#97 - May 2016 by CPI Financial

Dubai Technology and Media Free Zone Authority

ISSUE 97

T H E A U T H O R I TAT I V E V O I C E O F I S L A M I C F I N A N C E ISSUE 97 ON TRACK FOR PROJECTED GROWTH Ghulam Muhammad Abbasi, Director, Islamic banking, State Bank of Pakistan

ON TRACK FOR PROJECTED GROWTH Ghulam Muhammad Abbasi, Director, Islamic Banking, State Bank of Pakistan

A CPI Financial Publication

PLUS:

page 3-4 contents97.indd 1

TECH:

Analytics for Africa

SUKUK:

A record quarter

TAKAFUL:

Overcoming challenges

23/05/2016 15:17

Remember When no Filters Were Needed?

CAMERA / 1971– 2002

THE FUTURE IS HERE FASTER THAN YOU THINK. Plan ahead with Sanadi, an innovative new savings plan, combined with protection, by National Bonds.

600522279 sms “Sanadi” to 4248 www.sanadi.nationalbonds.ae

bleed guide.indd 1

24/05/2016 11:34

CONTENTS

ISSUE 97

REGULAR SECTIONS

EDITOR'S LETTER

Greetings all,

elcome to our latest issue of Islamic Business & Finance. Last issue, you heard from both a leading CEO and read our overview of Islamic finance in Pakistan. As you’ve seen on the cover, this issue, we managed to speak with someone very special from Pakistan’s central bank— Ghulam Muhammad Abbasi, the director of Islamic Banking for the State Bank of Pakistan. He offers exclusive updates on Islamic finance’s progress in the state, and provides some insight that you can’t afford to miss. Further in the issue, you will find more leaders. The Governor of the Central Bank of Djibouti talks about Islamic finance’s importance to the country, and the head of the DIEDC offers his thoughts on the state of the Takaful industry. Thought leadership at its best! We at Islamic Business & Finance are so glad to speak with the key decision makers in the Islamic finance world, and we look forward to bringing you more with each subsequent issue. Until next time,

William Mullally

OPINION

WHAT’S HOLDING US BACK?

COVER INTERVIEW

10 ON TRACK FOR PROJECTED GROWTH Ghulam Muhammad Abbasi, Director, Islamic Banking, State Bank of Pakistan

SUKUK

38 A RECORD FIRST QUARTER FOR SUKUK

TAKAFUL

42 ISLAMIC ECONOMY NEEDS TAKAFUL

44 OVERCOMING TAKAFUL’S CHALLENGES

DIARY AND MARKET WATCH

6 7

DATES FOR YOUR DIARY MARKET WATCH

Log on to www.islamicbusinessandfinance.com for news, polls, events, analysis, blogs, features, commentary and more.

www.islamicbusinessandfinance.com

page 3-4 contents97.indd 3

ISSUE 97 | Islamic Business & Finance

26/05/2016 15:27

CONTENTS

CHAIRMAN

SALEH AL AKRABI CHIEF EXECUTIVE OFFICER

MANAGING EDITOR

ROBIN AMLÔT robin@cpifinancial.net Tel: +971 4 391 4681

GEORGINA ENZER georgina@cpifinancial.net Tel: +971 4 391 3728

EDITORIAL

sales@cpifinancial.net

EDITORS

SALES DIRECTOR

SARAH OWERMOHLE sarah@cpifinancial.net Tel: +971 4 375 2527

OMER HUSSAIN omer@cpifinancial.net Tel: +971 4 391 5419

JESSICA COMBES jessica@cpifinancial.net Tel: +971 4 364 2024

BUSINESS DEVELOPMENT MANAGERS

NABILAH ANNUAR nabilah.annuar@cpifinancial.net Tel: +971 4 391 3726 LONDON BUREAU

ISLA MACFARLANE isla@cpifinancial.net Tel: +44 7875 429476

CONTRACT PUBLISHING EDITOR

JON DESPRES jon@cpifinancial.net Tel: +971 4 433 5321

SALES DIRECTOR

DANIEL BATEMAN daniel@cpifinancial.net Tel: +971 4 375 2526 NIKHIL MATHUR nikhil@cpifinancial.net Tel: +971 4 391 3717 MOHAMED MAKSOUD mohamed@cpifinancial.net Tel: +971 4 433 5320

CHIEF DESIGNER

HEAD OF CONTRACT PUBLISHING & BUSINESS DEVELOPMENT

SENIOR DESIGNER

FLORANTE MAGSAKAY florante@cpifinancial.net Tel: +971 4 391 3724

VINOD THANGOOR vinod@cpifinancial.net Tel: +971 4 391 3725 EVENTS MANAGER

CREATIVE DESIGNER

NATALIA KAILA natalia.kaila@cpifinancial.net Tel: +971 4 365 4538

ONLINE EDITOR

UMAIR AHMED KHAN, ACA umair@cpifinancial.net Tel: +971 4 391 3727

ONLINE CONTENT MANAGER

NADINE ABOUZEID nadine@cpifinancial.net Tel: +971 4 433 5322

ANA MAKSIĆ ana@cpifinancial.net Tel: +971 4 391 3723

MATT AMLÔT matt@cpifinancial.net Tel: +971 4 391 3716 SIYA PAINAYIL siya@cpifinancial.net Tel: +971 4 391 3722

NAPOLEON ESTAMPADOR nap@cpifinancial.net Tel: +971 4 391 4680

SARAH SPENDIFF sarah.spendiff@cpifinancial.net Tel: +971 4 391 3729

BUENAVENTURA R. JALUAG, JR. jun@cpifinancial.net Tel: +971 4 391 3719

FEATURES

ADVERTISING

editorial@cpifinancial.net Islamic Business & Finance WILLIAM MULLALLY william@cpifinancial.net Tel: +971 4 391 3718

ISSUE 97

FINANCE MANAGER

DATA ANALYST

CONTRIBUTORS

ALAN CHUA, AZADEH MESKARIAN, ABDULLA MOHAMMED AL AWAR, BLAKE GOUD

ADMINISTRATION & SUBSCRIPTIONS

enquiries@cpifinancial.net Tel: +971 4 391 4682 Tel: +971 4 391 3709

COUNTRY FOCUS: INDONESIA

HALAL BUSINESS

16 ON THE UPSWING 17 DUBAI ISLAMIC BANK’S

32 DUBAI TO BECOME HALAL REGULATION HUB

ISLAMIC TECH

ACTIVITY IN INDONESIA

ISLAMIC INVESTMENT

34 TEMENOS

20 SHARI’AH-COMPLIANT

THE INSIDE STORY

CROWDFUNDING IN THE MIDDLE EAST

46 ‘ROI...WITH A CLEAR CONSCIENCE’

SPECIAL FEATURE

PRODUCT WATCH

24 CIBAFI SECRETARY GENERAL 28 DJIBOUTI CENTRAL BANK

50 MOBILE DURING RAMADAN

GOVERNOR

31 CONFIDENCE GROWING IN ISLAMIC FINANCE

Get the next issue of Islamic Business & Finance before it is published. Full details at www.islamicbusinessandfinance.com ISSUE 97 Dubai Technology

and Media Free

Zone Authority

Dubai Technology and Media Free Zone Authority

CPI FINANCIAL FZ LLC P.O. Box 502491, Dubai Media City, Dubai, UAE Fax: +971 4 390 9576

R I TAT THE AUTHO

ISSUE 95

ISSUE 96

ISSUE 97 Abbasi, Director, Islamic banking, State Bank of Pakistan

INSPIRED Emirates Islamic CEO Jamal Bin Ghalaita

PLUS:

bleed guide.indd 1

Islamic Business & Finance | ISSUE 97

page 3-4 contents97.indd 4

A CPI Financial Publication

PLUS:

TECH:

Analytics for Africa

SUKUK:

A record quarter

TECH:

Bringing Islamic finance to the cloud

SUKUK:

2016’s expected issuance

A CPI Financial Publication

Abbasi, Ghulam Muhammad State Bank of Pakistan

Islamic finance in Pakistan looks to continue its upward trajectory

TO INNOVATE A CPI Financial Publication

FOR TH Banking, GROWDirector, Islamic

ENSURING SUSTAINABLE GROWTH

INSPIRED TO INNOVATE Emirates Islamic CEO Jamal Bin Ghalaita

Muhammad GROWTH Ghulam

ACK TREC ON PR OJ TED

ENSURING SUSTAINABLE GROWTH Islamic finance in Pakistan looks to continue its upward trajectory

ON TRACK FOR PROJECTED

PRINTED BY United Printing & Publishing – Abu Dhabi, UAE

@IBFMag on Twitter for stories as they're being told

ISSUE 95

T H E A U T H O R I TAT I V E V O I C E O F I S L A M I C F I N A N C E

www.cpifinancial.net Registered at the Dubai Media City

Dubai Technology and Media Free Zone Authority

ISSUE 96

FINANCE OF ISLAMIC IVE VOICE

TAKAFUL:

Bolstered by sovereign issuance

12/04/2016 17:56

PLUS:

page 3-4 contents95.indd 1

AWARDS:

The Islamic Business & Finance Awards Asia

SUKUK:

Cote D’Ivoire’s first launch

TAKAFUL:

The road forward

18/02/2016 13:16

TAKAFUL:challenges Overcoming

www.islamicbusinessandfinance.com

26/05/2016 15:27

bleed guide.indd 1

23/05/2016 08:57

DATES FOR YOUR DIARY

06 June-07 July 2016

14-15 October 2016

(Jorge Salcedo/SHUTTERSTOCK)

HARVARD UNIVERSITY MUSLIM ALUMNI ISLAMIC FINANCE CONFERENCE

(clicksahead/SHUTTERSTOCK)

RAMADAN

This conference aims to unite thought leaders, practitioners, scholars and students in a dialogue to assess the role that Islamic finance can play in realising the sustainable development goals adopted by the United Nations in 2015.

On behalf of everyone at Islamic Business & Finance and CPI Financial, we would like to wish you and your families well during the holy month of Ramadan.

Venue: Harvard University, Cambridge, MA, US www.harvard.edu

02-04 Aug 2016

05-07 Dec 2016

(saiko3p/SHUTTERSTOCK)

WORLD ISLAMIC ECONOMIC FORUM

Now in its 12th edition, WIEF this year will follow the theme "Decentralising Growth, Empowering Future Business", focusing on topics which include infrastructure investments, Islamic finance, SME financing, innovative technology, and more. Venue: Jakarta Convention Centre, Indonesia www.wief.org

Islamic Business & Finance | ISSUE 97

page 6 Diary97.indd 6

(Dr Ajay Kumar Singh/SHUTTERSTOCK)

WIBC 2016

Now reaching its 23rd year, the World Islamic Banking Conference (WIBC) continues to be a key date on the yearly map for Islamic financial professionals worldwide, bringing together those from across the Islamic economy to discuss the most important issues of the day as well as making landmark agreements and announcements. It will be run in strategic partnership with the Central Bank of Bahrain. Venue: Gulf Hotel, Bahrain www.WIBC2016.com

www.islamicbusinessandfinance.com

24/05/2016 17:06

MARKET WATCH

OUTSTANDING SUKUK MAP OUTSTANDING SUKUK MAP

THE SIZE OF THE OUTSTANDING SUKUK MARKET GLOBALLY AS OF 11 MAY 2016

The size of the outstanding Sukuk market globally as of 11 May 2016

SOURCE: Zawya Islamic

OPEN SUKUK IN MAY 2016 STATUS

ISSUER NAME

SUKUK NAME

SUKUK STRUCTURE

COUNTRY

CURRENCY

SUBSC. DATE

ISSUE SIZE ($M)

MARGIN

TENOR

ARRANGER/ADVISOR

Announced

Cahya Mata Sarawak Bhd

Cahya Mata Sarawak Sukuk Ijarah Program

Ijarah

Malaysia

MYR

Announced

Ministere des Finances - Tunisie

Tunisia Sukuk

Unknown

Tunisia

TND

20-Oct-16

495.786

Announced

Saudi Arabian Airlines

Saudi Arabian Airlines 2016 Sukuk

Unknown

Saudi Arabia

SAR

14-Jul-16

1,333.30

HSBC Saudi Arabia Limited

Announced

DSI Perpetual Sukuk Limited

Drake & Scull International Sukuk II

ModarabahMurabaha

UAE

USD

10-Jul-16

150

Al Hilal Bank PJSC, Emirates NBD Capital Limited, HSBC Bank Middle East Limited, Standard Chartered Bank

Announced

Bank AlBilad

Bank Albilad Sukuk

Unknown

Saudi Arabia

SAR

16-Jun-16

266.66

Announced

Ezdan Holding Group Q.S.C.

