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Friday, 26 April 2019

Islamic finance & management events in Kuala Lumpur Malaysia 2019 & 2020


Date: 17-18 September 2019
Event: KL Conference on Islamic Finance 2019
Event site:

Date: 21-22 January 2020
Event: KL Conference on Islamic Wealth Management & Financial Planning 2020
Event site:

Date: 17-18 March 2020
Event: KL Conference on Shariah & Legal Aspects of Islamic Finance 2020
Event site:

Date: 17-18 April 2020
Event: KL Conference on Sukuk 2020
Event site:


To register or reserve a seat online, please go to:

Organizer: Alfalah Consulting

Thursday, 25 April 2019

UNHCR unveils the Refugee Zakat Fund, a global Islamic finance structure to help displaced populations worldwide

25 April 2019 (UNHCR)

Dubai, United Arab Emirates, April 25, 2019. The Muslim world has the potential to transform philanthropy through strategic targeting of tens of billions of dollars of obligatory alms, the United Nations High Commissioner for Refugees announced at an event attended by officials, ambassadors and specialists, to launch its Refugee Zakat Fund, a new global structure that transforms UNHCR’s existing Zakat program into a global fund aimed at aiding the most vulnerable displaced populations while meeting the needs of Islamic institutions as well as individuals in fulfilling their social responsibility.

UNHCR unveiled its “UNHCR Zakat Program: 2019 Launch Report”, developed in partnership with DinarStandard, a growth strategy research and advisory firm and the co-authors of the report, during the Refugee Zakat Fund launch today. The report indicates that UNHCR’s Zakat program globally received US$14.4 million from 2016 to 2018, directly assisting 6,888 displaced families, primarily Syrian refugees in Jordan and Lebanon. In addition, the report shows that the global Zakat giving stands at US$76 billion worldwide, and could potentially reach an amount as high as US$ 356 billion, if proper mechanisms are in place for Muslims to safely fulfill their Zakat obligations.

Zakat is the mandatory alms given by Muslims who meet the necessary criteria of wealth each year, particularly to the needy. UNHCR has pioneered the leveraging of Zakat and established its Zakat program to aid the most vulnerable displaced families. The decision to restructure the Zakat program into the global Refugee Zakat Fund is due to the high donor turnout UNHCR has witnessed in the past years.

The Fund allows individuals and institutions alike to fulfil their Zakat obligations efficiently through a globally trusted structure, governed by UNHCR, with 100% of contributions delivered directly to the most vulnerable refugees and internally displaced families. It is fully Sharia-compliant; backed by fatwas from leading Islamic scholars and institutions, and subject to strict governance, ensuring utmost transparency. UNHCR aims to bridge its required funding of US$208.6 million for some 154,740 of the most vulnerable displaced families.

“Over the past few years, UNHCR has seen the demand for a trusted and efficient way of fulfilling Zakat obligations, while making an impact on the lives of some of the most vulnerable populations in the world,” said Houssam Chahine, UNHCR’s Head of Private Sector Partnerships in the MENA region. “With Islamic finance becoming a prominent part of the global economy, we are launching our first annual Zakat report today on the occasion of the Year of Tolerance from Dubai, the capital of Islamic economy. It was inevitable for our Zakat program to evolve into a structure that better appeals to the global Islamic finance industry. The Fund allows UNHCR to be even more transparent and trusted in how it receives and distributes Zakat funds.” he added. 

“Zakat has the potential to release tens of billions of dollars into global philanthropic causes and humanitarian needs, inaugural UNHCR report reveals”, said Rafi-uddin Shikoh, CEO and Managing Director at DinarStandard. “Muslim obligatory charitable contributions might be just the solution to address UNHCR’s funding gap given that 60% out of the 68.5 million of forcibly displaced people worldwide (around 40.8 million people) are Zakat-eligible.” he added.

While the Fund was unveiled just before the Holy Month of Ramadan, traditionally a month of giving and charity for Muslims around the world, UNHCR’s Chahine was keen to emphasize that Zakat obligations can also be fulfilled all year round. “Ramadan is an important time for refugees, and this year we are launching a major campaign globally to encourage Muslims to remember refugees in their prayers, and remember them with their Zakat. However, the Refugee Zakat Fund accepts contributions all year round, helping individuals, institutions and businesses align their philanthropic Zakat with statutory finance requirements and their own calendars.”

The budget required by UNHCR in 2019 is US$7.9 billion, to respond to the overall needs of refugees and internally displaced and other people of concern around the world.

For more information about the Refugee Zakat Fund, click on the following link: zakat(dot)unhcr(dot)org.

