October 2009 Issue

North America next big growth market for Islamic Finance

Al Bawaba, Middle East | September, 2009

As world economies struggle to move from recession to recovery, Islamic finance is being hailed as a possible alternative to risk-prone conventional financial services – even in the capitalist heartlands of the USA and Canada. Extensive evidence of this shift in action is presented in a new report called Islamic Finance in North America 2009 published tomorrow by Yasaar Media and co-published by Codexa Capital, UM Financial Group, King & Spalding, and Doha Islamic. The report explores for the first time the true depth of penetration of Islamic finance in both the USA and Canada and concludes that both core North American markets could be set for a boom. According to the report Islamic finance in North America has developed along two quite separate paths. The first path focuses on ..................

France works to make Paris Islamic finance capital of Europe

SmartBried, USA | September, 2009

The French parliament rewrote financial laws to welcome Islamic sukuk bonds, and Qatar Islamic Bank applied for a charter to do business in the country. This is all part of a campaign by the French government to establish Paris as Europe's capital of Islamic finance and attract billions of dinars and dollars in investment from Muslim countries.

Islamic Finance Set for Big China Leap

Reuters, UK | September 29, 2009

China is the next big Islamic finance market, as demand grows for ethical funds, but Asia's fastest-growing economy must first sort out tax issues, a unit of British insurer Prudential said on Friday. A large Muslim population and growing wealth provide a ready retail Islamic banking market in China, a senior executive of Prudential's (PRU.L) Kuala Lumpur-based fund management unit said. The $1 trillion (629 billion pounds) Islamic finance industry is targeting rapidly growing Asian economies such as China and India and new markets like Kazakhstan and Sri Lanka to offset slowing growth in its traditional base of Gulf Arab states. Islamic banks are touting wheat-based deposit products and metal-based funds as ethical investments to appeal to investors burnt by the recent conventional banking crisis. .................

India plans stake in bank run on Islamic principles

Livemint, India | September, 2009

In an indian province Kerala, the Kerala’s Left Democratic Front (LDF) government, composed of political parties that are avowedly agnostic, is promoting a financial institution that will run on Islamic principles and start operations with at least Rs500 crore of capital. In support: Kerala’s minister for finance Thomas Isaac. Kerala State Industrial Development Corp. Ltd, a state government arm, will take an 11% stake in the institution and the balance will be held by individuals, primarily Keralites based in West Asia. The institution, to be registered as a non-deposit taking, non-banking financial company because Reserve Bank of India rules do not allow an Islamic bank to be licensed as a commercial bank, will act like a venture capital firm and fund infrastructure projects.

Opportunities for Islamic finance in USA and Canada

Insider, USA | September, 2009

In Toronto, a Seminar was sponsored by PricewaterhouseCoopers. At the event, the speakers addressed a variety of issues ranging from opportunities in this field and challenges in making it compatible in the existing environment, to future outlooks of the industry. Many of their concerns surrounded Canadian laws regarding double taxation, but there is no need to delve into that further. After all the speakers had shared their concerns and visions for the industry, I had the opportunity to mix and mingle with the corporate representative from PwC. He had been living in Europe for many years prior to coming to Canada. The question on my mind was why they were sponsoring this particular event, considering that Islamic finance industry in Canada is currently very small and comprised of only a few start-ups. The answer was simple. When the industry becomes large, they want a piece of the action by becoming the auditors of these companies in the future. ..................

UK Tories would maintain Islamic finance focus

Reuters, UK | September, 2009

The UK Conservative Party would foster the development of Islamic finance as much as the Labour government, if it comes to power after next year's general election, an Islamic finance expert linked to the Party said. All the ways (in which) Labour has supported Islamic finance would be every bit as valuable under David Cameron (Conservative Party leader) as prime minister. The next conservative government would be very supportive of Islamic finance. The UK has undergone a series of tax and law changes in the last few years to allow the launch of retail Islamic-compliant services such as mortgages, bank accounts and insurance. In April the budget 2009 changed the tax regime to facilitate Islamic-debt issuance and encourage the growth of London as an Islamic finance hub.