Ezdan Sukuk

Unknown

Qatar

USD

26-May-16

500

5 Years

Barwa Bank Q.S.C., Emirates NBD Capital Limited, HSBC Bank, Mashreq Bank PSC

Announced

International Islamic Liquidity Management Corporation

IILM Short Term Sukuk(Tranche 25)

Wakala

Malaysia

USD

18May16 to 24May16

1,340

3 Months

Abu Dhabi Islamic Bank PJSC, Albaraka Turk Katilim Bankasi A.S., CIMB Investment Bank Berhad, Kuwait Finance House K.S.C.P., Maybank Investment Bank Berhad, National Bank of Abu Dhabi PJSC, Qatar National Bank S.A.Q., Standard Chartered Bank

Announced

Saudi Arabian Oil Company

Aramco 2016 Sukuk

Unknown

Saudi Arabia

SAR

13-May-16

SOURCE: Zawya Islamic

www.islamicbusinessandfinance.com

page 7 Market Watch97.indd 7

ISSUE 97 | Islamic Business & Finance

23/05/2016 15:18

OPINION

What’s holding us back? I

slamic finance seems to have more visibility these days than ever before. The industry continues to grow even as the world struggles through myriad challenges. Sukuk issuance, after a slower than expected 2015, has rocketed back up in 2016, at record rates (as described in more detail later in this very issue). But in the many discussions I have, it is clear that there are still things holding back participation in Islamic finance. But what are they? When I sat down with Abdelilah Belatik, Secretary General of CIBAFI at their first Global Forum in Bahrain recently, we discussed this issue as well (read more on page 24). But rather than ask you all one at a time, we took to our website’s poll section, which you should visit at CPIFinancial.net if you have not already, to pose this question. So, in your views, what is holding back participation? The most popular response is something that shouldn’t surprise you: awareness issues. Thirtysix per cent of you listed awareness as the biggest issue affecting participation. This is something that industry is keenly aware of, as you know, and bodies like CIBAFI and the DIEDC (also featured in this issue) dedicate a large chunk of their activities to increasing awareness. But what kind of awareness is most effective? CIBAFI’s Belatik, for one, believes that people need to be aware of the link between Islamic finance and responsible finance, as ethical investment has become a trend beyond the Islamic world. Almost 27 per cent of our website readers selected lack of global Shari’ah harmonisation. This is another refrain we have spoken on time and time again, but also something that the industry is working diligently on. At every conference I go to from the Middle East to Southeast Asia to Africa and beyond, this is a top priority, and something we get closer to year after year. Only 17 per cent said that insufficient product innovation was what was holding participation back, and I might be inclined to disagree with you. In many markets, it is product innovation

Islamic Business & Finance | ISSUE 97

page 6 Opinion97.indd 8

that has driven new customers to Islamic finance. True innovation can often be the hardest part of the process to make time for, but that doesn’t mean that a truly differentiated product line is what is going to really set Islamic finance apart from its conventional competition. Two choices, ‘ease and availability’ and ‘branding’, issues we’ve spoken about at length in this magazine, came in at nearly five per cent each, which didn’t reach, even combined, the 11 per cent of you that chose ‘other’. I’m not sure why we include that, honestly, because it’s always a mystery to me what you might have meant. Please shoot me an email if you’d like to expound!

William Mullally

Editor

www.islamicbusinessandfinance.com

23/05/2016 15:18

ICD.indd 1

19/05/2016 09:06

COVER INTERVIEW

ON TRACK

FOR PROJECTED GROWTH

IN AN EXCLUSIVE INTERVIEW, GHULAM MUHAMMAD ABBASI, DIRECTOR, ISLAMIC BANKING, STATE BANK OF PAKISTAN, TELLS IB&F THAT ISLAMIC BANKING IN PAKISTAN IS SET TO REACH ITS PROJECTED MARKET SHARE OF 15 PER CENT BY 2018

Islamic Business & Finance | ISSUE 97

page 10-14 Cover Interview 97.indd 10

www.islamicbusinessandfinance.com

26/05/2016 14:31

COVER INTERVIEW

hat is the current market share for Islamic banking in Pakistan?

The Islamic banking industry in Pakistan has shown significant growth since its re-launch in 2002. As of December 2015, it constitutes 11.4 per cent share in assets of overall banking industry of the country while in terms of deposits its share is 13.2 per cent.

How much growth has Islamic finance experienced in Pakistan in the last two years? The Islamic banking industry continued its growth trend over the last two years as reflected by considerable growth in its assets and deposits; assets of the Islamic banking industry increased from PKR 1.014 trillion in December 2013 to PKR 1.610 trillion in December 2015 depicting growth of 58.8 per cent during the last two years. Similarly deposits of the Islamic banking industry grew by 58.4 per cent in the last two years increasing from PKR 868 billion in December 2013 to PKR 1.375 trillion in December 2015. This growth can be linked with the expansion of the industry as over the said period the branch network has expanded from 1,304 in December 2013 to 2,075 in December 2015 exceeding the target given in the second strategic plan for Islamic banking industry.

(Ramillah/SHUTTERSTOCK)

How many Islamic banks are there now and do you expect more to open? At present, 22 Islamic banking institutions (IBIs) (five full-fledged Islamic banks, one Islamic banking subsidiary and 16 conventional banks having standalone Islamic banking branches) are operating in the country with a network of above 2,000 branches. During the last year, two major mergers and acquisitions have taken place; Bank Islami Pakistan Limited acquired and converted operations of ex-KASB Bank Limited and Meezan Bank Limited acquired and converted HSBC Omanâ&#x20AC;&#x2122;s (S.A.O.G) Pakistani branches. Regarding the opening of new Islamic

Islamic banking in Pakistan has reached 11.4 per cent of overall banking assets.

cont. overleaf

www.islamicbusinessandfinance.com

page 10-14 Cover Interview 97.indd 11

ISSUE 97 | Islamic Business & Finance

26/05/2016 14:31

COVER INTERVIEW

Ghulam Muhammad Abbasi,Director, Islamic Banking, State Bank of Pakistan

Islamic Business & Finance | ISSUE 97

page 10-14 Cover Interview 97.indd 12

www.islamicbusinessandfinance.com

26/05/2016 14:31

COVER INTERVIEW

cont. from pg 11

banks, two conventional banks that have Islamic banking divisions have shown inclination towards conversion into full-fledged Islamic banks, while two more banks that have Islamic banking divisions are interested in establishing Islamic banking subsidiaries.

Since the launch of your 2014-2018 strategic plan, what have you accomplished? SBP in consultation with all key stakeholders developed the second1 five year strategic plan (2014-18) for the Islamic banking industry in Pakistan. This strategic plan builds upon the major strengths of industry, identifies key issues and weaknesses in the policy environment and gives strategies and action plans to address/ resolve these issues and challenges. Since the launch of Strategic Plan 2014-2018, the Islamic banking industry has shown progress on various fronts; recent significant achievements in this regard include (i) the downward revision of initial paid up capital requirement for Islamic banking subsidiaries from PKR 10 billion to PKR 6 billion; subsequently an Islamic banking subsidiary of a conventional bank has started its operations (ii) operationalisation of Shari’ah compliant open market operation (OMO) to a provide level playing field for Islamic banking industry for liquidity management (iii) issuance of Shari’ah governance framework for strengthening the Shari’ah compliance on part of Islamic banking institutions and (iv) issuance of survey-based study on Islamic banking as well as Knowledge, Attitude and Practises (KAP) of Islamic banking in Pakistan.

What are the key challenges that Islamic finance in Pakistan is currently facing?

¹ The first five year strategic plan was issued for 2007-2012.

Islamic finance internationally, as well domestically, is one among the fastest growing sectors. Despite this growth trend, Islamic finance is confronted with some major challenges. Research shows that the real potential for Islamic finance lies in greenfield growth, however, the Islamic banking business is still concentrated in corporate and traditional sectors due to factors such as lack of trained and skilled staff, low economies of scale, lack of awareness amongst the masses for the current paradigm of Islamic banking, limited liquidity management instruments and limited research and development.

These are each factors affecting the growth trajectory of Islamic banking in Pakistan.

What opportunities are there currently for Islamic banks in Pakistan, and what are you pursuing? Having a more than 95 per cent Muslim population and high financial exclusion levels in the country, there are ample opportunities for the Islamic banking industry in Pakistan to capitalise upon. In this regard, agriculture and small and medium enterprise (SME) are sectors of paramount importance in terms of their contribution to GDP, employment generation and overall development of the country. Islamic finance can contribute more effectively towards economic growth of the country by encouraging projects in said sectors on the basis of their merit and feasibility. SBP is therefore persuading the industry to increase financing to these areas and has recently given indicative targets to the banking industry inclusive of Islamic banks for these areas.

What is the central bank currently doing to support Islamic finance in Pakistan? Since the re-launch of Islamic banking in 2002, SBP has accepted the dual responsibility of regulator as well as facilitator of the Islamic banking industry and has played a critical role for the development and promotion of Islamic banking in the country. As a regulator, SBP has been working towards providing an enabling legal, regulatory and supervisory environment. In this regard, efforts towards providing liquidity management solutions for the Islamic banking industry, and help in establishing of three centres of excellence for Islamic banking and finance education are worth mentioning. As a facilitator, SBP in collaboration with the industry has issued the five year strategic plan for the Islamic banking industry (2014-2018) which provides a direction and roadmap for the industry to sustain its growth momentum. SBP is also actively engaged in capacity building of the industry through various promotion and training programmes. In this regard, SBP has been conducting targeted seminars, conferences, and workshops across the country along with extending support and collaboration to many local and international organisations for such programmes. cont. overleaf

www.islamicbusinessandfinance.com

page 10-14 Cover Interview 97.indd 13

ISSUE 97 | Islamic Business & Finance

26/05/2016 14:31

COVER INTERVIEW

(Thomas Kauroff/SHUTTERSTOCK)

The foundation of new Islamic banks is a very real possibility for Pakistan in the near future.

cont. from pg 13

What kind of market share do you envision in the future for Islamic banking in Pakistan? The Islamic banking industry has maintained impressive growth over the last decade and a strong demand for Islamic banking services prevails in the country as depicted in the findings of our recent survey-based Knowledge, Attitude and Practises (KAP) of Islamic Banking in Pakistan study. According to KAP results, there prevails an overwhelming demand for Islamic banking in Pakistan for both the

Islamic Business & Finance | ISSUE 97

page 10-14 Cover Interview 97.indd 14

retail (95 per cent) and corporate sectors (73 per cent). With a more than 95 per cent Muslim population in the country, as well as the resolve of the present Government for promoting Islamic finance and proactive approach of the central bank, we believe that the expansionary trend of Islamic banking is likely to continue and the industry is well set to increase its market share to 15 per cent by 2018 as targeted in the strategic plan for Islamic banking industry (2014-18).

www.islamicbusinessandfinance.com

26/05/2016 14:31

THE BUSINESS OF BANKING Banker Middle East is the MENA region’s most prestigious financial title. Read by senior bankers & financiers across the Middle East, for more than a decade it has been the most informative source of news, developments and strategic thought from within the financial community.

