The European Islamic Commercial Exhibition (EICE)

 

 

 

 

 

 

The European Islamic Commercial Exhibition (EICE) is an initiative
designed to bring together businessmen, producers, importers, distributors and investors, FROM SLAMIC AND EUROPEAN COUNTRIES, where  they can identify possible ways of cooperation and stimulate trade and  mutual relationships in their respective fields in order to:
 
Increase the visibility and the presence of Muslim products & services
in European countries.

Encourage the presence of European products & services, designed for
Muslims markets, in Muslims countries.

 Further information about the project vision and objectives can be found on ECIE2010 website http://www.eice2010.com

Participant sectors (but not limited to):

 -Islamic Banks/Insurance firms/Investment
 -Textile/clothing/Fashions/shoes/Cosmetics
 -Food & Beverage/Catering/Halal nutrition’s
 -Airlines/Travel Agencies/Tour operators.
 –Press/Media/Bookstores/publishing houses
 -Islamic traditional and handcrafts providers.
 -Islamic Civil Associations & Organizations.
 -ICT/Multimedia/Education/Learning Institutions

first edition of the EICE which will be held in Brussels Belgium

on 23 AND 24 OCTOBER 2010

Islamic banking needs to focus on innovative products: Dr Zamir Iqbal

Dr Zamir Iqbal, a renowned scholar on Islamic Finance, has stressed the need for developing mechanism to enhance liquidity and innovative Islamic financial products in order to cater to the growing demand of Islamic Finance in the world.

Delivering a talk on ‘What Needs to be Done for Islamic Finance to Succeed’ at the State Bank of Pakistan, Karachi on Tuesday, Dr Iqbal observed that current business model of the Islamic banking industry needs to be reviewed to cater to the demand for more sophisticated products, which is likely to grow rapidly.

He said that it would be better for the Islamic banking industry to innovate rather than replicate the conventional banking products and noted that no or limited collective efforts have been made so far to develop such products.

Highlighting some factors for sustainable growth of Islamic Finance, Dr Iqbal emphasised the need for consolidation of Islamic banking; expanding the scope, services and products, strengthening the risk management systems and reducing reliance on commodity/fixed income-like products.

Referring to legal and regulatory issues, Dr Iqbal asserted that there is a need to improve corporate and Shariah governance, and supervision & monitoring systems. He also stressed the need to promote risk-sharing through participatory instruments like Musharaka and Mudaraba.

Dr Iqbal said that over the years Islamic Finance has grown into a global phenomenon and Islamic Finance market in the world is estimated at $1 trillion. “Islamic Finance is not just a phenomenon restricted to only Muslim countries,” he said and added that there is a growing recognition and acceptance of Islamic Finance in the world.

He said that several factors have contributed towards global acceptance of Islamic finance, which include increased demand for Shariah-compliant products fuelled by increased liquidity in the market, successful track record of Shariah-compliant financial intermediation, commitment by Islamic Development Bank, AAOIFI and IFSB to promote Islamic finance industry, etc.

Dr Iqbal said the development of Sukuk also had a positive impact on the development of Islamic finance.

Director Islamic Banking Department, State Bank of Pakistan, Saleemullah, who also spoke on the occasion, highlighted the achievements of Dr Zamir Iqbal in the field of Islamic Finance.

source : dailytimesPK

Islamic finance to grow, needs to work on basics

Islamic finance consistent with Sharia law is poised to grow and take advantage of the conventional banks’ lost reputation after the global financial crisis, banking experts said Monday, but the sector still needs to work on its basics to succeed.

Although Islamic banks were the least affected by the worldwide crisis and posted strong growth, “there is no room for complacency,” the Governor of Bahrain’s Central Bank, Rasheed al-Maraj, said in Singapore.

“If we can ensure that the foundations are sufficiently robust, the Islamic financial industry has a great and profitable future ahead,” he told a conference on Islamic banking. “There is a great deal of work to be done.”

Assets of the top 500 Islamic banks jumped 28.6 per cent year-on-year to 822 billion dollars in 2009, according to the Singapore-based Islamic Bank of Asia.

Industry experts predict assets of Islamic banks to top 1 trillion dollars this year, representing about 1 per cent of all global bank assets.