25 April 2019 (UNHCR)

Tuesday, 23 April 2019

Malaysia on right track to become global Islamic finance hub

23 April 2019 (Bernama)

KUALA LUMPUR: Malaysia is on track to becoming the world’s leading global Islamic finance hub, said Deputy Finance Minister Datuk Amiruddin Hamzah.

Amiruddin said Malaysia had the International Islamic Liquidity Management Corporation (IILM) which was established in 2010 in cooperation with 12 central banks around the world, and its main function is to pioneer government initiatives involving the development of Islamic finance globally.

“According to Thomson Reuters’s Islamic Financial Development Report in 2018, Malaysia remains the leader among 56 countries for Islamic financial institutions, and this shows that the establishment of the corporation in 2010, which was the government’s ‘frontier’ to develop the country’s Islamic finance at the global level was the right step towards making Kuala Lumpur the best Global Islamic Finance hub,“ he said in a question and answer session at the Dewan Negara today.

He was responding to Senator Asmak Husin’s question on the government’s measures to make Malaysia the world’s leading global Islamic Finance Hub.

Amiruddin said Malaysian banks were appointed as the regulator and lead manager of sovereign ‘sukuk’ or bonds for other countries such as Turkey and Hong Kong, which also proved that Malaysia was now internationally recognised as a leader in international Islamic finance.

In answering a supplementary question from Asmak on the government’s plans to increase talent and human capital in Islamic finance from Malaysia, Amiruddin said the International Centre for Education in Islamic Finance (INCEIF) offered bachelors degrees and doctorates that could provide the expertise needed to bring the sector to the international level.

“In fact, in 2018, INCEIF received the prestigious accreditation from the Association to Advance Collegiate Schools of Business (AACSB) which placed the centre among the top five per cent of international institutions offering business and Islamic finance programmes,“ he added.

Amiruddin said the International Shari’ah Research Academy for Islamic Finance (Isra) provides advisory and consultancy to emerging markets in matters related to Islamic finance. — Bernama

23 April 2019 (Bernama)

Sunday, 21 April 2019

Islamic Financial Services Board (IFSB) - an international standard-setting body for Islamic financial services industry

The Islamic Financial Services Board (IFSB), which is based in Kuala Lumpur, was officially inaugurated on 3rd November 2002 and started operations on 10th March 2003. It serves as an international standard-setting body of regulatory and supervisory agencies that have vested interest in ensuring the soundness and stability of the Islamic financial services industry, which is defined broadly to include banking, capital market and insurance. In advancing this mission, the IFSB promotes the development of a prudent and transparent Islamic financial services industry through introducing new, or adapting existing international standards consistent with Sharî'ah principles, and recommend them for adoption.

To this end, the work of the IFSB complements that of the Basel Committee on Banking Supervision, International Organisation of Securities Commissions and the International Association of Insurance Supervisors.

As at December 2018, the 180 members of the IFSB comprise 78 regulatory and supervisory authorities, 8 international inter-governmental organisations, and 94 market players (financial institutions, professional firms, industry associations and stock exchanges) operating in 57 jurisdictions.

Malaysia, the host country of the IFSB, has enacted a law known as the Islamic Financial Services Board Act 2002, which gives the IFSB the immunities and privileges that are usually granted to international organisations and diplomatic missions.
Adoption of Standards

Since its inception, the IFSB has issued thirty Standards, Guiding Principles and Technical Notes for the Islamic financial services industry. The published documents are on the areas of:
1. Risk Management (IFSB-1)
2. Capital Adequacy (IFSB-2)
3. Corporate Governance (IFSB-3)
4. Transparency and Market Discipline (IFSB-4)
5. Supervisory Review Process (IFSB-5)
6. Governance for Collective Investment Schemes (IFSB-6)
7. Special Issues in Capital Adequacy (IFSB-7)
8. Governance for Islamic Insurance (Takāful) Operations (IFSB-8)
9. Conduct of Business for Institutions offering Islamic Financial Services (IIFS) (IFSB-9)
10. Sharīʻah Goverance System (IFSB-10)
11. Solvency Requirements for Takāful (Islamic Insurance) Undertakings (IFSB-11)
12. Liquidity Risk Management (IFSB-12)
13. Stress Testing (IFSB-13)
14. Risk Management for Takāful (Islamic Insurance) Undertakings (IFSB-14)
15. Revised Capital Adequacy (IFSB-15)
16. Revised Supervisory Review Process (IFSB-16)
17. Core Principles for Islamic Finance Regulations (IFSB-17)
18. Retakāful (Islamic Reinsurance) (IFSB-18)
19. Recognition of Ratings on Sharīʻah-Compliant Financial Instruments (GN-1)
20. Risk Management and Capital Adequacy Standards: Commodity MurābahahTransactions (GN-2)
21. Practice of Smoothing the Profits Payout to Investment Account Holders (GN -3)
22. Capital Adequacy Standard: The Determination of Alpha in the Capital Adequacy Ratio (GN-4)
23. Recognition of Ratings by External Credit Assessment Institutions (ECAIS) on Takāful and
      Retakāful Undertakings (GN-5)
24. Quantitative Measures for Liquidity Risk Management (GN-6)
25. Development of Islamic Money Markets (TN-1)
26. Stress Testing (TN-2)
27. Disclosure Requirements for Islamic Capital Market Products (IFSB-19)
28. Supervisory Review Process of Takāful / Retakāful Undertakings (IFSB-20)
29. Core Principles for Islamic Finance Regulation [Islamic Capital Market Segment] (IFSB-21)
30.Revised Transparency and Market Discipline (IFSB-22)

