Friday, 31 July 2015

Pakistan: SBP to set up centers of excellence in Islamic finance at 3 institutions

The State Bank of Pakistan (SBP) held a signing ceremony for Financial Innovation Challenge Fund (FICF) on promoting excellence in Islamic finance in Pakistan under its financial inclusion programme funded by the UK’s for International Development (DFID) funded. The signing ceremony marks the beginning of the implementation phase of the FICF innovative Islamic finance education and research projects in partnership with leading higher education institutions which was earlier launched by Finance Minister Ishaq Dar on January 9, 2015.
SBP Deputy Governor Saeed Ahmad, who is also the FICF advisory committee chairman, hosted and witnessed the signing ceremony. The chairman congratulated the successful institutions for proposing projects which will build platforms for Islamic finance education and research in Pakistan. He shared that the committee held a series of long meetings to select the best projects from the long list of proposals received under the challenge round. The decision was based on well-defined uniform evaluation criteria including uniqueness of the proposed innovations, sustainability of the ideas and potential for financial inclusion to establish value for money.
Saeed Ahmad, while sharing his enthusiasm and hope, urged the successful institutions to implement their projects over the next 12 months to ensure timely completion to further build Islamic finance education research infrastructure in Pakistan. He hoped that the centers of excellence would meet the growing human resource and knowledge gaps through quality and value-added services and knowledge products.
At the ceremony, three projects were signed with Institute of Business Administration (IBA), Lahore University of Management Sciences (LUMS) and Institute of Management Sciences (IM Sciences).
The FICF is a component of the larger financial inclusion programme (FIP) being implemented by the SBP under the funding assistance of UK aid to spur innovative financial inclusion in Pakistan. The first and second round of the fund was held on financially inclusive government to person (G2P) payments and promoting rural and agricultural finance accordingly.
(Pakistan Today / 31 July 2015)
---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Thursday, 30 July 2015

Event Summary (KLCIF2015) - KL Conference on Islamic Finance 2015


KL Conference on Islamic Finance 2015


Date    : 18-19 August 2015
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 10 July 2015
Malaysian   :  RM1,500
International  :  USD600

Normal Fee:
Registration with payment after 10 July 2015
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.


DOWNLOAD BROCHURE
(will be uploaded soon...for now you may request for tentative program or you will be given a tentative program when register online)

 Download the brochure

REGISTER ONLINE



ORGANISER


VENUE


Grand Seasons Hotel, Kuala Lumpur - Malaysia

MEDIA PARTNERS


Kuala Lumpur


Lahore

Malaysia sukuk sale lures weakest demand in 2015 on 1MDB concern

KUALA LUMPUR (July 30): Malaysia attracted the weakest demand at a sovereign sukuk auction in almost eight months amid concern it will need to bail out a state-owned investment company.
The Treasury sold 3.5 billion ringgit ($916 million) of Shariah-compliant bonds due October 2025 to yield 4.105 percent on Thursday, according to data published on the central bank’s website. The bid-to-cover ratio of 1.85 was the lowest since Dec. 5, data compiled by Bloomberg show.
Prime Minister Najib Razak removed his deputy Tuesday as he seeks to head off a public rift within his cabinet over his handling of financial probes into debt-ridden 1Malaysia Development Bhd. The state-owned entity’s borrowings totaled 41.9 billion ringgit ($11 billion) at the end of March 2014.
“There is less interest because people are unsure of the contingent liabilities from 1MDB,” said Nizam Idris, the Singapore-based head of foreign-exchange and fixed-income strategy at Macquarie Bank Ltd. “The domestic political uncertainty also has a part to play.”
The yield on the existing 3.99 percent Islamic government bonds due October 2025 declined three basis points to 4.1 percent as of 2:18 p.m. in Kuala Lumpur Thursday, according to Bursa Malaysia prices.
The ringgit weakened 0.1 percent to 3.8150 a dollar, prices from local banks compiled by Bloomberg show. That took its decline in 2015 to 8.3 percent, the worst performance in Asia.
(The Edge Markets / 30 July 2015)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Wednesday, 29 July 2015