“The figures of Islamic banks are impressive, but there are some challenges,” said Sultan bin Nasser al-Suwaidi, governor of the Central Bank of the United Arab Emirates.

One challenge is to set standards in accordance with Sharia law, he said, urging more coordination in rulings by Sharia boards.

Because there is no single version of Sharia, which for example prohibits the payment or acceptance of interest fees for lending, a contract regarded as Sharia-compliant by some scholars might be rejected by others, said Bahrain’s al-Maraj.

“There exists a lack of legal certainty,” he said.

For Ibrahim Hassan, chief executive officer of Malaysia’s Maybank Islamic, the issue of standards should be addressed “from a global perspective” to attract worldwide investors.

One other key driver for the sector’s growth is innovation, “to offer more products to a wider range of customers,” he said.

So far Islamic banks have a relatively high concentration of risk on real estate, al-Maraj warned, noting that it was critical for Islamic finance to “find ways of diversifying its risks.”

Jacques Tripon, chief executive officer of BNP Paribas’ Islamic Banking said the sector needed more “money market products” quickly.

Islamic banks should not just aim to make profit, but “also go back to the essence of Islam,” offering micro finance for low-income clients, he said.

Innovation and research are one of Islamic finance’s weaknesses, Tripon said. Others are “very scarce” human resources and expertise.

For Tan Jeh Wuan, managing director corporate banking and capital markets at the Islamic Bank of Asia, there “is little doubt that the Islamic finance and Islamic banking institutions are in an enviable position.”

During the global crisis investors saw the risks of complicated financial products, he said.

Now there is a trend to basic products, Tan said, calling Islamic finance “an example of such no-frills financial solutions.”

“The financial turmoil has … presented windows of opportunity for promoting Islamic finance,” he said, noting that besides the Middle East, Islamic finance is becoming more widespread in Asia.

The growing economies of Indonesia, China and India – as well as Europe – are potential markets, Maybank’s Hassan said.

Looking ahead, Islamic finance would see some consolidation, BNP Pariba’s Tripon said, because “we have too many banks.”

Contrary to other analysts who painted a rosy picture of the sector’s future, Tripon gave a more moderate outlook.

“The challenges ahead of us are huge,” he said, warning that “we have to be very, very careful to stick to our principles.”

“We are progressing maybe at a slower peace, but still much faster than the conventional market.”

source : businessreport

Malaysia Launches Global Search for Most Outstanding Contributor to Islamic Finance

Spearheaded by the Malaysia International Islamic Financial Centre (MIFC) initiative, Malaysia today launched a global search to recognise and honour the outstanding contribution of an exceptional individual in Islamic finance.

Dr. Zeti Akhtar Aziz, Governor of Bank Negara Malaysia and Chairman of the MIFC Executive Committee (ExCo) said: ‘Inspired by universal ethical principles and driven by the real value propositions that it contributes to the economy that is appreciated by all, Islamic finance has become one of the fastest growing segments in international finance. It is timely for Malaysia to recognise individuals who have contributed towards shaping the global Islamic finance.’

A special taskforce, headed by the Securities Commission Malaysia Chairman Zarinah Anwar, has been established to spearhead the implementation of this effort. ‘We hope in time this award will be regarded as a global benchmark in identifying the exceptional individuals who have inspired the development of Islamic finance worldwide,’ Zarinah said.

Unlike the commercial awards that are based on deals, this award is unique as it focuses on the individuals’ record of achievement and outstanding contribution towards the development and advancement of Islamic finance globally. The selection process of this award will be rigorous and based on an independent international jury, chaired by the former Malaysian Deputy Prime Minister and Chairman of the World Islamic Economic Forum Foundation Musa Hitam, to select the deserving individual.