Banker Middle East is a controlled circulation publication. You may apply to subscribe via our website or by emailing subscriptions@cpifinancial.net

CPI Financial FZ LLC • PO Box 502491 Al Shatha Tower, Office 1209 Dubai Media City, Dubai, U.A.E. Tel: +971 (0) 4 391 4681 • Fax: +971 (0) 4 390 9576 • www.cpifinancial.net BME_ June 2016.indd 1

23/05/2016 14:58

COUNTRY FOCUS INDONESIA

On the upswing WITH GROWTH AT AROUND 30 PER CENT A YEAR, ISLAMIC FINANCE IN INDONESIA CONTINUES ITS UPWARD TRAJECTORY

he rest of the world, take note: Indonesia’s Islamic finance industry is growing. From 2010 to 2014, Islamic banking assets grew from $8 billion to $22.3 billion, a compound annual growth rate (CAGR) of 29.2 per cent. According to the Financial Services Authority of Indonesia, (OKJ), there are a number of Islamic institutions both big and small. Muliaman D. Hadad, Head of the OJK’s Board of Commissioners, has said that, as of first quarter of 2015, the Islamic banking industry of Indonesia included 12 general Shari’ah banks that service 2,138 branches, 22 Shari’ah departments within conventional banks, and 163 Shari’ah 'people’s credit' banks. As the most populous Muslim country in the world, the importance of Indonesia to the future of Islamic finance is hard to overstate, and, in turn, Islamic finance is important to the future of the state. Bank Indonesia, the central bank of country, has increased its support for Islamic finance in the last eight years. “The enactment of Act no. 21 of 2008 issued on 16 July 2008 has provided a more adequate legal base to the development of Islamic banking in Indonesia, and consequently will accelerate the growth of the industry. With an impressive development progress

reaching an annual average asset growth of more than 65 per cent in the last five years, it is expected that Islamic banking industry will have a more significant role in supporting national economy,” said Bank Indonesia, in its brief on Islamic banking. Bank Indonesia Governor Agus D.W. Martowardojo has also noted his confidence in the industry in 2015. “The global Islamic financial industry is expected to reach the total assets of $2 trillion this year. The industry is growing at about 17.3 per cent compounded average growth rate. It is almost twice as much as the conventional industry has achieved.” Though the path forward is not always clear, Governor Martowardojo is committed to Islamic finance. “Despite the uncertainty faced by the industry, I am confident that the Islamic financial industry could maintain its pace of growth in years to come. There are at least five driving forces to sustain the industrial development including the growth of emerging economies, crossborder financial transactions, innovative Islamic financial products, regulatory advancement driven by more advanced and comprehensive regulator y standards, and continuous growth of Muslim population,” he said. As part of that commitment,

Islamic Business & Finance | ISSUE 97

page 16 Country Focus-Indonesia_97.indd 16

Bank Indonesia has continued to follow its Blueprint of Islamic Banking Development in Indonesia, which it published in 2002. Their vision for the future of Islamic banking is a modern and universal one. “The Islamic banking system envisioned by Bank Indonesia is a modern Islamic banking with open and universal characteristics and inclusive to all Indonesian people with no exception. It refers to banking system presenting applicative forms of Islamic economic concept that is wisely formulated in the current context of problems faced by Indonesia within the consciousness of the historical socio-cultural condition of this country. Only by doing that, the aspiration development of Islamic banking will always be recognised and accepted by all Indonesian people as a part of the solutions to the various problems encountered by this country,” said Bank Indonesia. For now, Bank Indonesia is focused on developing Islamic finance domestically.“In the short term, the phase of Islamic banking development is more directed toward servicing the huge potential of domestic market. In other words, Indonesian Islamic banking must be able to become a domestic player with international quality in services and performance,” said Bank Indonesia.

www.islamicbusinessandfinance.com

24/05/2016 17:19

COUNTRY FOCUS INDONESIA

Inside DIBâ&#x20AC;&#x2122;s move into Indonesia DUBAI ISLAMIC BANK (DIB) COMPLETED ITS INVESTMENT INTO PANIN DUBAI SYARIAH BANK IN DECEMBER 2015. ADNAN CHILWAN, CEO, DIB, SPOKE WITH IB&F TO GIVE INSIGHT INTO THE BANK'S INDONESIA STRATEGY

Adnan Chilwan, CEO, Dubai Islamic Bank

hy d i d D I B p r i o r i t i s e t h e Indonesian market?

It is a well-known fact that Indonesia has the largest Muslim population of any country in the world. During the last five years, the economy has shown healthy progress with GDP growing at a CAGR of almost 5.5 per cent year on year. This has contributed to higher disposable income and consequently, greater wealth creation in the country. What is even more attractive for players like us is the fact that this growth has

largely emanated from local demand and as such, has seen less volatility, despite swings in the global economic landscape. This consistent and sustained growth has yielded a fast developing middle class in Indonesia which in turn, is driving the demand for more products and services with a greater degree of refinement and diversity in the banking sector. Given the current rate of evolution, it is expected that by 2030, Indonesia will rank amongst the top five economies in the world. In light of the above, combined with a low cont. overleaf

www.islamicbusinessandfinance.com

page 17-19 Country Focus-Indonesia_97.indd 17

ISSUE 97 | Islamic Business & Finance

29/05/2016 08:47

COUNTRY FOCUS INDONESIA

cont. from pg 17

banking penetration of around 40 per cent, we believe that Indonesia ranks as one of the most attractive investment destinations in the world for Islamic banks.

What kind of growth do you expect there? Total banking assets in Indonesia have been growing at around 15-17 per cent over the last five years. In contrast, but similar to other key markets, Islamic banking assets have grown at twice that rate. Despite this tremendous rise, Islamic banking assets still constitute less than six per cent of the total banking assets, which we as a pioneer of the concept, and as a leading Islamic bank, view as a massive and extremely attractive opportunity. You are aware that DIB has been instrumental in creating opportunities which go beyond the typical Islamic niche as seen from our successful business model in the UAE. We intend to approach the Indonesian market with the exact same strategy targeting the entire bankable population

Islamic Business & Finance | ISSUE 97

page 17-19 Country Focus-Indonesia_97.indd 18

of consumer and wholesale. It is also important to note that as GDP growth continues and disposable incomes grow, demand for Islamic banking assets from a predominantly Muslim population will also expand, thereby opening more opportunities for Shariâ&#x20AC;&#x2122;ah banks in Indonesia.

Indonesia has shown healthy growth in Islamic finance in recent years.

How has Islamic finance performed in the market since that investment was made? DIB completed its investment in Panin Dubai Syariah Bank in December 2015. Since then, we have been involved in finalising corporate and other regulatory formalities and drawing up upgradation and restructuring plans. Our aim is to start the actual work of upgrading the banking platform soon, but this process will run concurrently with business as usual and we expect no disruption for our customers. Generally, in Indonesia, Islamic banking growth has somewhat lagged behind when compared to the sectorâ&#x20AC;&#x2122;s growth in other key

www.islamicbusinessandfinance.com

23/05/2016 15:20

COUNTRY FOCUS INDONESIA

markets around the world. This is largely motivated by supply factors as incumbent Shari’ah banks in Indonesia have failed to upgrade their product and service propositions to levels that provide a competitive alternative to conventional banking. We are confident that given our very sophisticated offerings suite in the UAE, we shall be able to introduce cutting edge products and services via a plethora of convenient and quality distribution channels, with the aim to achieve similar growth levels as seen elsewhere.

What are the key challenges in that market? To me, the most obvious challenge is one which is very common in many key Islamic markets around the world—the general acceptance that Islamic banks are for the Islamic niche client segments only. This, I see as the main contributing factor behind the supply side issues for competitive offerings as I mentioned earlier. I strongly believe

Our aim is to start the actual work of upgrading the banking platform soon, but this process will run concurrently with business as usual and we expect no disruption for our customers. ADNAN CHILWAN, CEO, Dubai Islamic Bank

that the DIB’s extensive product knowledge and Islamic banking expertise will address this gap via not just deepening and strengthening the expertise base, but also opening up new customers previously not banked by Shari’ahcompliant financial institutions. Whist financial performance is an obvious key metric, we see ourselves as promoters, educators, innovators and effectively the catalyst for the advancement of Islamic banking and finance in Indonesia with the aim of making the concept a norm rather than an alternative to the conventional counterpart.

What are the bank’s assets and market share? Panin Dubai Syariah Bank’s assets as of 31 December 2015 are IDR 7.1 trillion, equivalent to $500 million. Currently, the bank’s market share stands at 2.41 per cent of the Shari’ah banking industry and 0.12 per cent of the total banking sector assets. Given that in Dubai, we have more than a seven per cent share of the overall banking

www.islamicbusinessandfinance.com

page 17-19 Country Focus-Indonesia_97.indd 19

sector and around a third of the Islamic banking segment, we view the Indonesian business as an exciting opportunity with strong potential for further growth as we penetrate and deepen our relationship in this already fast growing economy.

What have been Bank Panin Syariah key recent milestones? Panin Dubai Syariah Bank, supported by Panin Bank inherent local expertise and market knowledge, for its size and positioning is already making waves in the industry. In 2015, the bank was singled out as the best issuer in the banking sector as well as the best Shari’ah bank in its category. The bank also topped the list for the most efficient full-fledged Islamic bank in its equity class as well as the most efficient Islamic bank in its asset class. Simultaneously, in the category of banks with under IDR 10 trillion of assets, Panin Dubai Syariah Bank has been ranked number one in areas of Finance & Value Creation, Corporate Communication, Human Capital, and Good Corporate Governance. We see the basic pillars already in place for a success story and we will use our expertise and inherent strengths to unlock the huge potential that this franchise and the Indonesian market represent in the years to come.

How involved is DIB in Bank Panin Dubai Syariah? As part of the understanding developed with our joint venture partners, Panin Bank, we have a shared responsibility to establish, guide and influence the financial performance and future direction of the bank. DIB’s involvement therefore, pertains to our experience in the field and it is our intention to work actively and extensively with Panin Bank in making Panin Dubai Syariah Bank the most progressive and model Islamic bank in Indonesia in the near future.

Do you still plan to get more involved in the future? As our respective expertise are mutually exclusive, we do not foresee a more extensive influence than what is being enforced today. However, we and Panin Bank will continue to collaborate in the evolution of Panin Dubai Syariah Bank as the bank matures and establishes itself as a meaningful player in the financial services sector. All future development, needless to say, will be done in close consultation with our joint venture partner in Indonesia.

ISSUE 97 | Islamic Business & Finance

25/05/2016 16:17

ISLAMIC INVESTMENT

The scope of Shari’ah-compliant crowdfunding in the Middle East THERE ARE MANY SHARI’AH-COMPLIANT STRUCTURES THAT HAVE THE POTENTIAL TO BE SCULPTED FOR CROWDFUNDING, WRITES TAREK EL-ASSRA, PARTNER IN THE DUBAI OFFICE OF MORGAN LEWIS

he concept of crowdfunding is a recent phenomenon that first came into public consciousness in 2006. The UK Government’s Parliamentary Co m m i s s i o n o n B a n k i n g Standards defines crowdfunding as an online marketplace which “aggregates many investors (often for very small amounts)

to provide funds for investment in a particular project”. It is important to appreciate that the term crowdfunding is flexible and not all crowdfunding is the same. There are currently four main crowdfunding opportunities, where it can be used for providing funds by raising debt, providing funds by raising equity, providing

Islamic Business & Finance | ISSUE 97

page 20-23 Islamic Investment-97.indd 20

funds as a donation or providing funds in return for rewards. The benefits of crowdfunding are numerous. It provides pretty much anybody with accessibility to greater investment opportunities, without having to ‘break the bankʹ to make such investments. It also provides those looking to raise funds

Investment schemes such as crowdfunding have the possibility of opening up Islamic investment to more people than ever before.

www.islamicbusinessandfinance.com

26/05/2016 16:25

ISLAMIC INVESTMENT

to receive financing solutions, such as those in the cultural or creative sector, as they do not have tangible assets and market demand can be unpredictable. Again crowdfunding may provide a lifeline for such businesses. The potential for crowdfunding is therefore very exciting. When US President Barack Obama signed the Jumpstart Our Business Startups Act (the JOBS Act), a law that enables crowdfunding, he said that it’s ‘a potential gamechanger’ for startups. However, the ability of crowdfunding to blossom into a platform that is an integral feature of the global financing eco-system depends on many factors. The regulatory framework will be critical to its development. Most jurisdictions in the Middle East do not have regulations that deal with crowdfunding in the way that it has been regulated in more mature crowdfunding markets, such as in the US by the Securities and Exchange Commission and the JOBS Act, and in the UK by the Financial Conduct Authority and the Financial Services and Markets Act 2000. For the on-going development

of the crowdfunding industry in the Middle East, regulation should be implemented in each country to attract investors and entrepreneurs, including those who require Shari’ahcompliant solutions. The goal should be to have a framework that protects all parties, without over-regulating the sector and potentially deterring investment.

