Dubai Technology and Media Free Zone Authority
ISSUE 98
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 98 DOING AWQAF THE RIGHT WAY His Excellency Tayed Al-Rais, UAE Secretary General of Awqaf and Minor’s Affairs Foundation (AMAF)
DOING AWQAF
THE RIGHT WAY His Excellency Tayeb Al-Rais, UAE Secretary General of Awqaf and Minors Affairs Foundation (AMAF)
A CPI Financial Publication
PLUS:
bleed guide.indd 1
TECH:
Making solutions better
SUKUK:
Spotlight on Oman
TAKAFUL:
MicroTakaful in Sudan
25/07/2016 17:06
bleed guide.indd 1
09/06/2016 14:40
CONTENTS
ISSUE 98
REGULAR SECTIONS
EDITOR'S LETTER
14
Greetings, all
W
elcome to our latest issue of Islamic Business & Finance. We loved seeing you last year. And this year, mark your calendars, the Islamic Business & Finance Awards, the premiere event to celebrate the best of the Islamic financial community, returns to Dubai. For a first look at this year’s categories, see page 10. This issue, we turn our focus to Malaysia, one of the key markets for Islamic finance in the world. The world’s eyes are always on Malaysia as a true innovator and leader in the field, so, as always, our contributors on the subject are names that you know and trust. First you’ll hear from our friend Mark Mobius, who writes an exclusive piece for the magazine following his headlining keynote address at the Global Islamic Finance Forum in Kuala Lumpur. Following that, RAM Ratings contributes exclusive comments on the current landscape for Sukuk in the country. We hope you enjoy those insights. Beyond that, there’s plenty more to peruse. I hope you enjoy digging into another great issue. Until next time,
William Mullally
OPINION
8
40
FLYING TOO CLOSE TO THE SUN?
COVER INTERVIEW
14 DOING AWQAF
THE RIGHT WAY His Excellency Tayeb Al-Rais, UAE Secretary General of Awqaf and Minors Affairs Foundation
43
SUKUK
40 Oman heralds a new
framework for Sukuk issuances
TAKAFUL
43 MicroTakaful in Sudan 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 contents98.indd 3
ISSUE 98 | Islamic Business & Finance
3
25/07/2016 15:12
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
28
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 98
FINANCE MANAGER
AWARDS
SPECIAL FEATURE
10 THE 11
28 ISLAMIC FINANCE IN
th ANNUAL ISLAMIC BUSINESS & FINANCE AWARDS
HONG KONG
32 BREXIT’S IMPACT ON
COUNTRY FOCUS: MALAYSIA
ISLAMIC FINANCE
20 MALAYSIA AND ISLAMIC
50 ISLAMIC FINANCE
FINANCE IN EMERGING MARKETS
IN RUSSIA
ISLAMIC TECH
24 EPF’S UPCOMING
36 MAKING ISLAMIC
SHARI’AH-COMPLIANT FUND COULD BOOST SUKUK DEMAND
SOFTWARE SOLUTIONS BETTER
DATA ANALYST
ADMINISTRATION & SUBSCRIPTIONS
enquiries@cpifinancial.net Tel: +971 4 391 4682 Tel: +971 4 391 3709
THE INSIDE STORY
46 ALCHEMIYA 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
4
Islamic Business & Finance | ISSUE 98
page 3-4 contents98.indd 4
A CPI Financial Publication
© 2016 CPI Financial FZ LLC All rights reserved. No part of this publication may be reproduced or used in any form of advertising without prior permission in writing from the Managing Editor.
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
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
24/07/2016 16:53
Untitled-1 1
19/07/2016 10:34
DATES FOR YOUR DIARY
02-04 Aug 2016
05-07 Dec 2016
(Dr Ajay Kumar Singh/SHUTTERSTOCK)
(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
WIBC 2016
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. Now reaching its 23rd year, it will be run in strategic partnership with the Central Bank of Bahrain. Venue: Gulf Hotel, Bahrain www.WIBC2016.com
14-15 October 2016
23 November 2016
(Jorge Salcedo/SHUTTERSTOCK)
HARVARD UNIVERSITY MUSLIM ALUMNI ISLAMIC FINANCE CONFERENCE
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. Venue: Harvard University, Cambridge, MA, US www.harvard.edu
6
Islamic Business & Finance | ISSUE 98
page 6 Diary98.indd 6
THE 11TH ANNUAL ISLAMIC BUSINESS & FINANCE AWARDS
For over a decade, CPI Financial has been gathering the industry’s leaders to honor the best of the best in the field. This November, we look forward to welcoming you to Dubai in order to do it all over again. As always, it will be the must attend event of the season. Keep an eye out in future issues for announcements on when voting will open! Venue: TBA Dubai www.cpifinancial.net
www.islamicbusinessandfinance.com
24/07/2016 12:37
MARKET WATCH
OUTSTANDING SUKUK MAP OUTSTANDING SUKUK MAP
THE SIZE OF THE OUTSTANDING SUKUK MARKET AS OF 1010 JULY The size of the outstanding SukukGLOBALLY market globally as of Jul 2016 2016
SOURCE: Zawya Islamic
ANNOUNCED SUKUK IN JULY 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
455.063
-
-
-
Announced
SIB Sukuk Company III Limited (SIBIII)
Sharjah Islamic Bank 2016 Sukuk
Unknown
UAE
USD
10-Aug-16
3,000
-
-
HSBC Bank
Announced
Saudi Arabian Airlines
Saudi Arabian Airlines 2016 Sukuk
Unknown
Saudi Arabia
SAR
14-Jul-16
1,332.98
-
-
HSBC Saudi Arabia Limited
Announced
Jordan Dubai Islamic Bank
TAJ Mall Sukuk
Ijarah
Jordan
JOD
13-Jul-16
63.577
-
7 Years
Bank Alkhair B.S.C. Jordan Dubai Islamic Bank Jordan Investment Trust P.L.C
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
266.709
-
-
-
Announced
FGB Sukuk Company Limited
First Gulf Bank Sukuk
WakalaMurabaha
UAE
USD
8-Jun-16
3,500
-
-
Citigroup Global Markets Limited HSBC BankZawya Islamic SOURCE:
www.islamicbusinessandfinance.com
page 7 Market Watch_98.indd 7
ISSUE 98 | Islamic Business & Finance
7
25/07/2016 16:45
OPINION
Flying too close to the sun I
don’t usually celebrate when I fail to bring a story to our readers, but in this case, that’s exactly what I’m doing. Since the launch of Rayani Air, the world’s first (and hopefully not the last) ‘Halal airline’, I was eager to get an inside scoop at the story. After all, it’s the perfect Islamic Business & Finance story—is it not? For more than a decade, our publication has covered not only the Islamic economy’s history but also its future, encompassed by the many firsts we’ve experienced as a community year after year. And when a business boldly enters as big a space as aviation while also joining the Islamic economy, I couldn’t help but cheer. I wanted to get the inside story on not just what they wanted to do but how they were going to do it—the real, nuts and bolts plans that were going to make it all happen. Their mission statement is still up on their website. “Respect and Serve with a heart—this is what the Rayani Air brand encapsulates. Malaysia’s latest airline is doing what is fundamentally right in the aviation industry— committed to greater passenger satisfaction. While the industry is battling for a bigger share of passenger load, Rayani Air will instead focus on service delivery,” it still reads. The statement goes on to describe their plans for rapid ascension to the top of the aviation world. Big dreams, all to happen seemingly overnight. I wanted to tell the story. I was going to tell the story. But at some point this spring, they stopped returning my emails. The CEO went quiet on me. And then bad things started to happen. The headlines started to trickle in. Then, soon after, an outright tsunami. Alleged pictures of handwritten boarding cards showed up online, worrying potential customers. Soon after, Rayani reportedly suspended operations all together, before reportedly having their license officially revoked this summer. Investors pulled out. When customers tried to get refunds, they were reportedly met with shrugs from Rayani.
8
Islamic Business & Finance | ISSUE 98
page 8 Opinion98.indd 8
Rayani’s seeming failure has nothing to do with its aspirations of Shari’ah compliance. Instead, it comes down to basic business sense. Big dreams aren’t enough to send you soaring. Big claims may get you headlines, but they won’t make things work out. This an exciting space to be in. But if you just claim something without the proper business sense to make it happen, in the end, it’s just a claim. The Islamic economy has an astounding future before it. But we’re not going to get there overnight, and Rayani Air shows us we’d be fools to even try that route in the first place. If we’re going to do this, we need to do it right.
William Mullally
Editor
www.islamicbusinessandfinance.com
25/07/2016 15:14
bleed guide.indd 1
20/07/2016 13:11
AWARDS
Over a decade of awarding excellence MARK YOUR CALENDARS—11th ANNUAL ISLAMIC BUSINESS & FINANCE AWARDS WILL BE RETURNING TO DUBAI THIS FALL
T
h i s N o v e m b e r, C P I Financial will proudly host the 11th Annual Islamic Business & Finance Awards ceremony. As we have for over a decade, the Awards aim to honour the best of the best within the Islamic finance industry. Islamic finance’s continued success around the world continues to surpass expectations, expanding into new markets as well as further entrenching itself in its established countries from one side of the world to the other. The leaders of this industry still hold innovation as a guiding principle, finding new ways to spur growth and bring Islamic finance to new customers, creating value for investors and service to their respective communities.