Zarinah said the 7-member jury was carefully selected and they comprise eminent individuals, Shariah scholars, academicians and Islamic finance practitioners from Asia, Europe, the Middle East and the United States. Besides Musa Hitam, the jury consists of:
Abdul Hamid Mohamad, former Chief Justice of the Federal Court of Malaysia and member of the Shariah Advisory Council of Bank Negara Malaysia and Securities Commission Malaysia
Professor Dr. Volker Nienhaus, former President of University of Marburg in Germany
Professor Dr. Abbas Mirakhor, former Executive Director of the IMF and Holder of the First INCEIF Chair in Islamic finance (2010)
Dr. Mohamed Ali Elgari, Professor of Islamic Economics at King Abdul Aziz University in Saudi Arabia
A. Riawan Amin, Chairman of the Indonesian Association of Islamic Banks
Dr. Yahia Abdul-Rahman, Founder, Chairman and CEO of LARIBA Bank of Whittier, USA

With immediate effect, nominations from the global finance community can be made via the website ‘mifc.com/award’. The closing date for nominations is 15 July 2010.

source : PRWEB

Islamic Banks Unhurt By Toxic Assets, But Could Suffer As Crisis Evolves

By Ron Synovitz
  

Islamic banks have not been hit by the global financial crisis as hard as their Western counterparts because they refrained from investing in toxic assets that were deemed “un-Islamic.”

Indonesian President Susilo Bambang Yudhoyono says the financial crisis has proved the strength of Islamic methods of banking and finance. He says Western bankers have a lot to learn from Islamic finance, and he is calling on Islamic banks to take more of a leadership role in the global economy.

The focus on the Koran’s prohibitions arguably make it difficult for Islamic financial institutions to work in the same way as a conventional Western bank.

For example, Islamic law prohibits investment in businesses that sell alcohol or pork, or that are involved in gambling. That means an Islamic banker must ensure clients that their deposits are not being reinvested in a firm that does business deemed as “un-Islamic.”

Another basic rule of Islamic finance is a prohibition against what the Koran calls “riba” — a word interpreted as the payment and collection of interest on loans or savings deposits. Under Islamic law, transactions must be backed by real assets — tangible, physical assets such as gold, land, or equipment.

Abdul Gafoor, a Netherlands-based author on Islamic finance, tells RFE/RL that these Sharia-compliant rules prohibited Islamic bankers from dealing in second-hand interest-bearing mortgages — the financial assets at the root of the U.S. subprime property market crisis which pushed the world into economic crisis. But it didn’t prohibit them from investing directly in real estate, which has been losing value in many countries since last year.

“[Islamic banks] go mostly for real estate and that kind of thing. And when real estate prices go down, [their portfolios] also go down,” Gafoor says. “It depends on whether they invested directly in real estate or through securities. Here, you cannot make a general claim [about the strength of Islamic banking]. It depends on each individual bank — how they behaved.”

Still A Wide Spectrum

In fact, there isn’t a fixed set of rules that governs Islamic banking. Like Shari’a law, it’s subject to interpretation.

Some conservative Islamic scholars have concluded that investing in stock markets is a form of gambling — and is therefore prohibited by the Koran. But others interpret the Koran to mean that they shouldn’t get involved in day trading — the practice of buying shares one day with the intention of selling that equity soon after for a profit. Those Islamic bankers have invested in equity.

“The thing about Islamic banking, at the end of the day, in some respects, it is going back to banking the way it used to be done,” Neil Miller, a prominent Islamic finance expert and partner at the Norton Rose international law firm in London, says. “So it is very much based on relationships, on analyzing risks, and understanding the risk and the relationships in the specific projects or company that you are looking to finance and getting comfortable with that. People need to go back to fundamentals.”

But Miller also warns that being an Islamic bank is not enough to guarantee immunity in the long run from the financial crisis. He tells RFE/RL that some Islamic banks still could be hurt as the impact of the crisis spreads across the globe — sending land and equity prices tumbling.

“Islamic banks have certainly avoided the worst excesses of the toxic-asset problem because they were certain asset classes that they could never have invested in. So in that regard, they have been insulated,” Miller says. “As the crisis has developed and turned into a credit crunch, I think you have to start looking at Islamic banks in different countries and different parts of the world.”

Risk Aversion?

Miller says that in some places, such Islamic institutions are better insulated against adverse affects from the current troubles.

“It really depends on exactly what their current asset component is,” Miller says. “Many of the Islamic banks hold high levels of real estate and high levels of private equity. So although they have not been badly hit with bad debt through lending, which they can’t do, they have been hit by asset valuations — as some of their portfolios are perhaps not as robust as they had been in previous years.”

Duncan MacKenzie, director of economics at International Financial Services in London, says there are other aspects of Islamic finance that have helped Islamic banks fare better as the economic crisis evolved into a credit crunch — the drying up of credit that has made it more difficult for anyone, including banks, to obtain short term loans.

