Monday, 22 September 2014

Event Summary (KLCIF2014) - KL Conference on Islamic Finance 2014


KL Conference on Islamic Finance 2014


Date    : 20-21 October 2014
Venue : Grand Seasons Hotel, Kuala Lumpur - Malaysia

“An international gathering of practitioners, scholars and experts to discuss and share their knowledge, expertise and experience on the principles, instruments and issues related to Islamic finance, to be held at the world’s leading Islamic financial centre…Kuala Lumpur.”


Event site : www.islamic-finance-conference.net

KEY FOCUS/TOPICS:
- Product development and Implementation of Islamic financial products
- Ensuring Shariah compliance in Islamic financial instruments
- Sukuk: development, issues and challenges
- Islamic gold account: a golden opportunity
- Islamic mutual funds (unit trusts): factors to consider in making an investment
- The rise of Islamic wealth management in Islamic finance industry
- Islamic financial planning: success in both worlds
- Takaful: innovation and solutions
- Enterprise risk management for Islamic banks
- Enterprise risk management for takaful operators
- Accounting and auditing
- Human capital development in Islamic finance industry
- Legal issues and challenges in Islamic finance
- Dispute settlement in Islamic finance: issue and solutions
Islamic ethics in financial services industry
- Corporate governance for Islamic finance industry


SPEAKERS:

Speakers are selected from Islamic banks, takaful operators, academicians, legal practitioners, consultants, regulatory bodies.

Among the speakers are:


WHO SHOULD  ATTEND:
- Islamic bankers/bankers
- Takaful/insurance operators
- Regulators
- Head of governmental departments
- Financial planners/wealth advisors
- Financial consultants
- Legal practitioners (lawyers)
- Academicians (lecturers)
- Entrepreneurs (businessmen/importers/exporters etc)
- Other professionals 

REGISTRATION:
Early Bird Fee: 
Registration with payment by 30 September 2014
Malaysian   :  RM1,500
International  :  USD600

Normal Fee:
Registration with payment after 30 September 2014
Malaysian  :  RM1,800
International  :  USD700
Special fee for Malaysian university lecturers :  RM1,000 (group discount not applicable)

Fee is inclusive of lunch, refreshments and seminar package only.


Group Discount:
Enjoy 20% discount for third and subsequent delegates registered from the same organisation and the same billing source.


