GCC urged to follow unified Islamic finance regulations

The Gulf Co-operation Council (GCC) should have a unified rule under one regulator for Islamic investment products for ensuring lower cost of funds, according to Islamic Wealth Management (IWM) Report 2012.
“The GCC countries could take a leadership role by establishing standards for the registration of Islamic investment products with one regulator,” the Bank Sarasin report said.
The report was launched by Bank Sarasin managing director and head of Islamic Finance Fares Mourad and Monzer Kahf, a leading Islamic finance scholar.
Such unified rule would allow asset managers to market the product to clients across the region, it said.
Currently any offering needs to comply with different regulations in Bahrain, Kuwait, Saudi Arabia, Oman, Qatar and the UAE, resulting in a lengthy and expensive registration process, the report said. “Reducing expenses and increasing the availability would increase competition, benefiting local investors and further the GCC’s development as a centre of excellence for Islamic finance.”
Although unified rules could be done either a state, region or Arab league level, it would be better to have a centralised agency that could interpret the legislations regarding Shariah investments, Mourad said.
Asked whether there was a need for a separate entity for the regulation and supervision of Islamic investments and products, he said “I really would like to have this” but it was for the regulators in the respective jurisdictions to decide.
Kahf said the Islamic Financial Services Board could take the lead in the centralised agency as it consisted of central bankers in the Muslim countries. “Once you have such an agency, there is no need for separate Shariah boards as lawyers specialised in the field could suffix its role,” he added.
The report also took note of the constant criticism of certain Islamic finance structures such as the ‘Tawarruq’, which involves purchasing a commodity with deferred payment and selling it to a third party for cash, hence replicating the effect of a loan.
“Regulations need to be adjusted to allow financial institutions to engineer products that fit the spirit of Islam while meeting legal and regulatory requirement,” it said.
In this regard, the report cited an example of recent co-operation between the halal industry (mostly foodstuffs) and Islamic finance – two sectors with similar goals that have had little contacts.
With issues related to the environment and social practices as well as corporate governance getting more attention, it said there has been more reporting on corporate social responsibility, which is important to Islamic finance.
“There is still much room for improvement with higher standards and a more strategic approach required at the state, company and private level. The Muslim countries face the greatest challenges,” the report said.

source : gulf times

Dh30m fund for university research

SHARJAH // The American University of Sharjah has given the go-ahead to three new research centres that will pave the way for work in fields as diverse as Islamic finance and archaeology.

The centres – for research into Gulf coastal ecosystems, Islamic finance and banking, and humanities and science – were approved last week by the university’s board of trustees, which gave the projects a Dh30 million endowment over five years.


The national at : http://www.thenational.ae/news/uae-news/education/dh30m-fund-for-university-research

Dubai targets a green sukuk

April Yee

from The National

“Green sukuk” implies two sets of standards – environmental credentials and Sharia compliance – which helps explain why for now, it is merely a developers’ dream.

But industry executives plan to begin crafting guidelines next year to create the world’s first environmentally friendly Islamic finance, and calls are increasing for green-themed debt instruments to help raise the money needed to combat climate change – more than US$10 trillion (Dh36.73tn) over the next two decades, according to the International Energy Agency.

Dubai hopes to issue green sukuk to finance solar parks, biogas plants and energy efficiency devices for homes.

“I am trying to raise the appetite. We have the projects, so we just need to identify which one is best to basically lead the way,” said Ivano Iannelli, the chief executive of the emirate’s Carbon Centre of Excellence. “It would be a very interesting mode paving the way forward and a success story that investors are likely to follow.”

The call for green sukuk comes as other financing prospects look bleaker.

The biggest renewables project in the UAE, Masdar’s 100 megawatt Shams 1 solar thermal plant, was backed by $600m in loans from a consortium of international banks. But developers do not expect banks, particularly from Europe, to continue to be as free with project financing in the economic crisis.

Carbon credits, another source of funding for climate change abatement, have declined in the past year due to oversupply fears in Europe and a lack of confidence in the political policy underlying them. UN-issued carbon credits traded in Europe have fallen from €13.69 a tonne in May to below €5 given the lack of widespread commitment outside of the EU for renewing the Kyoto Protocol, the binding treaty to curb carbon emissions that backs the UN credits.