Experts point out that Islamic banks tend to lean more heavily on deposits, since they can’t fund themselves on the interbank market that sustains conventional banks.

Senior analyst Firas Abi Ali, from the Islamic Financial Information Service, agrees that Islamic banks generally are better placed to handle the credit crunch. He also says the turbulence and uncertainty in the conventional banking system is now prompting some non-Muslims to consider the option of Islamic banking.

Former Soviet republics in Central Asia also have been taking steps to create a legal framework for Islamic financial institutions.

In February, Kazakhstan’s Nursultan Nazarbaev signed amendments into law that are expected to help establish Islamic banking in the country. Kyrgyzstan’s parliament last month also approved amendments on the introduction of Islamic financial principles into the country’s banking system.

But critics say there are other issues that should make potential investors do their research before investing money in an Islamic bank.

Some say that Islamic finance has become so intertwined with the global financial system that problems in the future are unavoidable — especially as prices tumble for assets like real estate. Gafoor concludes that there is no real data available to check the claim that Islamic banks are largely protected from the global financial crisis.

The balance sheets being made available to the public by some major Islamic banks are unaudited, which raises questions about the real extent of their exposure to the crisis — even if their investments are deemed Shari’a-compliant.

source : rferl

Shari’a-Compliant Finance Becoming Viable Part Of Global Banking

By Ron Synovitz

Prohibitions dictated by the Koran make it difficult for Islamic financial institutions to work in the same way as conventional Western banks.

The rise in the price of oil in recent years has meant a windfall of revenue for the oil-rich Middle East. This infusion of petrodollars has led some of the world’s wealthiest Muslims to search for new ways to manage their wealth, investment opportunities that are consistent with the teachings of the Koran.

The result has been a rapid growth in Islamic financing, with centers of activity in places as far apart as London, Switzerland, Saudi Arabia, Dubai, and Singapore.
By some industry estimates, Islamic finance has grown worldwide during the past 20 years to $300 billion in bank assets. According to the General Council for Islamic Financial Institutions, that total is expected to exceed $1 trillion within the next five years. And those estimates do not include private savings accounts, which appear off the bank balance sheets.
The International Organization of Securities Commissions predicts that as much as one-half of the savings of the world’s 1.3 billion Muslims will be in Islamic financial institutions by 2015. In fact, Islamic finance has seen so much growth that the sector is now seen as a viable part of the global banking industry.
Asif Mumtaz, the regional head of HSBC bank’s Islamic finance arm, HSBC Amanah, agrees that Shari’a-compliant investment is no longer a niche market. Still, he says, Islamic banking needs innovators to come up with new Shari’a-compliant schemes before it is able to compete with the wide range of services offered by conventional banks.
“If we compare what has happened in conventional banking, it has grown over thousands of years. Shari’a-compliant banking, or Islamic banking, is 40 years old,” Mumtaz says. “So now we see that, yes, we have moved away from the niche, and we are going into the mainstream. In order to be fully there, we need to have that innovative thought process.”
Un-Islamic Investments
Indeed, the focus on the Koran’s prohibitions can make it difficult for Islamic financial institutions to work in the same way as a conventional Western bank. For example, Islamic law prohibits investment in sectors such as alcohol and gambling. So an Islamic bank must ensure its clients that their deposits are not being reinvested in a firm that does business deemed as “un-Islamic.”
Some conservative Islamic scholars have concluded that investing in stock markets is a form of gambling — and is therefore prohibited by the Koran.
Another basic rule of Islamic finance is a prohibition against what the Koran calls “riba,” a word interpreted as the payment and collection of interest on loans or savings deposits.
“The basic idea about Islamic banking is that it should be riba-free,” says Abdul Ghafoor, a Netherlands-based author and expert on Islamic finance. “Riba is generally equated to interest, but there is a little bit of a difference. The interest in a person-to-person transaction is equal to riba. It is also the same thing when I put some money in a bank and they give me interest. That is also riba. But, on the other side, [Islamic] banks lend at a higher rate. This increase can be excessive. But there is a component of expenses incurred by the bank.”
‘Riba-Free’ Savings
As a result, instead of collecting interest on their savings, a person who deposits money into a riba-free savings account instead collects a fee based upon a prearranged contract, a profit-and-loss sharing agreement with their Islamic bank.
“Many people do not agree with the present practices of Islamic banks,” Ghafoor says. “The model that they want to promote is what is called ‘mudarabah’ — that is to say, business-risk sharing, and profit-and-loss sharing. But that is not used very much. And if it is used, it is used only on one side [often to the disadvantage of the depositor].”
That makes savings accounts at Islamic banks much riskier than a guaranteed savings account at a conventional Western bank that also is backed up by government insurance plans for depositors. If an Islamic bank invests money from savings accounts into a firm that fails, the holders of those savings accounts can actually lose their money.
Aref Ismail al-Khouri is the general manager of the National Bank of Abu Dhabi, an Islamic bank in the United Arab Emirates that began operations this year. He says continuous economic growth in oil-rich Persian Gulf countries has made it imperative for Islamic banks to diversify the finance options they offer so they can meet the growing demand for both personal and corporate finance in the Muslim world.
Profit Pressure
With savings-account holders essentially taking risks similar to a shareholder, al-Khouri says there is a lot of pressure on Islamic bankers to turn a profit.
“They want us to be profitable from last year. As a shareholder, they always look at this,” al-Khouri says. “But, inshallah, we are planning to be profitable from year one.”
Other critics of the sector say the strong emphasis on prohibitions in the Koran has led most Islamic banks to serve only the wealthiest clients in oil-rich Arab states.
Michael Gassner, who heads a leading Islamic-finance consultancy that has offices in London, Germany, and Dubai, argues that the basic principles of Islamic finance need to be reevaluated in order to allow microloan programs that can help poor Muslims start small businesses and improve their lives.
“What we need is not only to exclude things which are forbidden by Islam, but to include things which are recommended by the religion,” Gassner says. “So we have to look at how we can better finance the poorer people — how we can include poor people and serve them like clients and earn money with them, having profits even with the poorest. This is something that we need to look at in the future.”
Gassner tells RFE/RL that many wealthy Muslims around the world are changing the way they think about Islamic investment. He notes there is a strong movement toward private-equity companies and local investment in the Middle East, despite the declarations of Islamic scholars that stock-market investments are a form of gambling.
Gassner concludes that in the core Middle East markets — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates — investors are starting to think more about ways to improve living conditions for people in the Muslim world.

