Ramadan wish list for Islamic finance

“Behind every success is endeavour… behind endeavour, ability… behind ability, knowledge… behind knowledge, a seeker ….” Unknown.

AS THE blessed month of Ramadan arrives, here is my “seeking” list for Islamic finance. It’s not about another voice asking when the International Islamic Liquidity Management Corporation (IILM) will issue its first paper or disagreeing with CIMB Group CEO Datuk Seri Nazir Razak’s comment on “rolling back” government’s involvement in business, but more to do with controlling our own Islamic finance manifest destiny. 

Information 

“The new source of power is not money in the hands of a few, but information in the hands of the many.” John Naisbitt What is the most valuable commodity in the world? Is it gold? Silver? Oil? Wheat? No, on all fronts. It’s information as almost all jurisdictions have laws against inside information to manipulate the markets to take unfair advantage. In Islamic finance, the information is fragmented, stale, difficult to access, etc. Hence, the anchor slowing the potential of growth, expansion and development.

The industry needs to establish an Islamic Information Industry body (IIIB) to: 

• CONNECT the Islamic finance hubs and international financial institutions (IFIs),


• WAREHOUSE all Islamic finance regulations and standards and database of Islamic finance jobs and registered financial planners (RFPs),
• ESTABLISH a global Islamic finance public relations agency (includes undertaking damage control) and with such information and connectivity


• ESTABLISH a global Islamic finance Arbitration Centre. The IIIB should be housed in Turkey (gateway to Commonwealth of Independent States (CIS), eastern Europe and Gulf Cooperation Council), Egypt, Australia or France.

For example, how should the industry “react” to: 

• SOUTH AFRICA’S FNB Islamic finance syariah board quitting (“untenable breakdown in trust”)


• CANADA’S UM FINANCIAL (receivership and bankruptcy and allegations of improprieties)


• MAJED AL REFAI (founder of Unicorn Investment Bank, now called, Bank Al Khair) found guilty of fraud and embezzlement by Criminal Court of Bahrain


• INVESTMENT DAR syariah board issued statement advising the company board to drop lawsuit against Blom bank concerning compliant deposit and others.

Once the trust and confidence of Islamic finance is questioned, it starts the erosion of the niche market and prevents it from achieving its ultimate objective: becoming mainstream.

Rebranding 

“The goal here is to build a brand around social relevance…” Jeff Skoll.

Islamic finance has a number of time-consuming challenges: lack of robust regulations in many Muslim countries, ever present conversations on standardisation, lack of enough scholars and qualified people and so on. However, it also has control of some of its own destiny yet seems to be stuck on form over function.

The essence of Islamic finance is “participatory, risk-sharing partnership”. Hence, the description is clean, crisp and clear for the (Muslim) “man on the street” and the non-Muslims. Thus, why not start a movement to “rename” to participation banking (like secular Turkey) as it takes away: 

• PROMOTING (one religion over another) religion argument;


• REBUTS BACKDOOR “Islamisation” argument;


• ERODES its only-for-Muslim argument; and


• REMOVES it from the political talking points (and fund raising) for those who want to divide.

Interestingly, the “no need to name change”, comes from the Muslims residing/working in Muslim countries, who are not exposed to the pressures of Muslim indians in India, Nigerian Muslims in Nigeria, Muslims in America and so on. 

Comments 

“Stand up for what you believe in, even if it means standing alone…” Unknown. There are few comments on Islamic finance articles and news stories. Why? My son has a blog, blackswanofbaseball, and he recently wrote about alcohol-free zones (family-friendly) zones at baseball parks (stadiums) and I posted it on my Linkedin account, which has many Islamic finance professionals, and he has gotten more reactions (approval) than articles and blogs.

May be the writing is too technical as focus usually on structuring, modalities of contract, special purpose vehicles, regulations, syariah, etc., and not the end result.

However, to shape a movement, one must have the courage to have a constructive input, otherwise be prepared to accept the comments of others as “your own” by an inquiring third party. 

Enfranchisement 

“We will champion inclusiveness not just because it is a foundation for political stability and economic growth, but because it is right,” said Prime Minister Datuk Seri Najib Razak when he was deputy prime minister.

Today’s Islamic finance conferences repeatedly miss the three most important stakeholders in Islamic finance, as they neither bankable nor efficiently accessible. They are students, youth and the “have nots”. And the million dollar question is their financial inclusion for they are tomorrow’s customers. Islamic finance rings “hallow” to them as they are not in any five business plans.

For example, it would be interesting to have an Islamic bank sponsor the equivalent of Dragon’s Den or Shark Tank, where these stakeholders, including the halal industry SMEs, submit their ideas for funding. To some, this may be part of Muslim philanthropy capital market style and to others, a cheap imitation of western programmes, etc. However, let the market decide by ratings. 

iECM 

“Commodities tend to zig when the equity markets zag.” Jim Rogers. 

How to build out an Islamic equity capital market (iECM) that becomes on par to the Islamic debt capital market (iDCM)? The industry needs to focus on building out the Islamic wealth management proposition, and one of the ways would entail an Islamic finance hub declaring (seems everyone is always declaring something in IF) to be Organisation of Islamic Cooperation (OIC) wealth management hub. Why OIC and not Islamic wealth management hub? Simple reason there are more conventional funds, equity, bond, money market, etc., than Islamic. However, its Muslim money. Thus, placing all the asset classes, from trade finance funds to SME funds to haj funds to zakat funds to initial public offering funds to real estate toreal estate investment trust to commodity and so on, on a single dashboard (funds supermarket) allows the attention and money to gravitate towards returns, values, etc.

Micro + Mega Takaful 

"Put your future in good hands - your own." Unknown

The conversation in Islamic finance needs to gravitate towards not only micro-takaful (for the "have not" masses), but also establishing a (well-capitalised) mega-takaful operator for the industry to become truly cross-border. The takaful development will also develop: 

• * ISLAMIC asset management industry and Islamic ECM;


• * INFRASTRUCTURE projects with larger IF tranches;


• * COMPLIANT deposit insurance; and


• * COMPLIANT deposit insurance; and


• * INSURING mosques in the West and other benefits.

Consolidation

"Consolidation results in convergence of businesses yielding new continuity and expanding connectivity for the betterment of the community that desperately wants to contribute." Rushdi Siddiqui 

Is the need for consolidation a cost or income play in (Islamic) overbanked markets like the UAE or Malaysia? When there is revenue (margin) compression implying growth ceiling approaching, consolidation developments start to take place, like the recent announcement of three-way merger in Bahrain of Capinvest, Elaf bank and Capital Management House. 