Another financing mechanism to arise from the international negotiating process that spawned Kyoto is the Green Climate Fund, which is meant to funnel $100bn a year by 2030 towards climate change abatement projects in developing nations. But nations have yet to agree on who will pay into the fund and who will run it.

That’s where green bonds come in, hopes Sean Kidney, the co-founder of Climate Bonds, a green bonds organisation.

“The world is shifting to these kinds of products in recent years,” says Mr Kidney. “The investors don’t want to take a haircut. The awareness of macro risks of climate change means that given the choice between a fossil fuel product and a green product where the risk-reward ratio is the same, they will choose the green product.”

Proponents say that green sukuk and bonds could provide as much as $300 billion for projects to combat climate change. Last year the value of the global bond market came to about $95tn.

Today the green bond market is only a hundredth of the way there, with about $3bn so far. Of the green bonds, most have ties to the development sector; the World Bank, European Investment Bank, African Development Bank and International Finance Corporation are among the entities that began green issuances starting in 2007.

Demand is strong for commercial banks to issue more green bonds of their own, according to a statement in which Allianz, Swiss Re and a coalition of other institutional investors outlined a desire for more low-carbon investment opportunities.

“As insurers and reinsurers we are conscious of the long-term risks that climate change poses to society and how it will affect pricing of weather risk transfer solutions long term,” read the statement this month. “We are also conscious of our role as large investors and see the importance of using our assets to mitigate this risk.”

Low liquidity in the low-carbon bond market and a need for more due diligence were holding them back, they said.

Climate Bonds and the Clean Energy Business Council, a UAE trade group, are expected to begin work next year on creating the standards for a green sukuk. Climate Bonds already has a set of standards for bonds that auditors such as KPMG and DNV can use. They submit their findings to Climate Bonds, which slaps its seal on the bond if it meets the criteria.

“It is marketing,” says Aaron Bielenberg, the director of the Clean Energy Business Council. “The difference is an issuer like the Government of Dubai can potentially access a different set of investors focused on sustainable investing and can also potentially raise money at lower cost.”

That is critical for Dubai given its target of drawing 1 per cent of its energy from the sun by the end of the decade. Next year the Supreme Council of Energy plans to hire a consultant to look at a framework for funding projects, and as soon as next month it could begin looking for the contractor to design and engineer a 10MW solar park that would cost about $30m, according to an industry benchmark of $3 a watt.

source : The national

Oman’s Islamic banking on growth path

Staff Reporter from Oman Tribune

MUSCAT Islamic banking services in the Sultanate will witness robust growth in the coming days as the central bank will develop general rules and regulations to ensure good governance in these banks, said HE Hamoud Bin Sangour Al Zadjali, Executive President of the Central Bank of Oman, while speaking at the Oman Islamic Economic Forum being held at Al Bustan Palace Hotel on Saturday.

However, Islamic banks should ensure that their banking transactions are sharia compliant, he added.

These banks need to follow assorted accounting standards in certain cases that are acceptable by the parties who are trading in the stock markets and are in line with international standards, he said.

The CBO will review regulatory issues at the legislations which came into force in the first quarter of 2011 and will revise the legislations from time to time based on the developments at the local and world markets.

While elaborating on the functioning of Islamic banking, he said these banks are not isolated from traditional banks and the central bank, the regulator of the banking sector, will keep a link between Islamic banks and other banks. However, it will be a real challenge now and in future.

While talking about the future of the Islamic banking, Prof. Humayan Dar, CEO, Edbiz Consulting and chairman of the Forum, said that the size of Islamic banking industry in the world is expected to touch around $1 trillion, a rise of 7 per cent, in near future. He said while traditional banks have been affected by the global financial crisis in the past two years, the Islamic banks managed to remain immune.

Dr Abdul Aziz Mohammed Al Hinai, deputy chairman of the Islamic Bank for Development, said Islamic banks, which have witnessed robust growth since their launch, are facing challenges in developing a relationship among them, the central bank and other regulatory bodies. Creating a proper supervisory system for the Islamic financial industry, diversification of Fatwas issued by Sharia Audit authorities, lack of standard criteria for contact, lack of efficiencies and talent crunch are also posing major challenges to these banks, he added.

