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Wednesday, 29 January 2014

Qatar: Call to make Zakat mandatory for commercial sector

If the payment of Zakat (obligatory alms giving in Islam) is made mandatory by law even on commercial entities in Qatar, the expected annual revenue would be to the tune of QR4bn, which is enough to support all the needy inside the country and many in other countries as well, a senior official has said.

Dr Mohamed Khalifa al-Kubaisi, director of Zakat services at the Zakat Fund, speaking at the Central Municipal Council (CMC) session yesterday, said that the Fund, unlike other charities, focussed on the needy inside Qatar, whether locals or expatriates. It is also a government entity which has limitations on publishing its activities.

“Currently the Fund supports 17,000 needy families. The number is expected to increase as the revenue of the Fund goes up due to the rapid increase in the country’s population. This puts great responsibilities and challenges on the Fund,” he pointed out.

Dr al-Kubaisi explained that the revenues of the Fund from donations and Zakat are spent 100% on charitable works and reach the needy in full without any deduction for the operational cost of the Fund such as salaries of the employees and other administrative issues as these are normally covered by the government.

He stressed that there are no really poor people among the locals, but those in need are usually who accumulated huge debts and could not pay back. He called for awareness efforts to persuade such people not to live beyond their means. As for the expatriates, there are still some needy families that need regular support.

“We calculate it like this: We divide the total income of the family members. We have standards for Qataris and expatriates. If the allowance of a Qatari family member falls beyond QR2,000-2,500 a month then the family is in need of a financial support from the Fund. For expatriates the allowance of a person in the family should come short of QR1,000-1,500 a month to be eligible for support.”

Dr al-Kubaisi said the Fund works in a way to spare the needy people any embarrassment. “They have to visit one time only the headquarters of the Fund to submit a request and register their information. They can call by phone and the staff of the Fund will reach out to them. A study of the case will ensue, when confirmed that the family is really needy, a monthly sum would be credited to their bank accounts on a regular basis for the duration of the aid as if it was a salary transfer.”

Dr al-Kubaisi urged yesterday CMC members to join its volunteers and ambassadors programme to promote the practice of Zakat giving in their constituencies and simultaneously help the Fund reach out to the needy.

“You know better your constituencies and we need your help in this respect. We have also engaged other influential people in this programme such as journalists, writers, artists, government officials and expatriate community heads,” he said.

Eventually, the move was highly welcomed by all CMC members, who saw a real need to focus efforts to address the local needs.

(Gulf Times / 22 Jan 2014)
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UAE bank and Al-Dhafra sign Islamic finance facilities deal


Abu Dhabi Islamic Bank (ADIB), has granted a AED450 million Islamic finance facilities to Al-Dhafra Cooperative Society to fund working capital and capital expenditure.

The agreement was signed at ADIB’s head office by ADIB CEO Tirad Al-Mahmoud and Mohammed Khalifa Al-Hamli, chairman of Al-Dhafra Cooperative Society, in the presence of Mohammed Al-Fahim, head of government and public sector, and Al-Dhafra CEO Saif Al-Hamli.

Al-Mahmoud said: “Through this financing facility ADIB is supporting the economy and the interests of UAE nationals in the Western Region. This is in line with the vision of the Abu Dhabi government, which has reiterated its commitment to the Western Region by announcing major investments and projects worth over AED40 billion.

ADIB’s financial strength has allowed the bank to grow our UAE-based financing portfolio over the last couple of years and we intend to accelerate this growth in 2014.”

The financing facility will help Al-Dhafra Cooperative Society implement a number of important projects to boost economic and social development, in line with the Abu Dhabi government’s Western Region 2030 Strategy.

Al-Hamli said: “We value our partnership with ADIB, which is helping Al-Dhafra Cooperative Society to implement the economic development strategy of the Western Region Development Council.

He added: “The choice of Abu Dhabi Islamic Bank to finance the activities of Al-Dhafra cooperative society is a testament to the strength the bank has demonstrated in supporting government institutions and the expansion that Al-Dhafra is looking to achieve in the Western Region.