However, the need for size and ensuing economies of scale are extremely important in Islamic finance.

Consolidation conversation makes more sense today as Islamic banks are "too small to fail" as the bigger risk is associated with confidence to withstand external and real estate shocks. 

Stewardship 

"Here we are, the most clever species ever to have lived. So how is it we can destroy the only planet we have?" Jane Goodall 

In the GCC, there is an estimate US$2 trillion (RM6.4 trillion) worth of projects, including the FIFA Cup in Qatar in 2022, and some will be financed by Islamic funds. There has been some chatter about a "Green Sukuk". However, that does not go far enough. 

Islamic finance is, at one level, is a movement about stewardship of the earth for successor generations, and GCC, the heartland of Islamic finance, is a major contributor to carbon emissions. Thus, Islamic banks and takaful operators need to be signatory to climate, carbon and equator principles as way to show they are responsible financiers and insurers.

Saudi Arabia & Cagamas 

"And I would argue the second greatest force in the universe is ownership." Chris Chocola 

With recent passing of the long-awaited mortgage law in Saudi Arabia, one of the outcomes may well just be:

• * INCREASED supply of (mortgage-backed) sukuk (local currency?)


• * FOR liquidity management (as monetary instrument).

Thus, the good work of Cagamas (mortgage-backed security (MBS)-issued sukuk) may fast track the learning experience (exported) to the kingdom and help out the takaful and pension market (fixed-income exposure) with longer dated maturities with high quality MBS.

The sukuk market may be established sooner with the passage of Saudi mortgage law and Cagamas reap some reputations and monetary benefits. 

Indicator of IF 

Today, it is well accepted, Islamic finance is a subset of conventional finance. So, what is a representative indicator/pulse of Islamic finance? 

Today, a standalone syariah-compliant index, syariah-based index and Islamic Interbank benchmark Rate do not give a meaningful understanding of the IF space, because such indexes still need to be measured by their conventional counterparts, conventional equity index and Libor. 

Thus, two types of delinking needs to take place: 

• * DELINKING from conventional benchmarks; and


• * MINDSET of comparison to conventional benchmarks.

 Conclusion

When there is sustained stakeholder chatter for an "Arab spring" moment in Islamic finance on the way forward, only then we will take the ramp for the highway of substance from the present roads of form.

Ramadan Mubarak!

Rushdi Siddiqui is the global head of Islamic finance at Thomson Reuters

Read more: Ramadan wish list for Islamic finance http://www.btimes.com.my/articles/20120717011025/Article/#ixzz20x9EGZn5

W Africa closer to Islamic finance services

Senegal and members of the West African Economic and Monetary Union (also known as the UEMOA region) have completed a review of the region’s financial regulations, aiming to launch Islamic financial services later this year.

The review, completed by the international consultancy IFAAS (Islamic Finance Advisory & Assurance Services), was commissioned by the Senegal Ministry of Finance with the support of the Jeddah-based Islamic Development Bank (IDB).

IFAAS, with the support of local taxation and legal experts, undertook a comprehensive review of the entire region’s financial sector and the regulations pertaining to the banking, insurance, microfinance, securities and capital markets industries.

The Senegalese tax laws were also reviewed to identify potential barriers that may impede the development of Islamic finance in Senegal and the UEMOA region.

The review was completed by IFAAS in close consultation with the relevant local and regional authorities and the findings were presented last week at a two-day workshop in the Senegalese capital, Dakar.

Over 80 senior officials from various authorities of the UEMOA member countries attended the workshop organised by the Senegalese Ministry of Economy and Finance and supported by Islamic development Bank.

During the workshop, IFAAS set out a roadmap of the regulatory changes required to facilitate the introduction of Islamic financial services across the region.  With similar experience in several other regions, IFAAS has recommended a phased implementation of the required changes.

This is to be supported by a pragmatic and progressive approach in order to avoid destabilising the existing financial system.  The proposed approach also aims to ensure a level playing field for Islamic Finance providers across all eight of the UEMOA countries.

Oulimata Diop, director of the Money and Credit Directorate of the Ministry of Economy and Finance of Senegal, said: “The integration of Islamic Finance into the regional financial system is very much possible on the basis of the current legislation. This finding is highly reassuring for the stakeholders that the implementation of Islamic finance in the region will not require highly complex reforms. IFAAS recommendations are very pragmatic and simple to follow.”

The representatives of the relevant authorities from different countries of the UEMOA region also expressed their satisfaction with the results and recommendations presented by IFAAS.

Farrukh Raza, managing director of IFAAS said: “It is an honour for us to have led this exceptional project. We are convinced that our report will provide a solid platform for establishing a sound Islamic financial industry in the region, providing innovative solutions to the public and the states of the West African union.” – TradeArabia News Service

http://www.tradearabia.com/news/BANK_220212.html

Islamic Finance and Investment in U.S. Expected to Grow

The United States has been, and is now, one of the largest markets in the world for Islamic finance and investment transactions, which are transactions conducted in accordance with those principles of the Shariáh that are applicable to commerce and finance.¹ A wide range of U.S. and international practitioners have participated in Islamic finance and investment transactions, and it is likely that even more will participate as the global financial markets rebound and investment activity in the United States increases again. This article anticipates those increases in transactional volume in the U.S. and presents summaries of some of the main financing structures that U.S. and international practitioners will encounter in the Islamic finance and investment transactions.

Most U.S. Islamic finance and investment transactions involve investments by foreign investors in U.S. real estate, equipment and private equity assets and businesses throughout the country. Many of these transactions involve prominent U.S. real estate projects (such as sale and leaseback arrangements involving corporate headquarters buildings) and prominent U.S. corporate entities (including warehouse chains, nursing home chains, coffee companies, and clothing companies). It is estimated that more than 150 U.S. banks have provided financing for these transactions, usually by way of a conventional interest-based loan that is integrated into a Shariáh-compliant transaction.