HE Sheikh Dr Kahlan Bin Nabhan Al Kharousi, the Sultanate’s Grand Mufti, said that the Sultanate seeks to learn from other countries’ experience in Islamic banking to avoid shortcoming and help financial and Takaful insurance companies that provide sharia-compliant products.

While talking about the establishment of legislative centres that will grant approval to Islamic banks, Al Kharousi said that banks need to fulfil three guidelines such as a legal framework, managing operations that ensure the provision of Sharia-compliant services and products and efficient and qualified human resources.

The applications require three levels of audit and sharia advice, on top of which is the Central Sharia Authority that lay the general principles and bases for the different sharia compliant activities; this is equal to bonds in capital markets in the Sultanate, he added.

Sharia committee will be in charge of developing details of daily transactions and ensure that they are compatible with the main restrictions. The Ifta house provides advice to decision-makers to ensure that the products are genuinely Sharia complaint.

In response to a question about restructuring of debts in the Islamic way, he said that this may be offered by Islamic banks to help people get rid of usurious transactions. The Islamic windows which will be opened here seek profits, hence the services offered by these windows will be based on sharia contracts.

Tun Abudllah Bin Haji Ahmed Badawi, former prime minister of Malaysia, said that there is a need for global standards in Islamic banking and finance to help it emerge as an international alternative in the sector.

Various countries have their own standards of Islamic banking and financial system. But this creates lots of difficulty in its progress, he said.

Khalid Bin Hilal Al Yahmadi, chairman of Amjad Development Company, said that researches and studies conducted found that principles of transactions at the Islamic economy provide satisfactory and fair solutions for the society.

More than 2 billion rials (over $5 billion) are semi frozen money or interest free deposits. This amount accounts for one-third of the total deposits at local banks. He pointed out that one of the studies affirmed that two-third of the Omani society prefer to deal with financial solutions that are Sharia compliant.

The two-day forum, organised by Amjad Group, was held under the auspices of HH Sayyid Shihab Bin Tariq Al Said and was attended by ministers, honoruable members of the State Council and Shura Council, undersecretaries, executive presidents of banks operating in the Sultanate and Islamic banking institutions from outside the Sultanate.

source : Oman tribune

Business students turn to Islamic finance

It is no secret that conventional financial systems are not working and the sector is looking for alternative and responsible ways of doing business.
Islamic finance poses an ethical and non-conventional model and is currently the only area with strong growth, said Professor Ignacio dela Torre, Academic Director of the Master in Finance Programmes at Spain’s Instituto de Empressa (IE) Business School last week.
Dela Torre was speaking at the relaunch of the Saudi-Spanish Centre for Islamic Economics and Finance, a partnership between IE Business School and Saudi Arabia’s King Abdul Aziz University.
The relaunch coincided with a conference on “Islamic Finance in the 21st century”. He said when employment levels are high in the West, it makes sense for finance students to familiarise themselves with alternative finance models that also include eco-finance and micro-finance.
“From a macroeconomic point of view it makes sense that European governments and financial markets set up Islamic windows so excess liquidity can be channelled through some European financing markets with these structures.”
Expertise needed
“There is already $1 trillion (Dh3.67 trillion) of Islamic money and it is growing at 20 per cent with $200 million of additional Islamic money coming in every year,” said Dela Torre.
Students are showing interest in this area of finance and universities in the United Kingdom and France have responded to the demand early on. Over the past five years, IE has been offering Islamic finance programmes.
“When you travel to the Gulf, where 50 per cent of banking is Islamised, there are not enough people with skills and understanding of Islamic finance,” he said.
He added that from a career perspective it is wise to have knowledge of this area because those who work in conventional finance will sooner or later be faced with Islamic finance.
Dela Torre says the field is not difficult to understand once the basics are covered in the curriculum illustrated by the fact most expatriate professionals in the GCC’s Islamic banking sector are Americans and Indians.
Dr Ahmad Mohammad Ali Al Madani, Head of Islamic Development Bank, said since the financial crisis, people have become more concerned with where their money ends up once invested and not just profit margins.
Celia de Anca, professor of Islamic Finance at IE Business School, added that students are increasingly interested in financial sustainability and ethics.