10
As is now the tradition, these Awards will be an opportunity t o r e w a r d t h o s e t h at a r e furthering the goals of the industry as a whole. Those that are short-listed, as well as those that win, are truly the stars of the Islamic finance world, and the scope of our categories this year is a reflection of the many ways that different institutions c o n t r i b u t e t o t h e o ve r a l l Islamic economy. “We are proud and privileged once again to be able to host the longest-established Awards p r o g r a m m e fo r S h a r i ’a h compliant financial services,” said Robin Amlôt, Chief Executive Officer, CPI Financial. “This is an industry which continues to impress with its growth, energy and expansion every year.”
Islamic Business & Finance | ISSUE 98
page 10-13 IBF Awards-98.indd 10
“The Islamic Business & Finance Awards offers the industry an unparalleled opportunity to meet, network and recognise best-inclass practitioners in Islamic finance from around the world. “In addition to our peervoted awards, recognition of the industry by the industry, we will, for the third time, be carrying out detailed financial analysis of the performance of Islamic financial institutions in order to identify the top performers from around the world,” said Amlôt. As always, the event itself promises to be the must-attend event of the season, where the premiere names in the industry come together to celebrate their respective achievements. CPI Financial hopes to see you all there this November.
The Awards aim to celebrate excellence through innovation.
www.islamicbusinessandfinance.com
25/07/2016 15:21
AWARDS
ISLAMIC BUSINESS & FINANCE AWARDS 2016 CATEGORIES BY COUNTRY:
Best Retail, Corporate & Commercial banks in: ◆ Levant ◆ KSA ◆ UAE ◆ Kuwait ◆ Indonesia ◆ Iran ◆ Jordan ◆ Egypt
◆ Qatar ◆ Bahrain ◆ Oman ◆ Malaysia ◆ Bangladesh ◆ Turkey ◆ Sudan ◆ Pakistan
BY REGION - MIDDLE EAST: ◆ Best Retail Bank ◆ Best Commercial Bank ◆ Best Takaful Operator ◆ Best Finance Company ◆ Best Consumer Finance Company ◆ Best Wealth Management
◆ Best Corporate Bank ◆ Best Investment Bank ◆ Best Sukuk Arranger ◆ Best SME Finance Company ◆ Best Islamic Window ◆ Best Corporate Advisory
BY REGION - ASIA: ◆ Best Retail Bank ◆ Best Commercial Bank ◆ Best Takaful Operator ◆ Best Sukuk Arranger
◆ Best Corporate Bank ◆ Best Investment Bank ◆ Best Asset Manager
BY REGION - AFRICA: ◆ Best Retail Bank ◆ Best Commercial Bank
◆ Best Corporate Bank ◆ Best SME Bank
INTERNATIONAL AWARDS: ◆ Best Training Institution ◆ Best Shari’ah Advisory Board ◆ Best Wealth Management Service ◆ Best Equity Research ◆ Best Institutional Investor Service
◆ Best Consultancy Service ◆ Best Sukuk Deal ◆ Best Investment Fund ◆ Best Savings Product ◆ Best Real Estate Finance cont. overleaf
www.islamicbusinessandfinance.com
page 10-13 IBF Awards-98.indd 11
ISSUE 98 | Islamic Business & Finance
11
24/07/2016 12:49
AWARDS
cont. from pg 11
A LOOK BACK AT THE ISLAMIC BUSINESS & FINANCE AWARDS 2015 Around 200 Islamic bankers and financiers from across the globe congregated in December 2015 to celebrate ‘Excellence through innovation’ at the gala dinner and Awards ceremony at the Emirates Towers Hotel, Dubai. Here’s a look at some of the highlights.
BANKER OF THE YEAR Jamal Saeed Bin Ghalaita,
Chief Executive Officer, Emirates Islamic
Jamal Saeed Bin Ghalaita, Chief Executive Officer of Emirates Islamic, won the esteemed Banker of the Year Award. He is a veteran banker with over 25 years of banking experience across multiple leadership domains.
12
Islamic Business & Finance | ISSUE 98
page 10-13 IBF Awards-98.indd 12
BEST ISLAMIC BANK Dubai Islamic Bank
(left to right) Saleh Al Akrabi, Chairman, CPI Financial; Adnan Chilwan, CEO, Dubai Islamic Bank; Georgina Enzer, Managing Editor, CPI Financial
Dubai Islamic bank emerged triumphant at the Awards 2015, winning Best Islamic Bank in addition to eight other accolades.
www.islamicbusinessandfinance.com
24/07/2016 12:49
AWARDS
MULTIPLE WINNERS IN 2015 Dubai Islamic Bank –Best Islamic Bank –Best Commercial Bank (ME) –Best Corporate Bank (ME) –Best Retail Bank (ME) –Best Sukuk Arranger –Best Sukuk Deal
(left to right) Saleh Al Akrabi, Chairman, CPI Financial; Adnan Chilwan, CEO, Dubai Islamic Bank; Georgina Enzer, Managing Editor, CPI Financial
aafaq Islamic Bank
–Best Customer Excellence –Best Finance Company (ME) –Best SME Finance Company (ME)
(left to right) Mujtaba Naseem, Chief Executive Officer & Deputy Chief Executive Officer, aafaq; Saleh Al Akrabi, Chairman, CPI Financial; Georgina Enzer, Managing Editor, CPI Financial
Bank of Khartoum
–Best Islamic Bank (Africa) –Best Islamic Bank (East Africa) –Best Retail Bank (Africa) –Best SME Bank (Africa)
(left to right) Saleh Al Akrabi, Chairman, CPI Financial; Faisal Abass M. Fadl, Deputy Chief Executive Officer, BOK; Georgina Enzer, Managing Editor, CPI Financial
Emirates Islamic
Al Baraka Islamic Bank –Best Retail Bank (Bahrain) –Best Corporate Bank (Bahrain) –Best Commercial Bank (Bahrain)
–Best Corporate Bank (Asia) –Best Sukuk Arranger (Asia) –Most Socially Resposible Bank (Asia)
(left to right) Saleh Al Akrabi, Chairman, CPI Financial; Jamal Bin Ghalaita, CEO, Emirates Islamic; Georgina Enzer, Managing Editor, CPI Financial
(left to right) Saleh Al Akrabi, Chairman, CPI Financial; Mohamed Isa Al Mutaweh, Chief Executive Officer and Board Director of Al Baraka Islamic Bank; Georgina Enzer, Managing Editor, CPI Financial
(left to right) Saleh Al Akrabi, Chairman, CPI Financial; Badlisyah Abdul Ghani, Executive Director and Chief Executive Officer of CIMB Islamic bank Berhad; Georgina Enzer, Managing Editor, CPI Financial
–Best Commercial Bank (UAE) –Best Retail Bank (UAE) –Best Wealth Management (ME)
www.islamicbusinessandfinance.com
page 10-13 IBF Awards-98.indd 13
CIMB Islamic
ISSUE 98 | Islamic Business & Finance
13
25/07/2016 15:25
COVER INTERVIEW
14
Islamic Business & Finance | ISSUE 98
page 14-17 Cover Interview 98.indd 14
www.islamicbusinessandfinance.com
25/07/2016 17:00
COVER INTERVIEW
HANDLING AWQAF
THE RIGHT WAY
HIS EXCELLENCY TAYEB AL RAIS, THE SECRETARY GENERAL OF AWQAF AND MINORS AFFAIRS FOUNDATION IN DUBAI (AMAF), TALKS TO IB&F ABOUT DUBAI’S VISION AS THE CENTRE OF THE ISLAMIC ECONOMY AND THE ROLE AWQAF PLAYS IN THAT VISION AS AN ESSENTIAL PART OF LIFE AND FINANCE
His Excellency Tayeb Al-Rais, Secretary General of Awqaf and Minors Affairs Foundation during his participation in Global Islamic Economic Summit
1Editor’s note: Awqaf, the plural of Waqf, is used more or less interchangeably with Waqf in this article. By definition, each fall under the context of Sadaqah, an inalienable religious endowment in Islamic law.