The benefits of crowdfunding are numerous. It provides pretty much anybody with accessibility to greater investment opportunities, without having to 'break the bank' to make such investments. Th e m a i n r i s k i n a ny investment, whether through crowdfunding or more traditional financing methods, is that the investor may lose the money. Defaults on payments by the beneficiary to its investors can be more complicated for crowdfunding when compared with traditional financing methods. Queries that will have to be adequately dealt with

(Umkehrer/SHUTTERSTOCK)

with more options, and if the fund raising is successful, then it can be a good indicator that the beneficiary will be more successful in their market. The more options for raising funds also creates greater competition for traditional banks, and arguably as the crowdfunding industry becomes more sophisticated, it has the potential to be less costly than traditional finance. The use of crowdfunding is not married to any specific industry or sector. It can be an alternative financing solution in many sectors, including for example, small and medium sized enterprises (SMEs), where several Middle Eastern banks have recently reduced their credit lines. There are a number of reasons why some banks have turned their backs on SMEs such as, an increase in defaults, the lack of security that SMEs can typically provide and that many SMEs do not have a track record of performance which then hurts their credit assessments by banks. Crowdfunding may be able to plug that funding gap creeping into the SME market. There are also other businesses which have historically struggled

cont. overleaf

www.islamicbusinessandfinance.com

page 20-23 Islamic Investment-97.indd 21

ISSUE 97 | Islamic Business & Finance

26/05/2016 16:25

ISLAMIC INVESTMENT

cont. from pg 21

will include for example: what collateral can the beneficiary provide, who holds the security in favour of the investors, how the platform and investors decide on enforcing that collateral (who makes the decision), will there be any financial guarantees and how are the costs of enforcement covered? As there is no easy answer, many crowdfunded investments are simply unsecured. Additional structural considerations that require being worked through include determining how the ownership of the loan is transferred between the platform to the individual investors. Questions to consider are whether there is actual lending activity by the platform (which could potentially have further compliance requirements) or does it merely act as a conduit between the investors and the beneficiary, by bringing all parties together in a legal structure that works? Determining how the transfer of the funds occurs, the flow of funds and which accounts are to be used for the investment, will be another key factor to a successful platform.

A crowdfunding platform operator must also have an efficient mechanism to undertake due diligence of the proposed beneficiary, including robust anti-money laundering sign-off and know your customer cheques. Further considerations will include a thorough review of the business model, clarification of the purpose of the proposed investment, a determination of the risks of the business and of the potential of its success. This information will need to be adequately and transparently set out on the platform, along with full details of the beneficiary and an honest assessment of the risks of the investment. There should be no cherry-picking of the information. That way the investors can make an informed decision to avoid having an unrealistic picture of the investment. Blending crowdfunding with Islamic finance is relatively straight-forward. The same

Islamic Business & Finance | ISSUE 97

page 20-23 Islamic Investment-97.indd 22

structuring issues highlighted above would be applicable, plus additional Shari’ah considerations such as having a Shari’ah scholar or board signing-off on the structure and a mechanism to review the Shari’ah compliance of the transactions on an on-going basis. There are many Shari’ahcompliant structures that could be sculpted for crowdfunding including Murabahah, Wakalah, Ijarah, Musharakah and Mudharaba. The documentation used will be different and will ultimately depend on the Shari’ahcompliant structure chosen. There will also be different considerations depending on the relevant Shari’ah-compliant structure used. For example: with the Murabahah structure, it will be necessary to find a

www.islamicbusinessandfinance.com

26/05/2016 16:25

ISLAMIC INVESTMENT

transparent and straight-forward method of implementing the commodity trades. In relation to equity like structures such as the Mudharaba, it may be that if investors are willing to accept a loss, and that they may not get the return that is anticipated, and that the beneficiary accepts that if things go well, the investors will share in the profits and the beneficiary may have to pay a higher profit rate to the investors. If such Mudharaba becomes one of the main Shari’ah-compliant crowdfunding techniques, t h e n S h a r i ’a h - c o m p l i a n t crowdfunding would have the added benefit of helping the whole Islamic finance industry by removing the shackles of debt based financing and developing into a more mature equity based

model, which is the preference of so many Shari’ah scholars. There are already some crowdfunding platforms in the Middle East, including a number that provide Shari’ah-compliant solutions. The crowdfunding industry is however, still in its infancy globally, including in the Middle East. Despite this there have been some high-profile fund raisings, such as the famous story of the Caterham racing team in Formula One, who back in 2014 in order to keep the team afloat, managed to raise GBP 2.35 million from crowdfunding so that it could participate in the final race of the year in Abu Dhabi. There was also the huge and successful $20 million raise for Pebble Time smartwatches, that was completed in March 2015 from over 78,000 backers through Kickstarter. These examples highlight the potential of how such alternative source of funding can play an integral part in the global market, including of course, in the Middle East.

www.islamicbusinessandfinance.com

page 20-23 Islamic Investment-97.indd 23

ABOUT THE AUTHOR

Tarek El-Assra is a banking and finance partner with the Dubai office of global law firm Morgan Lewis. He was born in Alexandria, Egypt and was raised in the UK. Tarek’s practice covers conventional and Islamic finance, including infrastructure and projects, general banking and finance, leveraged and acquisition, asset (aircraft and ships), real estate, trade, infrastructure and projects, and restructurings and work-outs. He advises borrowers and lenders and has more than a decade of experience working throughout the Middle East, North Africa, Asia, and Europe, where he has represented a number of major financial institutions, corporates, private equity investors, project sponsors, and family offices. Tarek has been listed in Chambers Global and IFLR1000 as a leading lawyer. In addition, Legal 500 EMEA and Islamic Finance News have recognised him for his service to clients. He studied law at the University of Manchester and at the College of Law in London and is the author of a number of publications.

ISSUE 97 | Islamic Business & Finance

26/05/2016 16:25

SPECIAL FEATURE

A VOICE

FOR ISLAMIC BANKS

Islamic Business & Finance | ISSUE 97

page 24-27 Special Feature-97.indd 24

www.islamicbusinessandfinance.com

23/05/2016 15:21

SPECIAL FEATURE

ON THE SIDELINES OF THE FIRST CIBAFI GLOBAL FORUM, CIBAFI SECRETARY GENERAL ABDELILAH BELATIK SAT DOWN WITH IB&F TO DISCUSS ITS ROLE SPEAKING ON BEHALF OF THE INDUSTRY AND THE PATH TO SUSTAINABLE GROWTH FOR BOTH ISLAMIC BANKS AND THE GLOBAL ECONOMY

(patpitchaya/SHUTTERSTOCK)

www.islamicbusinessandfinance.com

page 24-27 Special Feature-97.indd 25

hat is CIBAFI’s strategy? What are you prioritising? I joined three years ago, moving over from the the Islamic Financial Services Board (IFSB). After that, we had a brainstorming exercise to see what we were doing, its relevance, and whether we were working within the mandate that was outlined to us. We did a lot of consultations with CEOs and had a formal survey on satisfaction and expectations, asking direct questions on what they do and what they would like to see us doing. We got responses from banks from 28 countries, and they gave us a clear understanding of what they would like to see. There was a disconnect between what they expected and what we were actually doing. From there, after many brainstorming sessions, we came up with our strategic plan 2015-2018, which highlighted four strategic objectives. The first which we did not do in the past is on policy and regulatory advocacy. It’s something that is not tangible like a book or event, but it is something that involves working with central banks and other standardisation organisations internationally. We started a series of contacts and activities with the International Monetary Fund (IMF) and the World Bank. We signed a MoU with the World Bank for joint research, and we scheduled joint events with the World Bank as well. We engaged in a dialogue with the IMF on some of their working papers, and engage with the IFSB with some of the standards they issued. Coordinating with our members to get comments on those standards is a key activity for us—someone needs to talk on behalf of the banks on how this will impact

CIBAFI gathers feedback from across the Islamic finance world in order to provide a united voice for regulatory bodies and others.

ISSUE 97 | Islamic Business & Finance

25/05/2016 16:19

SPECIAL FEATURE

the banks. If they talk about it individually, it is not enough, and it will not work. Having a body that can do it very effectively is important. At the moment, within the next few weeks, we are working on comments to provide to the Basel committee on an exposure draft they have issued on operational risk. Again, we facilitate comments from our stakeholders to the relevant bodies. Our members will discuss these matters, and we will send a coordinated paper with these standard setters who are very happy to receive this feedback before the actual implementation of these standards. Second, we do research and publications. In the past, we did reports on emerging markets, Sudan, etc. In November 2015, we launched the Global Islamic Bankers Survey. We wanted to find out formally what the CEOs think. People will say many things about what banks want and do not want, but no one really asked them before. They talk to one, and then say that bank speaks for all banks! So we spoke directly to 83 CEOs from 35 countries, and they gave us challenges for growth, how they see macroeconomic development, what they see in growth potential. That feedback is now driving our work. Third, we are working on awareness and information sharing, through forums, round tables and larger meetings. We recently had a meeting in Jeddah with the directors of investment operations on SME financing, and a similar meeting in Kuala Lumpur. We will continue bringing people together in this manner so that institutions can share their experiences and see what they can learn from each other. Our fourth strategic objective is on professional development. We have various workshops, including executive programmes and more, which we do in coordination with others or by ourselves. These programmes are directed to C-level executives and mid-level staff to gain certifications in certain areas. All of our activities now are driven towards these four objectives. In the feedback that you have gotten from CEOs, do you find that their issues are uniform across the Islamic finance world or do they change depending on the region? We have the same concerns. In our survey, we

Islamic Business & Finance | ISSUE 97

page 24-27 Special Feature-97.indd 26

segregated different groups, such as Southeast Asia, the GCC, Europe, and more. We found that there are some similarities in both challenges and potential. With some, we asked about potential optimism level, and we found that, for instance, in Africa, there is a lot of optimism, but, simultaneously, many challenges. This is understandable. We have growth potential in Africa that exists and gives up optimism, but on the other hand, there are problems in regulation, no infrastructure, low human capital, and other issues. While they see the future as bright, they need help. In more developed or mature markets such as Malaysia, Indonesia and the GCC, we see different problems, more based around customers, and customer perceptions. Banks there are concerned about how to bring the perception of Islamic finance amongst customers to a certain level. Banks want to know how to bring values in to the centre of the conversation, and how to bridge the gaps between responsible investment and Islamic finance, which will probably be attractive to both Muslim and non-Muslim customers. We think that, and this view is shared by many, there are similarities and convergences between the principles of responsible investment and Islamic finance principles. But the premiere discussion has been on the branding. How do we want to brand it? Are we going to continue talking about the Islamicity of the financial transactions, or perhaps to talk about the values that they promote and share? That is what we are trying to do—rethink the values for sustainable growth. We want to talk about this. We might have to work on several fronts. One is to explain. When you speak to customers, they might say that conventional and Islamic finance are the same. But there are differences— in nature and in objectives. We think that we should move away from just saying that is Shari’ah compliant and following those rules, but really presenting the values that are inherent to it. With this, we will appeal to non-Muslims. To be honest, we have seen examples of this. Some fund managers that we know are Shari’ah compliant, but in public, they do not even mention this—they say they are

www.islamicbusinessandfinance.com

25/05/2016 16:19

SPECIAL FEATURE

Islamic finance has the tools to move towards an equity-based financing. When we say responsible investment and equitybased financing, we aren’t telling people to forgo profits. Experience has shown that it is profitable. In certain cases, I agree with you, that some customers are more focused on the bottom line in countries where business and ethics do not much mix. But profits are defendable, so Islamic finance is still attractive from purely when one is worried about returns. Profits are, in many cases, either the same or higher, with the Islamic financial model. Customers often say that they will use Islamic finance if it is cheaper or equal, not if it is more expensive. This isn’t true everywhere, but in some markets, this is the case. In Malaysia, over 50 per cent of customers are non-Muslim, but they aren’t using Islamic finance because it’s cheaper—it’s often because they were attracted to certain products. It is proven that innovative products are a great way to attract customers to Islamic finance. Islamic banks can leverage on innovative products, but development is probably one of the most challenging problems that came across all sectors. Product development and innovation is a challenge which is recognised across every market. responsible investments. They do this, because, by and large, those are the same thing. Of course there are levels, not everything that responsible investors do is acceptable under Shari’ah, but this is a front which we should look into more. Do you t h i n k c u st o me r s a re r e al l y attracted to values, or is it more about the bottom line? I do not think that everyone is attracted to these values, but there is a movement globally towards such. Beyond that, it’s not just about responsible investment. Many across various economies are talking about equity financing more and more. Economists today will not tell you that they prefer a debt-based economy to an equity-based economy. The problem is we do not see a way to move away from the deb-based economy because we are so entrenched in it, even though it is not efficient. We see that we have to move towards equity-based financing, but we do not know how to move away.

www.islamicbusinessandfinance.com

page 24-27 Special Feature-97.indd 27

Abdelilah Belatik, Secretary General, CIBAFI

So what is the best path forward for product development? From our level, we can create awareness and run workshops on product development. We have done this, and it was very successful when we conducted these workshops. But when we speak to CEOs, they are very concerned about innovation. People just work on their daily routines—making time for innovation is difficult. Do you believe the best choice for the global economy is to follow the tenants of Islamic finance? The value for the development of Islamic finance is by going back to the values which Islamic banks promote. The values that are inherent to the business model of Islamic banks converge with the values that are advocated by others as responsible investment, and so if you work towards these goals, you will ensure sustainable growth.

