they allow KFH to offer its clients innovative Islamic services and products.

Meanwhile, Al-Mulla stated that the PhD that he had obtained from Cairo University focused on Islamic financial operations, and noted that he chose this field of studies, since it is part of his work at KFH. He added that investors and institutions currently applaud Islamic financial transactions, especially after this industry withstood the financial crises that hit global markets during the past few years by offering real financial solutions. Such success forced non-Islamic markets to take advantage of such transactions.

http://www.arabtimesonline.com

Talent shortage in Syariah banking

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.

http://thestar.com.my

Action on lack of Islamic expertise

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.

http://www.thenational.ae

A guide to Islamic finance

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

Efforts to build local expertise in Islamic Finance

Amana Global, a fully owned subsidiary of Amana Takaful PLC has signed an MOU with a Malaysian Finance institute to build capacity in the local Islamic Finance Industry.

The Malaysian partner is the Islamic Banking and Finance Institute of Malaysia.

The Company says the move will help build industry specific knowledge in the field of Islamic Finance in Sri Lanka.

“At present there is a dearth of professional services available to satisfy the demand” added a statement issued by the Company.

Initially the aim of the program would be to offer short term courses for public audiences and corporate entities on the subject of Islamic Finance.

Fawas Farook, General Manager of Amana Global Limited speaking about the initiative said  “We have also sought a facilitator to make this partnership work and thus brought in First International Consultancy (Malaysia), which possesses a wealth of experience in propagating Islamic Finance learning”.

Amana Global is a BOI approved venture, established to provide advisory services in the field of Islamic finance both locally and internationally.

http://www.news360.lk

Dar Al Sharia, German Islamic Institute of Islamic Banking and Finance sign agreement

Dubai-based Dar Al Sharia Legal & Financial Consultancy has signed a collaboration agreement with the German Institute of Islamic Banking and Finance (IFIBAF)

The relationship between these two organisations originates from a highly successful Islamic Finance Trade Mission to Europe conducted by Dubai Exports, an agency of the DubaiDepartment of Economic Development.

The Islamic Finance Trade Mission sought to increase the awareness of Islamic financial service providers and institutions from the UAE in the European markets. In doing so the trade mission held a number of high level meetings and seminars with government and private sector participants in Europe. In due course, Dubai Exports will announce some of the outcomes fromthis mission but one success story was inked on 22 June 2011 at the Islamic Finance Forum organised by Dubai Exports with almost 200 participants.

Sohail Zubairi, Chief Executive Officer of Dar Al Sharia, said, “I strongly feel that the next big thing in the Islamic Finance industry may well be Germany. It is not the matter of why but when the first Islamic bank will start operation in the country. Our feeling is built upon pleasant revelation as to the high level of excitement and enthusiasm about Islamic finance amongst the bankers, lawyers, consultants and members of the public whom we met and talked to during the Islamic Finance Trade Mission in April.”

Dar Al Sharia and IFIBAF intend to work more close especially in the field of capital market transaction for retail and institutional business. Bringing in local market expertise in legal and regulatory requirements combined with Shari’ah-compliant product solutions, IFIBAF will benefit from the expertise of Dar Al Sharia, especially in the area of Shari’ah advisory and Shari’ah auditing.

IFIBAF is a German based consultancy that is developing Islamic banking and finance in the German speaking nations and Europe. IFIBAF serves clients in Shari’ah-compliant transactions and offers a full chain of services as an on shop system. IFIBAF was established in order to be a provider of Islamic finance knowledge and expertise to the largest Muslim population in Europe of 4.6 million with an estimated wealth in excess of EUR 35 billion.

Mounsif Chtaiti, Director of IFIBAF stated, 'This partnership brings together the huge and extensive expertise of Dar Al Sharia in providing Islamic financing and investment solutions to the institutions from around the world with the on the ground knowledge and connections of IFIBAF in Germany.

“This agreement will help in serving the institutions and clients needing consultancy services for Islamic finance products, training and Shari’ah audit in Germany and other German speaking nations in the Europe.”

Three quarters of the Muslim population in Germany is below the age of 49. In addition to this estimates show that the Muslim population in Germany has a much higher saving ratio of 18 per cent compared to 10 per cent for the country as a whole. More importantly, a survey in 2010 showed that 72 per cent of Muslims living in Germany are interested in Islamic financial products and services. The survey also found that if such products were to be offered in Germany, 60 per cent of respondents would consider making an investment. An amazing 94 per cent of them stated that they would purchase such products if offered by an Islamic financial institution. Muslim entrepreneurs generated more than EUR 50 billion in profits last year.

Dr Hussain Hamed Hassan, leading Shari’ah scholar and Managing Director of Dar Al Sharia said, “It is befitting to Dubai being the birth place of Islamic Finance that such an agreement is signed here which will allow the flow of innovative products from Dubai to Germany. I would personally like to thank Dubai Government represented by Dubai Exports Islamic Finance Team, and the German Government represented by AHK for facilitating the Islamic Finance Trade Mission and the agreement which is the direct result of the mission.”

cpifinancial.net

Two new courses are set to begin at the University of Bedfordshire.

The courses will recognise the increase in demand for Islamic financial products and services.

They will guide students through the principles of Islamic finance and the theory of Islamic commercial practice which is based on Shari'a Law According to these principles, Islamic financial products prohibit the charging of interest and investment in alcohol, pork, pornography or gambling.

