Double-digit growth expected for Islamic finance world

Tenth World Islamic Economic Forum (WIEF) Knowledge Partner PricewaterhouseCoopers (PwC) has shared an outline of the global Islamic finance environment in conjunction with the 10th WIEF, to be held in Dubai in October this year. 

On the global front, Islamic finance is expected to register double-digit growth this year and cross the US$2.7 trillion mark by 2017. According to PwC,  Islamic finance has grown both in size and geographic coverage around the world. The industry continues to see the establishment of Islamic financial institutions in new jurisdictions. There has been product innovation across all Islamic finance asset classes as the industry diversifies beyond its traditional banking products and services. Islamic banking continues to be the main driver for Islamic finance and is likely to account for more than 75% of global Islamic finance assets while sukuk currently account for nearly 15% of the market, PwC said.

Asia and Africa are expected to contribute significantly towards the growth in Islamic finance with approximately 95% of the global Muslim population located in these regions. Southeast Asia and the Middle East remain centres of Islamic finance activity. The Gulf Cooperation Council (GCC) accounts for approximately one-third of global Islamic finance and assets have grown over five years at more than 20% CAGR, says PwC. 

Globally, institutions and governments are increasingly resorting to Islamic financing in order to meet their funding requirements. Governments of the UK, South Africa and the Philippines have announced sovereign sukuk issues, led by the UK which announced its maiden sovereign sukuk issue at WIEF 9 in London last year and completed the issue earlier this year to an enthusiastic response. 

As a result, development and implementation of laws and regulations for the issuance of sukuk has been introduced by a number of countries. Dubai recently issued a decree to set up the Dubai Islamic Economy Development Centre as part of a wider plan to become a global hub for Islamic finance which, in the UAE, is expected to grow at a five-year CAGR of 17% from 2013 to 2018 from a base of approximately US$95 billion in 2013. Over US$16 billion of sukuk are expected to be issued by 2014 and Dubai has already emerged as a centre for this asset class.

More than 2,500 participants from 140 countries expected at the WIEF this year. The event includes a panel on Islamic finance, with Toby O'Connor, Chief Executive Officer, The Islamic Bank of Asia, Dr Adnan Chilwan, Chief Executive Officer, Dubai Islamic Bank, Tirad Mahmoud, Chief Executive Officer, Abu Dhabi Islamic Bank, and Muzaffar Hisham, CEO, Maybank Islamic, Malaysia as panelists and Samad Sirohey, CEO, Citi Islamic, UAE as the moderator. 

First Hajj flights reach KSA

The Saudi Press Agency has reported that the complex of Hajj and Umrah Terminals at King Abdulaziz International Airport in Saudi Arabia received 20 flights of pilgrims on August 27, with 22 flights expected to arrive on the 28th.

In the coming days, King Abdulaziz International Airport will receive six flights each hour, or 144 hajj flights daily. Prince Mohammed bin Abdulaziz International Airport in Al-Madinah Al-Munawarah has also welcomed this year's first Hajj flights, from Calcutta, India, on August 27.

Organisers flesh out details of the 10th WIEF in Dubai this October

The World Islamic Economic Forum (WIEF) Foundation and the Dubai Chamber of Commerce & Industry (Dubai Chamber) have unveiled details of the upcoming 10th WIEF which will be held in Dubai on October 28 to 30, 2014 at the Madinat Jumeirah Conference Centre. The annual forum is to be hosted in Dubai for the first time following events held in various cities, including Kuala Lumpur, Islamabad, Kuwait, Jakarta, Astana (Kazakhstan), Johor Bahru and London.

Source: WIEF Foundation. Launching the event. From left, Hassan Al Hashemi, Vice President – International Relations of the Dubai Chamber of Commerce and Industry, His Excellency Abdul Rahman Saif Al Ghurair, Chairman of the Dubai Chamber of Commerce & Industry, the Honourable Tun Musa Hitam, Chairman of the WIEF Foundation, Kunrat Wirasubrata, Director of Islamic Development Bank Group, Regional Officer for Southeast Asia, and Tan Sri Ahmad Fuzi Abdul Razak, Secretary General of the WIEF Foundation.

Themed Innovative Partnerships for Economic Growth, the Forum aims to forge greater collaboration between nations, bringing a new era of prosperity for the global economy. Recognised for its significant contributions to progress in the global Islamic economy over the last 10 years, the annual forum will highlight Dubai’s pursuit to play a key role in shaping the US$8 trillion Islamic economy, and introduce new features to celebrate Dubai as the land of creativity and city which embraces the culture of innovation. The new features include:

· Ideapad: Technology & Innovation Showcase – a platform for entrepreneurs and innovators to give a 15-minute pitch on stage to capture the attention, interest, and potentially, investment, of the forum’s international audience

· Business Exchange – a business match-making programme where selected companies give a three-minute pitch about their business, followed by a networking session with delegates

There will also be a specialised session on the second day of the Forum to inaugurate and drive the Halal bio-economy agenda focusing on food security, healthcare and well-being of the global Muslim community. Mobilising Capital from Waqf, Pension Funds and Unit Trusts: Developing Best Practices is another panel discussion which will be introduced at the 10th WIEF.

These new features will complement the current programme which includes panel discussions, Masterclass sessions, networking events and the Marketplace of Creative Arts Festival (MOCAFest).

Key topics at the 10th WIEF include:

· Global Economic Outlook: Developing a Resilient Model for Developing Economies
· Global Financial Landscape
· Islamic Finance’s Pivotal Role in Enabling Trade & Streamlining the Halal Supply Chain
· Socialising Education and the Role of Universities
· Retaining Young Talents
· Sustainable Urban Planning – Creating Smart Infrastructure and Holistic Communities
· Rise of Women Entrepreneurs – Developing a Peer Network

Source WIEF Foundation. Panelists from left: His Excellency Abdul Rahman Saif Al Ghurair, Chairman of the Dubai Chamber of Commerce & Industry, the Honourable Tun Musa Hitam, Chairman of the WIEF Foundation, and Kunrat Wirasubrata, Director of Islamic Development Bank Group, Regional Officer for Southeast Asia.