The standards prepared by the IFSB follow a lengthy due process as outlined in its Guidelines and Procedures for the Preparation of Standards/Guidelines which involve, among others, the issuance of exposure draft and, where necessary, the holding of a public hearing.
Awareness Promotion

The IFSB is actively involved in the promotion of awareness of issues that are relevant or have an impact on the regulation and supervision of the Islamic financial services industry. This mainly takes the form of international conferences, seminars, workshops, trainings, meetings and dialogues staged in many countries.

Source: IFSB's website on 21 April 2019

The World Bank and Islamic Finance

The World Bank Group is working with Islamic finance to reduce poverty, expand access to finance, develop the financial sector, and build financial sector stability and resilience in client countries.

Islamic finance has emerged as an effective tool for financing development worldwide, including in non-Muslim countries. Major financial markets are discovering solid evidence that Islamic finance has already been mainstreamed within the global financial system – and that it has the potential to help address the challenges of ending extreme poverty and boosting shared prosperity.


The Islamic finance industry has expanded rapidly over the past decade, growing at 10-12% annually. Today, Sharia-compliant financial assets are estimated at roughly US$2 trillion, covering bank and non-bank financial institutions, capital markets, money markets and insurance (“Takaful”).

In many majority Muslim countries, Islamic banking assets have been growing faster than conventional banking assets. There has also been a surge of interest in Islamic finance from non-Muslim countries such as the UK, Luxembourg, South Africa, and Hong Kong.

Over the past decade Islamic finance has emerged as an effective tool for financing development worldwide, including in non-Muslim countries. Major financial markets are discovering solid evidence that Islamic finance has already been mainstreamed within the global financial system – and that it has the potential to help address the challenges of ending extreme poverty and boosting shared prosperity.

Islamic finance is equity-based, asset-backed, ethical, sustainable, environmentally- and socially-responsible finance. It promotes risk sharing, connects the financial sector with the real economy, and emphasizes financial inclusion and social welfare.

The following key principles guide Islamic Finance: 1) Prohibition of interest on transactions (riba); ii) Financing must be linked to real assets (materiality); iii) Engagement in immoral or ethically problematic businesses not allowed (e.g., arms manufacturing or alcohol production); iv) Returns must be linked to risks. 


The World Bank Group involvement in Islamic finance is directly linked to the Bank’s work on reducing poverty, expanding access to finance, developing the financial sector, and building financial sector stability and resilience in client countries.

By helping expand the use of Sharia-compliant modes of financing in World Bank Group operations, we are helping deliver benefits to client countries in three areas:
The sustainable development of Islamic finance offers benefits for economic growth, reducing poverty and fostering shared prosperity. Islamic finance can significantly contribute to economic development, given its direct link to physical assets and the real economy. The use of profit- and loss-sharing arrangements encourages the provision of financial support to productive enterprises that can increase output and generate jobs. The emphasis on tangible assets ensures that the industry supports only transactions that serve a real purpose, thus discouraging financial speculation.
Islamic finance helps promote financial sector development and broadens financial inclusion. By expanding the range and reach of financial products, Islamic finance could help improve financial access and foster the inclusion of those deprived of financial services. Islamic finance emphasizes partnership-style financing, which could be useful in improving access to finance for the poor and small businesses. It could also help improve agricultural finance, contributing to improved food security. In this regard, Islamic finance can help meet the needs of those who don’t currently use conventional finance because of religious reasons. Of the 1.6 billion Muslims in the world, only 14% use banks. It can help reduce the overall gap in access to finance, since non-Muslims aren’t prohibited from using Islamic financial services.

