Global sukuk issuances to exceed US$150 billion

The rising interest in Islamic finance instruments will help drive global sukuk issuances to exceed the US$150 billion mark in 2015 despite the uncertainty in the global market.

Chief executive officer of International Islamic Financial Market (IIFM), Ijlal Ahmed Alvi, said the target was achievable based on the sukuk issuances in the pipeline.

“The upward trend next year will also be helped by expectations of sustained demand from existing Islamic financial institutions and the Islamic bond issuances from various countries.

“In 2015 alone, we expect the global sukuk issuances to be more than US$30 billion,” he said.

Ijlal said this to Bernama on the sidelines of the World Islamic Banking Conference 2014 held in Bahrain recently.

Sukuk issuances for project financing would be healthy next year, where growth was expected to come from the Gulf Cooperation Council countries, the Far East and the African region for development works, he said.

He said the sukuk market would not be greatly affected by the normalisation of interest rates in the US.

“If the economy is doing well, I think issuers will be encouraged to issue sukuk,” he said.

Sukuk issuances are considered to be the fastest-growing component of the activities constituting Islamic finance in general.

Total global sukuk issuances are likely to be in excess of US$130 billion, and this would be the third year in a row that sukuk issuances would cross the mark set in 2012, according to IIFM’s fourth edition of sukuk report for 2014.

It also said the total global sukuk issuances had grown by over 10 times to US$138 billion in 2013 from US$1.17 billion in 2001.

For 2013, the international sukuk issuances amounted to US$26 billion.

The IIFM is a pioneer institute in the field of financial market education, certifications, mentoring programmes, training and development workshops.

(The Rakyat Post / 26 December 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

Islamic banking set to boom in Canada

After emerging largely unscathed from the financial crisis that hammered North American and European financial institutions, Islamic banking has momentum.

Worth $1 trillion in assets, Islamic banking is being lauded by British Prime Minister David Cameron and supported by Canada’s Conservative government, major banks and credit unions, leading business schools and influential Muslims across the country.

Islamic banking — which bans interest payments, pure monetary speculation and investing in such things as alcohol, gambling, pornographic media and pork — is being sold as the next big thing in financing for Canada, which is home to just over a million Muslims.

“Awareness in Canada of Islamic banking has increased dramatically in the last few years,” says Walid Hejazi, an associate professor at the University of Toronto’s Rotman School of Management, where he teaches on the subject.

“With the federal government’s efforts in this respect, Canada’s attractiveness to Islamic finance will grow,” Hejazi says. He cited how Prime Minister Stephen Harper’s government helped sponsor a World Islamic Banking Conference last year in the oil-rich Persian Gulf.

Many Canadian Muslims are seeking “Shariah-compliant banking solutions to their personal finances,” says Hejazi, a Lebanese-Canadian. They want home mortgages that are not based on conventional Western interest payments, but which operate more like a partnership.

The International Monetary Fund, Hejazi says, recently attributed the expansion of Islamic finance to demand from the increasing number of Muslims living in the West, growing oil wealth in Muslim countries and people seeking “ethical” and lower-risk financial products.

Even though Islamic banking has some harsh critics among Canadian Muslims who consider it unwieldy — with many still suffering from the 2011 bankruptcy of Toronto-based UM Financial, which offered Shariah-compliant mortgages — the movement is gaining energy.

In addition to Canadian banks, such as CIBC, making explicit gestures to offer Islamic banking, Hejazi says the Canada Mortgage and Housing Corporation recently reported there are no regulatory hurdles to stop Shariah-compliant banking expanding in Canada.

To continue to grow, some of the world’s largest Islamic banks — most of which are in the Middle East, Indonesia and Pakistan — are looking at rebranding to appear less religious and more open to Western investors drawn to the kind of no-interest cooperative banking that is also offered in countries such as Sweden.

For instance, the Abu Dhabi Islamic Bank, the largest Shariah-compliant lender in the emirate, is considering removing the word “Islamic” from its name and calling itself Abu Dhabi International to emphasize its service quality. Many financial institutions in Muslim-majority countries already simply call themselves “participation banks.”

“I think many Muslims in Metro Vancouver are excited about the idea of Islamic banking. In general, I think it’s a good idea,” says Luay Kawasme, director of the Vancouver Muslim Community Centre.

“The appeal of it for Muslims is they don’t have to get involved in financing that involves interest. Instead, the risk occurs between the financial institution and the borrower. You basically go into business together as partners.”

The Islamic ban on usury grew out of the seventh-century era of Mohammed. The founder of Islam, Luay says, opposed the way “the wealthy would get outrageous returns on their loans; charging interest rates of 20, 30 and 40 per cent.”

Bans on usury are also embedded in Hebrew and Christian scriptures, Luay recognizes.

(The Vancouver Sun / 26 December 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