It is anticipated that there will be a further increase in Shariáh-compliant transactions driven by strong accumulations of investable cash in the Middle East, decreased interest in European investments as a result of the current European woes, decreased enthusiasm for short-to-medium term prospects in BRIC (Brazil, Russia, India and China) countries, and the large number of bullet financings of outstanding Shariáh-compliant debt that will come to refinancing in 2012-2014.²

The unfamiliarity factor is falling away as thousands of transactions have been completed in non-Muslim jurisdictions, including North America and Europe, many involving conventional interest-based banks. There is recognition that (i) Islamic finance and investment is not a mysterious process, (ii) it is an ethically oriented structured finance, (iii) customary risks are addressed in ways that are familiar and do not disrupt existing underwriting, credit, legal, regulatory and tax assumptions and practices, and (iv) there are no significant unanticipated risks as a result of using these financing and investment techniques.

Factors Affecting Growth

Transactional Models

Conclusion

Endnotes:

Islamic finance and investment transactions are conducted in accordance with those principles of the Shariáh that are applicable to commerce and finance. The Shariáh is a body of ethical, religious, moral, legal and ritualistic principles and practices; it is the 'path' by which a Muslim leads his or her life, in all aspects of life. Islamic finance and investment involve primarily the legal principles, which are comprehensive in respect of commerce and finance. The best known principle is that a compliant participant cannot pay or receive interest. However, the Shariáh has evolved as a body of law for more than 1,400 years, and lawyers, with time, tend to increase the complexity of the system in which they operate (if only to achieve greater precision, definition and certainty): 1,400 years is a long time. Thus, there are principles applicable to sales, leasing, agency, financing, guarantees, mortgages, pledges, and virtually every concept addressed by any other legal system. Mastery, even familiarity, takes a bit of effort, particularly in light of the absence of written compilations of the principles (knowledge transmission has been oral) and the absence of rigorous contemporary books and articles on the topic.

Before considering some illustrative modern contractual arrangements, consider five factors that have had the greatest impact on the development of the industry.

First, there has been a move toward consensus (ijma) in respect of transactional structures. Divergences as between the four orthodox schools of Sunni Islamic jurisprudence continue to exist, but there has been a focused effort to develop structures that work under all four schools. The consequent reduction in transaction costs is apparent.

Second, until recently transactions could make use of only one "nominate contract," which are long-approved, but quite rigidly defined, contractual forms. In the mid-1990s Shariáh scholars determined that a transaction could use more than one such contract. This allowed for significant advances in the sophistication of transactional structuring.

Third, the fatwa (opinion of Shariáh scholars) issued in 1998 to Dow Jones Islamic Indexes in respect of equity indices and equity investing (i) institutionalized a degree of permissible impurity or permissible variance from absolute adherence to principles, (ii) institutionalized purification or cleansing concepts, and (iii) institutionalized principles for determining permissible business activities in situations where a business has multiple lines of business.

Prior to 1998 a devout Muslim could acquire virtually no stock because essentially all companies either pay or receive interest (for financings or from investments). The fatwa set forth tests that allow investment if the amount of interest is not too great, and then required that the investment be purified or cleansed by donation of the impermissible interest income to charity. Impermissible business activities are relatively well known (pork or alcohol for human consumption, interest-based banking, non-compliant insurance, pornography, prostitution and others). But questions remained as to the permissibility of investment in companies that have multiple businesses, some of which are not permissible. Until 1998, an investment in an automobile, aircraft or turbine manufacturing company might well be precluded because the corporate group included an interest-based credit company. The fatwa established the principle that (with some exceptions) the determinative analysis is the core business of the group.

Fourth, the development of sukuk opened the financing side of the capital markets. And that area is now the fastest growing area of the industry.

Fifth, bifurcated structures were developed that allow the use of conventional financing in Shariáh-compliant transactions, as discussed below. This brought the Western banks and financial institutions into the industry and allowed Islamic finance and investment to be used in Western markets.

By way of introduction, consider three contractual arrangements that are at the core of modern Islamic finance and investment: (a) the murabaha, or cost-plus sale;³ (b) the ijara (lease); and (c) the diminishing musharaka or diminishing partnership.⁴ There are many others, but these three are predominant and illustrative.

The murabaha is the most frequently used, and the most frequently abused, structure. It is an ancient contract for commodities purchase and sale transactions. A client needing financing for the purchase of a commodity approaches a bank. These two parties execute a murabaha agreement pursuant to which the bank purchases the commodity from a third-party seller at a negotiated price (cost) pursuant to a purchase agreement that was negotiated by the client with that seller.

The bank then sells that commodity to the client at cost plus a mark-up (which may be determined at a fixed or a variable rate) with deferred payment terms. A debt is generated. There are various rules regarding a) disclosure of cost and profit, b) the bank taking actual ownership risks, c) the fixing of the price at inception of the transaction (any subsequent change in that price is prohibited), and d) the prohibition of discounts for early payment and interest for late payment.

That murabaha structure is well and good, and frequently used, where it involves a commodity desired by the parties. But in some transactional variants the commodity is only a vector and the parties' focus is really on generating the debt obligation. These vector murabaha transactions are commonplace, such as for term or revolving loan equivalents and short-term deposit accounts. Here, the commodity is a metal (usually platinum) or another permissible commodity (e.g., palm oil). It is purchased by the bank from a third-party seller at spot, sold to the client on deferred payment terms, and then sold by the client to a third-party purchaser at spot, all in the course of an hour or so.

The bank is out the spot payment amount; the client receives the spot payment amount and has a deferred payment obligation to the bank. This is compliant in form, but of questionable substance. The metal is used because all Shariáh requisites can be easily satisfied and there is no real ownership risk to the bank or associated costs (insurance or transportation). The structure is as an expedient, but is disfavored.

Click here for larger version of Figure 1.

The ijara (lease) is long-accepted and the most frequently used contractual form in sophisticated financings throughout the world. In various forms (it is highly flexible) it is used in financing real estate, private equity, project, infrastructure, equipment, aircraft, vessels, services and many other assets.

An ijara is a sale of a usufruct (right to use) under the Shariáh. The principles are quite similar to Western leasing principles, although there are some variances. The similarities render the structure easily accessible and comprehensible in the West. A generic transaction is illustrated in Figure 1. Notably, it is quite similar to a leveraged lease (albeit one that fails on the tax ownership side, such that the project company is the tax owner, but does not hold title).

A special purpose vehicle, the funding company, acquires (or constructs) the asset using a conventional interest-bearing loan from the bank plus an equity contribution from the fund via the project company to the funding company. The funding company then leases the asset to the project company, who may sublease it (or sell product to an offtaker).