source : gulfnews

World’s Largest Gathering of Islamic Finance Leaders to Address Next Phase of Global Growth

Manama, Nov. 20 (BNA) — The 18th Annual World Islamic Banking Conference opens on the 21st November with a series of pre-conference summits

Bahrain: 20 November 2011: Leading players, industry thought leaders and key regulators in the international Islamic banking and finance industry will take part in the 18th Annual World Islamic Banking Conference (WIBC 2011), which is set to commence on the 21st of November 2011 at the Gulf Hotel in the Kingdom of Bahrain.

The three day event which ends on the 23rd of November is convened under the patronage of HRH Prince Khalifa Bin Salman Al Khalifa, the Prime Minister of the Kingdom of Bahrain and held under the support of the Central Bank of Bahrain.

Speaking to the media ahead of the event, David McLean Managing Director of the World Islamic Banking Conference said that “in recent years Islamic finance has further transitioned into a dynamic, fast growing and highly competitive market servicing an increasingly international community.
This expanding globalization of Islamic finance has now gained significant momentum as manifested by increasing cross-border investment and deal flows that are Shari’ah compliant, greater participation in international Islamic financial markets, and the increased presence of Islamic financial institutions in new jurisdictions.
Held under the theme “Competing for Global Growth”, the 18th Annual World Islamic Banking Conference (WIBC 2011) will set the stage for discussions that will seek to boost the scale of Islamic finance activities across international markets.”

He also that said “this year we have delegates attending from more than 50 countries providing the discussions at WIBC with a truly international perspective.”

WIBC 2011 will begin on the 21st of November 2011 with a series of pre-conference summits. The pragmatically focused pre-conference executive briefing sessions, led by experienced and respected industry experts, will place a range of complex themes in a practical framework, enabling a deeper understanding of the critical issues facing the Islamic finance industry.

The main WIBC 2011 conference, which begins on the 22nd of November 2011, will be inaugurated by H.E. Rasheed Mohammed Al Maraj, Governor of the Central Bank of Bahrain. The inaugural session which focuses on strengthening the regulatory frameworks to accelerate the international development of Islamic finance will also feature H.E. Khaled Mohammed Al-Aboodi, Chief Executive Office & General Manager, The Islamic Corporation for the Development of the Private Sector, the private sector arm of the Islamic Development Bank Group (IDB), Saudi Arabia.
The inaugural plenary session will be followed by the high profile Industry Leaders’ Power Debate led by internationally respected CEOs and decision-makers from the key players in the industry.
Moderated by Ashar Nazim, Senior Director, MENA Leader for Islamic Finance, Ernst & Young, this dynamic session will analyze how the leading players are positioning themselves to capitalize on the new growth opportunities presented by the increasing internationalization of Islamic banking and finance.
The Power Debate session will feature Tirad Mahmoud, Chief Executive Officer, ADIB; Toby O’Connor, Chief Executive Officer, The Islamic Bank of Asia; Syed Abdull Aziz Jailani Bin Syed Kechik, Chief Executive Officer, OCBC Al-Amin Bank Berhad; Asad A Ahmed, Chief Executive Officer, Gulf African Bank; Abdulrazzak Mohammed Elkhraijy, Executive Vice President and Head of the Islamic Banking Development Group, The National Commercial Bank – Saudi Arabia; and Dr. Salah Addeen A Qadar Saeed, General Manager – Credit & Risk Management, Bahrain Islamic Bank.

WIBC 2011 will also feature a special keynote address on “Competing for Global Growth: Preparing for the Asian Century” by Prof. Kishore Mahbubani, the Dean and Professor in the Practice of Public Policy at the Lee Kuan Yew School of Public Policy (LKY School) at the National University of Singapore on the 23rd of November 2011. Jaseem Ahmed, Secretary-General of Islamic Financial Services Board (IFSB) will be the opening keynote speaker on the final day of the event.