W
hat is the strategic vision of AMAF, and how are you working towards achieving it? Awqaf and Minors Affairs Foundation (AMAF) operations began in 2004. With the expansion of the institution in its work and functions, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai issued law No. 9 in 2007 strengthening the work of the institution. The reason for that was very simple. Awqaf1 has been a successful financial instrument for the entire Islamic world since the very first days of Islam. People talk about the Islamic economy and say, ‘Oh, Awqaf is part of the Islamic economy’. But in reality, Awqaf is at the very heart of the entire Islamic economy and was born in the very earliest days of Islam. While we are a part of Islamic Affairs and both organisations are dedicated to the same ultimate goals—the two are very different. Islamic Affairs is focused on spiritual and scholarly issues and guidance and Awqaf is focused on the complex structure and daily operational issues governing the creation as
well as long term management of endowments. Historically, the two approaches do best when separate—as is our case. Our focus is business oriented and Islamic Affairs is the domain of scholarly religious issues. In a certain way, you have to see us as asset managers working on Islamic investment principles that deliver a humanitarian bottom line. In Dubai, Awqaf was separated from Islamic Affairs in 2004. In the decade after that, we managed to grow our assets from AED 200 million to close to AED 2.5 billion. The vision that HH Sheikh Mohammed put forward for the separation of these two organisations is now well in place. Islamic Affairs is thriving and Awqaf is thriving. Why? Simply because we are now both single-focused organisations—each doing what we do best in harmony. We did not reinvent the wheel—our responsibility is to make it work hard. As an example of our mutual interaction: Many of our traditional Waqf endowments are based on funding Islamic Affairs and the building of mosques. Thus, most of the money we make from this type of endowment all goes cont. overleaf
www.islamicbusinessandfinance.com
page 14-17 Cover Interview 98.indd 15
ISSUE 98 | Islamic Business & Finance
15
25/07/2016 17:00
COVER INTERVIEW
cont. from pg 11
back to Islamic Affairs. The result: Islamic Affairs got rid of the headache of money management, but still receives the benefits. But this type of permanent trust isn’t only found in the Islamic world. Oxford University is an endowment project, as is Harvard University. Harvard’s endowment assets are now around $34 billion, all with one goal: the perpetuation of the institution. It’s a sound strategy that has been adopted all across the world. The rest of the world has thrived on this concept of charitable permanent endowment, but in a way—the modern Islamic world hasn’t put as much focus on it as it deserves. We plan to bring the concept back to its old glory in a new era. Could you tell me more about the structure of your organisation? AMAF is a unique organisation. I’m not saying
16
Islamic Business & Finance | ISSUE 98
page 14-17 Cover Interview 98.indd 16
Dubai Corporation For Ambulance Services honored Awqaf and Minor Affair foundations
that because I’m running it; it’s because it has more than one core business. Usually any organisation like ours is based on only one pillar—strictly looking after minors, or Awqaf, or investments. We have all three pillars— Awqaf, minors, and investment. The investment department is responsible for investing on behalf of these core businesses. The Awqaf department raises funds which are invested as directed by the donors, whether for real estate, Islamic bonds, shares, partnerships with an organisation, building a mosque or for general good, which is left to our discretion. At the end of the year they have a return that goes back to the Awqaf department, and they distribute those funds according to the wishes of the donors. We have five banks, or accounts, for the dispersing of these funds—social, education, health, Islamic Affairs and piety/ righteousness.
www.islamicbusinessandfinance.com
25/07/2016 17:00
COVER INTERVIEW
What happens to these funds, and where do they originate? For example, if someone comes and says, ‘I have AED 1 million’, I will respond, ‘where do you want this fund to go?’ The person could say they want it to go to orphans, or health care, or be even more specific. Based on that, that fund will be invested, and the return will go back to what they have wished. You mentioned the Investment department and Awqaf responsibilities and operations. What about the Minors department? With regards to Minor’s Affairs, it’s a little different. Let me give you an example: a gentleman dies, and he has an inheritance for his family. He has a wife, a grown girl, and three minors. For us, a ‘minor’ is up to 21 years old, unlike other countries. So we have a responsibility for these children up to that age. After that, they go back to court with two witnesses, have their sanity attested to, and if found capable of handling their own affairs, their funds will be released to them. If someone is mentally incapacitated, the funds return to us and we act as a custodian until the person becomes well. The money for minors goes to that department, with each individual having their own file. The money that they have is then invested, and the return goes back to that individual file. We invest in a pool to give us leverage, but each individual gets back the return according to how much money they put in. This is, in a nutshell, how we invest and care for our minors. Do you approach investment differently from a typical Awqaf endowment? Endowment was (and often still is) historically invested predominantly in real estate. For us, we are diversifying into other things that may have more direct impact as well as social benefit to the community. We just opened the first convenience store that is 50 per cent owned by AMAF. We have also opened private sector companies. Why? Real estate is important but static—we could only do so much with another building. I started investigating the benefits of growing exponentially. I come from the private sector, and that mentality tells me to ask myself why
www.islamicbusinessandfinance.com
page 14-17 Cover Interview 98.indd 17
Everything we do is compliant with Shari’ah. At the end of the year, we deduct Zakat, and spend it on our poor minors. The part of the fund that we spend on poor minors is the part of Zakat that we deduct from wealthy minors.
I am putting all my eggs in one basket—is there a better more beneficial way to do what we have traditionally done? In order to grow, meet new targets and develop new opportunities, we created a new company, specialised for real estate-related activities, to allow us to do other things. It’s called Zawaya Real Estate, and they efficiently run other people’s properties too. Tell me about Noor Awqaf? To take it a step further, for the first time we signed an agreement and partnership with Noor Investment Group, which is an Islamic banking group. We created a joint-venture company called Noor Awqaf. AMAF’s Awqaf investment return year-onyear between 2014 and 2015 was 12 per cent. Our return last year was AED 88 million, and this year is AED 98 million. For our whole organisation, the return was 19 per cent. In order to increase those returns, Noor Awqaf was set up as a holding company, and under it we are going to have new companies. The first one was Zawaya, and now we have our aforementioned first concept green neighbourhood convenience stores which just opened in partnership with Union Co-Op on a 50/50 ownership basis. Our aim is to go global with it. Why not us, right? What is your aim with this convenience store project? Our retail operations are called Fresh N One and we aim to be something like the pioneering
ISSUE 98 | Islamic Business & Finance
17
25/07/2016 17:00
COVER INTERVIEW
cont. from pg 13
HE Tayeb Al Rais celebates his country's passion for football.
retail food concept launched in 1982—Newman’s Own products. With every dirham spent, 50 per cent goes to Awqaf. We believe that this concept will bring customers to us as well as bring benefit to the neighbourhoods the stores serve—just as the concept launched as a boutique charity 35 years ago brought customers to Newman’s Own brand products—a foundation thriving today. How do you manage risk? All of our investments are done on a carefully studied low—risk basis by our risk assessment team who always look at all investments very closely to make sure there is as little risk as possible. This guideline applies whether we are evaluating a future investment or looking at current investment performance. We have seen minors who have taken their money after 21 to invest, and lost it all. That is a sad fact but also part of the decisions made in an individual’s life. As an organisation we are structured on sound business principles and risk management is at the heart of what we do. We try to minimise risk as much as possible, even though there is a potential for higher
18
Islamic Business & Finance | ISSUE 98
page 14-17 Cover Interview 98.indd 18
returns if you accept more risk. We want to keep things as safe as possible and believe innovative and well—structured projects will always yield good returns. Is everything in your operations Shari’ah compliant? Everything we do is compliant with Shari’ah and governed by Islamic guidelines for investment and return. At the end of the year, we deduct Zakat, and spend it on our poor minors. How are you supporting the aim of Dubai becoming the capital of the Islamic economy? We aren’t just helping it—we are an active part of it. We have a seat on the board of that initiative, and we have been a part of it since day one. What’s your personal management style? As a father at home, how do your children learn? You show them; you tell them. What is the difference between doing that at home versus in the office? Is there a difference? No, if you do not show them by example, they will never know how to do it. So I do that, and others follow.
www.islamicbusinessandfinance.com
25/07/2016 17:00
Faisal Islamic Bank (Sudan) Best Corporate Bank in Africa 2015
www.fib sudan.com
bleed guide.indd 1
20/07/2016 13:23
COUNTRY FOCUS MALAYSIA
Malaysia and Islamic finance in emerging markets NEW TECHNOLOGIES ARE SHAPING THE ISLAMIC FINANCE WORLD, WRITES MARK MOBIUS, EXECUTIVE CHAIRMAN OF TEMPLETON EMERGING MARKETS GROUP
T
he world of Islamic finance and investing represents an exciting world of opportunities for Muslims all over the world, and one we think should likely continue to grow. I recently had the pleasure of attending the Global International Islamic Finance Forum (GIFF) in Malaysia and had the opportunity to share our team’s views as well as exchange information on the future of Islamic finance in emerging markets. More than a 1000 participants from around the world attended this year’s GIFF in Malaysia, which I think is testament to the growth of Islamic finance. Many investors outside the Muslim world might not know much about Islamic finance, but recognition and interest in it has been growing globally. Bank of Malaysia Governor Datuk Muhammad bin Ibrahim spoke at GIFF and reported that by 2020, total assets in global Islamic finance are expected to reach more than $3 trillion. He also said that in at least 10 jurisdictions, Islamic banking today represents more than 20 per cent of total banking assets, and in many countries, Islamic
20
Islamic Business & Finance | ISSUE 98
page 18-21 Country Focus-Malaysia_98.indd 20
MARK MOBIUS
www.islamicbusinessandfinance.com
25/07/2016 15:29
COUNTRY FOCUS MALAYSIA
banking services are offered in tandem with traditional types of financial services and products. For those who are not familiar with Islamic finance, it encompasses both equity and credit-based investments (Sukuk) that are compliant with Shari'ah. The goal is the same as with other types of investments: to produce a favourable return and/or generate income. The difference is that Islamic investments must adhere to various tenets, including the prohibition of the payment of interest (Riba) as well as certain forbidden activities and products including alcohol, armaments and a number of foodstuffs and food-related activities. The interpretation of what is Shari'ah-compliant and what is not can be complex, requiring the active involvement of Islamic scholars (who may not always agree). This can add a layer of complexity for investors. If the main business of a company is not deemed compliant with Shari'ah, a portfolio manager cannot purchase, hold or sell its shares. Of course, the desired goal or purpose of any investment is to make money for those who invest in it. So, I think it is worth a look at how these types of investments have performed versus emerging market equities more broadly and versus global equities in developed markets more broadly. You can see in the chart below how the MSCI Islamic Total Return Index has largely mirrored the performance of the MSCI Emerging Markets Total Return Index since 2002 with some slight variations, while generally outperforming the MSCI World Index. Of course, some countries’ equity markets have performed better or worse than others.