The Honourable Tun Musa Hitam, Chairman of the WIEF Foundation said, “The Islamic economy is not insulated from happenings around the world and our focus, at the World Islamic Economic Forum Foundation, is bringing to the fore opportunities which will ensure continued progress for the economy and the people. Three ways we can achieve this are by exploring prospects in smaller, non-majority Muslim markets, leveraging the continued growth of Islamic finance and, represented in our theme for 10th WIEF, forging innovative partnerships for business success.

“The upcoming 2015 Asean integration, as well as the increasing purchasing power of Muslim consumers, underscores the strong growth potential of the Islamic economy. Our priority for the 10th WIEF is bringing global leaders, businesses and all members of the community together to realise these opportunities for sustainable development worldwide. We all have a part to play.”

His Excellency Abdul Rahman Saif Al Ghurair, Chairman of the Dubai Chamber of Commerce & Industry stated, “The Arab world offers one of the most comprehensive and attractive Islamic capital market systems in the world, and Dubai, already the region’s key business hub, is the gateway for businesses to unlock the potential of the Islamic economy across the Gulf and wider Middle East.

“The close collaboration between the WIEF Foundation, Dubai Chamber of Commerce & Industry, and Dubai Capital of Islamic Economy in preparation for this forum is testament to the success formula of innovative partners for economic growth, and we are confident that more such partnerships will be forged when global leaders and businesses converge in Dubai for the 10th WIEF.”

Highlighting that economic growth will provide an opportunity to help the less fortunate, Kunrat Wirasubrata, Director of Islamic Development Bank Group, Regional Officer for Southeast Asia commented, “Governments, businesses and individuals are becoming increasingly cognisant that they can and should play a role in eradicating global social issues, such as poverty and famine. By re-introducing social instruments such as waqf*, the Islamic community is well-placed to lead the change in narrowing the gap between the rich and poor. We have seen increasing interest among wealthy families who seek to give back to the community through the use of Islamic waqf.”

The 10th WIEF which is expected to be attended by more than 2,500 participants from 140 countries, and will offer a global platform to form innovative partnerships based on the seven pillars of the Dubai Capital of Islamic Economy initiative launched in 2013: Islamic finance, halal food industry, halal tourism, Islamic digital economy, capital of Islamic art and design, centre for Islamic economy standards and certification, and international centre for Islamic information and education.

*Waqf (وقف) is a donation of assets to be used for the benefit of a community and can be used to build schools, hospitals or shelters. Waqf asset managers are not owners but trustees and must abide by all conditions set by the waqf in the first instance. The practice of waqf is not limited to Muslims, and non-Muslims can be both benefactors and beneficiaries of waqf.

Muslim Travel Index 2014 reveals favourite European destinations for KSA, UAE, Malaysia

The Muslim Travel Index 2014 has revealed which European countries that Muslim tourists from Saudi Arabia, UAE and Malaysia will likely visit in the future. The halal tourism sector was worth US$140 billion in 2013, representing around 13% of global travel expenditures. This figure is expected to reach US$192 billion by 2020.

“This Index is a great indication of the value of halal tourism to Europe and the potential of the market to the economy,” said Tasneem Mahmood of CM Media, who are organising the world’s first halal tourism conference in Spain in September. “If you consider that visitors from the Middle East spent £1.1 billion in the UK in 2013 while those from UAE contributed £527 million, it shows just exactly how big this market is. Furthermore they travel in different times of the year which means there are opportunities across 12 months. 

Source: Halal Tourism Conference 2014.

“This research represents great opportunity for tourism boards, tour operators, travel agencies, hotels, restaurants and the entire sector.”

France is the most popular destination in Europe, with 30% saying they would like to visit in the near future. England and Italy tied for second place (28%) while Germany and Turkey (26%) rounded out the top five. According to the Index, 93% of international travellers said it was important that the country they were visiting had facilities that catered for a halal lifestyle.

The Muslim Travel Index Europe 2014 showed that although France topped the overall table for most popular destinations, only Malaysia (28%) picked it at the top of its list. For Saudi Arabian visitors Germany (33%) was the most popular destination while 39% of UAE residents opted for Turkey.

Almost all respondents - 97% - said it was important the country of destination provided halal food while 89% said it was important to provide praying facilities. Almost a quarter (24%) who had been to France, Germany, Italy and England previously described the halal facilities as average.

The Muslim Travel Index Europe 2014 looked at the attitudes and behaviour of majority Muslim populations to tourism in the future and their experiences of countries they have already visited in Europe. It was conducted with residents from Saudi Arabia, United Arab Emirates and Malaysian residents who are already frequent visitors to Europe.

The Halal Tourism Conference, which is being held on 22 and 23 September 2014, will bring together the travel industry from around the world to discuss ways of tapping into this niche market. The event, which is being hosted in Andalucia, Spain, aims to equip delegates with market intelligence, industry forecasts and trends to understand how to market to the Muslim consumer and benefit commercially.

Changing lifestyles and growing disposable income boost ready-to-eat market in Indonesia

Rising employment opportunities, economic growth and general lifestyle changes are all driving demand for ready-to-eat food products in Indonesia. TechSci Research, a research-based global management consulting firm, projects that demand will continue to increase. 

In Indonesia Ready-to-eat Food Market Forecast & Opportunities, 2019, the country's ready-to-eat food market is projected to grow at a CAGR of more than 7% during from 2013 to 2014. The company points out that the country has a large base of young consumers which now form the majority of the country's workforce. These consumers have little time for traditional cooking, creating significant demand for convenience food products, which can be cooked easily and quickly. Rising per capita disposable income, especially in the middle income group, is also driving significant growth in the Indonesian ready-to-eat food market. 