Commenting on the Central Bank of Bahrain’s support for the event, Khalid Hamad Abdul-Rahman Hamad, Executive Director – Banking Supervision, Central Bank of Bahrain noted that “Bahrain has a long and proud history in supporting the progress of Islamic finance. The Kingdom continues to play a pioneering role in the advancement of industry standards, best practices and in developing a strong regulatory structure. We look forward to welcoming back the global stage of the 18th Annual World Islamic Banking Conference to the Kingdom of Bahrain and to continuing its tradition of supporting growth and innovation in the international Islamic finance industry. The past few years were so challenging for Islamic finance but at the same time the future raises several business development potentials and opportunities which we are all looking forward to explore during the 18th Annual World Islamic Banking Conference,” he said.

A similar view was expressed by Shaikh Mohamed Bin Essa Al-Khalifa, Chief Executive of the Bahrain Economic Development Board who said that “Bahrain continues to be widely recognised as a global leader in Islamic Finance, and is also home to a number of central bodies which set the standards for the industry across the globe. Guiding over thirty countries on conducting business by Islamic principles has provided many investors with the confidence they need despite the turbulent market conditions in recent years. We have built a solid foundation for Islamic banking in the Kingdom; presently there are more than twenty five Islamic banks and the monthly issues of the Sukuk Al-Salam Islamic securities are regularly over-subscribed.”

He also said that “given our heritage in Islamic Banking, and our commitment to a strong future for the sector, we are proud to continue to host and support the 18th Annual World Islamic Banking Conference.”

As a part of the world comes to WIBC initiative, a leading panel of international experts will converge at the Country Focus Roundtable to address how well-positioned Islamic banks can explore international opportunities in the most dynamically evolving high-growth markets for Islamic finance. The Country Focus Roundtable along with the WIBC Country Pavilions will explore exciting opportunities in key jurisdictions including France, the United Kingdom, Singapore, Bahrain, Bermuda, Luxembourg and Labuan.

HMA Iain Lindsay OBE, British Ambassador to Bahrain, who will be inaugurating the UK roundtable at WIBC 2011, noted that “with a proven track record as a leading international financial centre and a long history of building strong regulatory infrastructure, the United Kingdom is keen to further establish its links and partnerships with the international Islamic finance industry. Given the UK’s strong financial and trade links with the Gulf and South East Asia, which are the major centres for Islamic finance, there are tremendous opportunities for cross-border investment flows that are Shari’ah-compliant. The progress made by UK firms in the Islamic finance industry is notable and the UK Pavilion at the World Islamic Banking Conference 2011 will be an opportune platform to showcase the Islamic finance capabilities of the UK and further build our relationships with the leading international players.”

WIBC 2011 will feature more than 60 leading industry partners and exhibitors showcasing their latest innovations at the World Islamic Banking Exhibition organised along the sidelines of the conference. The exhibition will be officially inaugurated on the 22nd of November.

The eagerly anticipated 2011/12 edition of the World Islamic Banking Competitiveness Report, developed in collaboration with Ernst & Young, will also be launched on-site at the 18th Annual World Islamic Banking Conference in an exclusive session on the 22nd of November 2011.

source : Bahrain News Agency

Emirates airline eyes Islamic finance as European banks back out

Dubai’s Emirates, the rapidly expanding Gulf Arab carrier, is looking at the more resilient Islamic finance market to fund aircraft deliveries as international banks back out of plane deals because of the euro zone debt crisis.

European lenders, especially French banks, which have been major financiers for Emirates’ aircraft deals with Airbus and Boeing, have become risk-averse because of the crisis, the airline’s president Tim Clark told Reuters.

“We were kind of planning for finance from European banks…but it’s just a bit difficult now,” said Clark.

“We still have the Islamic finance market to go with and other funding options are always open for us,” he said, adding that issuing an Islamic bond or sukuk was “not out of the question”.
Clark declined to comment on specific financing deals, but said liquidity in the international loan market was lower and French banks were shying away from new deals. “This won’t change for the next six to nine months,” he said.

Societe Generale, France’s second-biggest listed bank, on Tuesday scrapped its 2011 dividend to help bolster capital as it reported a 31 percent drop in quarterly profit, hit by charges including Greek debt writedowns. Its chief executive said the bank would reduce its aerospace financing “very significantly”.