EMERGING MARKETS ISLAMIC VS.WORLD MARKET PERFORMANCE (US$) June 3, 2002–May 3, 2016
— (INDEX) MSCI EM (Emerging Markets) Islamic - Total Return Index — (INDEX) MSCI EM (Emerging Markets) - Total Return Index — (INDEX) MSCI The World Index - Total Return Index
500 450 400 350
EM
300
EM Islamic
250
World
200 150 100 50
'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16
SOURCE: FactSet, MSCI
SECTOR WEIGHTINGS: EMERGING MARKETS VS. EMERGING MARKETS ISLAMIC AS OF APRIL 2016 Top 10 Sector Weightings Differences % 0 5 10 15 20 25 30 Financials
27.4
5.5
Information Technology
9.8
Consumer Discretionary 8.2 7.9 7.9
Consumer Staples Energy Telecom Services
6.9
Industrials
6.8 6.8
Materials Utilities Health Care
3.2 2.7
17.2
20.3
13.0
8.2 7.9 12.7
4.9
MSCI EM MSCI EM Islamic
4.3
SOURCE: MSCI, April 2016 For illustrative purposes only. Not reflective of any Franklin Templeton fund
We would note that Islamic investment indexes in Indonesia, Turkey and Malaysia have seen some periods of volatility but have generally outperformed many other countries in this category since 2002. If you look at the sector weightings of the MSCI Emerging Markets Islamic Index versus the more general MSCI Emerging Markets Index, you will see significant differences. For example, financials is much
smaller in the Islamic Index, while consumer discretionary and energy are much higher for the Islamic index. Country weightings also differ between the indexes.
ECONOMIC GROWTH IN THE MUSLIM WORLD M u s l i m p o p u l at i o n s h ave been growing worldwide, and economies in Muslim countries have similarly been growing. In 1987, Muslim-majority countries cont. overleaf
www.islamicbusinessandfinance.com
page 18-21 Country Focus-Malaysia_98.indd 21
ISSUE 98 | Islamic Business & Finance
21
25/07/2016 15:29
COUNTRY FOCUS MALAYSIA
represented about four per cent of global gross domestic product (GDP); as of December 2015, they represented about eight per cent of global GDP. We believe that percentage will continue to grow. We also have observed that GDP growth has been higher in emerging markets generally (including many Muslim countries) than in developed markets over the past two decades. Many Westerners associate countries in the Middle East with the Muslim world, but some countries in Africa and Asia also have large Muslim populations and good potential growth trends, Indonesia being the most populous individual Muslim country. In the charts on page 23, you can see the estimated growth and growth forecasts for Muslim-majority countries as well as select emerging markets versus select developed markets.
MALAYSIA: ISLAMIC FINANCE HUB At the GIFF, Malaysia’s central bank governor discussed Malaysia’s role as a global leader in Islamic finance, which operates alongside conventional financial markets. Malaysia has been a pioneer in Islamic finance, and the central bank’s efforts to develop Islamic finance span more than three decades. In 2001, the Securities Commission Malaysia provided a framework for establishing the country as a leader in Islamic finance as part of its first 10-year ‘Capital Market Master Plan.’ In 2006, the Malaysia International Islamic Financial Centre (MIFC) was launched to help further its goal of becoming an international Islamic financial hub—which I think clearly has been achieved!
22
Malaysia’s equity market has experienced weakness this year, along with its currency, which fell to its lowest level versus the US dollar since the mid– late 1990s, at a time Asia was experiencing financial crisis. We had to ask ourselves: Was it really that bad in the country— was this year’s selloff justified? There are many ways to determine currency valuations, but we use purchasing power parity to help determine whether a currency is overvalued or undervalued. This measures inflation in one country versus inflation in the United States. So, for example, if inflation in Malaysia, China or any other country is higher than inflation in the United States, those currencies should naturally decline versus the dollar. Based on this measure, we currently see the currencies of both China and Malaysia, as well as the currencies of Indonesia, Thailand and Saudi Arabia, appearing to be undervalued. We also see equities in emerging markets generally undervalued based on measures such as price/earnings and price/ book ratios. L o o k i n g at s o m e o t h e r fundamentals in Malaysia, we know that the country is a net exporter of oil and gas, so lower prices have had a negative impact. Palm oil is also a key export for Malaysia (the world’s secondlargest producer) and its price has been weak, and that certainly has had at least a psychological market impact. However, the use of palm oil globally is not declining, mainly because of demand from China and India, and we do not expect prices to stay permanently depressed. Additionally, Malaysia has a diverse array of export products, and is actually predominantly
Islamic Business & Finance | ISSUE 98
page 18-21 Country Focus-Malaysia_98.indd 22
a consumption-driven country (representing 60 per cent of GDP), so commodity prices alone cannot explain the dire situation the markets seemed to be reflecting there. Malaysia’s economy has a large service sector, which to me is a sign of its maturity. GDP growth since 1996 has averaged about five per cent, and while various forecasters call for growth below that level this year, it still appears to be experiencing a solid growth rate. Looking at some other metrics, household debt is at 89 per cent and public or government debt-to-GDP is at 54 per cent. While those readings may seem high to some observers (and higher than they were in 1997 during the Asian financial crisis), both readings are actually less than that of the United States. Malaysia’s trade surplus is good (which not many countries can boast) and foreign reserves remain at a healthy level. We also believe Malaysia’s demographics represent a positive factor going forward, as its young population is entering its most productive years and represents a big consumer market. I think the country has much more potential in many consumer sectors, as well as in tourism. If economic fundamentals do not seem to be signalling crisis, it seems that political scandal has been more likely behind the flight of foreign investors from Malaysia. The default of 1Malaysia Development Bhd (1MDB) and the related political scandal affected investors’ sentiment and confidence. However, foreign investor flows are often short term in nature and temporary. Negative news certainly affects investor confidence but we generally see these periods of market
www.islamicbusinessandfinance.com
25/07/2016 15:29
COUNTRY FOCUS MALAYSIA
overreactions as opportunities— if we find reasons for a recovery long term. We find a number of sectors to be attractive in Malaysia today, including i n t e g r at e d o i l c o m p a n i e s involved not only in production but also exploration, refining and marketing, as well as companies involved in the consumer sector. Our strategy has been to focus on the long term and not get side tracked with individual news items; that is something we strive to do in any market we invest in. 1MDB is not the entire story of Malaysia’s economy—although positive resolution should help foster improved investor sentiment. The proliferation of the Internet and smartphones is accelerating change, including bringing corruption to light in many countries. Exposing corruption and scandals publicly can help bring about positive longer-term changes—hopefully that is the case for Malaysia and 1MDB. Meanwhile, Malaysia continues its efforts in the area of Islamic finance. I found Datuk Muhammad bin Ibrahim’s comments at the GIFF quite interesting in regard to how new technological innovations could take Islamic finance to the next level of development. He spoke of how the digital revolution and widespread penetration of technology-driven applications were already present in nearly every segment of the financial sector, and that so - called ‘fintech’ innovations have been fundamentally altering the way we experience and deliver financial products and services. This is something I have also been talking about for some time. Emerging markets are
COMPARING GDP GROWTH IN SELECT COUNTRIES 2016 Forecast (%)
0.8
4.2 1.1
1.2
1.4
7.4
5.0
2.0
1.6
-1.3 -3.7 Brazil
Russia
Japan
Saudi Arabia
United Arab Germany Emirates
United Kingdom
United States
Malaysia
Indonesia
China
India
SOURCES: International Monetary Fund, Economic Intelligence Unit, as of May 5, 2016. There is no assurance that any projection, estimate or forecast will be realised.
MALAYSIA: PURCHASING POWER PARITY VS. US$ RINGGIT CURRENTLY APPEARS UNDERVALUED Ringgit/US$ Exchange Rate Vs. Malaysia/US PPP Index 2.0 2.5 3.0 3.5 4.0
Ringgit undervalued 24%
4.5
05/05/16: 4.0 Ringgit/ US$ ◀
5.0 01/90 01/92 02/94 02/96 02/98 01/00 01/02 01/04 01/06 01/08 01/10 01/12 01/14 01/16 Malaysia/US PPP
Ringgit per US$ Base Date: JAN 1990
SOURCES: FactSet, International Monetary Fund, Economist Intelligence Unit, Franklin Templeton Investments, May 2016. See www.franklintempletondatasources.com for additional data provider information.
experiencing a technological leapfrogging in many areas; the adoption of new technologies is moving very fast. One example is in the area of mobile banking and electronic payment systems, which are growing worldwide. In Malaysia, the first Islamic Shari'ah-compliant internetbased banking platform was launched this year, called the
www.islamicbusinessandfinance.com
page 18-21 Country Focus-Malaysia_98.indd 23
6.5
Red bars represent emerging markets Blue bars represent developed markets
Investment Account Platform (IAP). Formed by six Islamic banks in Malaysia, it utilises technology to efficiently channel funds from investors to viable economic ventures, promoting risk-sharing and supporting cross-border investments. This is just one example of how new technologies are shaping the Islamic world, and the world of emerging markets.