source : rferl

Islam could help us avoid toxic assets -Nick Sherry Assistant Treasurer Australia

The Assistant Treasurer, Nick Sherry, says the growth of Islamic finance in Australia could help to shield the economy from damaging speculative activities that spread toxic assets during the global financial crisis.

Islamic finance forbids the payment of interest and forms of betting, taking its guidance from Islamic law, or sharia. The global industry has boomed in recent years on the back of rising oil prices and economic development in Muslim countries, and is worth about $1 trillion.

The federal government is reviewing tax law to ensure the sector is not disadvantaged against conventional banking, as Islamic finance is seen as a valuable source of funding for Australia.

Launching Demystifying Islamic Finance, a publication by the Malaysian law firm Zaid Ibrahim, Senator Sherry said that the industry could also help to shelter the economy from damage caused by complex financial instruments used by regular banks.

”The sharia prohibition of betting or gambling means that Islamic banks can use fewer risk-hedging techniques and instruments than conventional banks,” he said in Sydney. ”As the world learnt to its cost, the excessive use of risk-hedging instruments led to the growth of ‘toxic assets’ during the global financial crisis.”

For example, before the financial crisis banks sold complex debt securities called collateralised debt obligations, which received AAA credit ratings because they were thought to spread risk. These assets, bought by many councils and charities, have since collapsed in value. Under Islamic finance, which has attracted tentative interest from Westpac and NAB, lenders in effect take possession of the borrower’s tangible asset and are then entitled to a share of its returns, rather than interest payments.

Proponents say this also helps to direct savings towards the ”real” economy of production.

Senator Sherry said: ”The Sharia prohibition against highly speculative activities not only helps to protect the economy against abuses and distortions, but also forges a closer link between financial activity and the real economy. This maximises the efficient allocation of capital and resources, helping to create jobs and boost sustainable growth.”

source : smh