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Tuesday, 5 March 2013

Egypt: Sukuk Bill Referred to Shura Council

Finance Minister al-Morsi Hegazi said the Sukuk bill was referred on Sunday 3/3/2013 to the Shura Council for discussion, noting that the bill has been probed by the Cabinet's the legislative and economic committee where a detailed memo was drafted on the draft law.
He asserted that the bill entails all guarantees that safeguard the state's rights and the Sukuk holders.
The Minister's statements came during the press conference he held for expounding the importance of Sukuk for the Egyptian economy during the current stage.
Hegazi denied the rumors circulated on offering Egypt's antiquities for lease, asserting that the Sukuk aim at bridging the financial gap between the rates of saving, which reached 11 per cent and the investment needed rates, ranging between 35 and 40 per cent of the Gross Domestic Product (GDP) so as to create new jobs, increase the exports and offer foreign cash.
The minister also underlined that the Sukuk mechanism will not add any further burdens on the state's budget or the public indebtedness, given that the risks will be shouldered by the Sukuk holders.
Sukuk are essentially Islamic bonds in which the creditors buy shares in an investment or project, meaning that the holder of a Sukuk bond is technically a partner in the enterprise and not a creditor.

(All Africa / 04 March 2013)

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Noor Awqaf formed to tap Islamic finance

A Memorandum of Understanding (MoU) has been signed to establish a new asset management firm, specialising in Awqaf (Islamic endownments), in Dubai’s bid to become a global centre for the business of Shariah-compliant in line with the emirate’s vision to position as the world’s capital for the Islamic economy.

Ahmed Kalim, Deputy Group chief executive officer, Noor Investment Group, and Tayeb Abdel Rahman Al Rayes, secretary-general of Awqaf and Minors Affairs Foundation (Amaf), have signed the MoU to set up Noor Awqaf LLC in the UAE. Noor Awqaf will complement the work of Amaf in offering enabling financial services to Awqaf entities around the world.

The initiative is in line with the recent announcement of His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, to transform the emirate into the world’s capital for Islamic finance and other businesses based on Islamic principles.

Noor Awqaf has been set up as an independent limited liability company, with an initial issued and paid-up share capital of Dh10 million. Noor Awqaf is 60 per cent owned by Noor Investment Group and 40 per cent by Amaf. It will manage Awqaf funds and provide other asset management services. It will also offer due diligence, financial analysis and assistance in the creation and implementation of strategic objectives for Amaf and other similar entities around the world. One of the Islamic economy sectors that will be targeted by Noor Awqaf is the $2.1 trillion Halal industry.

Noor Awqaf intends to build a business model to position Dubai as a Halal centre which facilitates and adds value to the globally expanding market force, in food, pharmaceutical, cosmetic, additives and ingredients, lifestyle and services sectors.

Dr Ahmed Al Janahi, deputy group chief executive officer, Noor Investment Group, said: “The cooperation with Amaf, which is aligned with Dubai’s vision to shape the future of the Islamic economy, is in line with our strategy to give back to the society through support for charities and foundations in the UAE. We will provide expertise with respect to the set-up and management of Noor Awqaf, including fund and asset management services, the creation of appropriate legal structures and the investment of funds under management.”

Al Rayes said: “The cooperation with Noor Investment Group, to establish an independent company, will ensure the enhanced management of the Awqaf fund, in addition to extending product and financial services to other funds. Amaf will on its part provide access to its relationship with other entities and expertise in Awqaf best practices, policies and procedures.” 

(Khaleej Times / 04 March 2013)

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UK: Can Islamic Finance save us from the Banksters?