ISSUE 98 | Islamic Business & Finance
23
25/07/2016 15:29
COUNTRY FOCUS MALAYSIA
EPF’s upcoming Shari’ahcompliant fund could boost Sukuk demand EMPLOYEES PROVIDENT FUND OF MALAYSIA IS SET TO LAUNCH A FUND IN 2017 THAT COULD AFFECT SUKUK IN MALAYSIA, WRITES RUSLENA RAMLI, HEAD OF ISLAMIC FINANCE, RAM RATING SERVICES BERHAD
T
he Demand for Sukuk in Malaysia is expected to be further bolstered by the Employees Provident Fund of Malaysia (EPF) imminent launch of its pioneer fully Shari'ah-compliant fund by January 2017. The EPF, with
24
an investment portfolio valued at some $171.1 billion (or MYR 684.5 billion) as at end-December 2015, plans to launch this Islamicbased option with an initial investment of $25 billion (or MYR 100.0 billion).
Islamic Business & Finance | ISSUE 98
page 24-27_Country focus Malaysia.indd 24
This recent effort by EPF is another thrust forward for Malaysia’s thriving Sukuk market and would be beneficial to global Sukuk development. Despite the rapid expansion of other Sukuk markets, Malaysia is still
www.islamicbusinessandfinance.com
28/07/2016 10:53
COUNTRY FOCUS MALAYSIA
FIGURE 1: COMPOSITION OF GLOBAL SUKUK ISSUANCE BY COUNTRY (AS AT END-JUNE 2016) Pakistan (5.1%) Turkey (3.6%) Brunei (0.9%) Iran (0.4%) Gambia (<0.04%)
Others 10.2%
Indonesia 7.6%
(Rat007/SHUTTERSTOCK)
UAE (9.3%) Saudi Arabia (8.6%) Bahrain (3.1%) Qatar (1.3%) Kuwait (0.7%)
Malaysia 59.3%
USD37.2 billion GCC 23.0%
Source: Zawya and RAM
FIGURE 2: MALAYSIAâ&#x20AC;&#x2122;S DOMESTIC BOND ISSUANCE MARKET BY TYPE OF ISSUER (AS AT END-JUNE 2016)
USD93.6 billion
USD29.5 billion
USD32.3 billion
USD31.3 billion
51%
39%
2014
2015
USD14.2 % of Sukuk against billion total sovereign bond issuance 42% June 2016
Corporate + Quasi-government
Sovereign
USD16.9 billion
59%
51%
57%
2014
2015
June 2016
% of Sukuk against total corporate & quasi-government bond issuance
Source: Bond Pricing Agency Malaysia, RAM Note: Sovereign bond issuance includes Malaysian Government securities and Bank Negara Malaysia debt securities
www.islamicbusinessandfinance.com
page 24-27_Country focus Malaysia.indd 25
ISSUE 98 | Islamic Business & Finance
25
25/07/2016 15:52
COUNTRY FOCUS MALAYSIA
FIGURE 3: MALAYSIA’S DOMESTIC BOND MARKET BY TYPE OF ISSUE (AS AT END-JUNE 2016)
USD14.8 billion
20
USD15.5 billion
USD billion
USD13.0 billion
USD15.7 billion
Government 38%
Corporate 41% USD15.7 billion
10
0
June-15
June-16
Conventional
Quasigovernment 21%
Sukuk
Source: Bond Pricing Agency Malaysia, RAM Note: Sovereign bond issuance includes Malaysian Government securities and Bank Negara Malaysia debt securities
the largest (with a 59.3 per cent market share, equivalent to $22.1 billion as at end-June 2016) and most liquid, with a deep base of institutional investors. Coupled with developed and supportive tax , legal and regulat or y frameworks, the Sukuk market has become a popular financing avenue for domestic issuers and foreign entities. Against this backdrop, RAM Ratings has had the privilege of rating 31 foreign issuers from 15 countries of which 45 per cent established Sukuk programmes where issuers consists of financial institutions as well as diversifiedh o l d i n g s a n d p l a n t at i o n based companies. In the first six months of 2016, the Malaysian debt
26
capital market posted notable jumps in the issuance of quasiGovernment securities (+59 per cent y-o-y) and corporate debt papers (+36 per cent y-oy), bringing the cumulative amount to $16.9 billion (MYR 67.7 billion). Shari'ah-compliant securities accounted for 57 per cent (or $9.7 billion) of quasiGovernment and corporate issues, highlighting Sukuk as the preferred financing option. At the same time, the issuance of Malaysian sovereign securities (comprising Government securities and central bank debt issuance) amounted to $14.2 billion (MYR 56.8 billion), of which 42 per cent ($14.2 billion) constituted Islamic securities. Looking ahead, RAM expects $25 billion–$30 billion (MYR 100
Islamic Business & Finance | ISSUE 98
page 24-27_Country focus Malaysia.indd 26
billion-MYR 120 billion) of gross issuance for the domestic Sukuk market in 2016, supported by the Government of Malaysia’s (GOM) and private sector’s ongoing efforts to deepen this segment through the issuance of Islamic securities. As at end-June 2016, Malaysia’s Sukuk issuance had reached $15.7 billion (MYR 62.7 billion) with the corporate sector holding the lion share of issuance at 41 per cent or $6.4 billion. Amid efforts to deepen the Sukuk market, the GOM has the capacity to support more issuance of Islamic securities in anticipation of the EPF’s potential demand. To date, Sukuk issuers have originated from the infrastructure & utilities, financial services, transportation and diversified
www.islamicbusinessandfinance.com
25/07/2016 15:52
COUNTRY FOCUS MALAYSIA
(Farizun Amrod Saad/SHUTTERSTOCK)
Malaysia hustles and bustles forward
holdings sectors. The largest corporate Sukuk issued to date include the MYR7.7 billion Sukuk issued by Sunway Treasury Sukuk Sdn Bhd and the MYR4.5 billion Sukuk issued by DanaInfra Nasional Berhad. RAM opines that the infrastructure sector will continue to underpin the corporate sectorâ&#x20AC;&#x2122;s Sukuk issuance, backed by the ongoing and future implementation of infrastructure projects. Nevertheless, the future performance of the quasi-Government and corporate sectors is envisaged to hinge on overall expectations of market conditions, which will in turn be influenced by the operating environment, the performance of the ringgit and global oil prices.
TOP 10 ISSUERS OF MALAYSIAâ&#x20AC;&#x2122;S RINGGIT DOMESTIC SUKUK MARKET (AS AT END-JUNE 2016) Amount MYR million
Market share per cent
Government of Malaysia
24.00
38.3 per cent
Sunway Treasury Sukuk Sdn BHD
7.67
12.2 per cent
DanaInfra Nasional BHD
4.50
7.2 per cent
Pengurusan Air SPV BHD
3.20
5.1 per cent
Prasarana Malaysia BHD
3.05
4.9 per cent
Sime Darby BHD
2.50
4.0 per cent
Malaysia Airlines BHD
1.50
2.4 per cent
Sarawak Energy BHD
1.50
2.4 per cent
Danga Capital BHD
1.50
2.4 per cent
MEX II Sdn BHD
1.30
2.1 per cent
Top 10 Issuers
50.72
81.0 per cent
Total Ringgit Domestic Market
62.66
100.0 per cent
www.islamicbusinessandfinance.com
page 24-27_Country focus Malaysia.indd 27
ISSUE 98 | Islamic Business & Finance
27
26/07/2016 09:03
SUKUK
Hong Kong looks to further activity in Islamic finance
IB&F SPOKE TO BY PROF. K.C. CHAN, SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY, HONG KONG SPECIAL ADMINISTRATIVE REGION, AT THE ASIAN FINANCIAL FORUM 2016 ABOUT HONG KONGâ&#x20AC;&#x2122;S CONTINUED INTEREST IN BECOMING A HUB FOR ISLAMIC FINANCIAL ACTIVITY AND SUKUK ISSUANCE
28
Islamic Business & Finance | ISSUE 98
page 28-30 Sukuk-98.indd 28
www.islamicbusinessandfinance.com
24/07/2016 15:59
SUKUK
W
Hong Kong sails towards a brighter Islamic financial future.