It helps strengthen financial stability. As the 2008 global financial crisis ravaged financial systems around the world, Islamic financial institutions were relatively untouched, protected by their fundamental operating principles of risk-sharing and the avoidance of leverage and speculative financial products.

Despite its recent years of rapid growth, Islamic finance is still in its early stages of development, and it will need to address several challenges. We are supporting our client countries to strengthen the legal, regulatory and institutional foundations of Islamic finance. We have also expanded our efforts in promoting the systematic and sustained use of relevant knowledge of Islamic finance to raise awareness, build consensus and promote the worldwide use of Sharia compliant financing instruments.

As part of its work on Islamic finance, the World Bank, in partnersip with the government of Turkey, established the Global Islamic Finance Development Center in 2013 as a knowledge hub for developing Islamic finance globally, conducting research and training, and providing technical assistance and advisory services to World Bank Group client countries interested in developing Islamic financial institutions and markets.

Recent Engagements

In recent operations in Egypt and Turkey, for example, the Bank Group helped governments to design Sharia-compliant financing frameworks to expand financing for small and medium scale enterprises.

Also, in July 2015, the World Bank and the General Council for Islamic Banks and Financial Institutions (CIBAFI), the global umbrella of Islamic financial institutions, signed a Memorandum of Understanding (MoU) to help foster the development of Islamic finance globally and expand its use as an effective tool for financing development worldwide, including in non-Muslim countries.

Islamic Finance Principles and Instruments

The term Islamic finance is used to refer to financial activities conforming to Islamic Law (Sharia). One of the main principles of the Islamic finance system is the prohibition of the payment and the receipt of riba (interest) in a financial transaction. The term riba covers all forms of interest and is not limited to usury or excessive interest only. The most critical and significant implication of banning interest is the indirect prohibition of a “pure” debt security. The key point to bear in mind is that Islamic law doesn’t recognize money and money instruments as a commodity but merely as a medium of exchange. Hence any return must be tied to an asset, or participation and risk-taking in a joint enterprise (such as partnerships). A pure debt security is replaced with an “asset-linked” security, direct financing of a real asset, and different forms of partnerships of which equity financing is the most desirable.

In addition to prohibition of riba, there are several other important provisions which may affect financial transactions. These include the prohibition of ‘gharar’ (uncertainty or asymmetrical information), ‘maysir’ (gambling, speculation), hoarding, as well as trading in prohibited commodities (for example, pork and alcohol).


Basic instruments include: cost-plus financing (murabaha), profit-sharing (mudaraba), leasing (ijara), partnership (musharaka) and forward sale (bay’salam). These constitute the basic building blocks for developing a wide array of more complex financial instruments. 

Murabaha – Trade with markup or cost-plus sale. The purchase of an asset is financed for a profit margin, with the asset purchased on behalf of client and resold at a pre-determined price. Payment could be in lump sum or in installments and ownership of the asset remains with bank till full payments are made

Ijara – Operational or financial leasing contracts. Bank purchases asset on behalf of client and allows usage of asset for a fixed rental payment. Ownership of the asset remains with the financier but may gradually transfer to the client who eventually becomes the owner (ijara wa iqtina).

Mudaraba – Trustee financing contract. One party contributes capital while the other contributes effort or expertise. Profits are shared according to a predetermined ratio and the investor is not guaranteed a return and bears any financial loss.

Musharaka – Equity participation contract. Different parties contribute capital and profits are shared according to a pre-determined ratio, not necessarily in relation to contributions, but losses are shared in proportion to capital contributions. The equity partners share and control how the investment is managed and each partner is liable for the actions of the others.

Sales contracts. Deferred-payment sale (bay’ mu’ajjal) and deferred-delivery sale (bay’salam) contracts, in addition to spot sales, are used for conducting credit sales. In a deferred-payment sale, delivery of the product is taken on the spot, but delivery of the payment is delayed for an agreed period. Payment can be made in a lump sum or in installments, provided there is no extra charge for the delay. A deferred-delivery sale is similar to a forward contract where delivery of the product is in the future in exchange for payment on the spot market. 

Sukuk – Certificates of Ownership. Sukuk are certificates of equal value representing undivided shares in ownership of tangible assets, usufruct and services, or (in the ownership of) the assets of particular projects. The returns on the certificates are directly linked to the returns generated by the underlying assets.

Source: World Bank's website on 21 April 2019

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