The governments of the world lurch from crisis to crisis as they try to prop up the corrupt, debt-based money system, but there is a positive alternative if they have the courage to take it.
PAY THE BANK TO HOLD YOUR CASH was the headline in the February 27 issue of City A.M. That may not sound like an attractive proposition, nor may the suggestion that we should adopt negative interest rates, but there is a positive side to it.
On page 17, the overpaid so-called experts disagreed: Ross Walker, an economist with the Royal Bank of Scotland voted yes; Philip Booth of the Institute of Economic Affairs voted no. We've been here before, but imagine you were diagnosed with a serious illness and half the doctors recommended antibiotics while the other half said you needed no treatment at all. What would that do for your opinion of the medical profession?
Today, it was reported that the banks were lending less, in spite of all the promises by Vince Cable and others of funding for lending and yet more Quantitative Easing. So should we have negative interest rates? No, we should have no interest rates at all.
The propaganda that is still peddled by mainstream economists to this day in the face of overwhelming evidence to the contrary is that people deposit money in the bank, which then lends it. The bank pays depositors X%, lends at X+Y% and makes its profit by the difference - ie Y% plus fees and so on. The truth is very different.
What happens is the money stays in the bank, the bank then creates credit out of thin air, lends it at interest to a businessman, company or whatever, and when this new money is deposited in another bank, it increases the money supply. When the borrower repays the loan, this new money is cancelled out of existence, but any interest remains as new money and new debt. This can be proven mathematically, and was by the great Major Douglas before any of you were born, but if you can't understand his equation (below), just remember this simple saying: "Every bank loan creates a deposit; every repayment of a loan destroys a deposit".

(Digital Journal / 04 March 2013)

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Standard & Poor's sees active year ahead for Islamic finance

Banks are expected to continue tapping Islamic debt facilities to keep sukuk markets active in the year ahead, according to a new report from Standard & Poor's, amid mounting cynicism that the asset class is falling out of favour with investors.

But the credit ratings agency warned that the pipeline of new bond sales could become jammed if investors' demands for higher yields on sukuk and longer-dated debts head too high.

"In view of supportive debt capital market conditions, we forecast banks' issuance levels to remain elevated in 2013," the report said. "We expect most of the impetus to come from banks in the United Arab Emirates, the largest issuers in 2012, and Qatar, where issuance has been steadily increasing."

There are some signs that 2013 will not scale the highs reached last year, when total Islamic bond sales reached US$21.2 billion (Dh77.8bn).

Arabian Gulf sukuk issuances have totalled $2.1bn this year. During the first quarter of last year, sukuk sales reached $8.3bn.

Meanwhile, Bank of America Merrill Lynch, Coutts and Société Générale have said the sukuk rally has run out of steam.

Total returns on the HSBC Nasdaq Dubai GCC US dollar sukuk index increased by 10.3 per cent. The banks believe sukuk and other emerging market debts will lag stocks this year.

So far this year, the index has returned just 0.6 per cent while global equities have rallied, with the MSCI World index up 4.7 per cent during the same period.

Others disagree, including HSBC, the biggest underwriter of sukuk debt.

Sales could total between $30bn and $35bn, Mohammed Dawood, the managing director of debt capital markets at HSBC Amanah, told Bloomberg News last month.

Standard & Poor's said it also expected more hybrid issuances by banks during the year as lenders seek out riskier structures to entice yield-hungry investors.

"We anticipate that the expected issuance will show dependence on pricing levels.

"If we were to see a change in the region's fixed-income investors' expectations, such as demands for higher yields on sukuk and longer-term bonds, this could curb issuance activity because regional banks are highly price sensitive," S&P's report said.

Bond yields move in the opposite direction from price.

Returns on safe assets have dwindled as a result of bond-buying programmes by central banks including the US Federal Reserve, the Bank of England and the Bank of Japan, which have pushed yields on many fixed-income assets to below prevailing inflation rates.

Investors have moved to protect themselves against rising inflation and an anticipated rise in interest rates as the global economy recovers, which could cause prices of fixed-income assets to fall. Equities have become more popular as a result.

Data released by BlackRock shows that globally, net inflows into fixed income mutual funds and exchange-traded products have fallen during four out of the past six consecutive months.