ith so many financial centres around the globe interested in becoming more active in Islamic finance, Hong Kong is looking to leverage its many established strengths to increase its own activity in the space as well as attract more activity to the special administrative region. Hong Kong is not new to Islamic finance. In 2015, the HKSAR Government made its second foray into the world of Sukuk. The 2015 Sukuk, with an issuance size of $1 billion and a tenor of five years, was also issued in US dollar, much like the previous Sukuk issued by the HKSAR Government, its inaugural issuance made in September 2014. Last year also saw Hong Kong reaching out to the rest of the Islamic financial world as well. Following a global roadshow commencing 18 May 2015, covering Riyadh, Jeddah, Dubai, Abu Dhabi, Kuala Lumpur, Hong Kong and London, the Reg S US dollar Sukuk was priced on 27 May 2015 at 1.894 per cent (35 basis points over five-year US Treasuries). The global Islamic finance world responded to that openness in kind. The Sukuk received warm welcome from global investors, attracting orders of $2 billion, which was two times the issuance size. Despite the volatility observed in the international bond market and the large movements of sovereign bond yields within a short period of time, benefitting from the investor confidence in Hong Kong’s credit strengths and the strong demand for high quality Sukuk, the final pricing was set at the tight end of the initial price guidance. The cost of funding
was at a very low level of 1.894 per cent, which was lower than that for the inaugural Sukuk issuance in 2014. The deal attracted interest from a diverse group of conventional and Islamic investors. Orders were received from 49 global institutional investors, and 42 per cent of the Sukuk were distributed to the Middle East, 43 per cent to Asia and 15 per cent to Europe. By investor type, 77 per cent was distributed to banks, private banks and fund managers, and 23 per cent to sovereign wealth funds, central banks and supranationals, according to the Hong Kong Government. Though Hong Kong has yet to issue another Sukuk since then, now more than a year later, Hong Kong has not abandoned Islamic finance. “We are very interested in developing an Islamic finance platform here in Hong Kong,” said by Prof. K.C. Chan, Secretary for Financial Services and the Treasury, Hong Kong Special Administrative Region, to Islamic Business & Finance. "It’s not because Hong Kong has a good-sized Islamic population. The reason is that we believe that Islamic activity is a major part of the international financial world. Islamic finance assets are a good percentage of the international financial assets. In order for Hong Kong to be a comprehensive financial centre, Hong Kong would like to offer Islamic financial products. That is the reason that we are interested in it.” Hong Kong has worked to make sure Islamic finance operates on an even playing field in the special administrative region. “ We have actually changed our tax law in Hong Kong so that when an issuer cont. overleaf
www.islamicbusinessandfinance.com
page 28-30 Sukuk-98.indd 29
ISSUE 98 | Islamic Business & Finance
29
25/07/2016 15:55
SUKUK
cont. from pg 29
issues certain financial products, those financial products from a tax standpoint will be treated very much like conventional bonds. There is no longer any disadvantage for the issuance of Islamic products in Hong Kong. In the tax area, we have levelled the playing field so that Islamic financial products can evolve in Hong Kong without any kind of tax disadvantage,” said Chan. Chan also highlighted the aforementioned Sukuk’s issuance’s rationale, as well as the strengthened ties that issuances created with Dubai.“The Hong Kong Government also issued two Islamic products in the last two years to demonstrate how you can use the existing institutions of Hong Kong and legal framework to issue Islamic financial products. Those Sukuk were also listed in the Dubai exchange to show how this can create a global exchange.” Hong Kong’s interest in Islamic finance is also tied to broader China’s �One Belt One Road� initiative, which is an effort to strengthen Hong Kong and China’s economic ties with its historical ‘silk road’ partners across Eurasia. “We will continue this effort. We believe that with the One Belt One Road initiative, there will be more opportunities to issue Islamic financial products for many different kinds of investments. We are very interested in continuing our work of attracting those issuances in using our platform. “ With the One Belt One Road initiative, there will be an increasing need to develop Islamic products. As we see the renmibi [RMB] become more internationalised in the future, we will find that the Islamic
30
products could be denominated in RMB. That will not happen right away, but we feel that will be something possible to develop in the future. We just want to make sure that we are ready,” said Chan. Chan also highlighted Malaysia’s strength in the space, and Hong Kong’s strong ties with the country in terms of Islamic finance and more. “We have a very strong relationship with the Bank Negara Malaysia, and we have participated in a number of forums in Malaysia. I believe that many of the people working on Islamic financial projects in Hong Kong also have ties to Malaysia. Some of the Malaysian banks operating in Hong Kong are also working on these projects. We definitely have a strong and friendly relationship with Malaysia.” Though Malaysia remains strongest, that does not mean that Hong Kong does not have a lot to contribute potentially to the Islamic economy. “As I said earlier, Hong Kong does not have an Muslim population. The thing about the Muslim population in Asia is that Malaysia is the foremost Islamic financial centre. In our own consi der at i o n, we b e l i e ve Hong Kong does possess many advantages, starting with the fact that Hong Kong is a very well developed international financial centre. We have a set of rules and regulations and laws understood by international investors. When we talk about Muslim financial products, many are invested in by the nonMuslim population. It’s not just an Islamic population investing in an Islamic product—it’s more diverse. that is why a city like
Islamic Business & Finance | ISSUE 98
page 28-30 Sukuk-98.indd 30
The Hong Kong Government also issued two Islamic productsin the last two years to demonstrate how you can use the existing institutions of Hong Kong and legal framework to issue Islamic financial products. Those Sukuk were also listed in the Dubai exchange to show how this can create a global exchange. PROF. K.C. CHAN, Secretary for Financial Services and the Treasury, Hong Kong Special Administrative Region to Islamic Business & Finance
London is developing an Islamic financial platform. We want to be a comprehensive platform and be able to offer those services.” Chan did, however, question to what degree they will succeed with that initiative. “Will there be enough demand? That is an open question. We think that Hong Kong is a good centre to issue Islamic products. that is why we try to put ourselves in that position to demonstrate we can do that. We realise that there are many choices of where one can issue Islamic products, but we have enough capabilities to offer this, and view ourselves as a good choice.” In terms of further Sukuk issuance, the answer is still vague. “We’re still reviewing t h i n g s . Th e r e i s n o t h i n g definite. We’re just reviewing our strategy.”
www.islamicbusinessandfinance.com
24/07/2016 15:59
NOVEMBER NOVEMBER 2016 2016 - DUBAI - DUBAI bleed guide.indd bleed guide.indd 1 1 Wealth Wealth Sindigate Sindigate house ad.indd house ad.indd 6 6
20/07/2016 20/07/2016 13:43 13:43 7/17/167/17/16 3:48 PM3:48 PM
NOVEMBER 2016 --DUBAI NOVEMBER NOVEMBER NOVEMBER 2016 2016 2016 -DUBAI -DUBAI DUBAI NOVEMBER 2016 bleed guide.indd 1 bleed bleed bleed guide.indd guide.indd guide.indd 1 1 house 1 Wealth Sindigate ad.indd Wealth Wealth Wealth Sindigate Sindigate Sindigate house house house ad.indd ad.indd ad.indd 6 666
bleed bleedguide.indd guide.indd 11 Wealth Sindigate house ad.indd 6
- DUBAI 20/07/2016 13:4313:43 20/07/2016 20/07/2016 20/07/2016 13:43 13:43 7/17/16 3:48 3:48 PM 7/17/16 7/17/16 7/17/16 3:48 3:48 PM PM PM
24/07/2016 20/07/2016 14:22 13:43 7/17/16 3:48 PM
SPECIAL FEATURE
NOTES ON A SMALLER
ISLAND
(patrice6000/SHUTTERSTOCK)
ISLAMIC FINANCE THRIVED IN GREAT BRITAIN, BUT, POST-BREXIT, COULD IT SURVIVE IN LITTLE ENGLAND?
32
Islamic Business & Finance | ISSUE 98
page 32-35_Special Feature.indd 32
www.islamicbusinessandfinance.com
26/07/2016 09:02
SPECIAL FEATURE
If Britain’s global clout is softened in the wake of Brexit, Islamic finance will have lost its champion in the western corner.
W
hat a difference a day makes. When Britain leap-frogged New York to become the world’s number one financial centre in 2015, it was the envy of the world and the obvious hub for Islamic finance in Europe. London has always welcomed Gulf money; a large part of its skyline was forged with Islamic investment. In return, London seemed the ideal spot for Islamic institutions looking to gain a foothold in the west, and soak up the City’s centuries-strong regulations and infrastructure. Then, on 24 June, Britain shocked the world by announcing that its public had voted to leave the EU. Overnight, the FTSE 100 tumbled, the sterling crumbled and Britain’s credit rating lay in tatters after being downgraded by Moody’s, Standard & Poor’s and Fitch. Banks, still recovering from their near death experience in 2008, bore the brunt of panicked investors as stocks nosedived. This is a very different crisis from that of 2008, when Islamic banks came out smelling of roses thanks to a ban on speculative investments. Now Britain’s Islamic banks are in the same position as its conventional peers, and may suffer alongside them. It is not yet known under what terms Britain will exit the EU, leaving the financial services sector—which Islamic institutions are very much a part of—facing a long period of uncertainty.
BUSINESS AS USUAL Perhaps understandably, the Islamic banks we contacted remained tight-lipped about the outlook for Islamic banks in Britain. In fairness, with no clarity likely to materialise before a new Prime Minister moves into Number 10 in September, there is little they can do but reassure their customers that business will continue as usual. “Our priority is to ensure that we serve BLME’s customers and support the staff here at the bank,” Jabra Ghandour, Chief Executive Officer of the Bank of London and the Middle East (BLME), told Islamic Business & Finance.
“Our priority is to ensure that we serve BLME’s customers and support the staff here at the bank. “Following the vote to leave the EU there will be much debate about what happens next. Our commitment remains to our customers and our shareholders. We are open for business as usual in London and Manchester and there are no plans for this to change. BLME will continue to work closely with the Government and the regulators to develop and support an environment in which Shari’ah finance and investment can thrive.” Al Rayan Bank voiced a similar stance. “We are a stable and secure UK bank,” said its Chief Executive Officer, Sultan Choudhury. “Our customers’ money will continue to be protected by the Financial Services Compensation Scheme up to a limit of GBP 75,000. Our financial position is very healthy and we have a strong parent in Qatar-based bank, Masraf Al Rayan. We have limited exposure to the European market. “There are no changes planned to the expected profit rates of our savings accounts. Until any impact of the referendum on the UK savings market is known and understood, we will continue to operate on a business as usual footing.” However, there is little escape from the volatility that the Brexit vote has wreaked. Banks and property developers, the two sectors most vulnerable to market sentiment, were among the hardest hit in the market fallout following the referendum result. Islamic banks partiality for UK real estate could be particularly painful if property prices fall, as they are predicted to, by as much as 10 per cent. Islamic banks’ overreliance on the property sector is well documented, and Britain has long been a favourite destination for real estate investment. “As yet, we do not know the long-term effect on the UK housing market of the UK’s decision to leave the EU,” Choudhury assured us, adding that business had to go on as usual until more clarity was offered. cont. overleaf
www.islamicbusinessandfinance.com
page 32-35_Special Feature.indd 33
ISSUE 98 | Islamic Business & Finance
33
26/07/2016 09:02
(Zoltan Gabor/SHUTTERSTOCK)
SPECIAL FEATURE
cont. from pg 33
DON’T FORGET YOUR PASSPORT
The biggest issue facing the UK financial services sector is whether institutions will retain their passporting rights. Currently, a British bank can provide services across the EU from its UK home. More importantly, a Swiss or an American bank can do the same from a subsidiary established in the UK. Unless a special deal is negotiated, this won’t be possible in post-Brexit Britain. As such, London’s gateway to Europe will be slammed shut.