As Indonesia has the largest Muslim population across the globe, food suppliers have to secure halal certification from the concerned authorities to ensure proper food quality standards in accordance to Islamic regulations. The process of certification is very stringent, the research firm notes. TechSci Research also notes that Indonesian consumers are highly price-sensitive, with brand preference changing very quickly with small changes in price. 

Major players in Indonesia's ready-to-eat food market include Charoen Pokphand Indonesia, Tee Yih Jia Group and Sekar Bumi Indonesia.

"Retail chains are the key contributors in increasing the awareness level among consumers about ready-to-eat products. Significant presence of large retail formats in regions like Java is contributing to the demand for ready-to-eat food products in Indonesia. However, such chains are predominantly restricted to urban centres within the country. 

"To overcome this issue, many retail giants have voiced plans to expand their distribution network to other regions over the coming years, especially in the eastern region. These efforts are expected to add to the awareness level of consumers in other regions as well, thereby driving growth in the country's ready-to-eat food market over the next five years," said Karan Chechi, Research Director, TechSci Research.

Aafaq and MENACORP to offer Islamic finance products that leverage UAE stock market

Aafaq - Islamic Finance Company, a UAE-based shari’ah-compliant financial services group and MENACORP, an investment bank in the UAE, have entered into a strategic partnership in order to provide Islamic financing solutions to investors on the DFM, ADX and NASDAQ Dubai with respect to their trading needs on these UAE markets.

Aafaq - Islamic Finance Company provides a wide range of Islamic finance products and services which are approved by the Aafaq Shari’a Board. It offers financial solutions for corporate and retail segments along with other services such as Wages Protection System and Labour Guarantee Issuance. 

Source: aafaq - Islamic Finance Company. The agreement was signed between Sheikh Faisal Bin Saud Al Qasimi, Managing Director of aafaq – Islamic Finance Company, and Fathi Ben Grira, CEO of MENACORP. Dr Mahmoud Abdelaal, CEO, aafaq and Nabil Al Rantisi, MENACORP’s Managing Director-Brokerage, also attended and witnessed the signing ceremony.

In line with strategic growth plans of both companies, the alliance will provide the customers with diversified services by offering them an opportunity to enter the UAE’s finance and trading market.

“Aafaq is delighted to sign this partnership with MENACORP, as evident by the stable economic growth of the UAE, which can be accredited to the wise vision in leadership in addition to the existence of diverse and unique investment opportunities, especially in the financial market and in what these markets have recently envisioned to get upgraded to emerging markets. 

"This strategic alliance falls in line with our expansion strategies and will offer cutting-edge Islamic finance products and services so that customers can take advantage of the UAE’s thriving stock market. We are looking forward to working closely with MENACORP to offer Shari’a-compliant solutions to our customers,” said Sheikh Faisal Bin Saud Al Qasimi, Managing Director of aafaq – Islamic Finance Company.

Fathi Ben Grira, CEO, MENACORP, said: “Most of our clients are GCC-based investors who are attached to the principles edicted by shari'ah law for their financing requirements. The total value of our clients’ portfolio recently crossed AED8.5 billion and most of it is controlled by investors valuing the ethic of Islamic finance, especially for their transactions on the stock market. 

"Our partnership with aafaq – Islamic Finance Company will help us to serve these clients in accordance with their values. This deal is an important milestone for MENACORP as it is in line with our strategy which is to focus on our core business (execution on stock markets) and to rely on a leader such as aafaq – Islamic Finance Company for the financing needs of our clients.” 

Dubai Islamic Bank backs Union Properties with refinancing facility

Dubai Islamic Bank (DIB), the largest Islamic bank in the UAE, will provide property developer Union Properties with an AED360 million Islamic re-financing facility to help it manage its balance sheet and enhance the focus on its core business. The developer has been moving forward with expansion plans after repaying AED7 billion worth of legacy bank debt.

Source: Union Properties website.

DIB CEO Dr Adnan Chilwan said: “The real estate sector in the UAE has rebounded strongly on the back of the economy’s core fundamentals. The current and planned infrastructure of Dubai and the UAE positions the country amongst the most attractive markets in the world for business growth and prosperity. The expatriate population has seen a significant rise over the recent past as the nation relentlessly progresses towards establishing itself as the hub for regional and global names. With key regulations in place and optimum enforcement of the same by relevant authorities, the industry is now on a solid and sustainable growth path. 

"Given the current scenario, quality names like Union Properties are uniquely positioned to capitalise on the opportunities that Dubai and UAE represent, and DIB with its rich heritage, expertise and highly liquid balance sheet, is the ideal partner for such strategic names.”

Real estate transactions in the UAE have grown at a rapid pace since 2012, with the volume of deals in Dubai increasing by about 50% over the past year – excluding remortgages and donations – according to Dubai’s Real Estate Regulatory Agency. Standards & Poor’s suggests that prices in the sector will continue to remain stable and will be backed by the strong macroeconomic growth in the UAE, the DIB noted.

Union Properties General Manager Ahmed Al Marri said: “Over the past few years, Union Properties has focused on strengthening its capital position by investing in its core fundamentals and repaying its legacy debt. As we have now successfully completed all these payments, we are well placed to move forward with our new growth strategy that is backed by our positive financial performances. As a result, we are proud to partner with the leading Islamic bank in the country, and this new financing arrangement with DIB represents a fresh start for the company.”

Naveed Ali, Chief of Corporate Banking at Dubai Islamic Bank said: “We have been a critical player, leading and participating in many key deals this year, and our arrangement with Union Properties is another promising addition to our finance book. It is part of our strategy of strengthening our balance sheet by selectively conducting business with major players in the commercial real estate market. Given UP’s strong financial performance this year, the repayment of all previous debt, as well as the growth in the real estate sector, we believe this deal to be another successful step in establishing a sustainable trend in the real estate sector.”