South Africa proposes extending sukuk to corporate issuers

South Africa's Treasury has proposed extending tax reforms to facilitate the issuance of sukuk, or Islamic bonds, by listed companies after the government did a $500 million debut deal last September.
Sukuk transactions in Africa have been few and infrequent but this is gradually changing as governments see an opportunity to tap cash-rich Islamic investors from the Gulf and Southeast Asia.
Senegal issued sukuk for the first time in June last year while Niger, Nigeria and Ivory Coast are planning debut deals.
South Africa introduced tax amendments in 2011 to allow the government to issue sukuk and this was extended to public entities in April this year. The proposed changes will come into effect in January 2016.
"It has always been the government's intention to ensure that these financing arrangements are accessible to other entities as well as an additional source to raise capital," the Treasury said in the draft of the legislation.
Taxation is often problematic for sukuk because of their asset-backed nature, which means multiple asset transfers may be required for a transaction to take place, creating a heavy tax burden for issuers unless special legislation is in place.
Firms such as South African National Roads Agency Ltd (Sanral) and power utility Eskom have been considering following the government's sukuk deal, which attracted an order book of $2.2 billion.
Sanral has studied sukuk for years but has faced some challenges relating to the transfer of assets and its tax status, the company told Reuters in May.
Both Sanral and Eskom have said they would only sell sukuk if this was cost-effective versus other funding sources.
(Reuters / 28 July 2015)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

WHAT DODD-FRANK CAN LEARN FROM ISLAMIC FINANCE


Five years ago this month, Congress took a step toward reining in elements of a troubled financial system when it passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. The move was touted as an end to the laissez-faire principles embodied in the repeal of Glass-Steagall, which had previously protected against many of the excesses the banking industry is now notorious for.

A Pew poll from earlier this year found that 63% of Americans said the US economic system is no more secure today than it was before the 2008 economic crisis. One explanation for this may have to do with inadequacies in the legislation. How can we continue to make things better? One answer can be found in the principles of Islamic finance.

Almost everyone remembers that high-risk loans, speculation, and leverage fueled the run-up to the Financial Crisis. As the financial sector began to collapse in mid-September 2008, the aggregate default and the trading of mortgage-backed securities (MBS) was a major liability. Banks bought and sold MBS products of all types, keeping some on their books but shifting most of the credit risk to bank trading partners. Although Dodd-Frank provides for securitizing banks to retain an economic interest in the credit risk of any asset transferred, sold, or conveyed to a third party, the amount is less than 10% and exemptions to this rule abound. Islamic finance expressly prohibits the buying and selling of debt and elevates lending (without interest) to be a charitable activity, incentivizing instead risk-taking ventures in partnership with customers in order to produce a tangible impact in communities.

At its core, the credit and housing market crisis was caused by a banking industry that issued loans at excessive interest rates to home buyers who ultimately defaulted. Families with adjustable-rate mortgages were left vulnerable to fluctuating interest rates. These unsound banking practices are still condoned by Dodd-Frank in various forms.

Islamic finance, which recognizes the consequences of charging a gain without sharing the risk, prohibits these practices due to the inherent inequity this arrangement causes between the parties. According to Islamic finance, riba, which is usually translated as “interest,” “usury,” or both, is considered a tool of oppression, as it exploits the needy by unjustly taking their money and enabling those who receive it to -illicitly hoard wealth. Over time, the effects of riba take a toll on society, limiting upward mobility and creating an entrenched financial elite.

The principles of Islamic finance are steered by the need for justice and fairness in financial arrangements. Dodd-Frank was an attempt to move us closer to correcting the excesses of a banking sector still desperately in need of structure, or at the very least a conscience. There’s something to be said for the stability brought by a system centered on justice. Until we have a banking system that more fully participates in a partnership with customers—instead of treating them like nameless, faceless numbers on a spreadsheet—we distance ourselves from the ideals of a just society.

Finally, one of the biggest reasons we still sit on the precipice of crisis five years after Dodd-Frank is that many of its components still need to be written. Doubtless, this has created an environment of uncertainty and timidity in the banking industry. Politicians talk about making lasting reforms but have yet to follow through. This regulatory limbo cannot abide.

Talk is cheap. Dodd-Frank can be better, and the principles of Islamic finance can help.

About the author
Joshua Brockwell is the Director of Investment Communications at Azzad Asset Management. Azzad Asset Management is investment advisor to the Azzad Funds, halal mutual funds that follow investing criteria outlined by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). Azzad is renowned both for its advocacy of the Seven Tenets of Halal Investing and as sponsor of the first Shariah-compliant, socially responsible fixed-income mutual fund in the United States, the Azzad Wise Capital Fund.