34
Islamic Business & Finance | ISSUE 98
page 32-35_Special Feature.indd 34
Although all banks will suffer as a result of this, passporting rights are arguably less of an issue for Britain’s Islamic banks who, in reality, do very little trade with the rest of the EU. “A considerable portion of Islamic finance activity in London has been focused on non-EU markets like the Gulf and Malaysia, and Brexit should not affect London's ability to continue dealing with those jurisdictions as before,” Habib Motani, Partner at Clifford Chance in London, told Islamic Business & Finance. “Of course, there will be the question of accessing investors
London's connection to the Eurozone is in question after the Brexit vote.
www.islamicbusinessandfinance.com
25/07/2016 15:59
SPECIAL FEATURE
in the EU from London. This is the same single passport issue as banks and others will be facing in relation to the conventional market. “We will have to wait and see what agreement there will be regarding this between the UK and the EU, but whatever solution the banks implement in relation to the conventional market will affect Islamic banks too. There will be questions around which market or exchange to list a new issue on—London or another; but to be honest, I am sure this will prove manageable in the context of instruments like Sukuk. Accordingly, much of Islamic finance should continue as before.”
LIVING WITHOUT EU Losing access to the EU’s single market may not hurt Islamic banks as much as conventional ones, however there is a real danger that London will lose its competitive edge. If the City’s reputation as the best place to bank wanes, will Islamic institutions be as keen to do business there? If the UK loses its status as the Islamic finance capital of Europe, there are plenty of financial centres lining up to take its place. “I have seen reports that Luxembourg is viewing Brexit as an opportunity to surpass London as a hub for Islamic finance,” said Motani. “Of course Luxembourg has, for many years, been very active in Islamic finance; especially in the context of Islamic funds, Luxembourg already has an excellent standing, complementing its high stature in the investment fund world more generally.” Luxembourg isn’t the only contender. France has previously made bids to woo Islamic finance, as has Germany. Whether they will rekindle their interest if the number one spot opens up remains to be seen. Neighbouring Scotland, which voted overwhelming to remain a part of the EU, has also courted Islamic finance and would make a convenient second home for Islamic institutions should it choose to divorce itself from the UK. However, London would be a hard act to follow. No country outside the Muslim world has embraced Islamic finance as wholeheartedly as Britain. The number of institutions in the UK that offer Islamic financial services is nearly double that of the US, and dwarfs other western countries. The UK was the first non-Muslim nation to host the World Islamic Economic Forum, and to issue a sovereign Sukuk.
www.islamicbusinessandfinance.com
page 32-35_Special Feature.indd 35
BEST OF BRITISH Over 20 banks offering Islamic services, of which five are fully Shari’ah-compliant, are licensed in the UK. The London Stock Exchange is a key global venue for the issuance of Sukuk. The UK offers by far the most complete service for Islamic finance outside its home markets, with financial intermediaries, asset managers, insurance providers and over 30 international law, accountancy and consultancy firms all catering to an Islamic crowd. If Britain’s global clout is softened in the wake of Brexit, Islamic finance will have lost its champion in the western corner. The UK is also by far the largest provider of Islamic finance courses, with offerings at around 70 educational institutions. The UK Government is also working on Shari’ah-compliant student loans. In the midst of a severe talent shortage, this isn’t an asset Islamic finance could afford to lose. There is much at stake for Britain too. Islamic finance plays a significant role in infrastructure development in the UK, from The Shard to the Olympic Village. Over 6,500 homes are currently being financed by a GBP 700 million investment by Gatehouse Bank. The UK cannot afford to lose this funding, especially when investment from Europe dries up. In the short-term, this is unlikely to happen, as the crumbling pound has only made Britain more attractive to foreign investors. “The fall in sterling makes UK assets and, just as importantly, services cheaper to non UK investors, meaning they will represent good value,” said Motani. “I expect vigorous marketing efforts to promote these. Let's be optimistic and look forward to UK-based houses making the most of the opportunity, even though there will be some downside to have to cope with.” Long-term, the impact Brexit will have on Islamic finance remains unclear, because no one yet knows what shape Britain will take when it finally exits the EU. Because of how intricately Britain is woven into the world’s financial markets, the consequences of Brexit will touch every segment of the financial services industry, including Islamic finance. It would be a great pity if this led to either party distancing itself from the other, as there is much to be gained, and lost, on Britain’s future relationship with Islamic finance.
ISSUE 98 | Islamic Business & Finance
35
24/07/2016 16:03
(everything possible/SHUTTERSTOCK)
ISLAMIC TECH
Islamic banks need to focus on tech in order to meet the needs of the future.
Making Islamic banking software solutions better EFFICIENT ISLAMIC BANKING SOFTWARE PRODUCTS IS CRUCIAL TO EXPANDING A BANKâ&#x20AC;&#x2122;S MARKET SHARE, WRITES ASHAR NAZIM, PARTNER, GLOBAL ISLAMIC BANKING CENTRE, EY 36
Islamic Business & Finance | ISSUE 97
page 34-36_Islamic Tech.indd 36
www.islamicbusinessandfinance.com
24/07/2016 16:31
ISLAMIC TECH
The software used by Islamic banks needs to be fully compliant with the tenets laid down by Shari’ah and should also support operational efficiency. Recent analysis by EY indicates that Islamic banks have experienced a decline in profitability and their average return on equity (ROE) lags behind that of conventional banks by 20 per cent. Operating expenses are also 50 per cent higher for Islamic banks. Falling oil prices have further aggravated the situation, as banks are under extreme pressure to cut costs and become more efficient. With the usage of wide-ranging transformation programmes, that include digital transformation, the profit pool of Islamic banks could potentially increase by 25 per cent.
THE ISLAMIC BANKING SOFTWARE MARKET
A
t the heart of any banking operations, the software plays a fundamental role in entailing operational efficiency. Islamic banks are expected to make appropriate investments in best-in-class software with Islamic capability with components covering business process modelling, compliance and risk management tools that would enhance banks’ profitability and performance, thereby passing the benefits indirectly to the end-customers of Islamic banks.
The growing demand for tier 1 software that has Shari’ah compliant functionality (also known as Islamic core banking system) has entailed several existing and new players joining the software arena. In terms of Islamic banking, such systems can be categorised under two groups: 1) modular software with Islamic banking capability — these are the software which have an existing capability to support conventional banking. The module to support Islamic banking is developed over the conventional part of the system; 2) pure play software with Islamic banking capability, systems developed only to serve Islamic banks. There has recently been significant improvement in the level of participation of governing bodies, senior executives from banks and certain tier 1 software vendors (which offer solutions
with Islamic banking capability) to reinforce the Islamic banking solution capabilities and bring synergies into the Islamic banking landscape. With the sharp increase in asset shares within Islamic banking, sophisticated systems with Islamic banking capability is definitely the need of the hour.
LACKING ATTRIBUTES Though relatively in its nascent stage, Islamic banking has witnessed fast growth and technology has been instrumental in this leap. There has been significant investment in the application of technology in the realm of Islamic banking but there have been challenges, partly due to the relatively complicated processes (emanating from Shari’ah tenets) and due to the varying interpretations of some of the Shari’ah principles in different parts of the world. Some of the typical challenges with the software used by Islamic banks include: 1) Zakat computation, automatic calculation of Zakat thereby placing onus on the software to make these intricate calculations; 2) non co-mingling of funds for restricted deposits, where the customer demands that their investment should only be utilised under a particular project with the returns to be channelled specifically without co-mingling the returns to the other set of investments; 3) distribution of loss, where distribution of losses becomes a complicated process involving computation, allocation and distribution, and due to the complex nature of this process as well as the incapability of several software to comply with Shari’ah tenets, this is typically performed outside the software through manual cont. overleaf
www.islamicbusinessandfinance.com
page 34-36_Islamic Tech.indd 37
ISSUE 97 | Islamic Business & Finance
37
24/07/2016 16:31
ISLAMIC TECH
cont. from pg 35
methods; 4) facility rescheduling and restructuring, where the ‘selling price’ in a financing portfolio restructuring should not be changed in a contract, thereby making rescheduling and restructuring tricky, especially when same contract is supposed to be used; 5) compensation charges for late payment, where the software used should be flexible enough to accommodate variations in the interpretations across different geographies.