ISSUE 97 | Islamic Business & Finance

23/05/2016 15:21

SPECIAL FEATURE

A PERFECT

MATCH SMES ARE VITAL TO GROWTH AND ISLAMIC FINANCE IS IDEAL FOR SMES, WRITES AHMED OSMAN, GOVERNOR OF THE CENTRAL BANK OF THE REPUBLIC OF DJIBOUTI

Djiboutiâ&#x20AC;&#x2122;s SMEs need Islamic finance and vice versa.

Islamic Business & Finance | ISSUE 97

page 28-30 Special Feature-97.indd 28

www.islamicbusinessandfinance.com

23/05/2016 15:22

SPECIAL FEATURE

jibouti is a small country situated on the Horn of Africa at the strategic crossroads of the Red Sea and the Indian Ocean, close to one of the world’s busiest shipping lanes. It has seen rapid economic growth in the last fifteen years, becoming an international maritime hub. Djibouti’s economy is expected to grow by 6.5 per cent in 2016, mainly due to the many major infrastructure projects currently underway such as a new multipurpose port, two new international airports, a modern electric railway to Ethiopia, as well as luxury hotels, shopping complexes, hospitals and housing across Djibouti. Growth has been driven primarily by the tertiary sector, with transportation and port activities accounting for 69 per cent of economic activity in 2014. However, Djibouti has a flourishing informal sector comprising of small-scale production of goods and services which account for 60 per cent of all business activity in the country. Under the government’s long-term plan, Vision 2035, it will integrate small businesses into its formal, regulated economy and diversify the sources of growth for Djibouti. Islamic finance can play a significant role here by supporting those small enterprises not currently part of the formal economy. It opens additional funding avenues for small businesses by way of new microfinance products, which are key to creating jobs and eradicating poverty. At an Islamic finance conference in Kuwait in

November 2015, IMF Managing Director Christine Lagarde said that Islamic finance holds the promise to foster inclusive growth and support the livelihood and aspirations of the people in Africa and beyond, adding that risk sharing features and the strong link of credit to collateral means that it is well suited for small- and mediumsized enterprises (SMEs). Islamic finance is supported by the Djiboutian people who are increasingly drawn to financial products that conform to their religious beliefs. In early 2012, the government launched a microfinance pilot project backed by the Islamic Djibouti Social Development Agency, encouraging access to an Islamic financing scheme for 10,000 households in the country. SMEs are very important in Djibouti in terms of employment generation, sustainability and economic growth, providing significant opportunities to employ women and young people. Djibouti has a very young population with 44.4 per cent under the age of 20. This poses employment challenges to its growing economy. The Government plans to improve access to Islamic finance together with its five-year development plan to focus on private sectors such as tourism, ICT, fisheries and the manufacturing industries. This approach will benefit small businesses in these sectors and provide more employment opportunities for Djibouti’s youth. Currently, only five per cent of SMEs receive funding from the cont. overleaf

www.islamicbusinessandfinance.com

page 28-30 Special Feature-97.indd 29

ISSUE 97 | Islamic Business & Finance

26/05/2016 14:45

SPECIAL FEATURE

cont. from pg 29

banking sector in Djibouti. In order to create a better business environment for them, banks have started to provide new financing initiatives. For example, in March 2016, Djibouti’s Central Bank and the Ministry of Economy and Finance collaborated with the World Bank and FIRST Initiative for technical assistance to design a Partial Credit Guarantee Fund as part of a broader initiative to lay the foundation for private sector growth. In addition, efforts are being made to connect SME owners to know-how from international i n v e s t o r s . Th e N a t i o n a l Confederation of Djiboutian Employers and the Federation of Djiboutian Corporations actively encourage foreign companies and investors to connect with Djiboutian SMEs, thereby sharing knowledge, creating employment and encouraging the use of locally manufactured goods. Overall, the government of Djibouti is creating an enabling business environment for small enterprises, alongside the establishment of a financial, regulatory framework to account for Islamic finance’s risk and profit sharing model. It is also developing ways to strengthen the creditworthiness of SMEs. Despite its fairly recent arrival in Djibouti, Islamic finance has contributed significantly to the financing of the economy and has a firm foothold in the country’s banking system. Islamic finance is growing fast—at 20 per cent per annum—and has enabled the government, local companies and foreign investors to access new pools of liquidity for infrastructure development. Foreign Shari’ah-compliant institutions have been prominent

in supporting a number of large capital projects. For example, the building of the Doraleh Container Port was facilitated by a $617 million loan backed by the Multilateral Investment Guarantee Agency, which is part of the World Bank, and funded by Dubai Islamic Bank and Standard Chartered. Reinsurance for the deal was covered by the Islamic Corporation for Insurance of Investment and Export Credit. As a Muslim country situated at a commercial crossroads, Djibouti is a strong contender to be the Islamic finance hub for the whole of Africa. Economic growth is strong, averaging five per cent over the past eight years. Furthermore, the Islamic finance sector has grown considerably— three out of ten banks in Djibouti are Islamic with assets over $324.4 million accounting for 17 per cent of total assets in the banking sector. Perhaps most importantly, Djibouti has a world-class regulatory framework providing the right environment for the establishment and success of Islamic banks in Africa. To accelerate the penetration of Islamic finance in Djibouti and in Africa as a whole, the government is cooperating with its African neighbours to offer Islamic finance products, train its people and share successful experiences. Every year Djibouti hosts the Islamic Finance Summit gathering world leaders to exchange expertise in this field. With the support of partners such as the Islamic Financial Services Board, the International Monetary Fund and the Islamic Development Bank, Djibouti is well positioned to capture the opportunities offered by Islamic finance in Africa.

Islamic Business & Finance | ISSUE 97

page 28-30 Special Feature-97.indd 30

As a Muslim country situated at a commercial crossroads, Djibouti is a strong contender to be the Islamic finance hub for the whole of Africa. AHMED OSMAN, Governor of the Central Bank of the Republic of Djibouti

The risk sharing aspect of Islamic finance is suited to SME’s realities, says Ahmed Osman.

www.islamicbusinessandfinance.com

24/05/2016 17:36

SPECIAL FEATURE

GLOBAL CONFIDENCE IN ISLAMIC FINANCE INCREASING ISLAMIC FINANCE IS INCREASINGLY BECOME AN APPEALING ROUTE TO MEETING DEVELOPMENT OBJECTIVES, ACCORDING TO STANDARD & POOR’S RESEARCH

ollowing the widely successful Millennium Development Goals (MDGs) formed in 2000, members of the United Nations drew up 17 new sustainable development goals (SDGs) in September 2015, including 169 measurable targets. These goals build on the targets achieved in poverty reduction, maternal health improvement, access to education and several other fields over the past 15 years. In its latest report, Standard & Poor’s Ratings Services (S&P) said that Islamic finance could contribute to meeting some of these goals. “Islamic finance could play a role—a modest one at least— in meeting some of the SDGs, particularly those that are in line with the core principles of Islamic finance,” Mohamed Damak, Standard & Poor’s Global Head of Islamic Finance, said. “Some Sukuk issues by global multilateral lending institutions over the past few years illustrate this point, although their overall amount remains small compared with multilateral lending institutions’ (MLIs) conventional debt issuance,” Damak continued.

ISLAMIC FINANCE ASSETS VERSUS GDP OF ORGANISATION OF ISLAMIC CONFERENCE (Trillion $) 8 7 6 5 4 3 2 1 0

Percentage of GDP (right scale) (%) 35 30 25 20 15 10 5

2008

2009

2010

2011

2012

2013

2014

2015

OIC–Organisation of Islamic Conference Economies.

“Still, Islamic finance will likely remain a moderate contributor due to the industry’s small size and the issues it has yet to resolve to unlock its global potential.” The report, entitled Islamic Finance Could Aid Modestly in Achieving Sustainable Development Goals, noted that multilateral organisations (MLIs) are increasingly using Shari’ah-compliant products as a method of raising funds. The International Finance Facility for Immunisation (IFFIm) and International Finance Corporation (IFC) have both issued Sukuk in recent years. “Although the oversubscription rates are somewhat lower for these MLIs’ Sukuk than for some

www.islamicbusinessandfinance.com

page 31 Special Feature-97.indd 31

OIC economies' GDP (left scale)

Islamic finance total assets (left Scale)

governments or private sector Sukuk issued over the past few years, we consider that access to the Sukuk market could offer MLIs the opportunity to diversify their funding bases and tap liquidity that is not allowed to go the conventional route,” it said. S&P estimated that the overall investor base with a Shari’ahcompliant appetite is $500 billion worldwide. “In addition, with Basel III deadlines approaching for some Islamic finance core markets and the chronic lack of high quality liquid assets (HQLA) in the industry, we think Sukuk issues by MLIs might attract some interest,” it stated.

SOURCES: International Monetary Fund and Standard & Poor's © Standard & Poor's 2016

ISSUE 97 | Islamic Business & Finance

24/05/2016 17:38

HALAL BUSINESS

(pisaphotography/SHUTTERSTOCK)

Dubai set to become Halal regulation hub ON ITS PATHWAY TO BECOMING THE CENTRE OF THE ISLAMIC ECONOMY, DUBAI HOSTED REPRESENTATIVES OF 10 COUNTRIES TO SIGN AN MOU THAT AIMS TO ESTABLISH THE INTERNATIONAL HALAL ACCREDITATION FORUM IN THE EMIRATE

lobal standardisation of Halal products and services has been an issue discussed across the Islamic world for years. For members of the Islamic economy, as their needs, their industries and public awareness grow, so too has the need for a centralised body that can address that issue. In order to do just that, representatives of 10 countries signed a memorandum of understanding (MoU) in Dubai on 4 May for the establishment of the International Halal

Accreditation Forum (IHAF) to be based in the emirate. The initiative is a joint venture of the by Dubai Islamic Economy Development Centre (DIEDC) and the Emirates Authority for Standardisation & Metrology (ESMA). According to a media statement from the DIEDC, this reinforces the Government’s efforts to shape Dubai into a global reference point in Halal p r o d u c t c e r t i f i c at i o n a n d enabling legislation. Once established, IHAF will aim to regulate the Halal industry

Islamic Business & Finance | ISSUE 97

page 32-33 Halal Business97.indd 32

and introduce an inspection mechanism that safeguards customers’ rights and industry promotions, said the statement. In addition, the accreditation body will attempt to build credibility and confidence in Halal-certified food and nonfood products globally. It will also aim to bolster trade by facilitating trade movement in the Halal industry and increasing cooperation among regional and international organisations. The signatories of the MoU represent different bodies in

Dubai’s initiative will help regulate the Halal industry and introduce inspection mechanism to safeguard customers’ rights.

www.islamicbusinessandfinance.com

24/05/2016 17:40

HALAL BUSINESS

the UAE, Qatar, Spain, the US, Pakistan, Saudi Arabia, Australia, New Zealand, The UK and Egypt. His Excellency Dr Rashid Ahmad bin Fahad, UAE Minister of State and Chairman of the Board of Directors of ESMA, stated the importance of this measure. “Standardisation is key to the Halal value chain. Having unified schemes that ensure the development of necessary specifications, and put in place suitable verification systems are vital to the growth of this industry. Accreditation bodies are crucial to the overall scheme of things in a nascent sector such as the Islamic economy”. “Once established, the International Halal Accreditation Forum will comprise several local and international accreditation bodies as members that will be individually and collectively responsible for the growth of the sector. The primary objective of establishing IHAF is to build and maintain confidence in products carrying Halal certifications and Halal marks worldwide through harmonising conformity assessment practises in the domain. IHAF will also help ratify multilateral recognition agreements between the members. We are confident this is turn will drive the Halal trade within their countries and ultimately on a global level,” said HE Fahad. “Each economic system requires a well-defined structure and culture, agreeable standards and unified references. This is why we consider the agreement to establish the International Halal Accreditation Forum, an essential initiative that contributes to the development of Islamic economy,” said His Excellency

www.islamicbusinessandfinance.com

page 32-33 Halal Business97.indd 33

Mohammed Al Gergawi, Chairman of the DIEDC. “The agreement will facilitate the structured organisation of varied sectors of Islamic economy and the formation of its entities. Furthermore, it will enable the documentation of local and international references and lay down specifications for a unanimously agreed mechanism that will be binding on all participating countries in the Islamic economy space,” he continued. The move furthers Dubai’s initiative towards becoming a capital of the Islamic economy in a tangible way. “Since the launch of the ‘Dubai: Capital of Islamic Economy’ initiative, we have focused our efforts in creating a legitimate international entity that has the power to grant licences to Halal bodies so they may boost the Halal sector and enhance its growth and sustainability. Dubai and the wider UAE have already paved the way for this achievement b y l au n c h i n g i n i t i at i v e s without which we could not have succeeded in globalising Islamic economy and unifying its references and standards,” HE Al Gergawi continued. Gergawi also took time to thank the leader of Dubai. “ We deeply appreciate the wise directives and visionary leadership of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, for supporting our efforts in steadily and noticeably growing our economy—both the regular economy as well as the Islamic economy—to unprecedented global levels. This initiative will establish a unified foundation

for the concept of Halal and Halal production mechanisms—so that we can use it as a benchmark and expand its scope to include even more countries, he said. “The key factor that drove the UAE into prime position in establishing IHAF include the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to shape Dubai as the capital of Islamic economy. The establishment of the Dubai Islamic Economy Development Centre (DIEDC) and the launch of more than 40 initiatives in different sectors of the Islamic economy served as key catalysts in cementing this role,” he continued. Dubai’s history as a trade hub underlines why it is a strategic location for the Islamic economy’s capital. “The country’s policy that supports the globalisation of trade through engagement of all stakeholders, its integrity and transparency in implementing schemes and processes as per international practises to remove technical barriers to trade (TBT), were also crucial. Furthermore, the UAE’s strategic location for trade, vast experience in Islamic economy, quality policy and infrastructure, as well as technical and logistical infrastructure significantly added value to the decision to base the IHAF in Dubai.” Minister Fahad also emphasised that IHAF membership is set to be open to all accreditation bodies for conformity assessment activities that represent their countries in the Halal domain. The establishment of IHAF will be governed by a by-law approved by the IHAF General Assembly during its first meeting.