Basic rent payable by the project company to the funding company on the lease from time to time is exactly equal to the debt service payable by the funding company to the bank at such time.

A purchase undertaking incorporates mirror images of all mandatory prepayment provisions from the bank loan documents, allowing the bank, through the funding company, to pass all mandatory prepayment obligations to the project company. The payments may be a portion of the outstanding principal amount of the bank financing (for example, a partial prepayment on a debt service coverage ratio violation), or the entire outstanding principal balance (as in a default acceleration).

The sale undertaking incorporates mirror images of all voluntary prepayment provisions from the loan documents, thereby allowing the project company to prepay the financing in whole or in party or acquire the asset (such as for sale to a third party). The managing contractor agreement removes the funding company from all decision-making in the overall transaction. The funding company is a disregard entity for tax purposes.

The diminishing musharaka, like the ijara, is frequently used for home purchase financings and project and infrastructure financings.

In a construction financing for an electricity project, the project company (electric company) contributes capital to the musharaka (partnership) and receives partnership interests (hissas). The bank contributes cash, on a monthly basis in conformity with monthly construction certifications, to the musharaka to pay for construction, and receives hissas for each contribution. The interest of the bank is leased to the project company to allow the project company to construct and operate the project.

Repayment of the financing is effected on an agreed amortization schedule (identical to a conventional schedule). The project company purchases hissas from the bank until the project company owns all the hissas (and the partnership is dissolved into the project company). The bank is the financial partner, controlling all financial matters, and the project company is the technical partner, responsible for construction and operation.⁵

Islamic finance and investment transactions are now commonplace throughout the world, including the United States. Most U.S. transactions are governed by and enforceable under New York law. Most international transactions are governed by and enforceable under English law. Normally no mention is made of the Shariáh in the transactional documents and customary enforceability opinions are rendered. Both international and U.S. finance practitioners are likely to be involved in an Islamic finance and investment transaction. It will become apparent that these are structured financings that are more similar to conventional financings than not, although there will be a need to seek guidance in addressing the (relatively small) portion of the transaction that is divergent from the conventional.

Michael J.T. McMillen is a partner at Curtis, Mallet-Prevost, Colt & Mosle. He focuses his practice in the finance sector, particularly on Islamic finance, project and infrastructure development and finance, investment funds and real estate.

1. Michael J.T. McMillen, Islamic Capital Markets: Market Developments and Conceptual Evolution in the First Thirteen Years, available athttp://papers.ssrn.com/sol3/papers.cfm?abstract_id=1781112, summarizes developments in the Islamic finance and investment industry since the mid-1990s.

2. The factors favoring an increase in US activity are enhanced by related global developments. For example, Middle Eastern and Southeast Asian governments are actively promoting Islamic finance and investment, particularly in the infrastructure sector. As another example, there are significant increases in the volume of sukuk issuances (sukuk are Islamic asset and whole-business securitizations that are commonly, but inaccurately, described as "Islamic bonds"), in the first quarter of 2012 (volume was US$43.5 billion, an increase of 55 percent over 2011, and the best year on record). Notably, in 2011, for the first time in history, sukuk issuance volume in the Gulf Cooperation Council exceeded conventional bond issuances in those countries.

3. Michael J.T. McMillen, Trends in Islamic Project and Infrastructure Finance in the Middle East: Re-Emergence of the Murabaha, available athttp://papers.ssrn.com/sol3/papers.cfm?abstract_id=1753252.

4. Regarding the ijara and diminishing musharaka, see Michael J.T. McMillen, Islamic Shariáh-Compliant Project Finance: Collateral Security and Financing Case Studies, 24 FORDHAM INTERNATIONAL LAW JOURNAL 1184 (2001).

5. In a home purchase financing, there is one bank payment at the time of house acquisition.

http://www.newyorklawjournal.com/PubArticleNY.jsp?id=1202562605596&thepage=3

Prayers and playthings

IN THE souks of old Damascus modestly clad plastic dolls lie alongside carved wooden Koran stands. There, as in Cairo and other Islamic capitals, vendors tout calligraphic renderings of devotional texts, bookmarks with the 99 names for Allah and strings of coloured prayer beads. “E-rugs” are prayer mats with an alarm for the five prayer times and a compass that points towards Mecca.

Religions rarely praise consumerism. But 2.2 billion Christians and 1.6 billion Muslims are a big market. Sales of books on the world’s two biggest faiths are soaring, with interactive Korans and Bibles among the innovative products. Last year sales of religious books in America grew by 8% in a declining industry.

Three years ago Fehmida Shah set up Smart Ark, a London-based online firm that sells Islamic books, toys and gifts, mainly for children. “HSBC [a bank] was doing Islamic bonds and religious books were selling well, so I thought why not tap into the niche but growing market?” she says. Customers from Britain to Singapore have bought her products. They include a pricier Fairtrade range that includes stickers of mosques around the world and a book on why Muslims should recycle.

Christians have a larger range of goods to chose from than their Islamic fellow-believers. Most goods are aimed at evangelicals, who make up the bulk of the big-spending consumers, according to a recent study by Baylor University in Texas. Specialist retailers in America sell “Smile, Jesus loves you!” blankets and nail files emblazoned with “Woman of God”. Swanson Christian Products of Tennessee sells golf balls alluding to scriptural texts and devotional sayings, such as: “I once was lost but now I’m found!” Since 2007 Walmart supermarkets have stocked talking biblical action figures, including Jesus.

Islamic toys do not depict the Prophet Muhammad (that would be blasphemous). But they do try to compete with toys, such as Barbie, that they take to embody Western decadence. Fulla, for example, is a popular slimline mannequin with a headscarf manufactured for the Muslim world. She has no male companion (Barbie has Ken) and modest clothing that covers her knees and shoulders. Hala al Duwik of Newboy, Fulla’s UAE-based manufacturer, says over 1.5m dolls have been sold since 2003, plus a range of spin-offs including hand wash and chewing gum. In Iran Barbie is banned outright (but consumers can buy locally made, plumper dolls, such as Sara and her male pal Dara). Sales are rising as Islamic festivals become as consumerist as many Christian ones.