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ORGANISER


VENUE


Grand Seasons Hotel, Kuala Lumpur - Malaysia

MEDIA PARTNERS


Kuala Lumpur


Lahore



Let’s not forget the voice of the Islamic banking customer

It is easy to get caught up in the endless debate over why Islamic finance has not readily embraced a centralised approach to developing common transaction structures, or why progress in the standardisation of documentation and processes at a global level has been so slow. Despite the good work of various organisations such as AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions), IFSB (Islamic Financial Services Board) and IIFM (International Islamic Financial Market), we still find most Islamic financial centers at differing stages of development. While the difficulty of attaining these goals cannot be underestimated, discussions on industry development tend to focus mainly on regulation and standardisation. Important as these are, I am left wondering what the role of the customer is in this whole process? Could the future of Islamic finance be better served by simply placing more focus on customer needs to drive innovation and growth? In other words, who should drive the growth of Islamic banking — the regulators or the customers?
Islamic banks operate under the governance of a Sharia board that serves to ensure customers are not misled in the compliance of their financial transactions, judged against approved standards. This means, development and innovation are primarily the domain of the bank and Sharia board, whereas, I believe, Islamic institutions would benefit by finding ways to be more inclusive of customers in this process, and being more flexible and proactive in finding solutions to their requirements. Flexibility does not mean compromising Sharia standards, but it does mean adopting a methodology to better understand financial requirements and improve response times, so that decisions can be made in a timely and efficient manner. It’s possible that this type of bottom-up approach based on customers’ needs could contribute to faster development of commonly accepted regulatory frameworks and standards.
Running a Treasury department means taking care of customers who are typically businesses or wealthy individuals, as well as managing the bank’s own financial needs. Each customer has a different level of willingness, or tolerance, to enter into Islamic financial transactions. Some bank in a Sharia compliant manner no matter what, while others will not compromise on cost or structure if it is not competitive with a conventional alternative. However working in this region I have come to understand that a great many would, all things being equal, prefer to be participating in Sharia compliant transactions. If the industry can bridge the gaps between customer needs and Islamic product offerings, growth and standardisation should follow.
We are living and working in a region that is undergoing strong economic growth and social development. Similarly, our customers’ financial needs and aspirations are developing and ever changing and many would like to fulfil their financial needs through products structured under Islamic rules. It is no stretch to imagine that the financial institutions which are able to understand this, and organise themselves accordingly, will be most likely to succeed. This organisation will include the responsibility to drive the necessary legal and regulatory changes, all derived from a basis of customer needs.
At Noor Bank we believe we have made a good start in the journey to improving the voice of the customer. We don’t expect to land the next jumbo-sized complex derivative transaction from the largest corporate clients, but are increasingly structuring more sophisticated transactions for customers. It is in the middle markets and SME segment where we are finding customers who have financial risks that they want to manage. It is only by having a relationship with these customers and listening to them that you can start to understand the type of Islamic structures that the market needs. On the investments side, we are also seeing a significant expansion in the type of products that customers are seeking exposure to. For customers that are adequately aware of the transactions they are entering, and have the appetite for the associated risks, there are many Sharia compliant options beyond a standard fixed-term wakalah or murabaha investment.
Equipped with a better understanding of customer needs and generating genuine customer demand, we are able to engage in the type of innovation that will contribute to the growth of the Islamic banking industry. As we satisfy customer requirements, we can also introduce the tools that will help to form standardisation across the industry. The adoption of the Tahawwut Master Agreement (TMA), developed by the International Islamic Financial Market (IIFM) to govern hedging transactions, is one such example. And as banks manage their own risks and balance sheet needs more effectively and efficiently, based on customer activity, this and similar tools will grow in acceptance and use.
There remains a great deal of work to be completed in forging a unified global Islamic banking industry, operating to commonly accepted standards. Banks and regulators are an important part of this development but we cannot ignore the needs of our customers in this process. Embracing their challenges and understanding their needs would help to accelerate the process of achieving common platforms and standardising products and agreements.
(Gulfnews.Com / 21 September 2014)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Dubai: Global takaful contribution expected to reach $20b by 2017

Dubai: GCC’s gross takaful contribution is estimated to reach around $8.9 billion (Dh32.6 billion) in 2014 from an estimated $7.9 billion in 2013, according to EY’s [Ernst &Young] report, Global Takaful Insights 2014.
The report forecasts a continued double-digit growth momentum of the global takaful market of approximately 14 per cent from 2013 to 2016 and expects the industry to reach $20 billion by 2017. This is against a backdrop of continued buoyancy in the estimated $2 trillion global Islamic finance markets.
The Gulf Co-operation Council (GCC) countries and Association of Southeast Asian Nations (Asean) markets are likely to maintain their current growth path in the next five years, subject to their economic growth.
Within the Gulf region, Saudi Arabia accounts for the majority of the total gross takaful contribution at 77 per cent, followed by UAE, which accounts for 15 per cent. The rest of the Gulf countries account for just 8 per cent of gross takaful contributions.
Dubai: GCC’s gross takaful contribution is estimated to reach around $8.9 billion (Dh32.6 billion) in 2014 from an estimated $7.9 billion in 2013, according to EY’s [Ernst &Young] report, Global Takaful Insights 2014.
The report forecasts a continued double-digit growth momentum of the global takaful market of approximately 14 per cent from 2013 to 2016 and expects the industry to reach $20 billion by 2017. This is against a backdrop of continued buoyancy in the estimated $2 trillion global Islamic finance markets.
The Gulf Co-operation Council (GCC) countries and Association of Southeast Asian Nations (Asean) markets are likely to maintain their current growth path in the next five years, subject to their economic growth.
Within the Gulf region, Saudi Arabia accounts for the majority of the total gross takaful contribution at 77 per cent, followed by UAE, which accounts for 15 per cent. The rest of the Gulf countries account for just 8 per cent of gross takaful contributions.
(Gulfnews.Com / 14 September 2014)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Friday, 19 September 2014