The university says that students choosing these courses, The Master of Science (MSc) in Islamic Banking and Finance and the Master of Laws (LLM) in Islamic Commercial Law, will benefit from growing employment opportunities in the West representing Muslim interests and in Muslim countries.

Tariq Khan from the University of Bedfordshire told the BBC there is a demand for this type of course:

"We are based just outside London, the financial capital of the world, where there is a large demand for Islamic finance and banking products.

"Our international students, who are often from the Middle East, and who will return home to practise law, have also highlighted a need for a foundation in Islamic banking and finance laws."

Although the growth of formalised Islamic products and services is relatively new, a recent estimate puts the value of assets managed by the Islamic financial industry at US$1 trillion, a figure that is predicted to grow between 10 and 15 per cent per year.

Today, there are more than 500 financial institutions offering Islamic finance in more than 80 countries

bbc.co.uk

CFA Institute today announces the appointment of Usman Hayat, CFA, FRM, as director of Islamic finance and Environmental, Social, & Governance (ESG) Investing, to its Europe, Middle East and Africa (EMEA) office. Usman moves to London from the Asia Pacific Office in Hong Kong, bringing with him invaluable expertise in Islamic finance to the organisation's EMEA headquarters. 

As director of Islamic finance and ESG Investing, Hayat's main focus is to assist in developing educational content for investment professionals and members of CFA Institute in these two areas. In response to the growing interest and activity in Islamic finance and ESG issues, CFA Institute has created this directorship to support its Life Long Learning initiative - a scheme that helps members to stay updated in their profession through access to conferences, online multimedia and resources, publications, and executive education. 

Hayat holds the CFA designation, as well an MBA from Lahore University of Management Sciences. Previous to his role at CFA Institute, Hayat worked as an independent consultant in the capital markets of Pakistan. He has extensive knowledge and experience in the areas of market development and risk management having also worked as Joint Director at Pakistan's Securities and Exchange Commission. Since 2002, Usman has had over 60 articles published in English language media.

Commenting on the appointment, Nitin Mehta, managing director for EMEA at CFA Institute, said, "Usman's appointment is timely: Islamic finance and ESG factors are becoming important features of the investment landscape, and, therefore, investment professionals are seeking more educational opportunities related to these areas. Among the major financial centres, London is a leader in both topics, so Usman is ideally positioned to build a network of support and influence in developing educational content and programmes for the global investment community." 

Source: Zawya

Saudi academicians, businessmen to participate in forum

Saudi businessmen expressed solidarity with the local academe for the propagation of Islamic finance in Europe, making Spain as its hub.

According to Dr. Abdullah Q. Turkistani, director of Islamic Economic Research Center, King Abdulaziz University, no less than the chairman of the Jeddah Chamber of Commerce and Industry (JCCI) showed strong support for the promotion of Islamic finance in Europe and Latin America through the Center of Islamic Economics and Finance (CIEF) which was established in Madrid last year under the collaborative efforts of the King Abdulaziz University and the Instituto de Empresa (IE) University in Madrid.

He said the visit of Dr. Rafael Puyol Antolin, president, IE University and Joe Luis Perez Estevez, director, CIEF last Saturday to King Abdulaziz University and the meeting with officials of JCCI the following day was fruitful, with the chamber officials manifesting their desire to participate in the upcoming conference in Madrid slated on June 16-17.

The two-day meeting titled “Beyond the Crisis: Islamic Finance in the New Financial Order” is “unique”, said Estevez, as “there won’t be main speakers. Instead, the participants will be divided into working groups to tackle issues” confronting Islamic finance and come up with summary, course of action and conclusion at the end of the second day.

Some 30 international Islamic finance experts will join in the forum that will begin at the Madrid Stock Exchange.

The conference will focus on banking and insurance, Islamic finance products, new technologies and public and government sectors.

Estevez stressed that there is a dramatic interest in the Islamic finance system since it “does not need radical change” as compared to conventional financial practices. 

It is more resilient that the latter, he added, with “built-in stability features,” though “it needs level playing field” vis-à-vis the conventional.

He pointed out that CIEF Madrid is strategically located, as it serves as a bridge to Latin American countries as well as to Europe, notwithstanding Spain’s Arab heritage.

He further said in the long run, CIEF will not only serve as the center for spreading awareness on Islamic economics, but would also serve as a conduit for exchange students. 

The CIEF “makes a lot of sense in Europe” as it will let people know about the “ethical” financial system. He said at present, Europe’s knowledge about Islamic finance “is very limited,” hence “a lot of lessons could be applied.” 

“The seminar in June is good both for the companies, academia and the government sectors to meet each other and understand” the system, he noted.

Dr. Ahmed Belouafi, assistant professor and researcher, Islamic Economics Research Center, added that though Islamic finance constitutes only one percent of the global finance, with approximately $1 trillion in global assets, yet the demand is dramatic because of its distinctive features, such of asset-backed finance where the credit facility is linked to particular activity or project and is transparent, among others.

The CIEF endeavors to strengthen the foundations and capacity of Islamic finance to contribute toward global growth.

In a meeting at Economic Research Center, King Abdulaziz University last Saturday, Turkistani said that the Center will, in the near future, be elevated to become the International Institute for Islamic Economic and Finance that would offer masters degree and online courses and at the same time provide professional certificates in Islamic finance.

He added that the center increases awareness on Islamic finance by going to malls and presents the topic there, saying that it plans to encourage “gifted students” to have doctorate degrees. – By Querubin 

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