Many importers source their products at trade fairs. CBA, an association of 1,700 Christian stores across America, holds a yearly get-together to show the latest goods—the next one is the International Christian Retail Show, in Orlando on July 15th. Saudi Arabia and the Gulf countries often host Islamic trade conventions: the Islamic Clothes fair will take place in Istanbul in September. Curtis Riskey, CBA’s head, says some Christian stores like to sell local artisanal work to differentiate themselves from high street chains. But many products are mass-produced in Asian countries, not just because it is cheaper. “Products from the Arab world are generally garish and low quality,” says Ms Shah delicately, recalling her attempts to import Islamic stationery from the Middle East. She now has most of them made in China and Sri Lanka. “Everything here used to be made here,” says a vendor close to the Ummayad mosque in Damascus. “But now so much is imported from China.”

http://www.economist.com/node/21558563

The economic toll of Islamic law

Right now, the Islamic world is in the midst of a grand experiment. After decades facing an unappetizing choice among secular dictatorship, monarchy, and Iranian-style theocracy, nations across the region are grappling with how to build genuinely modern governments and societies that take into account the Islamist principles shared by a majority of voters.

As they do, a shadow hangs over their prospects. Islamic nations in the Middle East on the whole have underperformed their counterparts in the West. Asian nations that were poorer than the Arab world at the beginning of the Cold War have overtaken the Middle East. And promising experiments with democracy have been few and far between.

The question of why is a contentious one. Has the Islamic world been held back by its treatment at the hands of history? Or could the roots of the problem lie in its shared religion—in the Koran, and Islamic belief itself?

A provocative new answer is emerging from the work of Timur Kuran, a Turkish-American economist at Duke University and one of the most influential thinkers about how, exactly, Islam shapes societies. In a growing body of work, Kuran argues that the blame for the Islamic world’s economic stagnation and democracy deficit lies with a distinct set of institutions that Islamic law created over centuries. The way traditional Islamic law handled finance, inheritance, and incorporation, he argues, held back both economic and political development. These practices aren’t inherent in the religion—they emerged long after the establishment of Islam, and have partly receded from use in the modern era. But they left a profound legacy in many societies where Islam held sway.

Islamic partnerships and inheritance law limited the ability of merchants to pool capital and build competitive enterprises with long life spans. Islam’s emphasis on fairness and a division of assets among children had the unfortunate effect of preventing large-scale businesses from taking root. Meanwhile, the primary vehicle for organizing institutions—the Islamic trust—placed severe limits on the development of civic institutions such as universities, guilds, and charities. Over time, the result was a stagnant economy and an enfeebled civil society with no way to challenge the established political order.

http://articles.boston.com/2012-07-01/ideas/32473085_1_islamic-law-societies-timur-kuran

World's biggest brand? Not McDonald's but halal

People may think Google or McDonald's are the biggest brands in the world, but that's just because they're not thinking of halal, says billionaire Malaysian businessman Tan Sri Halim Saad.

With around 1.8 billion Muslims in the world required by their religion to eat only halal food, that makes the halal brand worth an estimated US$2.3 trillion.

"Muslims consume only halal food. If it's not halal, Muslims will stay away from it," says Halim Saad, executive director of Malaysia-based Markmore Energy.

"Halal is an old brand but people never recognise the potential."

Halim Saad is in New Zealand with members of Malaysia's Halal Industry Development Corporation (HDC) with a clear message - New Zealand businesses need to wake up and see the opportunities available in the global halal economy, which is growing by 20 per cent each year.

"You are a food hub. You have the quality. So, if you were to move into the halal segment of the industry, you could enter into the supply chain. I think you are in a good position. Animal origins are very important to Muslims and that's where your strengths are."

Halim Saad, once named by Time Magazine as one of the upcoming leaders who would define the coming age, is speaking today at an Auckland University Business School conference about the halal investment opportunity for New Zealand.

"Of the seven billion people in the world, 900 million are undernourished," he says.

"We need to produce more food and to grow that food we need land twice the size of France and we need more water. The only way we can do that is to have better yield and better farming practices. That is where New Zealand should come in."

Many of those going without food are Muslims living in countries belonging to the Organisation of Islamic Cooperation (OIC), a body consisting of 57 member states. Many countries in which Muslims live are not arable and can cannot produce food.

"They have tons of oil, lots of money but little food and no water," Halim Saad says.

"The idea is to tap New Zealand expertise and funds from the OIC to grow food in other countries. New Zealand is very advanced in agritech and biotech - the meat, the milk and the green industry."

Halim Saad and the HDC wanted to help set up alliances between different nations to solve the global food security issue, while also meeting demand for halal products.

"What is required here is a matching exercise whereby we bring the money to the countries that have a lot of natural resources. New Zealand has expertise in farming, these OIC countries have a lot of cash, and other countries have a lot of arable land. So if you combined all three...

"At the end of the day, we want to see some kind of collaboration between the countries that have the financial capabilities with the countries that have the technical capabilities to go into business and produce halal products for countries to address their food security issues."

He points to a country like Kazakhstan which has "a lot of land and a lot of resources" but little expertise in farming.

Halim Saad came to New Zealand in 1973 to study accounting at Victoria University. He has since returned about 20 times and is an Honorary Professor at the Auckland University Business School.

His prominence grew while he led the Renong/United Engineers Malaysia Berhad (UEM Group) in Malaysia from 1985 to 2001. He then went on to start energy company Markmore Group, with has numerous overseas investments in oil and gas exploration.

He believes there is a lack of awareness both in New Zealand and abroad about the meaning of halal.

"The idea is to bring awareness to New Zealand. This is a journey of a thousand miles. We are at the beginning. Halal doesn't mean only food."

Halal also encompasses non-food industries such as IT products, finance services, travel, cosmetics, and tourism, he says.

Halim Saad also wants people to know that halal is not exclusively for Muslims.

"Halal should be inclusive. Yes, Muslim need to consumer halal products but it is not exclusive to them. The producers can be Muslim or non-Muslim. Many people think Halal is just about religion and ritual but it's about quality."

Malaysia is trying to become a global hub for the production and trade of halal products and services.

The HDC has been in discussions with the Islamic Development Bank(IDB) to set up a Halal investment fund, with the aim of financing agricultural businesses especially for IDB member countries.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10819310

Islamic finance to be probed

There is no doubt that Islamic finance is maturing into a global phenomenon with increasing appetite for Islamic instruments and deal structures in international capital markets, corporate loans and asset finance.

Estimates reveal that there has been dramatic growth in the Islamic corporate finance industry and many experts believe that this growth will continue to flourish as major economies in the Middle East and Asia, which are the major markets for Islamic finance, continue to expand even against the backdrop of global economic uncertainty.