The bank has been involved in a number of landmark international and domestic corporate finance deals over the past year, including a US$750 million sukuk tranche for the Dubai Department of Finance. 

Go for ijarah sukuk and have respected shari'ah scholars certify them: IMF working paper

The type of sukuk and the choice of shari'ah scholar could affect interest in a sukuk issue.

In Do the Type of Sukuk and Choice of Shari'a Scholar Matter?, a working paper* from the International Monetary Fund (IMF) released in August 2014, authors Christophe Godlewski, Rima Turk, and Laurent Weill study a sample of 131 sukuk from eight countries from 2006 to 2013 and find both criteria do indeed matter.

Some observations from the analysis include: 

• The average coupon is above 4%, maturity is 8 years, and the average amount issued is US$1,270 million with a large standard deviation. 
• An average of three scholars certify an issuer’s sukuk. 
• On average, half of the team of scholars is from the same country as the issuer. 
• A typical scholar certifies on average 24 sukuk per year, or almost 75 issues over three years. 
• Issuing firms have issued on average more than 11 bond issues.

According to the working paper, ijarah (اجارۃ) sukuk "exert a positive influence on the stock price of the issuing firm". The authors suggest that ijarah structures may benefit the most from the expansion of sukuk markets because of the better investor reaction to them compared to other structures. 

The authors observe that sukuk in the musharakah and mudarabah formats, which are partnership contracts in which the financier and entrepreneur share profits based on pre-agreed ratios but also the losses that are proportional to their contributions (financial or physical) to the partnership, are not as popular. "Ijarah is a debt-based instrument that is not based on profit and loss sharing principles; hence, it does not suffer from the possibility of attracting borrowers of poor financial condition as would a musharakah instrument," the authors suggested.

A similar positive impact was observed with sukuk that had been certified by prominent shari’ah scholars from the same country as the sukuk issuer. In more than half of the sample, at least one scholar is from the same country as the issuer, the authors observed. 

"Our finding provides some evidence that high compensation for reputable shari’ah scholars certifying sukuk may be justified on the grounds of better valuation of issuing firms," the authors said.

*Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. The views do not necessarily represent the views of the IMF or IMF policies.

Bright future for QISMUT through to 2018

In a February 2014 newsletter, EY's Global Islamic Banking Excellence Center noted that the strong fundamentals for Islamic finance in Qatar, Indonesia, Saudi Arabia, Malaysia, UAE and Turkey, collectively known as QISMUT, could lead to much more by 2018. 

According to EY, some of the favourable drivers for QISMUT include:

• Combined GDP set to cross US$4.8 trillion by 2018
• Average per-capita income range between US$5,500 and US$103,000; 
• a bankable population of 252 million, 
• banking penetration of 90%, and 
• a volume of trade that is expected to increase by 49% in the current decade.

There are challenges, however. Sociopolitical stability is critical, as is regulatory clarity; an Islamic financial regulatory framework is required, covering supply mechanisms, demand management and infrastructure. Islamic banks are relatively small, EY says, and have yet to convert significant megatrends like mobile banking into a business advantage.

According to EY, the misuse of commodity murabahah and tawwaruq practices has also disillusioned proponents of Islamic banking. "Banks, multilaterals and Islamic infrastructure institutions should grab this (small) window of opportunity to help drive and sustain product development efforts," EY said in the newsletter.

In an analysis of the challenges for various countries in QISMUT, EY said the primary risk for Dubai in the UAE is the "quality of execution". In Istanbul, Turkey, it is a "supply-side bottleneck" that is the challenge; more regulatory clarity and additional financial institutions are required for growth. EY believes that financially independent Islamic subsidiaries will help to sustain strong performance in Kuala Lumpur, Malaysia.

EY forecasts a CAGR of 19.7% through 2013 to 2018 for QISMUT, with total assets reaching US$1.6 trillion by the end of the forecast period, provided economic stability is maintained in certain Islamic finance markets, the larger Islamic banks transition successfully to a new phase of development; and there is connectivity across high-growth markets and sectors. Globally, EY said the Islamic banking profit pool is projected to reach US$30.5 billion by 2018.

Read the full document here.

Muslim Friendly Hospitality Services standard is voluntary but could help businesses succeed

Islamic tourism is often thought to be about providing halal food, but Malaysia has noted that it also includes the full suite of hospitality services that comply with shari'ah law. This encompasses hotels, resorts, restaurants and airlines that offer food with halal certificates, but also do not serve alcoholic beverages, prayer facilities, provide separate wellness facilities for women, and a generally Muslim-friendly environment.

The Muslim Friendly Hospitality Services (MFHS) standard is Malaysia’s first standard dedicated for the Islamic tourism sector. Initiated and led by International Institute for Halal Research & Training (INHART) of the International Islamic University Malaysia (IIUM), the original submission to develop the standard was made in December 2012 to the Department of Standards Malaysia (DSM). This was followed by the appointment of SIRIM as the standard’s secretariat by DSM and the formation of a draft committee by the Technical Committee (TC) on Management System from Islamic Perspectives.

The draft, released as Draft Malaysian Standard : Muslim Friendly Hospitality Services – Requirements, is available for public feedback from 1 August to 30 September 2014. Find out how to participate here.

An industry review was held on 14 August and reported on 15 August on the ITC website. According to the report, Zulkifly Said, Director General of the ITC, said that implementation of the standard will be on a voluntary basis on the part of industry players, but pointed out that the guidelines will be a powerful marketing tool for businesses.

Royal Award for Islamic Finance 2014 to be presented in September

The Royal Award for Islamic Finance (The Royal Award) Dinner and Award Presentation will be held in Malaysia for the third time on 2 September 2014, in conjunction with the Global Islamic Finance Forum 2014 (GIFF 2014). 

Source: The Royal Award for
Islamic Finance website.