Insurance: Takaful is not just for Muslims -Hassan Bashir

Hassan Bashir, Founder of Takaful Insurance of Africa, says the Kenya-based company's products can bring possibilities to many and are not exclusively for people of the Muslim faith.
The Africa Report: Why did you launch Takaful Insurance of Africa in 2011?
What is the difference between conventional insurance and Takaful?There was a need for the service. I have been involved in the insurance industry since 1997, and it was something that I had become aware of. For my MBA I researched customer behaviour across the Kenyan insurance industry, and what came out was evidence of dissatisfaction and a need for honesty and ethics in the insurance products and services. I came across a lot of people who did not have insurance, or if they did they only had the basic statutory amount. They said that they did not feel comfortable with some aspects of insurance – that it did not accommodate their religious beliefs – and some people said they felt conventional insurance was a bit like gambling.
The big difference is that conventional insurance is a risk-transfer model, whereas takaful is a risk-sharing model. In the case of takaful, it's more like a joint fund, where the company and shareholders are paid a portion of the premiums. The risk remains partly shared and collectively based on all those taking part in the scheme. At the end of the insurance period there is a payout, not a 'no-claims bonus', more of a dividend.
Why did you choose Kenya, which has a relatively small Muslim population?
I started in Kenya because I am Kenyan. This is the market I know – and because I saw there was a gap in the market here. I agree there are bigger markets, like Nigeria or Ethiopia, but that means there is potential to grow. Six months ago we opened an office in Somalia. We have made expressions of interest in Uganda, Djibouti and Tanzania, so we have big plans.
Is takaful only for Muslims?
No, not at all. Our products are not exclusively for people of the Muslim faith. We can serve anyone, and we do. Initially, people thought it was only for Muslims, but now around 15% of our client base is non-Muslim and we are growing.
Are people put off Islamic finance solutions by negative connotations of Islamism? 
Some people in our community are ill-informed, it is true. I've been asked – directly to my face – "If someone defaults on payments, will their hands be chopped off?" People are only like this because they do not know all the information, so it is our job to educate them. There are sensitivities, which I can understand, but I believe economic development will help change minds. Extremism thrives in spaces where there is poverty and a lack of education, and where people are desperate and have nothing to do and no means of earning a livelihood. But I believe that Islamic finance can bring possibilities to many people by helping them get employment and access to finance. Look at what we are achieving with the index-based livestock takaful. We are continuously educating [pastoralists] so that they understand that the cover is in line with their religious sensitivities and this is to cushion them against the harsh weather so that they sustain their livelihoods despite the droughts that may occur from time to time. In the long run, this will answer the question you asked about the negative perceptions about Islamic finance.
Do you think Kenya will launch a sukuk this year?
I am not sure if it will be this year, but I have no doubt it will happen soon. Kenya wants to become an Islamic finance hub in the East and Central Africa region, and it is well placed to do so. ●
(The Africa Report / 18 September 2014)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Indonesia preps Islamic pension rules as Islamic banking growth slows

Indonesia's capital market regulator is projecting a drop in the growth rate of Islamic banking assets and is developing an array of initiatives to boost the sector, including much-awaited rules governing Islamic pension funds.
Indonesia's financial services authority, Otoritas Jasa Keuangan (OJK), said in a report that it is preparing a five-year blueprint aimed at industry issues such as sector consolidation, a lack of scale and foreign ownership limits.
OJK said it was now preparing draft regulations for Islamic pension funds, after Indonesia's national sharia council issued a ruling approving the overall concept in November last year. It has been under study since 2009.
"There is demand from the public to participate. With this, it is hoped that the number of sharia products increase and the public's wish for a pension fund on the basis of sharia principles is fulfilled."
Countries such as Pakistan and Malaysia have made efforts to develop Islamic pension systems of their own, where fund managers screen their portfolios according to religious guidelines such as bans on tobacco, alcohol and gambling.
Under a "moderate" scenario, the OJK projects Islamic banking assets will grow by 14.4 percent in 2014, down from 24.2 percent in 2013 and 34 percent in 2012, although these figures would remain above those for conventional banks.
As of December, Indonesia's Islamic banking industry - which included full-fledged lenders, Islamic windows and Islamic rural banks - had a combined 248.1 trillion rupiah ($20.6 billion) in assets, or 4.9 percent of the country's total banking assets.
That means Indonesia, which has the world's biggest Muslim population, remains well below neighbouring Malaysia, where Islamic banks hold more than 20 percent of all banking assets.
The OJK said challenges faced by Islamic banks were mainly internal, rather than related to external pressures such as falling commodity prices or lower export demand, as the sector's foreign currency funding stood at about 5.9 percent.
In particular, competition for third-party funds is a factor affecting growth, given the small scale of Islamic banks which makes it difficult for them to compete with large-scale conventional banks in attracting liquidity, the OJK said.
Despite this, the sector welcomed its 12th full-fledged Islamic bank last year, Bank BTPN Syariah, which was spun-off from its parent Bank BTPN (BTPN.JK). The Islamic lender also absorbed conventional peer PT Bank Sahabat Purba Danarta.
The industry has also seen growth in other areas such as Islamic mutual funds: As of December, there were 65 Islamic mutual funds in the country which saw a 12.1 percent increase in assets in 2013.