Though Islamic finance has been emerging as a viable corporate finance alternative, which is highlighted by several recent landmark transactions regionally and globally, the Sharia-compliant corporate finance market has not yet realised its full potential.

Its value proposition has not been fully communicated to its corporate client base.

"It is essential that there must be further refinements and innovations brought into the industry to fully realise the growth potential for Islamic corporate finance and meet the growing and often complex needs of corporate borrowers," said second annual International Summit on Islamic Corporate Finance (ICFS 2012) organiser David Mclean.

"To achieve success for borrowers and lenders, it is critical to engage all key components in the deal-making value chain - the corporate borrowers and bankers - in focused dialogues to develop long-term successful business relationships," he added.

The summit in Abu Dhabi on September 25 will be held under the theme "Boosting Deal Flow in Islamic Syndicated Lending, Trade Finance, Corporate Sukuk and Project Finance to Meet the Needs of Corporate Borrowers".

It will create an ideal platform to bring key components of the deal-making value chain together - corporate banking leaders, both Islamic and conventional, and corporate end-users of these services - to ensure the objectives of both are achieved. ICFS 2012 will provide in-depth interactive discussions and high-profile networking opportunities to create the most productive and results-orientated environment.

http://www.gulf-daily-news.com/NewsDetails.aspx?storyid=333378

Shareholder Bishop supports Islamic banking

A Bishop in the Dioceses of Chris Temple Ministry International, Bishop Goodluck Akpore, yesterday said opponents of Islamic Banking in Nigeria are ignorant of the products the bank offers as it is not against Christians in the country.

Speaking at the Annual General Meeting of Jaiz Bank Plc in Abuja, the Bishop who is also the Chairman of Onitsha zone shareholder association said he was going to preach to his congregation to buy into the bank.

He said: “I will preach tomorrow in the church and let everybody in this country come and hear me,” he said.

The Christian Association of Nigeria has kicked against the operation of Islamic Banking in Nigeria saying it would Islamised the country.

But the Bishop said CAN statement does not represent the views of every Christian.

He said: “Let me tell you, people can go personal and we have gone to meetings several times and we have told them that look don’t talk for me, what you have in your mind cannot be for me, I have my own opinion, business is a personal issue, let Christian go and open their own Christian Bank if it is possible.

Asked if he was not going to be looked at as a sell out among his Christian brothers, Akpore said, “Those who know me know that I cannot be bought over.”

http://www.dailytrust.com.ng/index.php?option=com_content&view=article&id=170995%3Ashareholder-bishop-supports-islamic-banking&catid=1%3Anews&Itemid=2

Demand to make Islamic banking mandatory in Pakistan

“In Pakistan Islamic banking is being practiced on the basis of supply and demand, and is not mandatory,” said Director Education Jamiatur Rasheed Abdul Aziz Raja.

Addressing a seminar on “A blend of contemporary and religious education,” held at the Korangi Association of Trade and Industry (KATI), Raja said that a banking ordinance was introduced in 1974 but tabled in-house in 1984, under which Islamic banking in Pakistan should be mandatory and not optional.

He said that Islamic banking should be enforced with the Supreme CourtÕs orders. “Islam is a complete code of life and is not limited to a few rituals. It provides a complete economic system,” said Raja. He added that only five percent of the work required to implement Islamic banking and an Islamic financial system had been completed in the country thus far; 95 percent of the work remains undone.

“Jamiatur Rasheed has introduced various courses on the Islamic financial system and economic principles. It offers graduate and post-graduate courses on banking and finance, accounting, book-keeping, supply chain and marketing. The campus constructed in Ahsanabad is modern and has all the required facilities,” said Raja. He invited trade and industry representatives to visit the campus.

Chairman KATI Ehtesham Uddin said that interest-free banking is the need of the hour. He pointed out that interest-free banking is being practiced in Japan and a number of western countries, while Pakistan’s businessmen are being charged double-digit interest. “At this juncture when religious institutions have forgotten modern and technical education, Jamiatur Rasheed, which is imparting the most modern education, is an asset for the nation,” he said. Ehtesham Uddin said that like Jamiatur Rasheed other religious institutions should also impart technical and modern education to their students. President AKIA Mian Zahid Hussain announced that a delegation of industrialists would soon visit Jamiatur Rasheed. He declared Jamiatur Rasheed a blend of modern and Islamic education.

Sardar Yasin Malik advised representatives of religious institutions to also provide technical education to their students so that they could compete with other people. He proposed the name ‘Al-Rasheed University’ for Jamiatur Rasheed.

http://www.thenews.com.pk/Todays-News-3-119161-Demand-to-make-Islamic-banking-mandatory-in-Pakistan

Will India accept Islamic banking?

Experts weigh its pros and cons while critics say it goes against the nation's secular fabric

BY holding the first-ever meeting in India this week of its International Advisory Panel (IAP), the World Islamic Economic Forum (WIEF) Foundation promoted its agenda of "building bridges through business" in a country where it sees big potential.

Foundation chairman Tun Musa Hitam emphasised the need to "solidify the partnerships and work towards concrete initiatives based on changing trends and new opportunities in the global economic scene".

The Malaysian-led initiative sought to establish rapport between political leaders and officials, inviting Indian Planning Commission deputy chairman Dr Montek Singh Ahluwalia, a key aide of Prime Minister Manmohan Singh, to attend the 8th WIEF meet in Johor Baru in December.

Foundation secretary-general Tan Sri Ahmad Fuzi Abdul Razak said he expected a score of Indian businessmen-delegates to be at the forum, which would discuss issues, including the promoting of private sector partnerships among a host of Muslim and non-Muslim nations.

While this is a welcome move, one of the forum's thrust areas -- the introduction of Islamic banking in India -- may have to await a policy decision on a complex issue. It is part of an ongoing debate and a decision is unlikely any time soon.

Ahluwalia raised the issue at the meeting with the delegation. Ahmad Fuzi explained: "India is a non-Muslim country with a huge Muslim population. But we do not want to confine Islamic banking to Muslims. We are optimistic that India will come up with a policy decision to enable Islamic banking in the country."

Indian Law Minister Salman Khurshid, who is also in charge of minority affairs, did not dwell on it during his address. But asked by media on the sidelines, he called it "a good idea" but admitted that it was "difficult" to fit in Islamic banking with the existing regulations, as the very concept of debt and equity was different in Islamic banking.