The Royal Award, held once every two years, is spearheaded by Bank Negara Malaysia and Securities Commission Malaysia under the Malaysia International Islamic Financial Centre (MIFC) initiative.

Presented by the King of Malaysia, His Majesty the Yang di-Pertuan Agong, the Royal Award recognises and honours an Islamic finance visionary whose achievements and innovation contribute significantly to both the growth of the global economy and social progress of communities around the world.

“The Royal Award for Islamic Finance has seen a 25% increase in nominations since the inaugural award in 2010 with nominees coming from all parts of the world. It is through the extraordinary leadership and dedication of these visionaries and pioneers that Islamic finance is growing rapidly in Muslim and non-Muslim economies,” said Tun Musa Hitam, Chairman of the Jury Panel, who is also former the Malaysian Deputy Prime Minister as well as Chairman of the World Islamic Economic Forum Foundation.

The nominees for The Royal Award 2014 come from various regions across the world, with the most interest from the Middle East and Southeast Asia:

• Africa (2%)
• Europe (19%)
• Middle East (33%)
• North America (7%)
• South Asia (10%)
• Southeast Asia (29%)

An independent seven-member international jury panel will select the most deserving individual for the award. The jury panel comprises distinguished thought leaders and industry experts in Islamic finance who represent various geographical locations across Asia, Europe, Middle East, and the US. Selection criteria encompass both qualitative and quantitative aspects of each nominee’s exceptional contribution towards Islamic finance globally. These include financial innovation and pioneering work, exceptional leadership, adoption and acknowledgement within the industry and inspiration and influence towards future progress and development of Islamic finance.

The recipient of The Royal Award will receive a medallion, a certificate of recognition and US$250,000 in cash. The recipient will embark on a journey to educate the community on the role of Islamic finance in the global economy through industry and public lectures, seminars and conferences.

Previous award recipients recognised for their efforts in advancing Islamic finance were Iqbal Khan in 2012 and Shaikh Saleh Abdullah Kamel in 2010. The inaugural Royal Award ceremony in 2010 also recognised the late Dr Ahmad El-Naggar with a posthumous honourable mention. Often referred to as ‘Father of Modern Islamic Banking’, Dr El-Naggar spearheaded the first modern experiment with Islamic banking by creating a savings bank based on profit sharing.

Iqbal Khan, who will be speaking at GIFF 2014 during the session “Developing the Marketplace for Global Linkages”, was instrumental in the development of the world’s first global sovereign sukuk issued by the Government of Malaysia. He motivated the push for a global sovereign sukuk and led the shari'ah thought process towards greater understanding of the concept of foreign currency global sukuk. 

He played a key role in establishing a number of institutions and initiatives in the Islamic finance industry, including Citi Islamic Investment Bank, the Islamic Finance Project at Harvard University, Meezan Bank, HSBC Amanah and, most recently, Fajr Capital, of which he is not only Founding Board Member but also Chief Executive Officer.

Shaikh Saleh Abdullah Kamel pioneered the adoption of Shariah-compliant principles in banking and business and was one of the first individuals to devise Islamic contracts for use in the 1960s. He founded a group of companies which provides Shariah-compliant retail, corporate and investment banking and treasury services as well as the Islamic Arab Insurance Company, a pioneering takaful (Islamic insurance) company. 

To inspire and develop future talent and innovation, he established the Islamic Economics Research Centre, King Abdulaziz University and Jeddah Center for Science and Technology in Saudi Arabia. He also founded the Saleh Kamel Centre for Islamic Economy, Al-Azhar University, Cairo and Saleh Kamel Center for Banking Studies and Research, King Saud University, Saudi Arabia.

Hashtag: #theroyalaward

Malaysia's Halal Outreach Program to touch down in Sarawak

The Halal Industry Development Corporation (HDC), the government agency responsible for the overall development of the halal industry in Malaysia, is launching the Halal Outreach Programme (HOPE) in Sarawak, Malaysia together with the Ministry of International Trade and Industry (MITI) on 18 August.

Source: Halal Outreach Programme Sarawak website.

The two-day outreach includes halal training programmes, mentoring and business matching activities, panels, briefings by government agencies, and an industry clinic. According to the HOPE microsite, the programme aims to raise awareness and increase participation among halal local entrepreneurs in the halal industry. 

Participants will gain knowledge on marketing halal products and services internationally, while entrepreneurs will be exposed to business opportunities and receive tips on how to market their products. Entrepreneurs who have been successful in their respective fields will be sharing their experiences with event participants.

Islamic finance can complement shift towards sustainable and responsible investments

Source: Securities Industry Development Corporation. Zainal Izlan Zainal Abidin,
Executive Director, Islamic Capital Market Business Group,
Securities Commission presenting his opening remarks
at the Islamic Markets Programme 2014.

The Securities Commission Malaysia (SC) and its training and development arm, the Securities Industry Development Corporation (SIDC), hosted the 9th Annual Islamic Markets Programme (IMP) themed 'Strengthening the Wellbeing of Societies' from 11 to 14 August 2014 in Kuala Lumpur, Malaysia, and saw 48 Islamic finance regulators, experts and practitioners from eight countries discuss the evolving role of Islamic finance in enhancing the wellbeing of societies and what it will take to ensure sustainable development of global Islamic finance. 

Speaking at the opening of the programme, Zainal Izlan Zainal Abidin, Executive Director, Islamic Capital Market Business Group at the SC said, “The Islamic capital market may seek to capitalise on a growing shift in preference especially in the developed markets towards sustainable and responsible investments, or SRI. 

"Islamic finance and SRI share similar underlying principles which suggest that the current significant growth of the SRI market can also potentially benefit the Islamic finance industry. The greater awareness as well as demand for social responsibility in conducting business is driving the growth of the SRI segment, and Islamic finance - which places similarly strong emphasis on preserving commercial and social balance - can offer a distinctive value proposition for global investors.”