In addition, there were 10 corporate Islamic bonds issued last year, worth a combined 2.2 trillion rupiah, with total sukuk outstanding representing 9.4 percent of total debt issuance.
(Reuters / 18 September 2014)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Thursday, 18 September 2014

Pakistan: Helping the needy: Zakat, dowry assistance revised after 31 years

MULTAN: 
The Provincial Zakat Council has increased the monthly stipend for the needy after 31 years. The raise has been approved for nearly five million recipients of zakat in the province, The Express Tribune has learnt.
This includes dowry grants. The amount has been revised after 20 years. The amount has been raised by up to 100%.
The amount of zakat for a single person has been increased from Rs500 to Rs1,000.
The provincial government had earlier revised the dowry fund in 1994, announcing Rs10,000 for each deserving family. The amount has been raised to Rs20,000.
The eligibility of a family for the fund is determined by the Punjab Baitulmal and charity organisations operating under the Provincial Zakat Council.
The government will start paying the revised zakat and dowry funds from the next month.
The council has informed District Zakat Councils about the raise in the stipends.
A study of the official record revealed that zakat councils in all 36 districts have submitted 21 requests to the council over five years for raising the funds.
Some of the beneficiary families The Express Tribune spoke to said the government should have raised the amount by 500%.
Naseem Bibi, a daily wager, said she was happy with the raise in the dowry fund. “Although the government should have announced a raise of 400%, the current announcement is a welcome move,” she said.
Muzafargarh Zakat Officer Muhammad Adnan said he had received provincial government’s orders for the raise in funds. He said the district zakat office currently had for three months. “We have funds for July, August and September. The beneficiaries will be paid in line with the new directive,” he said.

(The Express Tribune / 14 September 2014)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Goldman Learns From Debut Flop in Islamic Finance Market

Three years after its first foray into the Islamic capital markets ended without a sale, investors piled in to buy sukuk debt from Goldman Sachs Group Inc. (GS)yesterday as the bank joined the governments of Hong Kong and the U.K. in selling debut Shariah-compliant bonds this year.
The New York-based lender attracted bids for three times the $500 million of sukuk it sold yesterday, according to two people familiar with the deal, who asked not to be identified because the information is private. The five-year sukuk was priced to yield 90 basis points, or 0.9 percentage point, over the benchmark midswap rate, according to the people.
After failing to sell sukuk bonds in 2011 amid criticism the deal didn’t ensure debt would be traded at par, as required by Islamic law, Goldman adjusted the structure this time in a bid to appeal to more investors. The new issue is a Sukuk al Wakala, a Shariah-compliant format in which one party entrusts another to act on its behalf.
Islamic financial assets globally will double to $3.4 trillion in the five years through 2018, according to forecasts from Ernst & Young LLP. The U.K. became the first non-Muslim country to issue sovereign Islamic bonds in June with a sale that lured orders for 10 times the amount offered. Hong Kong raised $1 billion in a debut sukuk last week, with a bid-to-offer ratio of 4.7.

‘New Entrants’

“You’re starting to see a lot of new entrants coming into the sukuk market,” Damian White, a treasurer at Dubai-based Noor Bank, said in an interview yesterday. “The hope is that they will not be one-time visitors, and that it will encourage others.”
David Wells, a spokesman for Goldman in New York, declined to comment on the firm’s issuance of Islamic bonds.
The pricing “seems pretty aggressive at first glance, although we don’t see paper like this very often,” Ahmed Shehada, the Abu Dhabi-based head of advisory and institutions at NBAD Securities LLC, said by e-mail yesterday. “This will attract a different institutional base, mostly sovereign wealth funds and banks looking to manage liquidity and cash.”
Global sales of Islamic bonds have surged 39 percent this year to $33 billion, according to data compiled by Bloomberg, as investors have tapped the expanding pool of liquidity. Issuers from Malaysia are the biggest sellers of sukuk this year, having raised about $14 billion, according to data compiled by Bloomberg.
Abu Dhabi Islamic Bank PJSC (ADIB), National Bank of Abu Dhabi PJSC, Emirates NBD Capital Ltd. and NCB Capital also managed the offering, the people said. Standard & Poor’s rated the issue A-, the seventh-highest investment grade, it said in a statement this month.
(Bloomberg / 17 September 2014)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

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