Emirates is active in corporate funding markets because of its busy schedule of plane purchases; it received 10 new aircraft this year and a further 13 are scheduled for delivery before the end of March next year. Emirates chairman Sheikh Ahmed bin Saeed al-Maktoum has said there is a good chance of the airline placing yet more orders at next week’s Dubai Airshow.

However, Clark played down that idea. “We will book if we have a requirement and get good deals. Otherwise we won’t,” he said.
The sukuk market has been relatively resilient during this year’s instability in global financial markets, which has made it more difficult for even highly rated companies around the world to issue conventional bonds.

That is partly because Islamic investors in the Gulf remain cash-rich, partly due to the limited supply of sukuk, and partly since sukuk investors tend to hold the bonds until maturity, reducing the chance of big swings in secondary market prices triggered by shorter-term speculators bailing out of positions.

Goldman Sachs registered a $2 billion Islamic bond program last month, a fresh case of a conventional borrower looking at sharia-complaint funding sources as other markets dry up.

Traditionally, Islamic finance has been more expensive than conventional money. But the gap between the two, especially in the fixed income sector, has narrowed during the global financial turmoil of the past year and may, for now, have disappeared completely.

Dubai shopping mall developer Majid Al Futtaim decided against issuing a conventional bond because of pricing concerns earlier this year. It has now mandated banks to set up a separate sukuk program.

Emirates has used sharia-compliant financing facilities before so the company is aware of how Islamic finance works, according to Qudeer Latif, head of Islamic finance at law firm Clifford Chance in Dubai.

However, funding planes on order using sukuk could be tricky because Islamic finance, in addition to forbidding payment of interest, prohibits pure monetary speculation and requires deals to involve concrete assets. It would be harder to win a seal of approval from Islamic finance scholars for a sukuk that was based on assets which the airline did not yet own.

“It’s much easier to use existing planes to issue a corporate sukuk,” Latif said.

“For new aircraft, it’s not impossible but it’s much more complicated as the cash would have to go from investors through a special purpose vehicle to the manufacturer, and then a lease- back arrangement put in place with Emirates.”

Currently, two aircraft-based sukuks have been issued globally, and they were backed by existing aircraft: a $500 million issue from GE Capital in November 2009, and a $100 million deal for Nomura in July 2010.

Clark acknowledged that his airline, whose conventional $1 billion bond issue in June was more than five times oversubscribed, would be in new territory with a sukuk.

“This will be a new territory for Islamic finance. They (Islamic banks) are a bit hesitant, but they definitely have the capacity,” he said.
Emirates has continued to grow exponentially despite Dubai’s debt crisis two years ago, which hit several other government-related entities and forced the restructuring of billions of dollars in debt.

The Gulf carrier has over 190 aircraft worth more than $66 billion to be delivered over the next few years, including 73 Airbus A380 superjumbos and 41 Boeing 777-300 aircraft.

Emirates already operates in 67 countries and has 114 destinations; it has launched five new destinations this year.

The expansion of the carrier, as well as the growth of Etihad of Abu Dhabi and Qatar Airways, have alarmed older European airlines and fuelled mutual accusations of protectionism. Clark last year heaped further pressure on the European carriers by voicing plans to expand his fleet to include 120 Airbus A380s.

Source : al arabiya english

IFIBAF signs collaboration agreement with Dubai Dar Al Sharia

ubai based Dar Al Sharia which is the leading provider of Shariah services in the region has signed a collaboration agreement with the Frankfurt based Institute for Islamic Banking and Finance (IFIBAF).
The relationship between these two organizations originates from a highly success Islamic Finance Trade Mission to Europe conducted by Dubai Exports, an agency of the Dubai Department of Economic Development. The Islamic Finance Trade Mission sought to increase the awareness of Islamic financial service providers and institutions from the UAE in the European markets. (press Release)
source : opalesque

ACCA, KPMG undertake expert discussions on Islamic finance

The Association of Chartered Certified Accountants (ACCA) and KPMG are hosting the second in a series of high-level roundtable discussions in Dubai on May 5.

These discussions aim to answer critical questions on the growing issue of how the financial reporting of Islamic finance can be harmonised and made more consistent internationally.