ISSUE 97 | Islamic Business & Finance

24/05/2016 17:40

(GrandeDuc/SHUTTERSTOCK)

ISLAMIC TECH

Big data and other tech will be a big factor in helping Islamic banks in Africa moving forward.

Embracing analytics key for Islamic banks in Africa 34

Islamic Business & Finance | ISSUE 97

page 34-36 Islamic Tech_02_97.indd 34

www.islamicbusinessandfinance.com

26/05/2016 15:37

ISLAMIC TECH

EVERY INSTITUTION NEEDS SOLID ANALYTICS AND TECHNOLOGY, BUT ISLAMIC BANKING BRINGS SPECIFIC NEEDS AND OPPORTUNITIES TO LEVERAGE DATA, WRITES FADI YAZBECK, PRODUCT MANAGER FOR TEMENOS ISLAMICSUITE

frican banks are starting to realise the huge opportunities that the Islamic finance market offers. Nigeria (which has the largest Muslim population in Sub Saharan Africa) is, for example, trying to establish itself as the African hub for Islamic finance. Why? The significant liquidity available within Islamic finance, largely derived from Middle Eastern investors, presents an ideal source of funding for Africa’s huge infrastructure n e e d s . Th e a s s e t - s h a r i n g structure of transportation, property development and power generation projects are particularly well suited to the asset-sharing financing model of Sukuk. From a retail perspective, the emergence of mobile and agency banking as well as pan-African banking groups, have a great potential to transform the existing business models, improve competition and efficiency, as well as access to finance and support financial inclusion. However, Islamic banking historically has its challenges, and as African banks start to focus on the opportunities, they must also look to address these. According to the EY World Islamic Banking Competitive Report 2016, Islamic banks historically tend to have lower profitability (12 per cent ROE versus 14.5 per cent ROE) and lower cross selling rates (2.1 products per

customer versus 4.9) than conventional banks, while also lagging in customer experience. Another recent EY survey found that only 14 per cent of Islamic banking customers are satisfied with the speed of their bank’s service versus 20 per cent for the conventional banks, and only 11 per cent of the customers happy with the ease of their bank’s processes versus 21 per cent for the conventional banks. The Islamic finance industry has previously struggled in terms of efficiencies and these are starting to be addressed; a recent paper from Temenos, Taking Islamic Banking to the cloud: Turning opportunity into reality, looks at how these efficiencies can be greatly improved, however, Islamic banks must also become more customer- centric and data intensive to profit in this market. But how?

USING INFORMATION TO RETAIN YOUR CUSTOMERS With increasing competition (particularly from new players like M-Pesa), transparent product pricing, account switching made easy, and consumers’ attitude to managing their finances changing, customer loyalty is declining and the number of financial service providers per customer is increasing. Reducing the attrition rate of profitable, or potentially profitable, customers is key to increasing a bank’s balance sheet growth.

Reports such as Leading on the Edge of Chaos, by Emmett C. Murphy & Mark A. Murphy, indicate that a five per cent increase in customer retention can increase business profits by between 25 per cent and 125 per cent. By using predictive analytical models, a bank can increase profitability by focusing on customer attrition. It could determine which customers are profitable and which are not, which customers are at risk of moving or stagnating and which customers are prime for nurturing to make them more profitable. Embedded analytics can then be integrated into front line channels to evaluate the risk and either deter the customer from switching with an incentive or let the customer go according if they are deemed low value. Embedded analytics can also be used as part of a retention plan by enabling a more personal conversation with the customer across all touch-points and channels.

USING DATA TO INCREASE PRODUCT PENETRATION Targeting customers at the right time with the right solutions is crucial to increasing customer penetration (and in turn supporting retention) and of course increasing profit. However, according to the Capgemini report, Big Data Alchemy, only 37 per cent cont. overleaf

www.islamicbusinessandfinance.com

page 34-36 Islamic Tech_02_97.indd 35

ISSUE 97 | Islamic Business & Finance

26/05/2016 15:37

ISLAMIC TECH

cont. from pg 35

of banking customers globally feel their bank understands their needs and preferences. In Africa, where reports estimate that 67 per cent of the population now have a mobile phone, an instant source of rich data can be accessed. With the mobile money market generating over $656 million in revenue in Africa alone, there is a huge opportunity for Islamic banks to use this information to increase profitability. By integrating and blending captured data into analytical models, a bank can identify insights such as channel usage and preference, number and type of products per customer, typical product bundles, buying trends by demographic, and much more—the opportunities are endless. If Islamic banks use this insight to add value for customers and offer them a personalised service, we begin to move into the realm of experiencedriven banking; offering relevant products and services to customers, at the right time and place, via their preferred channel.

FINDING THE COMPLETE PICTURE There is a source within a bank’s infrastructure that contains rich, up-to-date customer information that has already undergone extensive analysis. Anti-money laundering software offers a complete picture to understand customer behaviour over time and across the product line. It should hold all the transactional information on the customer in one record, regardless of how many accounts they have (credit card, current account, savings, etc.). And this transactional information often provides a picture of several days, providing a detailed insight of the customers’ recent behaviour.

In addition, peer grouping and segmentation information is held in FCM software. This presents a significant opportunity to measure and understand trends to support cross-sales. The opportunities are endless when you combine information from several account sources, but with many banks having disparate systems that struggle to talk to each other, the FCM system provides the only holistic view. It is the cleanest unified set of data in a bank. In addition, Islamic banks must include a complete customer enhanced due diligence (CEDD) approach within their FCM systems to ensure full awareness at client level, offering a greater level of detail than is held at current account, savings or credit card account level. And where CEDD is practised an even greater level of data is available.

BIG DATA, BIG DEAL Big data offers huge opportunities for banks and none more so than to Islamic banks. Islamic banking in Africa is set to take off, but to compete banks must be prepared to offer the products their customers need and increase their‘stickiness’ for their customers to stay. There are challenges, however, such as overcoming data silos, storage issues and concerns around security. Sixty-two per cent of banks are cautious due to privacy concerns. For many institutions— and particularly Islamic banks where compliance and security is of utmost importance—the priority is to lock down customer data to ensure that it is not compromised. While the privacy of customers must be maintained, this mindset will limit banks’ ability to leverage data. Despite these challenges, none of them are unsurmountable

Islamic Business & Finance | ISSUE 97

page 34-36 Islamic Tech_02_97.indd 36

by investment in the required technologies, processes and people coupled with a top down commitment to becoming a data driven, customer centric Islamic bank. New providers are already making grounds within the region, using data to succeed. It will not be long until they tap into the Islamic banking market too. African banks must be ready and embrace this rich source of information to profiting from the $2 trillion opportunity that the Islamic market offers.

Compliance technology, important in all banking, is especially key for Islamic institutions, says Fadi Yazbeck.

Big data offers huge opportunities for banks and none more so than to Islamic banks. – FADI YAZBECK, Product Manager for Temenos IslamicSuite

www.islamicbusinessandfinance.com

26/05/2016 15:37

PROTECT • INVEST • ENJOY • PROSPER

Uniquely covering both sides of the luxury lifestyle, WEALTH Arabia is an essential read for the discerning elite of the GCC.

www.cpifinancial.net Wealth W148mm x H210mm.indd 1

23/05/2016 14:22

SUKUK

A record first quarter for Sukuk ISSUANCE OF SUKUK IS UP ALL AROUND THE WORLD, UP ON LAST YEAR, DUE TO CURRENT ECONOMIC FACTORS AND THE GOODWILL FOR THE INSTRUMENT AMONG GLOBAL INVESTORS

Islamic Business & Finance | ISSUE 97

page 38-40 Sukuk-97.indd 38

www.islamicbusinessandfinance.com

23/05/2016 15:25

SUKUK

ICD’s welcoming message on the Nasdaq Tower in Times Square, New York.

he good news on the Sukuk front is continuing. The proportion of Sukuk bond issuance hit a record in the first quarter of 2016 in the main markets for this form of finance, said Fitch Ratings. According to Fitch’s data, there is a clear upwards trend in use of Shari’ah-compliant borrowing as more countries create legal frameworks to support issuance and as issuers try to attract a broader investor base, including Islamic finance investors. Total new Sukuk issuance in the Gulf Cooperation Council, Malaysia, Indonesia, Turkey, Singapore and Pakistan was around $11.1 billion in the first quarter of 2016, with a maturity of 18 months. Issuance was up 22 per cent from the fourth quarter of 2015 and 21 per cent from a year earlier, while non-Sukuk bond issuance of $17.1 billion was down 23 per cent quarter on quarter and 45 per cent year on year. Sukuk represented 39.3 per cent of total bond and Sukuk issuance in these countries during the quarter—the highest proportion in the past eight years.

MALAYSIA DRIVING ISSUANCE Malaysia in specific is a large part of the uptick in issuance. According to RAM Ratings, there has been a 50.5 per cent jump in Malaysian Sukuk issuance to MYR 22.8 billion in the first two months of 2016. In comparison, in the first two months of 2015, Sukuk issuance reached only MYR 15.1 billion. The Malaysian issuance has made a significant contribution to global Sukuk issuance figures. In fact, the top three Sukuk global issuers in February 2016 were all Malaysia-based, according to RAM Ratings, being Danga

Capital Berhad ($2.3 billion), International Islamic Liquidity Management (IILM) ($1.3 billion) and the Government of Malaysia ($1.1 billion). A total of $8.9 billion of global Sukuk was issued in February, which brought yearto-date issuance to $12.3 billion by the end of the month. According to RAM, a total of MYR 14.4 billion of domestic Sukuk was issued in February, leading to a year to date issuance value of MYR 22.8 billion. “Malaysia is holding its ground, with 53.9 per cent of the world’s outstanding Sukuk,” highlights Ruslena Ramli, RAM’s Head of Islamic Finance. Meanwhile, corporate Sukuk issuance in Malaysia also picked up, which made it the largest contributor (69 per cent) of domestic Sukuk issuance, followed by Government Sukuk (31 per cent).

GLOBAL UPTICK Globally, the proportion of Sukuk issuance in five of the last six quarters has now been above the average since the start of 2009, according to Fitch. “We expect Sukuk issuance, both overall and as a proportion of total issuance, to remain relatively strong in the second quarter based on the pipeline of deals and the potential for some governments to issue debt to make up for weak oil revenues. The third quarter is likely to be quieter, due the combination of the summer break and Ramadan. Overall our expectation is for 2016 Sukuk issuance to at least match 2015 issuance,” said Fitch. New Sukuk laws in some countries is expected to support issuance by helping create a standardised structure and i m p r o v i n g t r a n s p a r e n c y, according to Fitch. The most recent country that updated its

Sukuk regulation is Oman, where a new law was published recently which includes requirements to set up a trustee structure and a special purpose vehicle. Oman’s update follows a similar one in another GCC country, as Kuwait updated its rules in 2015. In Kuwait, the lack of a specialised legal framework was as a key factor in the limited issuance in the country for the previous few years, according to Fitch. Sovereigns and supranationals lead issuance in the first quarter of 2016, including $2.5 billion by the Indonesian government and $1.5 billion by the Islamic Development Bank. These types of issuer are likely to remain dominant, but there is also the potential for bank and corporate issuance, especially as bank liquidity has become tighter as oil prices have dropped, according to Fitch. “Given the difficult economic environment, issuers are likely to favour issuing a mix of bonds and Sukuk, or solely Sukuk, rather than solely bonds, as they will not want to exclude part of the market. The Islamic banking sector, for example, is not allowed to invest in traditional bonds, while regional and international investors are increasingly comfortable investing in Sukuk,” said Fitch.