(Arab News / 29 Jan 2014)
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Malaysia Taxes Spur Indonesian Oil-Palm Sukuk

Bumitama Agri is joining Indonesian oil-palm planters selling sukuk in Malaysia to take advantage of the nation’s tax breaks and to tap its record Shariah-compliant banking assets.
The company set up a 2 billion ringgit ($599 million), 15- year Islamic bond program for investment and refinancing, according to a Jan. 21 stock exchange filing.
Singapore-listed Golden Agri-Resources, which has operations in Indonesia, was the last producer of the commodity to sell ringgit-denominated sukuk in July, paying a coupon rate of 4.75 percent for 2018 securities.
They yielded 4.91 percent on Jan. 24. Malaysia, whose Shariah-compliant banking assets more than doubled in the past five years to 543 billion ringgit, provides tax incentives for agricultural bonds as part of an effort to reinforce its position as a global Islamic hub.
Corporate issuance of sukuk in Indonesia rose almost 18 percent in 2013 to 2.2 trillion rupiah ($179 million), trailing the $14 billion in Malaysia, data compiled by Indonesia’s Financial Services Authority and Bloomberg show.
“We’re getting a fair bit of enquiries from Southeast Asian plantation firms,” Mohd Effendi Abdullah, head of Islamic markets at Kuala Lumpur-based AmInvestment Bank, the nation’s third-biggest Shariah-compliant debt arranger in 2013, said in a phone interview yesterday. “Islamic bonds are ideal for such companies because they can use the assets and the agricultural income to back the offering.”
Tax deduction
To encourage the issuance of agricultural-based sukuk, Prime Minister Najib Razak said in his September budget speech that taxes on expenses and stamp duties on such debt would be waived for four years through 2015. The securities pay returns on assets to comply with the Koran’s ban on interest.
Indonesia’s First Resources has also tapped the nation’s Islamic investors. The Singapore-based palm-oil firm sold 600 million ringgit of five-year securities in July 2012 at a coupon rate of 4.45 percent and they were paying 4.39 percent yesterday, Bursa Malaysia data show.
Golden Agri, the world’s second-biggest planter of the commodity after Malaysia’s Sime Darby Bhd., issued its first sukuk in November 2012.
The 1.5 billion ringgit of five-year notes paid a coupon of 4.35 percent and were yielding 4.85 percent on Jan. 24. Both securities are rated AA2 by RAM Rating Services, the third-highest investment grade.
Yields on AA-rated corporate debt sold in Malaysia climbed four basis points, or 0.04 percentage point, in 2014 to 4.45 percent as of Jan. 21, the highest level since June 2012, according to a central bank index.
‘Naturally compatible’
“Plantations and most other cash-crop commodities businesses are naturally compatible with Shariah-compliant financing structures,” Alhami Mohd Abdan, Kuala Lumpur-based head of international finance and capital markets at OCBC Al- Amin Bank said in an e-mail interview yesterday. “The sukuk market, and particularly the investor base in Malaysia, is very familiar and comfortable with” such issuance, he said.
Bumitama is tapping the market just as global borrowing costs are climbing amid stimulus tapering by the Federal Reserve.
Emerging-market sovereign bond yields advanced 15 basis points this year to 6.25 percent, the highest level since Sept. 13 and above the 2013 average of 5.47 percent, according to JPMorgan Chase & Co.’s EMBI Global Index.
The Bloomberg-AIBIM Bursa Malaysia Corporate Sukuk Index, which tracks the most-traded local-currency notes issued in the world’s biggest market for the debt, fell 1 percent this year to 104.120 after gaining 2.8 percent in 2013.
Bumitama’s bonds are rated AA3 by RAM Ratings, one level lower than those of Golden Agri and First Resources.
The issuance will be the company’s first and adds to a 5.5 trillion rupiah outstanding loan that comes due in 2018, according to data compiled by Bloomberg.
Market Depth Offerings of ringgit-denominated Islamic debt total 2.1 billion ringgit this year, compared with 181 million ringgit in the year-earlier period, according to data compiled by Bloomberg.
Other Southeast Asian oil-palm growers have also turned to Malaysia for funding via the sukuk market. Noble Group Ltd., which is listed on Singapore’s stock exchange, issued 300 million ringgit at a coupon rate of 4.3 percent in January 2013.
The three-year securities yielded 4.61 percent when last traded on Jan. 22, Bursa Malaysia data shows.
Malaysia’s Kuala Lumpur Kepong Bhd. sold 1 billion ringgit of 10-year notes in 2012 at 4 percent and they were paying 4.7 percent on Jan. 27. Islamic bonds aren’t actively traded because investors tend to hold them until maturity due to their relative scarcity compared with conventional bonds.
“For sukuk, Malaysia is one of the better places as we have the infrastructure in place, while market depth and liquidity aren’t an issue,” Lam Chee Mun, a Kuala Lumpur-based fund manager at TA Investment Management overseeing 680 million ringgit, said in a telephone interview yesterday. “If you think you want international investor participation, especially Islamic funds, you’d have to think of Islamic rather than conventional financing.
(Jakarta Globe / 28 Jan 2014)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

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