(The National / 05 March 2013)

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Malaysia: IFSA milestone for Islamic finance

Often times, when a general election draws near, I usually get a bit nostalgic and proud of what my country has achieved within 56 short years as an independent and sovereign nation.
It also gets me excited about what else we, as Malaysians, can do to better ourselves as a nation of dreamers and builders.
Naturally, as a Malaysian who has been involved in the Islamic finance industry globally, I am especially proud of what my country has achieved in this field over the years. The industry’s humble beginning in Malaysia started formally in 1963 when Lembaga Tabung Haji was established by the government to facilitate savings among Muslims in a syariah-compliant manner to prepare for their haj.
I am too young (since I was not born yet at that time) to know what actually transpired then, but I am glad it did happen because it led to the creation of the first regulated licensed Islamic bank in the world, Bank Islam Malaysia Bhd, 20 years later. A great many things happened after that, including the establishment of the first licensed takaful company in the world, the first licensed Islamic window operations and the first licensed Islamic asset manager.
Islamic finance was the epitome of the democratisation of the financial market in Malaysia. It brought about real financial inclusion for all.
There are just too many deliberate and structured developments that the industry players, the government of the day and the financial regulators did since then to develop the industry for me to mention here. As such, suffice for me to say that they were generally positive developments that helped propel Malaysia further as a global leader in the industry every step of the way.
Nonetheless, what I will identify as the most important development made, which helped change the world’s view on Islamic finance, is the institutionalisation of a comprehensive legislative, regulatory, legal and syariah framework for the industry in Malaysia – the first of its kind since the fall of the Ottoman Empire in the early 20th century. I dare say that this can and should be considered as one of the most significant paradigm shifting events in mankind’s modern hi story. All Malaysians should hold their heads high for this contribution to modern civilisation.
Thirty years haved passed and today, as a result of the comprehensive framework established, Malaysia has become the largest, deepest and broadest Islamic finance market anywhere in the world with the most comprehensive product offerings – from the simplest basic savings product to the most sophisticated investment products for everyone and anyone in the country, be they individuals or corporate bodies, residents or foreigners, Muslims or non-Muslims.
Clearer sense of destiny
As I contemplate on what to expect in Malaysia post the 13th general election (GE13), I can’t help but be excited with the prospect of Islamic finance moving forward. The reason for my excitement is because finally after 50 years of existence in the country, Islamic finance is being given the needed facelift and makeover.
Unbeknown to many, come May 2, the comprehensive legislative, regulatory, legal and syariah framework that has propelled the Malaysian Islamic industry to be where it is today will be overhauled, refreshed and strengthened in the much-awaited Islamic Financial Services Act (IFSA).
Malaysia’s Islamic finance industry is ready to move forward.
The new IFSA, read together with the Central Bank Act (CBA), provides a much stronger and more effective platform for Islamic finance, unparalleled with any other platform anywhere else in the world.
Islamic finance is now, for the first time, completely institutionalised as a component of the Malaysian financial market by parliamentary legislation.
Its future posterity and prosperity cannot be subjected to the whims and fancies of any individual who may or may not believe in Islamic finance.
Any fundamental change in the industry must now be congruent with what Parliament has set and if it is not, then only Parliament can make the change.
The sanctity and certainty of syariah management and governance in the industry has also been embedded and institutionalised comprehensively in parliamentary legislation.
The IFSA and the CBA clearly define the different duties and responsibilities of all parties in the industry in regard to syariah-compliance and help clarify the relationship between the financial regulators, the licensed financial institutions and the judiciary. It is the first time such thing has ever been done in the world. As a result, the certainty of doing business in the Islamic finance industry will be better than ever and will provide a very conducive platform for the industry to grow bigger and better. Perhaps it is time people look at doing global sukuk issuance under Reg S or 144A using Malaysian law instead of English law.
I anticipate there will be a period of adjustment for the industry in Malaysia as we take in the various changes that the industry will have to go through post the IFSA.
Once everything settles down, I foresee many new product offerings coming up and the Islamic financial institutions attaining a more enhanced competitive edge in the market vis-a-vis conventional riba-based financial institutions. I see the industry entering into its next 50 years of development with a renewed confidence and clearer sense of destiny.
Yes! Our country’s GE13 is coming and as much as I am intrigued like everyone else about the possible outcome of our democratic election, the one thing that I am sure of is that irrespective of the election result, our Islamic finance industry is poised and ready for more great things. I would urge all my fellow proponents of Islamic finance to be ready for the next push.

(F.M.T News / 04 March 2013)

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