The IMP is an established annual international platform for global subject matter experts, regulators and industry players to share information and insights on Islamic finance topics ranging from product innovation, human capital development and interpretation of shari'ah principles to issues of ethics and governance. 

First organised in 2006 with the objective of developing a talent pool and promoting knowledge sharing in the Islamic capital market, the IMP has hosted 401 participants from 38 countries to date and is an integral part of Malaysia’s strategy to become a recognised Islamic financial centre of excellence. This year’s event welcomed the first participants from Kuwait, Oman and Russia.

Emicool refinances with Dubai Islamic Bank

Emirates District Cooling (Emicool), a cooling service provider, has signed a US$245 million 12-year refinancing facility with Dubai Islamic Bank (DIB), the largest Islamic bank in the UAE.

Source: Emicool website.

Emicool's Chairman Abdulaziz Bin Yagub Al Serkal said the refinancing agreement with DIB would help to expand Emicool’s business and further cement the company’s leadership position as a top-tier district cooling service provider in the region.

"Emicool has mapped up ambitious growth plans and continued expansion of its production capacity. As the demand for district cooling grows across the region, it has become imperative for Emicool to optimise production capacity and further enhance its technological capabilities to meet market requirements efficiently,” he said.

Adib Moubadder, CEO of Emicool, added: “Emicool has proven its capabilities as a leader in the district cooling industry over the years. We provide continuous chilled water cooling services to over 15,000 customers, with the most efficient and highest quality service to support the growth of Dubai’s infrastructure with sustainable development and innovative technologies. This refinancing will help us further expand our operations geographic reach and technological excellence in the UAE, and other parts of the region.”

Dr Adnan Chilwan, CEO of Dubai Islamic Bank, noted that the UAE is witnessing renewed economic momentum with infrastructure development attracting local and international investors. "In our view, primary infrastructure development projects are the cornerstone of sustainable growth, a key element of the strategy of the country. 

"DIB has always played a pivotal role in leading and facilitating such transactions and is linked to many landmark deals with some of the top corporates across the country. Emicool’s business model and their long-term strategic vision, ties in well with DIB’s own growth plans, and further solidifies our position as a bank of choice in this sector,” he said.

Naveed Ali, Chief of Corporate Banking at Dubai Islamic Bank, said: “We are pleased to support Emicool for this refinancing arrangement and partnering with them in their growth ambitions. Over the past year we have been able to leverage our substantial experience in arranging complex financing deals, while maintaining a strong focus on managing risks, to expand our portfolio. Emicool is another important partner in this regard, and we believe that they have the leadership and right strategy in place to carry out their expansion plans.”

Emicool, a joint venture of Dubai Investments and Union Properties, is currently offering district cooling services in locations such as Dubai Investments Park, Dubai Motor City, Dubai Sports City, Uptown Mirdiff and Palazzo Versace and D1 Tower at Al Jaddaf, with an installed capacity of 330,000 tonnes of refrigerant. Emicool expects to expand into Saudi Arabia and Qatar in the future.

Al Baraka Banking Group working with World Bank to study musharakah, mudarabah

Al Baraka Banking Group has collaborated with the World Bank to begin a research partnership to benefit the global Islamic banking industry. The partnership's first initiative, part of a planned series of research projects, will be a study examining the risk-management challenges facing Islamic banks, with a particular focus on musharakah and mudarabah under the profit-and-loss-sharing system. Preliminary findings are expected to be available in the first quarter of 2015.

"We are committed to serving the sector by addressing several pressing issues that the industry is facing today. The research collaboration with the World Bank is yet another step in this direction," said Al Baraka's Group President and Chief Executive Adnan Ahmed Yousif. 

Abayomi Alawode, Head of Islamic Finance at the World Bank, said that the priority is to create an environment where the profit-and-loss system can flourish. "After a series of discussions with Al Baraka's Executive Management and Research Team, we recognise that the industry must address concerns that the majority of Islamic banking assets are debt-based and that the proportion of equity-based investments (such as musharakah and mudarabah) does not form a significant portion of the Islamic investments portfolio. The enabling support system to mitigate these inherent risks and challenges is either limited or nonexistent. As a result, equity-based investments remain under-represented in the Islamic banking industry," he said.

Adnan Ahmed Yousif added, "Being the first of its kind, the research project will not only collect data from a number of countries where musharakah and mudarabah are being used in banking transactions, but the project will also examine what enabling legal and regulatory environment would be needed to support the adequate risk management of musharakah and mudarabah."

Alawode remarked, "We look forward to our collaboration with Islamic financial institutions, such as Al Baraka, drawing on their front-line experience in the use of Islamic financial products. Their insights will contribute to producing a study that will encourage innovation and contribute to the sustainable growth of the industry. The Islamic banking and financial industry has reached a level where further growth is possible, if it develops new tools and innovative products that address those core issues."

The Al Baraka Banking Group is a Bahrain joint stock company licensed as an Islamic wholesale bank by the Central Bank of Bahrain, and is listed on the Bahrain Bourse and the Nasdaq Dubai stock exchanges. The Group has a geographical presence in fifteen countries: Jordan, Tunisia, Sudan, Turkey, Bahrain, Egypt, Algeria, Pakistan, South Africa, Lebanon, Syria, Indonesia, Libya, Iraq and Saudi Arabia.

Al Baraka is recognised as a pioneer in the Islamic banking sector for its thinktank, the Al Baraka Annual Islamic Banking Symposium (The Nadwa). The Nadwa is the only platform of its kind that annually provides the industry with resolutions and fatwas which form the basis of new products, standards and policies. 

*Click here for Investopedia definitions of musharakah and here for Bank Negara Malaysia's discussion on mudarabah.

Maybank launches Etiqa Life Insurance in Singapore

Source: Etiqa Insurance website.

The Maybank Group has increased its presence in Singapore with the launch of its insurance arm Etiqa Insurance, which will now sell its life insurance products at Maybank’s 22 branches in Singapore.