"Non-banking financial institutions are prevalent now and are accepted, but some ambiguities have to be addressed before they can take up Islamic finance."

He had written to the Planning Commission and the Reserve Bank of India (RBI) on the issue and was "quite hopeful" that they would "look at the issue afresh".

"Sooner or later, the RBI will come up with a final view. Let me say at this point of time that Islamic banking is an interesting idea, compelling idea, if you look at what France, Germany and the United Kingdom are doing. It's an attractive idea if you look at the sovereign wealth funds of the Gulf region and the fact that we need much more money to finance our infrastructure needs." Both Khurshid and Ahluwalia left it to the experts. The crux, however, lies in a political decision.

On March 27, Parliament was informed that Islamic banking was "not legally feasible" under RBI's existing statutory and regulatory framework.

Minister of State for Finance Namo Narain Meena told Rajya Sabha, the upper house, that the RBI had received references from the Indian Centre for Islamic Finance for introducing interest-free banking in the country "in order to ensure inclusive growth with innovation".

The centre cited recommendations of the Raghuram Rajan Committee that scrutinised the working of India's banking sector.

In 2010, the government opposed before the Kerala High Court the setting up of an Islamic banking institution in that state.

The National Minorities Commission has asked the government to allow Islamic banking. Its chairman, Wajahat Habibullah, said in an NDTV debate that such a bank network could cater to many sections in need of funds, like farmers.

A large number of them have committed suicide for lack of funds or inability to repay loans and interest. Like lawyer Zafaryab Jilani, he said India could develop its own model.

But critics say it goes against India's secular fabric. NDTV asked: "Will it open up a Pandora's box?"

Economist and right-wing politician Subramanian Swamy called the concept of loan without interest "a fraud". The 1947 Partition was essentially a Hindu-Muslim division. Hence, religion was best kept out of economic activity. He expressed the fear that if introduced, Islamic banking could be misused for "certain activities". He did not elaborate.

Left-leaning N. Ram of The Hindu newspaper called the introduction of tenets of any particular faith into the economic system "backward".

"Don't fear the word Islamic. See how non-Muslims are being benefited," said a senior Malaysian official at the conference.

This does not seem likely.

Read more: Will India accept Islamic banking? - Columnist - New Straits Times http://www.nst.com.my/opinion/columnist/will-india-accept-islamic-banking-1.103746#ixzz20C2y3toM

Closing the gap - next big step for Islamic banking

FIFTEEN years ago, Muslims wishing to take out a home finance using a credit card or deposit money into a current account would have been hard pushed to do so and stay compliant with syariah. 

With few Islamic banks around - and a limited range of syariah products - banking as a Muslim invariably involved compromising either your faith or your financial needs.

Today, in many markets, such compromise is no longer necessary. Islamic banking is becoming a part of the mainstream, widely available across financial products and geographies. 

In 2012, Islamic banking assets are expected to reach US$1.1 trillion (RM3.49 trillion) globally, up 33 per cent from 2010, according to Ernst & Young. Within just a few years, Islamic banking has transformed into a global industry.

There are three major drivers behind this extraordinary journey - three reasons why I believe Islamic banking will keep on growing far into the next decade.

First, increased competition has resulted in a widening of the Islamic product offering, bringing it within scope of a larger number of Muslims. 

In the early 2000s, a move by Islamic banks to make syariah-compliant products more commercially compelling was a real game changer in the industry. For the first time, Islamic Banks were reaching customers for whom the commercial aspects of banking were just as important as syariah compliance. Conventional banks, keen to retain their Muslim customers and make the most of the Islamic opportunity, have subsequently joined the fray, helping to grow the total market around the world.

Second, as the Islamic banking proposition has become more attractive, Muslims have converted from conventional banking at a rapid pace, spurring the industry to make the product offering even more sophisticated. 

Muslims who have been accustomed to using credit cards, for example, will not want to lose this benefit when switching to Islamic banking. Whether in terms of access, technology, products or services, they expect nothing less than they have been getting from conventional banks, and Islamic banks are responding. 

Muslims now have a choice: to bank in a syariah-compliant way, they no longer need to sacrifice the convenience, products and services they have been used to in the past. 

Third, the industry is receiving increasing regulatory support with governments in many markets actively encouraging the development of a healthy Islamic banking ecosystem.

In the UAE, all new local banking licences granted in the last 15 years have been for Islamic banks. Countries such as Oman, Uganda and Nigeria are opening up their markets. Issuance of Sukuk, or Islamic bonds, has become widespread, and Islamic finance is used increasingly for government support programmes. 

In Bahrain for example, Standard Chartered Saadiq now works with independent employment authority Tamkeen to provide syariah-compliant financing for small and medium enterprises (SMEs). 

Malaysia - probably the world's most successful Islamic banking market - shows what can be achieved. Here, concerted government action has pushed Islamic banking past the tipping point to represent around a quarter of total banking assets.

The next big step for the global Islamic banking industry will be to close the remaining gap with conventional banking when it comes to the range of products and services on offer. Islamic wealth management, for example, is clearly lagging behind, with syariah-compliant funds comprising less than 0.25 per cent of total assets under management. It is a classic chicken and egg story. 

To attract wealthy Muslim clients, you need a competitive range of products and services, but to get this, you need scale.

However, with the strong growth in Islamic assets and Islamic banking providers putting increased pressure on fund managers to respond, there is a good chance Islamic wealth management will catch up within the next few years.

For all the industry's recent growth, Islamic banking still represents a fraction of total banking assets globally, and the far majority ( it is estimated that roughly only one in every eight Muslims with a bank account, banks Islamic) of Muslims still bank conventionally. Penetration remains low in some of the world's largest Muslim countries, such as Pakistan and Indonesia at nine per cent and four per cent respectively. There are several reasons for this, the most obvious being a simple lack of awareness of what syariah banking has to offer. 

Regulatory barriers also persist in some countries. While different markets will develop at different speeds, support from governments and regulators will help keep up the pace of change. Opening markets to international Islamic banks will help, too. International providers tend to accelerate development in individual markets with their ability to migrate best practice, product sophistication and banking expertise between geographies. 

At Standard Chartered, for example, we work with regulators in a number of countries to help develop their framework for Islamic banking, using our experience from other markets. 

Clearly, by tapping into their global networks, international Islamic banks also play a role in facilitating cross-border banking for Islamic customers. This is essential if the industry is to attract more fast-growing SME customers as well as high net-worth individuals who wish to stay syariah-compliant without missing out on growth opportunities in foreign markets.