(Oil And Gas Financial Journal / 27 July 2015)
---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Tuesday, 28 July 2015

Female banker takes on Islamic industry

DUBAI: Samina Akram left her job at Merrill Lynch International Bank eight years ago to start her own consultancy in Londonspecializing in Shariah-compliant finance. Now she’s seeking to empower women in male-dominated Islamic banking.

What started as an informal ladies lunch club with other women in the industry will this week become the first global Women in Islamic & Ethical Finance Forum, a conference for more than 200 people at KPMG LLP’s Canary Wharf offices in London. Shariah-compliant finance forbids interest and typically relies on deals in which the buyer and the seller share risk as well as profit.
Akram, 36, who set up Samak Consultants LLP, is seeking to support women in an industry where they face more obstacles than in conventional banking because of religious conservatism, restrictions on mixed-gender working environments and stereotypes about women in Islamic finance.
In the six-nation Gulf Cooperation Council a shift may already be underway, as the banks aim to draw more female clients and recognize they need more female bankers to do so, according to PricewaterhouseCoopers LLC. Women’s net worth in the GCC may grow as much as 15 percent to about $258 billion in the 10 years through 2023, according to Kuwait Financial Center, an asset manager and investment bank.
“There is opportunity, absolutely,” Ashruff Jamall, the Dubai-based head of the Islamic finance division at PwC, said on July 21. “It’s a question of priorities. Islamic banks are now beginning to focus on the women’s segment. Developing female leadership also serves as a catalyst in attracting women as customers.”
Having started at Merrill Lynch in an administrative role, Akram rose to run the lender’s Islamic finance wealth management business. She left the bank in April 2009 as investment banks were shifting focus to outside Islamic finance consultants rather than in-house experts.
“I was an outsider with no direct industry experience and being a woman certainly did not help,” Akram said this month. “My personal struggle in the industry made me realize the obstacles women face and what needs to be done to overcome them. This is where the Women in Islamic Finance idea came from.”
Unemployment among women is five times higher than for men in the GCC, and women hold less than 1 percent of top executive positions, among the lowest figures worldwide, according to a report by McKinsey Middle East last year.
In more conservatives countries, such as Saudi Arabia, there are religious and social constraints that for example forbid the mixing of genders in the work environment. While women in the kingdom make up the majority of university students, they account for just 21 percent of the workforce, most of them employed in education and health care, according to Emad Mostaque, a London-based strategist at emerging-markets consultancy company Ecstrat Ltd.
In other parts of the world with large Muslim populations, women have made more progress in Islamic banking. Two of Malaysia’s 16 Islamic lenders are run by women and three of the 11-member central bank Shariah Advisory Board are female.
In the GCC, Abu Dhabi Islamic Bank PJSC, the UAE’s second-biggest Shariah-compliant lender, has unveiled a yearlong initiative to mentor about 40 female bankers who have spent at least four years at the bank and prepare them for more challenging leadership roles.
Shakeeb Saqlain, the CEO of IslamicBanker.com, a U.K.-based online training and networking platform specializing in Shariah banking, said the lack of women in leadership roles at banks has been a miscalculated strategy.
Financial institutions “must do more to offer Islamic financial solutions to this growing female segment, who desperately welcome the idea of investing in Shariah-compliant or ethical financial products,” Akram said.
(The Daily Star Lebanon / 28 July 2015)DUBAI: Samina Akram left her job at Merrill Lynch International Bank eight years ago to start her own consultancy in Londonspecializing in Shariah-compliant finance. Now she’s seeking to empower women in male-dominated Islamic banking.