SPOTLIGHT ON DUBAI In Dubai, the total nominal value of Sukuk currently listed has now reached $42.61 billion dollars. According to the ICD, this is “more than the value listed in any other centre globally and reinforcing the Emirates leadership role in the Islamic bond sector.” ICD in specific has underlined its commitment to the fundraising tool. “Using the funds raised by this Sukuk, cont. overleaf

www.islamicbusinessandfinance.com

page 38-40 Sukuk-97.indd 39

ISSUE 97 | Islamic Business & Finance

24/05/2016 17:49

SUKUK

(Alex Mit/SHUTTERSTOCK)

cont. from pg 39

we will further pursue our mission to provide financing and investment for a range of successful private enterprise projects in our member countries. As the international exchange serving the region, Nasdaq Dubai provides us with close links to investors in and beyond the Muslim world as well as global visibility and world class listing infrastructure,” said Khaled Al Aboodi, Chief Executive Officer of ICD. The Emirate of Dubai has also reaffirmed its support for the instrument, with key leaders gathering in Dubai to speak about ICD’s latest issuance. “Dubai is delighted to support the valuable activities of ICD by providing its capital markets infrastructure to host its Sukuk. This listing by a prominent multilateral entity gives further impetus to Dubai’s growth as the global Capital of the Islamic Economy, under the initiative launched by His Highness

Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President and Prime Minster, and Ruler of Dubai,” said HE Essa Kazim, Governor of Dubai International Financial Centre (DIFC), Secretary General of Dubai Islamic Economy Development Centre (DIEDC) and Chairman of DFM. The Sukuk issued by ICD, the private sector arm of the Islamic Development Bank (IDB) Group, listed on 14 April. IDB has seven other Sukuk currently outstanding on Nasdaq Dubai that have listed since 2014, with a total nominal value of $8.05 billion. For Nasdaq Dubai, Sukuk issuance is a key part of their strategy going forward.“The exchange looks forward to welcoming many more Sukuk listings from international and regional public and private sector bodies. As we continue to build critical mass in the Islamic capital markets sector, we will extend the

Islamic Business & Finance | ISSUE 97

page 38-40 Sukuk-97.indd 40

range and scope of the services that we offer to market participants including developing new products and further strengthening our links to investors,” said Abdul Wahed Al Fahim, Chairman of Nasdaq Dubai. “Our growing relationship with the IDB group demonstrates our commitment to serving Shari’ah- compliant issuers wherever they are based, providing visibility and close links with investors. We are also strengthening our ties with issuers around the world that are new entrants to the Islamic capital markets and will benefit from a relationship with the world’s leading Sukuk exchange,” Hamed Ali, Chief Executive of Nasdaq Dubai. Given Dubai’s commitment to becoming the centre of the global Islamic economy, Sukuk listing the emirate will surely continue.

Sukuk issuance is expected to rise year on year.

www.islamicbusinessandfinance.com

24/05/2016 17:49

Not your copy? Make sure you get your own copy of financeME regularly now! Simply fill in the form below and fax back to CPI Financial on 04 390 9576

subscriptions@cpifinancial.net Subscriptions Department, CPI Financial, Dubai Media City, PO Box 502491, Dubai, UAE

financeME 46-48.indd 1

23/05/2016 16:38

TAKAFUL

(Matej Kastelic/SHUTTERSTOCK)

Islamic economy needs Takaful INDUSTRY EXPERTS AND LEADERS GATHERED IN DUBAI AT THE LATEST WORLD TAKAFUL CONFERENCE TO DISCUSS THE BEST PATH FORWARD FOR THE INDUSTRY AS A WHOLE

h i l e t h e Ta k a f u l industry has shown an impressive double digit growth, it remains underdeveloped as compared to the thriving Islamic finance industry. In order to strengthen the overall Islamic economy, strengthening Takaful is fundamental to a successful future. Conscious of that trend, over 300 leaders from across the

industry gathered in Dubai in April for the latest edition of the World Takaful Conference, held by Middle East Global Advisors. The forum featured pointed addresses and lively conversation about the state of the industry, with many thought leaders offering their opinions and guidance for their peers. S a l m a a n J a f f r e y, C h i e f Business Development Officer

Islamic Business & Finance | ISSUE 97

page 42-43 Takaful97.indd 42

at the Dubai International Financial Centre (DIFC), shared words on the critical role of the DIFC as a global platform for the ReTakaful industry to service the economies of the Middle East, Africa and South Asian regions. â&#x20AC;&#x153;Today, the Islamic insurance industry has gained wider acceptance and appreciation transcending the boundaries of Muslim-based economies.

www.islamicbusinessandfinance.com

26/05/2016 14:52

TAKAFUL

This growing momentum is expected to continue and expand its reach into emerging markets in the MEASA region. Our goal as a leading financial hub is to create a dynamic Islamic financial system that will support this growth and contribute to the overall development of our economy,” he said. According to HE Ebrahim Obaid Al Zaabi, Director General of the UAE Insurance Authority, it is regulation and adhering to those requirements that will be key for Takaful players in the near future and beyond. “The Insurance Authority of UAE has played a pivotal role in setting out key rules to ensure stability of the insurance industry. Adhering to the regulatory requirements— ranging from adjusting the internal systems to appointing internal auditors and actuaries by 2018—will be challenging for the Insurance and Takaful Industry but will lead to its growth and stability.” Other leaders stressed Takaful’s importance to the wider Islamic economy. “Takaful is a key pillar within the Islamic ecosystem. Although a quantum leap cannot be expected in the Takaful Industr y within a year, there have been a lot of strategic developments which will pave way for the growth of Takaful within the Islamic finance landscape,” said Abdulla Mohammed Al Awar, Chief Executive Officer, Dubai Islamic Economy Development Centre (DIEDC). London was highlighted as an important gateway for Takaful to reaching the broader western market. “New horizons for the Takaful market lie ahead in the international market space. The establishment of the Islamic

www.islamicbusinessandfinance.com

page 42-43 Takaful97.indd 43

Insurance Association of London (IIAL) speaks of a large untapped market for Islamic insurance in the west. Whilst, IIAL is taking steps so that Islamic insurance is recognised in the UK, the main agenda is to work on four points, namely: innovation, talent development, promotion and modernisation,” said Dave Matcham, Member of Executive Committee, Islamic Insurance Association of London (IIAL).

challenges faced by the industry, the huge rise in GCC sovereign issuance is a potential boon for the Takaful industry, said Kazranian. “Two of the three leading markets globally, namely Saudi Arabia and the UAE, will see a $58 billion issuance in bond and Sukuk in 2016 alone. This is important given that pressure on underwriting profits means that sustainable investment returns will be critical for long-term growth.”

It is regulation and adhering to those requirements that will be key for Takaful players in the near future and beyond. HE EBRAHIM OBAID AL ZAABI, Director General of the UAE Insurance Authority

Echoing the themes of those sentiments, the Finance Forward World Takaful Report 2016 was launched by Middle East Global Advisors, which provides a comprehensive overview of the state of the global Takaful market. The report was launched by Sahar Kazranian (Acting CEO of Middle East Global Advisors) who shared key insights of the report, which is based on expert analysis and feedback from leading industry practitioners. “Takaful is an essential part of the Islamic financial ecosystem and is spreading beyond its core markets. The pace of growth has not matched up with the momentum seen in the Islamic banking segment, leaving significant ground for changes to help the industry scale,” she said. Athough over-competitiveness and price wars were major

“We see regulators becoming m o r e s t r i n g e n t o n w h at investments are permissible for Takaful operators, and our survey of industry leaders reflected a shift away from equity and commodities markets—so the potential new supply of Shari’ahcompliant fixed income can be hugely beneficial,” she concluded. Salmaan Jaffrey, Chief Business Development Officer at the Dubai International Financial Centre (DIFC), felt the event captured the right tone. “An ideal platform to showcase the vast potential of Takaful and Re-Takaful, this year’s World Takaful Conference was a great success. I am confident that our collective efforts to deliberate new solutions and innovations for the long-term development of Islamic insurance will transform the industry into a vibrant and resilient space,” he said.

ISSUE 97 | Islamic Business & Finance

26/05/2016 14:52

TAKAFUL

Overcoming Takaful’s challenges IN AN INDUSTRY EXPECTED TO REACH A VALUE OF AED 52 BILLION BY 2020, TAKAFUL COMPANIES IN DUBAI AND BEYOND HAVE A LOT TO ADDRESS, WRITES ABDULLA MOHAMMED AL AWAR, CEO OF DUBAI ISLAMIC ECONOMY DEVELOPMENT CENTRE (DIEDC)

he main challenge for the Takaful sector is to continue our efforts to unify Takaful standards and consolidate the credibility and legality of the Takaful system. Today, there is an increasing need to innovate and develop products that are relevant to customers and fulfill their needs and aspirations. The Takaful sector is very promising indeed. The latest report released by the Dubai Center for Islamic Banking and Finance (DCIBF), a joint initiative of Hamdan Bin Mohammed Smart University and Dubai the Capital of Islamic Economy in collaboration with Afaaq Center for Research in Islamic Economy (ACRIE), predicts that the sector will reach a value of AED 52 billion by 2020. These numbers indicate that there is a double digit growth despite the challenges faced by the industry. What this implies is of course that we have today a historical opportunity for growth—especially with the great support provided through initiatives to unify the standards

locally and regionally. The recent announcement by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to establish a higher Shari’ah authority to regulate the Islamic banking and finance sector is an important catalyst in triggering this growth.

OFFERING SOLUTIONS At DIEDC, we support the Takaful companies and the sector in general but we do not have specific collaborations with any individual entities. A s fo r t h e s o l u t i o n s t o the challenges, I suggest the following: First, to identify the real difference between the conventional insurance and Takaful so the Islamic insurance companies do not need to replicate conventional insurance products. This will need the empowerment of human resources to ensure the presence of requisite knowledge to drive and define the Takaful

Islamic Business & Finance | ISSUE 97

page 44-45 Takaful97.indd 44

business—its ser vices and o b j e c t i ve s a s we l l a s t h e nature of Takaful companies with reference to their legal infrastructure. We also need to enhance transparency, corporate governance and collaboration to design an Islamic governance system based on the experience of companies in the local/ regional market. Ta k a f u l i s a S h a r i ’a h compliant service and one that contributes to economic and social development. The premiums paid by contributors are used to finance sustainable projects in the economic landscape that are compliant with Shari’ah and in line with the growth and stability imperatives of the national economy. Ultimately, Takaful is like any other service that needs to find targeted consumers. Our mission at DIEDC is to persuade consumers to opt for Takaful products as opposed to those offered by conventional insurance providers. We also aim to achieve diversity in the customer base—whether individual or corporate.

www.islamicbusinessandfinance.com

24/05/2016 17:58

TAKAFUL

Abdulla Mohammed Al Awar, CEO of Dubai Islamic Economy Development Centre (DIEDC)

The main challenge remains the lack of ReTakaful options. This leads—in several cases— to the majority of Takaful companies using conventional reinsurance products to fill the gap. A n o t h e r c h a l l e n g e t h at is gaining significance is t h e c o m p e t i t i o n b e t we e n conventional insurance companies for the consumer’s currency. Takaful currently occupies only a niche segment of the pie. It would be a good idea for smaller Takaful players to merge their assets and enhance their competitiveness in order to sustain the sector and increase its growth potential for the longterm. Takaful will also need to establish a new premise or core foundation to stay relevant. Th i s fo u n d at i o n s h o u l d factor in legal aspects of Takaful products and their contribution to the growth of Islamic finance and the national economy as a whole rather than focusing only on profitability—as is the case with conventional insurance players.

www.islamicbusinessandfinance.com

page 44-45 Takaful97.indd 45

ISSUE 97 | Islamic Business & Finance

24/05/2016 17:58

‘ROI…with a clear conscience’ 46

Islamic Business & Finance | ISSUE 97

page 46-49 Inside Story-97.indd 46

(Mila Supinskaya/SHUTTERSTOCK)

THE INSIDE STORY

www.islamicbusinessandfinance.com

23/05/2016 15:26

THE INSIDE STORY

SINCE 1974, MIDAMAR HAS PRODUCED HALAL FOOD DISTRIBUTED FROM CEDAR RAPIDS, IOWA, DISTRIBUTED ALL OVER THE WORLD. THROUGH ITS MANY CHALLENGES AND OPPORTUNITIES, MIDAMAR BELIEVES THEREâ&#x20AC;&#x2122;S NOTHING BETTER THAN RUNNING A HALAL BUSINESS, ACCORDING TO SARA SAYED, MARKETING AND COMMUNICATIONS DIRECTOR, MIDAMAR CORPORATION

ell me about Midamar Corporation.