The event will bring together experts from the fields of accounting standard-setting, auditing, regulation, Islamic banking and ratings agencies. The first event in the series was held in Malaysia last October and the next will be held in London, this demand reflects the growing international interest in the subject.

Aziz Tayyebi, the ACCA’s Head of International Development who is also an expert in Islamic finance, said: “Islamic Financial Institutions (IFIs) are being set up in various countries including South Korea and Ireland and conventional multinational firms are also increasingly offering Shariah-compliant products. This is why we need a platform such as this, with some of the leading stakeholders in international Islamic finance, to address some fundamental questions around the topic of Islamic finance.” Some of the questions that will be under consideration by the expert panel in Dubai will include

· Should the objectives of the financial reporting of Islamic financial transactions be different from those of mainstream financial reporting?

· Should Islamic Finance use distinct Islamic accounting principles to provide a faithful representation of the nature of these transactions?

· Do non-financial institutions that use Islamic finance products have different accounting issues to IFIs?

Samer Hijazi, KPMG Audit Director and an expert in Islamic finance, noted: “As the Islamic finance sector matures and becomes increasingly mainstream, greater synergy of practices and transparency of institutions that sell Shariah-compliant products will become critical.”

Muhammad Tariq, KPMG’s Head of Islamic Finance in the UAE, added:“It is timely to review the current financial reporting practices across the globe and to address the issues which might prevent a consistent internationalised approach, with all the benefits that we have seen in the development of IFRS”.

Guests for the roundtable which is to be held at the Emirates Tower Hotel in Dubai, will include Wayne Upton, director of international activities, IASB, MNCs, global and local banks.

Together these distinguished panellists will not only discuss the wider issues related to harmonising financial reporting practices for Islamic finance, there will also be some specific questions addressed at the forum, aimed at the compatibility of IFRS with Islamic Finance practices:

· Does the prohibition of taking part in interest-based transactions influence the increasing use of discount rates for measuring the market value of financial instruments?

· Are concepts such as ‘control’, ‘risks and rewards’ and ‘rights and obligations’ – essential in determining accounting treatment under IFRS?

· Are the treatments of various types of profit-sharing investment accounts under IFRS consistent with the Shari’a basis for those transactions?

The ACCA is the global body for professional accountants. It aims to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.

KPMG is one of the best-known names in business. Its global network of member firms provides audit, tax, and advisory services to local, national, and multinational organisations.

source : khaleej times

Algeria can achieve real development through Islamic finance: expert

The development of Islamic finance industry in Algeria passes through a clear political desire to go forward in diversifying financial products and solutions, according to vice- president of the International Islamic University of Malaysia.

Western studies show that non-Muslims tend the most to this industry. “A total of 55 percent of Islamic banks’ clients are non-Muslims. This is due to its varied and several privileges,” Younes Salhi told Echorouk.

He believes that the Algerian government should study successful examples in this field including the Malaysian and Bahraini experiences. “This would enable the Algerian economy to benefit from very important resources to achieve a real economic growth in the gross domestic product, increase social integration opportunities, creating real jobs and wealth.”

He also stressed the necessity of not neglecting any relating activity including Islamic cheques which constitute a very efficient means to fund infrastructure projects and economy.

The economy expert said the Islamic finance is not a threat to the traditional finance. “It is a complementary product which enables to satisfy the aspiration of large categories in society.

“The Islamic economy deals with real goods and not unreal ones. The Islamic finance is the most successful way to fund young people’s projects and contribute in their integration in an efficient and sustainable way in the economic life.”

“It is time to start building a real economy,” he added.

Professor Salhi said Islamic finance in Malaysia is bases on three main pillars: Islamic banks, Takaful companies, successful Halal industry and Hadj Fund.

He added that the second main step which cntribvuted in the Islamic finance industry success is the existence of a legal frame.

Civil courts are reinforced with competent judges to decided in Islamic financial cases.

In 1983, the government set up the first law followed by the law on Islamic insurance companies in 1948 and then the amendment of the commercial law.

The Algerian expert warned against the consequences of not having control over the high liquidity in the Algerian banks. “That liquidity may be a victim of inflation. The Bank of Algeria should protect the purchasing power of Algeria’s high monetary reserves.”

source : ecoroukonline