Etiqa provides general insurance and takaful solutions. It has been present in Singapore for the past 50 years as a branch of its Malaysian office. Today, Etiqa is the exclusive insurance provider for the Housing and Development Board (HDB) fire insurance scheme.

Following the approval by the Singapore Monetary Authority of Singapore on 13 June 2014, Etiqa is now a licensed life and general insurance company. This marks the company’s foray into the local life insurance market.

Datuk Lim Hong Tat, CEO of Maybank Singapore and Head of Group Community Financial Services said, “Etiqa’s entry into Singapore’s life insurance market will provide consumers with greater choice and will ensure that our customers are served more holistically by all of us in the Maybank Group.”

Lim added, “We’re looking to Etiqa to increase Maybank’s market share and presence in Singapore. This is an exciting time for us, and we’re confident that Etiqa’s offerings will be welcomed by consumers as we continue to deepen our relationship with them.”

Maybank Singapore's bancassurance revenue has been growing at an average annual rate of more than 50% over the last three years.

“Life insurance will continue to be a cornerstone in a consumer’s financial portfolio,” said Sue Chi Kong, CEO of Etiqa Insurance.

“The life insurance industry achieved a 24% growth for the first quarter of the year1, and continues to make strong headwinds as it remains an area of focus among the public.

“Coupled with the rising affluence in Singapore and increasing awareness about the need to plan for retirement and other life needs, we see strong potential in this sector and are proud to be expanding our offer from general to life insurance to make a difference in the life of our customers,” Sue said.

“Etiqa firmly believes in placing people over policies, backed by its promise to understand consumers’ needs and to make insurance easy to understand.”

Etiqa aims to be a Top 10 life insurer in Singapore within the next five years. The launch of Etiqa comes at the conclusion of Maybank’s 10-year partnership with Prudential Assurance. Under the agreement of 2004, Maybank exclusively offered Prudential’s life insurance products through its sales channels in Singapore.

Etiqa will launch 12 products and nine riders in Singapore to address the protection and savings needs of customers. To celebrate the company’s launch, Etiqa will be running a series of promotions and road shows. Customers can visit any Maybank branch for more details.

Bright outlook for global halal food and beverage market

The halal food and beverage market, which includes raw meats such as chicken and beef as well as processed foods and beverages, was worth US$1.1 trillion industry in 2013, states a research note by the Dubai Chamber of Commerce and Industry based on a recent study by Thomson Reuters in collaboration with the Dinar Standard. 

The report estimates that in 2012, the halal food and beverage market accounted for 16.6% of the global food and beverage market. By 2018, the market is expected to be worth US$1.6 trillion, a CAGR of about 6.9%.

The Dubai Chamber report was released on 10 August against the backdrop of the 10th World Islamic Economic Forum (WIEF), to be held in Dubai from 28-30 October 2014. One of the discussion points at the event will be halal food as a major component of the Islamic economy.

H.E. Abdul Rahman Saif Al Ghurair, Chairman of Dubai Chamber, said: “We see opportunities to enhance the halal food industry. The research finding on halal food sector is of considerable importance for the UAE food and beverage business, especially since halal food is a key pillar in the Dubai Capital of Islamic Economy initiative launched in 2013. Based on the initiative, Dubai has the capability to create new avenues for growth in this sector, and become an international centre for the halal industry.”

According to the Dubai Chamber report, the UAE halal food consumption market was valued at around US$20 billion in 2012. Halal meat is an important component of this market, dominated by unpackaged meat which, according to 2013 estimates, accounted for 78.7% of the market.

Most of the meat sold in the UAE is uncooked, with retail sales accounting for 43.8% of the UAE raw meat market in 2013 while the food service business, including hotels, restaurants and catering outlets, constituted 47.9%.

Highlighting the preference of UAE residents for packaged food as they look for convenience in their busy lifestyle, the research note shows that packaged food worth about AED11,148 million was sold in the UAE in 2013. Increasing demand is expected to take the packaged food market to AED14,078 million by 2018, with sales value growing at a CAGR of 4.78% during this period, indicating a long-term business opportunity for halal food in the UAE. The report identifies branding and franchising in this area as critical to UAE businesses looking to increase profit margins, and new opportunities for international expansion.

Globally, the halal food industry is growing in a number of markets mainly in countries in the Middle East and North Africa (MENA) region, South and Southeast Asia. Indonesia is the biggest halal food market with a market value of US$197 billion in 2012, according to the report. Turkey, with US$100 billion, is the second largest market.

The report highlights the potential for UAE businesses to source lower cost basic food products from a variety of countries across Africa, Asia and Latin America, which can then be further processed, packed and branded to be sold in international markets. 

Dubai imports its meat from different sources. Based on Dubai Customs data, Brazil accounted for more than half of Dubai’s meat imports in 2013, supplying 166 thousand metric tons (TMT) of the total volume of 314 TMT to take 53% of market share, far ahead of the US at second place with 14%, the Dubai Chamber stated. The US exported 43 TMT while Australia was a distant third with 27 TMT, taking just 9% market share. Among the neighbouring countries, Pakistan and India each supplied 5% of the total volume, while Ethiopia cornered 3%.

Business opportunities in global halal food market are not limited to food production, but span the entire halal food value chain. This value chain includes businesses providing inputs such as seeds and fertilisers, farms raising livestock, businesses providing technology for food production, food processing facilities, logistics companies moving perishable food items, importers of food and finally retail outlets selling halal food products, the Dubai Chamber states in the report. Innovation across this value chain could therefore be a driver helping in the search for new markets and greater profits, it adds.

With economic indicators pointing to accelerating growth of the economy of Dubai and the UAE in the coming years, growing manpower requirements will lead to an increase in population, which in turn will raise imports of food, particularly meat which constitutes a major component of the population’s diet, the report states.