Midamar Corporation is a pioneer and leader in Halal food services. Midamar provides Halal food production and distribution, export management for US companies, and export services to restaurant concepts located throughout the Middle East, South East Asia, and the Far East. Founded in 1974, Midamar is centrally located in Cedar Rapids, Iowa, United States.

service similar to the Kosher certification service. Bill Aossey learned the certification process from the Kosher industry and passed this process on to Islamic Services of America (ISA) which was a non-profit educational organisation at the time. That is when ISA became the first Halal Certifier in the USA. ISA now certifies hundreds of US companies in the food industry, pharmaceuticals, cosmetics, and other industries.

What was your original inspiration behind Midamar? When Midamar was conceived over 40 years ago, there were no other US Department of Agriculture (USDA) approved national Halal food companies in existence. In the USA people who consumed Halal food either purchased kosher products or travelled to farms and slaughtered their own meat. In the 1960s after working for the US Peace Corps, Bill Aossey began working for a large multinational company in the USA and volunteered to work as a teacher and trainer in Saudi Arabia. This was before the oil boom. When he returned his friends and former students would ask him to send them products. After the oil boom there was a huge demand for protein products, that is when he founded Midamar. Typically companies are in business for a while before pursuing international markets. For Midamar, the company started exporting and then a few years later began producing products for the US market.

How did you begin? What work did you do behind the scenes to make this happen? At the beginning it was simply a matter of purchasing cattle, slaughtering, storing, getting USDA inspection and approval, filling export documentation, setting up a logistics channel, and delivering to customers. Later, a minister from Saudi Arabia asked for a certification

We are always looking for ways to reduce costs without compromising quality in order to pass the savings on to customers. SARA SAYED, Marketing and Communications Director, Midamar Corporation

Tell me more about the range of products you produce. Midamar is a Halal food brand that produces premium quality beef, chicken, lamb and turkey products. The products are flash frozen after processing and stored in Midamar-owned facilities. Some of the products are uncooked cuts of meat like steaks and others are processed products like franks, chicken nuggets, sausages, gyros. Midamar produces both retail products like the ones you find in Carrefour and food service items for the hospitality and institutional sectors.

Tell me about the process for keeping your products Halal. Is it difficult to do so in the US? It is not difficult to do so. For example cattle would be brought to a dedicated Halal/Kosher

Midamar's products are available throughout the Islamic world.

cont. overleaf

www.islamicbusinessandfinance.com

page 46-49 Inside Story-97.indd 47

ISSUE 97 | Islamic Business & Finance

26/05/2016 14:53

THE INSIDE STORY

cont. from pg 47

facility, then slaughtered by a slaughterman provided by a Halal-certifying agency. The meat would be stored with other Halal products, and then transported for further processing. Much of the meat is processed at Halal Food Processors which is a dedicated Halal facility.

What are the challenges of having customers all around the world? One of the challenges is that in the US, food companies operate in a heavily regulated environment. Combine this with the fact that each country has its own food regulations and import regulations and these regulations are constantly changing. Each region whether Southeast Asian, Middle Eastern, or South Asian has their own set of definitions on what is and is not Halal. Midamar taken surveys of scholars in the area of Halal and their interpretations differ as well. As a company we respect the laws of each country and work within the accepted regulations. In addition, each culture has their own tastes and preferences on the type of

Islamic Business & Finance | ISSUE 97

page 46-49 Inside Story-97.indd 48

meat demanded. This diversity in the market is a great thing, but as a brand we know that we cannot be all things to all people. For example, not everyone consumes hot dogs, franks, bratwurst, beef strips, chicken nuggets, and gyros. Similarly there are some cultures that do not have lamb in their daily cuisine. Iâ&#x20AC;&#x2122;m sure you understand culinary diversity, being in the UAE.

What are some of the other challenges that you are currently facing? We are focusing on growing and building the business. The environment is increasingly competitive especially for a small niche family business competing with large billion dollar corporations for the same international customers. We are committed to using quality ingredients and producing premium products. As a result we do not compete on price. The customers that value quality and taste understand that.

A gyro made with Midamar Halal meat.

www.islamicbusinessandfinance.com

26/05/2016 14:53

THE INSIDE STORY

What has been your marketing strategy for Midamar? We have both a market expansion strategy and a penetration strategy in place.

Midamar's meat has won awards globally,

What are your plans for the future? To continue to grow, introduce new products and expand our organic beef and chicken lines.

What else would you like to see improved in the Islamic economy? What other areas do you feel are under-serviced?

What is it like running a Halal business in a country that is not primarily Muslim? For the most part it is like running any other business. However there are some challenges. I would say the biggest challenge is ignorance about what Halal is. There are some organisations that do not understand the Halal process and are very vocal about Halal slaughter being inhumane. Of course nothing can be further from the truth. To be Halal the process must be humane from beginning to end. Then there are other vocal Islamophobic organisations that publically attack the Halal industry because of bigotry. Fortunately these are few in number and there is freedom of religion in the USA. Muslims are protected under the constitution so Muslims are free to produce and consume Halal products despite the opposition. Similarly, there is freedom of speech protected by the constitution of this country so those who oppose Halal have every right to voice their opinion as do those who support the Halal industry. This is the environment. As diverse and noisy as it is, as a Muslim business we appreciate, accept and work within it.

I think this area is growing and there are organisations out there that are creating standards and oversight, which is a good thing. As long as there are trade associations and organisations internationally that talk to each other and work together we are on the right track.

What advice do you have for those who want to start their own business to join the growing Islamic economy? The Islamic economy is growing and there is investment and demand in this area. Anyone with a good idea and the means to start a business in this area should pursue it. However, you should be in it for the long haul. This is a capital intensive business that requires vigilant oversight. It requires long hours, dedication, and long term commitment. That being said, in my opinion there is nothing better than running a Halal business. It is like investing in Halal products where you can make a good ROI and you can sleep at night with a clear conscience.

Both Midamar's beef and turkey bacon have gotten raves across the world.

How have you altered your product or operations based on the feedback you have gotten from users? No. Our customers want good food and that is what we do. Sometimes based on feedback we will introduce a new product, or a new service. We are always looking for ways to reduce costs without compromising quality in order to pass the savings on to customers.

www.islamicbusinessandfinance.com

page 46-49 Inside Story-97.indd 49

ISSUE 97 | Islamic Business & Finance

26/05/2016 14:53

PRODUCT WATCH

Turning to mobile during Ramadan THROUGHOUT THE HOLY MONTH LAST YEAR, MOBILE USAGE INCREASED, SOMETHING THAT ISLAMIC BANKS AND BUSINESSES ARE TAKING NOTE OF THIS YEAR

hen looking at customer habits during Ramadan, one platform has taken the spotlight: mobile. According to a recent study from Criterio, consumers are using their mobile phone throughout the Ramadan period, with spending on mobile increasing from 44 per cent two weeks prior to Ramadan. Beyond that, spending continues to go up during the month, with a rise of 49 per cent by the last week, and 57 per cent during Eid al-Fitr. After Ramadan, desktop engagement was seen to recover post Eid al-Fitr when regular working hours resumed, according to Criterio’s study. Criteo analysed nearly three million transactions from more than 35 retailers based in the Middle East and North Africa region (Saudi Arabia, UAE, Egypt, Kuwait, Morocco and Qatar) on desktop, smart phones and tablets for its study. Online purchases also increase during Ramadan evenings, said the study. Twice as much traffic than usual was recorded including a significant increase in sales transactions with 16 per cent more transactions taking place at night in comparison to a usual week. Weekends during Ramadan saw a steady stream of

e-commence activity with Friday performing only slightly below other days of the week. Users also turned to mobile increasingly as the week went on. Fridays saw desktop usage drop 10 per cent when compared to Mondays, while mobile usage surged 10 per cent. Across all devices, retail sales increased by 15 per cent and travel bookings soared by 35 per cent as consumers made plans to spend their Eid holidays with friends and family. Additionally, retail sales decreased by 37 per cent from the third week to Eid al-Fitr, but slowly rose after Eid with a 17 per cent increase. Online travel bookings continued to witness an increase by three per cent from the third week to Eid al-Fitr, and six per cent after Ramadan. “Ramadan is unlike any other time of the year in the region, and our findings give us a glimpse into consumer purchasing patterns and their preferences when it comes to shopping online. It is crucial for advertisers to understand how consumer shopping behaviour evolves during different time periods in the year in order to understand when to adjust marketing activities and budgets to reap maximum benefits,” said Dirk Henke, Managing Director Emerging Markets, Criteo.

Islamic Business & Finance | ISSUE 97

page 50 Product Watch97.indd 50

(diplomedia/SHUTTERSTOCK)

“With the exponential rise in online commerce in the region, this study can help brands better understand how they can reach their target audience and create long lasting engagement.” Islamic banks and businesses have taken note of this trend, and have put more of a focus on mobile. Emirates Islamic, for one, recently added to its mobile services, launching‘Scan to Pay’ on the Emirates Islamic mobile app. “Innovation is a key element of our growth strategy to become the leading Islamic bank and we will continue to invest in new technologies to enhance our customers’ mobile banking experience...We want our customers to enjoy the accessibility and convenience of the latest digital solutions alongside the benefits of Islamic banking values,” said Faisal Aqil, Deputy CEO, Consumer Wealth Management, Emirates Islamic.

Mobile usage shoots up during the month of Ramadan, according to a recent study.

www.islamicbusinessandfinance.com

24/05/2016 18:03

Dubai Technology and Media

Free Zone Authority

ISSUE 95

T H E A U T H O R I TAT I VE VOICE OF ISLA MIC FINANCE

Not your copy?

INSPIRED TO INNOVATE Emirates Islamic CEO Jamal Bin

Islamic Business & Finance is a controlled circulation magazine delivered to specific, named individuals in board level and the very top management positions within the Shari’ah-compliant banking and financial services sector around the world.

Ghalaita

Others may subscribe to receive the magazine regularly through the subscription form below.

INSPIRED TO INNOVATE Emirates Islamic CEO Jamal Bin Ghalaita

A CPI Financial Publication

PLUS:

AWARDS:

The Islamic Business & Finance Awards Asia

SUKUK:

Cote D’Ivoire’s first launch

TAKAFUL:

The road forward

bleed guide.indd 1 23/02/2016 09:19

Institutions may also arrange bulk purchase orders of the magazine and its supplements to circulate among internal and external stakeholders. If you wish to arrange regular bulk deliveries, please contact subscriptions@cpifinancial.net for terms. Annual individual subscription (11 issues/year) US$130

To subscribe, simply fill in the order form and return it, with your cheque for US$130 to: CPI Financial, PO Box 502491, 1209 Shatha Tower, Dubai Media City, Dubai, UAE. NAME POSITION 24/11/2015 09:45

page 3-4 contents94.indd

Dubai Technology and Media

COMPANY

Free Zone Authority

ISSUE 93

ADDRESS LINE 1

ISSUE 93

T H E A U T H O R I TAT I VE VOICE OF ISLA MIC FINANCE

ADDRESS LINE 2

JORDAN RISING JDIB, led by CEO Sami Al-Afghani,

ADDRESS LINE 3

is bolstering the Islamic finance industry in Jordan

PO BOX ZIP/POSTAL CODE

JORDAN RISING JDIB, led by CEO Sami Al-Afghani, is bolstering the Islamic finance industry in Jordan

A CPI Financial Publication

PLUS:

AWARDS:

The Islamic Business & Finance Awards 2015

SUKUK:

Sukuk’s global footprint

COUNTRY

TAKAFUL:

Takaful Emarat’s inside story

bleed guide.indd 1 27/10/2015 16:46

CPI Financial FZ LLC • PO Box 502491 Al Shatha Tower, Office 1209 Dubai Media City, Dubai, U.A.E. Tel: +971 (0) 4 391 4681 • Fax: +971 (0) 4 390 9576 • www.cpifinancial.net IB&F subscription house ad_new.indd 1

18/04/2016 16:01

bleed guide.indd 1

04/05/2016 11:56