The purpose of all banking, Islamic or conventional, is to help people to reach their aspirations. It is about connecting with customers and meeting their financial needs in a way that fits with how they live their lives. 

In the last few years, Islamic banking has caught up fast to meet this core requirement. 

It is still very early for syariah banking, but one thing is clear: with around 1.6 billion Muslims in the world, the upside for Islamic banking is huge, and the best is yet to come.

Wasim Saifi is CEO of Standard Chartered Saadiq Bhd and Global Head of Islamic Banking, Consumer Banking at Standard Chartered Saadiq.

Read more: Closing the gap - next big step for Islamic banking http://www.btimes.com.my/articles/WASIM/Article/#ixzz20C2Cpa9P

Sukuk Market to Set New Record

The sukuk (Islamic bonds) market in the oil-rich Gulf and other countries is expected to exceed $100 billion this year to smash the record $85 billion achieved in 2011, Saudi Arabia’s largest bank said.

Despite an expected rise in the six-nation Gulf Cooperation Council (GCC), Malaysia is projected to remain the world’s dominant sukuk market this year, National Commercial Bank (NCB) said.

In contrast, the bond market in the GCC, which controls over 40 per cent of the world’s proven oil wealth, bounced down in the first quarter of 2012 after recording a sharp rise in the fourth quarter of 2011.

"Sukuk issuance this year appears on track for another all-time record with last year’s $85.4bn set to be comfortably exceeded even under the more cautious projects," NCB said in its 25-page study on GCC equity markets.

"In view of current trends it appears likely that aggregate issuance will clearly exceed $100bn this year. Market innovation looks set to continue."

The report noted that the Clean Energy Business Council of the Middle East and North Africa along with the Gulf Bond and Sukuk Association have launched a Green Sukuk Working Group with a view to better aligning the climate change and capital market development agendas in the region.

In Saudi Arabia, the largest Arab economy, sukuk issuance is expected to continue to grow markedly this year.Among the recurrent issuers, SABIC in December gained CMA approval for a sukuk issuance of up to USD5bn, it said.In the UAE, the second largest Arab economy, Abu Dhabi’s Al Hilal bank is issuing a $500mn sukuk this year, NCB said, noting that the unlisted bank is fully owned by the Abu Dhabi Investment Council.

State-run Qatar Petroleum is understood to be considering a corporate sukuk this year in a pioneering move by a regional national oil company, it said.This could potentially trigger issuance by other government-related entities, eg Industries Qatar, as a way of diversifying funding sources, it added.

"As much GCC sukuk issuance has rebounded impressively in recent months, Malaysia remains the undisputed leader in the sector, typically accounting for more than 70 per cent of the global total," the report said.

"This state of affairs has persisted in spite of the fact that, more generally, the GCC countries have generally established themselves as the second major global hub for Shariah-compliant financial solutions. Moreover, in purely GDP terms, Malaysia lags far behind the Gulf: just under $200mn as opposed to some $one trn for the Gulf countries taken together."

According to NCB, Malaysia’s population reached 28mn in 2011, whereas the GCC’s total is around 40mn. The discrepancy is particularly "striking" in view of the fact that the GCC economies are among the leading global spenders on infrastructure, which should in principle open important new opportunities for Shariah-compliant capital market development.

"Nonetheless, GCC sukuk issuance in 2011 totalled $19bn as opposed to $58.7bn in Malaysia. The corresponding figures in 1Q12 were around $30.7bn for Malaysia and nearly $ 8.6bn for the GCC."

Turning to bonds, the report said that after a bumper quarter closed an exceptionally volatile year in 2011, the first quarter of 2012 marked relative normalization for the GCC conventional bond markets with overall primary market activity roughly halving in value from 4Q11.

Its figures showed total issuance in Q1 reached $5.9bn and involved eight corporate issuers and a total of 14 different issues.This compares to aggregate issuance of $11.9bn in 4Q11 (issues with tenors in excess of a year) and $9.4bn a year earlier in 1Q11, the report showed."These figures were broadly consistent with the continued strength of emerging bond markets globally where overall issuance reached $464bn in the course of 2011 and $10bn in the first quarter of this year."

NCB said it expected growing refinancing requirements would likely to be a key driver of market activity during the year."In particular, regional banks are likely to remain active in the bond markets during the year," it said, adding that Commercial Bank of Qatar is meeting with investors having established a $5bn issuance programme in August.

A number of Omani banks have, similarly, indicated interest in tapping the bond markets while in Saudi Arabia, Kingdom Holding is planning a maiden bond issue. The company currently has bank loans of some SR1.5bn.Among the regional utilities, Dubai’s Dewa has ruled out a near-term bond issue, although the company has a Dh1.2bn syndication due this year, NCB said.

http://www.globalislamicfinancemagazine.com/?com=news_list&nid=2323

Investment banking is booming

Investment banking boomed in the region during the second quarter of this year.

Share issues raised $4 billion during the period, four times as much as the first quarter, according to a report by a financial intelligence group

Strong merger and acquisition (M&A) activity during the second quarter took the total value of deals to $14.3bn by the first half of 2012, an increase of 137 per cent over the same period in 2011.

"Financials is the most targeted industry in the Middle East M&A activity with $4.3bn or 30pc of the activity so far this year, followed closely by telecoms with 29pc," said Thomson Reuters Middle East and North Africa managing director Russell Haworth.

Egypt is the most active Middle Eastern country, based on target, with $4bn for 28pc of first half activity.

Middle Eastern debt issuance reached $6bn during the second quarter of 2012, a 45pc decline from the strong first quarter total of $10.9bn.

It took first half 2012 activity to $16.9bn, up 51pc on the same period in 2011.

Islamic debt issuance reached $14.5bn from 34 issues, an increase of 25pc from the same period in 2011, and the strongest first six month total since 2008.

The top Islamic issuer nation during the first half of 2012 was Malaysia with 45pc of the activity, while the strongest industry was the financials sector.

Middle Eastern syndicated lending during the first half was $186.8m, a 98pc decrease from the same period in 2011, and the slowest first half in more than a decade.

Investment banking fees reached $234.8m during the first half of 2012, a 5pc increase from the first six months of M&A fees and totalled $59m, accounting for 25pc of the overall fee pool.

http://www.gulf-daily-news.com/NewsDetails.aspx?storyid=333685