Twitter volume dropped at sunset through Ramadhan

Twitter has blogged that tweets over Ramadhan dropped sharply after sunset in predominantly Muslim countries, rebounding shortly afterwards. 

This is likely due to people going offline to spend time breaking fast with their families, the company said in a blog post in late July. Several countries also saw tweet volume peak about an hour before sunrise, including Saudi Arabia and Malaysia. 

Tweet volumes went up near the time for suhoor*, the pre-dawn meal‎ before fasting begins for the day, and the fajr (dawn) prayer which occurs after suhoor.

Source: Twitter.

*Suhoor can be eaten anytime till slightly before the call to prayer for the fajr prayer. People may also sleep later during Ramadhan as the mealtimes must occur between sunset and fajr.

Mobile-based searches for Eid have grown from 2012 to 2014

An overview of summer (Editor's note: roughly June to August) rituals in Asia by Google has seen a large rise in mobile searches about Eid this year compared to last year. 

According to an August 7 blog post by Dušan Farrington, Communications Manager, Google Asia Pacific, mobile searches around 'Eid' in India, Indonesia, Malaysia, the Philippines and Singapore went up substantially from January to June. It appears that roughly 15% of searches for 'Eid' in June 2014 were from mobile phones whereas more than 25% of the searches by June 2014 were mobile-based. The figures as provided do not indicate how many searches were made, or if more searches were made in 2014 compared to 2013.

Ramadhan began in late June and Eid Al-Fitr 2014 was in late July so it is likely that the figures would continue going up all the way to July, and then spike again in early October for Eid Al-Adha. The double spikes seen for 2012 and 2013 indicate when the two Eids occurred. Eid Al-Fitr 2013 was about August 7 while Eid Al-Adha 2013 was around mid-October. Eid Al-Fitr 2012 was around August 18 while Eid Al-Adha 2012 was around 24 October.  

Image source: Google Asia Pacific blog. Mobile Percentage of Eid-related
searches in Indonesia, India, Malaysia, Philippines, and Singapore
Data source: Google Data, 2013–2014

*The Islamic calendar is based on the moon and moves a few days earlier every year.

*The formal start of a month may depend on whether the moon can be physically sighted, so different countries or areas would have months that start and end on different days. The difference would typically be no more than a day.

*There are two Eids every year, slightly over two Islamic months apart.

Ebola outbreak could affect hajj

The World Health Organization (WHO) has warned 8 August that the Ebola outbreak in West Africa is a Public Health Emergency of International Concern (PHEIC). The announcement, coupled with news that a Saudi man passed away in Jeddah, Saudi Arabia of suspected Ebola on 6 August, is causing some concern about the upcoming hajj pilgrimage.

As of 4 August 2014, there have been 1,711 cases (1,070 confirmed, 436 probable, 205 suspect) of Ebola virus disease (EVD), including 932 deaths. Between 5 and 6 August 2014, a total of 68 new cases of EVD (laboratory-confirmed, probable, and suspect cases) as well as 29 deaths were reported from Guinea, Liberia, Nigeria, and Sierra Leone.

On 6 August, a Saudi man suspected of being infected with the Ebola virus passed away at 8.45am at a specialised hospital in Jeddah, Saudi Arabia. The patient had been admitted to the intensive care unit late on 4 August after exhibiting symptoms of viral hemorrhagic fever following a business trip to Sierra Leone, Saudi's Ministry of Health said. The cause of the infection is still under investigation, and people who had been in contact with the man are being traced or monitored for symptoms of Ebola.

Gulf Business has also reported that hajj visas are not being issued to pilgrims of the affected countries, while the Minister in charge of Islamic Affairs in Malaysia is quoted in the Malay Mail as stating that the hajj will continue as normal from the country. Datuk Seri Jamil Khir Baharom said only healthy pilgrims would be allowed on the hajj.

At present there are no cases of transmission outside of the affected West African countries, but the situation could change rapidly. The next few weeks will answer questions such as whether Ebola spreads easily in countries which are prepared for epidemics, and whether a cure can be made available quickly. 

View the latest FAQ on EVD here. There are currently no registered medicines or vaccines against the virus, though several experimental options are currently under development.

AmInvest sees shari'ah compliant funds surpass benchmark returns

AmInvest has declared income distributions for nine of its funds for 2Q14, including two shari'ah-compliant funds. 

AmIttikal, designed as a medium to long-term investment with the objective of producing halal income and to a lesser extent capital growth, clocked in outstanding performances over the past three and five years, the company said. The fund recorded five-year total returns of 92.74%* which translated to 14.01%* per annum and has surpassed its benchmark’s returns of 33.99%** or 6.02%** annually. 

Topping Lipper’s Equity Sector Natural Resource category is AmCommodities Equity, which locked in three-year total returns of 19.11%*** outpacing the negative industry average of -3.65%*** based on a total of four funds in that category****. AmCommodities Equity, which was launched in July 2010, seeks to provide long-term capital growth by investing in Amundi Islamic Global Resources, which itself invests in shari'ah-compliant, global commodity-related securities.

Fund Name	Asset Class	Type of Income Distribution for the Financial Year	Net Income Distribution per Unit (sen)
AmIttikal	Equity	Interim	3.00
AmCommodities	Equity	Equity Final	2.00

*Lipper Investment Management, for the period 30 June 2009 to 30 June 2014, performance 
based on total returns, data extracted 10 July 2014. 
**Performance benchmark represented by Malayan Banking Berhad 12-month Islamic General 
Investment Account plus 3% spread, Lipper Investment Management, for the period of 30 June 
2009 to 30 June 2014, data extracted 10 July 2014. 
***Lipper Investment Management, for the period 30 June 2011 to 30 June 2014, performance 
based on total returns, data extracted 10 July 2014. 
****Lipper Investment Management, for the period 30 June 2013 to 30 June 2014, performance 
based on total returns, data extracted 10 July 2014.