The steady rise of Islamic finance

BBC News, UK | September, 2009

The growth of Islamic finance has been an unexpected outcome of the attacks on the World Trade Center of 11 September 2001. Islamic finance is based on rules from Islam's holy texts - the Koran. Scholars claim the fundamental difference to conventional banking is that Islamic finance is more ethical. First it bans any form of "riba" or interest, preventing consumers being exploited by high rates of borrowing. Secondly, it regards speculative trading as sinful. One of the world's leading experts on Islamic finance, Sheikh Hussain Hassan, argues the whole crisis in Western banking could have been avoided if these basic sharia principles had been followed. He said: "$600 trillion were wasted on options, futures and derivatives, all gambling. Sharia prohibited these kind of risks 14 centuries back." .................

Lack of Shariah Standars limiting Islamic Investment Funds

Business Intelligence Middle East, Bahrain | September, 2009

A lack of standardisation in products' compliance with Islamic law is limiting growth of its fund industry, a banker at French lender BNP Paribas said. The Islamic finance industry is governed by a patchwork of national regulators, standard-setting industry bodies and Islamic scholars ruling on products and contracts. Investors' views on which products comply with Islamic law, or sharia, differ in particular between its three main centers, South East Asia, the Gulf Arab region and Europe. Jacques Tripon, global head of Islamic banking at BNP Paribas said these divergent views were the reason why Islamic funds remain small in size. "We are in asset management but it's difficult to set up a geographically diversified Islamic asset management fund, for example Islamic loans or sukuk," he said. Most sukuk have been bought by financial institutions holding issues until maturity, and .............

U.S. Fund Manager Plans Islamic ETF in Q1 2010

Reuters, UK | September 28, 2009

U.S. fund manager Florentez Investment plans to launch an Islamic exchange traded fund next year, broadening the limited choice of sharia assets available in the world's top economy, its chief executive said on Monday. The fund, which is awaiting regulatory approval, will track the FTSE Sharia USA Index which measures the performance of large and mid-cap Islamic stocks, Florentez CEO Saeid Hamedanchi said. It will target investors in the United States, Southeast Asia and Gulf Cooperation Council countries and will likely be launched in the first quarter of 2010, Hamedanchi said. "The markets in the Islamic world and in the United States arenderserved," he told Reuters by telephone. The FTSE Sharia USA Index is up about 13 percent so far this year, compared with an 8 percent increase for the Dow Jones industrial average .................

Egypt, UK - Islamic Banking Development & opportunities

Global Arab Network, Middle East | September, 2009

Islamic Banking is founded on the (Sharia Law), as prescribed in the Koran this law provides the framework within which Muslims should conduct their lives. The overarching principle of this law when applied to the banking sector is that any form of interest (Riba) derived from investments is forbidden (This is still a controversial issue). Islamic finance works from the premise that both the individual customer and bank should be at equal risk upon investment; any possible profits or losses should subsequently be divided equally between them. Conventional financial services, as well as finance for activities related to alcohol, gambling and tobacco are incompatible with the principles set out in the Sharia Law and therefore prohibited in the Islamic banking system. ..................

Can religion help the economic crisis?

Reuters, UK | September, 2009

The worlds of economics and religion may seem far apart - but a meeting in South Korea has been attempting to narrow the gap between the two. Religious and political leaders gathered in Seoul for a conference on interfaith co-operation. They concluded their three-day meeting with a call for religious perspectives to be taken into account by governments tackling issues like the financial crisis. This unusual gathering brought diplomats and heads of religious groups around the same table. The Vatican representative was next to a Muslim leader, alongside delegations from nations across Europe and Asia. And as countries around the globe see their populations becoming increasingly varied in terms of culture and religion, the conference stated that social cohesion can be enhanced through interfaith dialogue. The organisers concede that ................

Brunei - Expertise key to Islamic finance growth

Isria, Brunei | September 29, 2009

Having a sufficient pool of talent and expertise in Islamic Finance will be key to the development of Brunei as an Islamic financial services hub in Asia. This was said by the Minister of Energy at the Prime Minister's Office, Pehin Orang Kaya Seri Dewa Major General (Rtd) Dato Seri Pahlawan Hj Mohammad Hj Daud. The Minister of Energy, who is also Acting Chairman of BIBD, said that there is a growing number of Islamic financial institutions and an increasing range of innovative Islamic financial products in the country. "This progress has been supported by a rigorous and well-developed legal, regulatory and Syariah framework, thereby ensuring its stability and sustainability." .................

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