What started as an informal ladies lunch club with other women in the industry will this week become the first global Women in Islamic & Ethical Finance Forum, a conference for more than 200 people at KPMG LLP’s Canary Wharf offices in London. Shariah-compliant finance forbids interest and typically relies on deals in which the buyer and the seller share risk as well as profit.
Akram, 36, who set up Samak Consultants LLP, is seeking to support women in an industry where they face more obstacles than in conventional banking because of religious conservatism, restrictions on mixed-gender working environments and stereotypes about women in Islamic finance.
In the six-nation Gulf Cooperation Council a shift may already be underway, as the banks aim to draw more female clients and recognize they need more female bankers to do so, according to PricewaterhouseCoopers LLC. Women’s net worth in the GCC may grow as much as 15 percent to about $258 billion in the 10 years through 2023, according to Kuwait Financial Center, an asset manager and investment bank.
“There is opportunity, absolutely,” Ashruff Jamall, the Dubai-based head of the Islamic finance division at PwC, said on July 21. “It’s a question of priorities. Islamic banks are now beginning to focus on the women’s segment. Developing female leadership also serves as a catalyst in attracting women as customers.”
Having started at Merrill Lynch in an administrative role, Akram rose to run the lender’s Islamic finance wealth management business. She left the bank in April 2009 as investment banks were shifting focus to outside Islamic finance consultants rather than in-house experts.
“I was an outsider with no direct industry experience and being a woman certainly did not help,” Akram said this month. “My personal struggle in the industry made me realize the obstacles women face and what needs to be done to overcome them. This is where the Women in Islamic Finance idea came from.”
Unemployment among women is five times higher than for men in the GCC, and women hold less than 1 percent of top executive positions, among the lowest figures worldwide, according to a report by McKinsey Middle East last year.
In more conservatives countries, such as Saudi Arabia, there are religious and social constraints that for example forbid the mixing of genders in the work environment. While women in the kingdom make up the majority of university students, they account for just 21 percent of the workforce, most of them employed in education and health care, according to Emad Mostaque, a London-based strategist at emerging-markets consultancy company Ecstrat Ltd.
In other parts of the world with large Muslim populations, women have made more progress in Islamic banking. Two of Malaysia’s 16 Islamic lenders are run by women and three of the 11-member central bank Shariah Advisory Board are female.
In the GCC, Abu Dhabi Islamic Bank PJSC, the UAE’s second-biggest Shariah-compliant lender, has unveiled a yearlong initiative to mentor about 40 female bankers who have spent at least four years at the bank and prepare them for more challenging leadership roles.
Shakeeb Saqlain, the CEO of IslamicBanker.com, a U.K.-based online training and networking platform specializing in Shariah banking, said the lack of women in leadership roles at banks has been a miscalculated strategy.
Financial institutions “must do more to offer Islamic financial solutions to this growing female segment, who desperately welcome the idea of investing in Shariah-compliant or ethical financial products,” Akram said.
(The Daily Star Lebanon / 28 July 2015)
---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Monday, 27 July 2015

RAM Ratings reaffirms MRCB Southern Link’s Senior and Junior Sukuk ratings

“The negative outlook on both ratings signals the potential for further deterioration in the ratings as a result of a weaker cashflow position should there be any delay in its refinancing exercise. The differential between the ratings of the Senior and Junior Sukuk reflects the Junior Sukuk’s subordinated status from a legal perspective.
“MRCB Southern Link is a funding conduit for the 8.62-km Eastern Dispersal Link (EDL) in Johor Bahru.
“The reaffirmation of the ratings is premised on the inroads that the Company has made with a debt-refinancing exercise. If the Company fails to complete the refinancing exercise by end-2015, a default on the Junior Sukuk is expected at end-December 2016, and a default on the Senior Sukuk at end-June 2019. As such, the ratings of the sukuk will face downward pressure if the refinancing exercise is not concluded by the end of the year. Elsewhere, as an interim measure to stave off a liquidity crunch, the Company procured bank guarantees (BG) amounting to MYR 90 million on 27 January 2015 to substitute the cash reserves in its finance service reserve accounts (FSRAs). As such, the Company was able to utilise these cash reserves for ongoing debt repayment as well as to support working-capital requirements.
“Since the commencement of tolling on the EDL on 1 August 2014, the Expressway’s monthly traffic volume has been volatile owing to toll-rate hikes on the JB-Singapore Causeway and the higher Vehicle Entry Permit fee imposed by the Singapore government. Compared to the last 5 months of 2014, the annualised average daily traffic (ADT) on the EDL had declined 1.7 per cent in the first 5 months of 2015. We anticipate a minor contraction in the volume of traffic on the EDL for 2015. Thereafter, we expect ADT growth to recover to between 2 per cent and 3 per cent per annum in 2016 and 2017, respectively. Elsewhere, the VEP fee planned by the Government, which has yet to be formalised, may negatively impact traffic volume on the EDL.
“Given the initial underperformance of traffic on the EDL in 2014 subsequent to the imposition of toll charges and our expectations of future traffic, the Company is envisaged to face liquidity stress. MRCB Southern Link will have to draw down the Junior Sukuk Special Reserve Account BG (of MYR 20.43 million) by end-2015 to provide the Company with temporary liquidity respite.”
(C P I Financial / 26 July 2015)
---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Alfalah Consulting's facebook