ISLAMIC VS. CONVENTIONAL BANKING SOFTWARE The key differences between software that has Shari’ah compliant functionality and conventional software are the fundamental differences between the two banking systems. They include: 1) concept of money and basis of transactions, whereas in conventional banking treats money as a medium of exchange and a store of value, Islamic banking money is a medium of exchange where the value of money is equal to that of its face value and does not consider timevalue-of-money invalidating the principle of interest; and 2) relationships with clients and customers, where conventional banking results in guaranteed principal and earning of fixed amount of income while Islamic banking forms relationships on the basis of partnerships operating on the basis of profit and loss sharing. Software solutions used by Islamic banks have to fully comply with the fundamentals above for all its business process transactions. Differentiating principles such as profit and loss distribution, management of
38
Islamic banks need to focus on a few high-impact opportunities: payments, mortgages and small investment accounts appear to have the highest payoff. – ASHAR NAZIM, PARTNER, Global Islamic Banking centre, EY
charitable income, segregation of funds, handling of Zakat, right accounting treatments, complex reporting and prevention of prohibited transactions, have to be inherently adopted in the software.
OUTLOOK Leading Islamic banks have done well to mainstream with a competitive, sieable business in their home markets. Analysts however, also point out that the return on shareholder equity could be significantly enhanced, by at least 15 to 20 per cent, and this need becomes more pressing in the context of the prevailing macroeconomic environment. The next big opportunity is for Islamic banks to regionalise. But the challenge is this has to be done in the context of lagging industry infrastructure that could potentially put shareholder value at risk. Fortunately, the progression of fintechs and the digitisation of banking business means that banks will have to completely reinvent their business model. The future of retail banking in emerging markets is an enhanced smartphone experience. Islamic banks need to focus on a few highimpact opportunities: payments, mortgages and small investment accounts appear to have the highest payoff. The boards of most of the 40 systemically important banks have been generous in sanctioning spend on digital initiatives—
Islamic Business & Finance | ISSUE 97
page 34-36_Islamic Tech.indd 38
between $15 million and $50 million over next three years— well aware that inaction could cost up to 50 per cent of their retail banking profit in next few years. The bigger challenge is the implementation of the digital strategies. The industry today is yet to reach 100 million customers. The potential captive market is six times bigger, but requires a different banking model. A digitalfirst strategy has to be the stimulus for Islamic banks to sign up the next 100 million customers over the next decade. This exciting journey is only just beginning.
Islamic banking software solutions should incorporate the following key features: • Shari’ah compliance — the system should be able to cater to the entire spectrum of product offering of an Islamic bank and has been subjected to a thorough Shari’ah audit exercise. • Flexible and scalable system to accommodate varying Shari’ah interpretations — parameter driven structure along with userdefinable codes to enable the system to easily accommodate varying Shari’ah interpretations (for different jurisdictions). • AAOIFI and IFSB compliance — software should be fully compliant with accounting standards for Islamic financial institutions as prescribed by AAOIFI and risk management and capital adequacy standards set by IFSB. • Capability to compute akat — charity as well as profit loss distribution. • Accurate accounting entries — detailed accounting entries required by the purchase and sale elements of Islamic financing to reflect the ownership of property.
www.islamicbusinessandfinance.com
25/07/2016 17:20
11th Islamic Business & Finance
Awards 2016
Excellence through innovation Rewarding pioneers in Islamic finance
SUBMISSION DEADLINE
SEPTEMB6ER
1, 201
23rd november 2016
SUPPORTED BY:
Emirates Towers Hotel, Dubai, UAE
For sponsorship and nominations opportunities please contact: Nap Estampador, Business Development Manager Tel: +971 4 391 4680 or Email: nap@cpifinancial.net bleed guide.indd 1
For other information please contact CPI Financialâ&#x20AC;&#x2122;s events team Tel: +971 4 391 4682 or Email: events@cpifinancial.net 10/07/2016 10:22
SUKUK
Oman heralds a new framework for Sukuk issuances and new listing categories WRITES SADAF BUCHANAN, PARTNER, MUSCAT, DENTONS
40
Islamic Business & Finance | ISSUE 98
page 40-42 Sukuk-98.indd 40
www.islamicbusinessandfinance.com
24/07/2016 16:34
SUKUK
T
he past few weeks have seen frenetic activity in key legislative developments being released in Oman. Hot on the heels of the publication of Oman’s new Sukuk Regulations on 5 April 2016 came the introduction of new listing categories on the Muscat Securities Market (MSM).
WHY ARE THE SUKUK REGULATIONS SIGNIFICANT?
Sadaf Buchanan, Partner, Muscat, Dentons
A glipse of the beautiful Nizwa, Oman.
The Capital Market Authority (CMA) Decision 3/2016 issued on 5 April 2016 introduced the CMA’s long-awaited Sukuk Regulations (the Regulations). These Regulations mark the culmination of more than three years of drafting, re-drafting and consultation with industry players both locally and internationally. The CMA has worked hard behind the scenes to take on board comments of key stakeholders to achieve the objectives of having a framework which will further promote capital market issuances in Oman. As an interim measure pending release of the Regulations, an amendment to the Capital Markets Law was promulgated in November 2014 (Sultani Decree 59/2014) which added licencing and regulation responsibility of SPVs to the CMA as well as the identification of the terms and conditions of financial trusts and issuance, listing and trading of Sukuk instruments and their Shari’ah supervision. The absence of a dedicated Sukuk regulatory framework, along the lines of the Regulations, did not hamper the ability of the Government of Oman to launch its debut Sukuk in 2015, nor the
ambitions of a number of key corporations in planning their issuances. However, those of us who are working on structuring Sukuk transactions for a range of Omani issuers drawn from a broad spectrum of industries and sectors welcome a more formal legislative basis, which brings more certainty for both issuers and investors.
WHAT ARE SOME OF THE KEY FEATURES OF THE SUKUK REGULATIONS? The SPV The ability to issue through an Omani limited liability company SPV with significantly lower minimum capital requirements, rather than through a joint stock company which requires minimum paid-up capital of OMR 500,000 (approximately $1,300,000). Not only must the SPV be a company registered at the Ministry of Commerce and Industry, but the CMA must also grant a separate licence to the SPV (terms and conditions have yet to be disclosed), which will mean a fee of OMR 1,000 with further fees on renewal of the licence every five years. The prospectus The Regulations refer to issuances taking place with a “draft prospectus as per the form prepared by the CMA”. Currently, no such form exists for Sukuk issuances and the current practise to date has been to adapt the model form of prospectus for equity issuances. This is not ideal and there are a number of areas of uncertainty in trying to fit bond and Sukuk issuances within that framework. cont. overleaf
www.islamicbusinessandfinance.com
page 40-42 Sukuk-98.indd 41
ISSUE 98 | Islamic Business & Finance
41
24/07/2016 16:34
SUKUK
cont. from pg 41
It remains to be seen whether a new dedicated model form will be released for Sukuk issuances but this would certainly assist issuers. The Regulations mention no requirement that the prospectus must be issued in Arabic form, thus providing a greater degree of flexibility to potential issuers in terms of both the cost and timing of a launch. In practise, however, the CMA is still insisting that the Arabic prospectus is filed and signed by the various advisers and the issuer. Credit rating The CMA may request a credit rating of the obligor but this is not a strict requirement. Sukuk programmes The Regulations anticipate both standalone Sukuk issuances as well as programmes. This marks a positive development and one designed to encourage issuers to have the programme establishment completed with the flexibility to take advantage of favourable market conditions and issue quickly and regularly. Shari’ah Supervisory Board Th e r e a p p e a r s t o b e n o requirement for the beneficiary/ obligor to have its own Shari’ah S up er v isor y Board, hence issuers may be able to engage the services of an independent Shari’ah consultancy firm. Further clarification will be required from the CMA as to how this is reconciled with annual reporting obligations confirming that the Sukuk is Shari’ahcompliant. The requirement of an annual certification by a Shari’ah Supervisory Board introduces further obligations on the issuer which were not
42
included in previous drafts of the Regulations. Financial trust The formal introduction into Oman law of the detailed requirements for constituting financial trusts in the context of Sukuk transactions. Subscription by Omanis only The CMA may restrict subscription and trading to Omani nationals in certain circumstances and further clarity will be required on these provisions.
WHAT ELSE? New listing categories on the Muscat securities market The other key development of the past few days relates to a further amendment of the Executive Regulations of the Capital Market Law of 1998. Decision No. 5/2016 came into force on 6 June 2016. One of the notable features is the introduction of a new “Bond and Sukuk Market” on the MSM. The CMA intends to have existing and future bonds and Sukuks listed on the MSM to be placed into this new category over time and we therefore expect the CMA to disclose the associated transitional arrangements. The Bond and Sukuk Market does not yet have US Dollar capability but we understand that this facility is being developed quickly. It remains to be seen what additional administrative requirements will be implemented by the MSM and whether privately placed bonds and Sukuk will be subject to public disclosure requirements or whether there will be an equivalent of a Third Market framework where bonds are traded OTC
Islamic Business & Finance | ISSUE 98
page 40-42 Sukuk-98.indd 42
Together with the Bond and Sukuk Market, there are a number of other new categories also being introduced, such as “Under Monitoring Market” and a “Rights Issue Market”. Th e n e w a n d u p d a t e d categories are also intended to serve as an upgrade and to facilitate the review of market information in line with the CMA’s mandate to promote capital markets in Oman.
WHAT NEXT IN RELATION TO SUKUK ISSUANCES? The Regulations refer to further forms and directives to be issued by the Executive President of the CMA to prescribe their implementation and we will continue to consult with the CMA as to the implications for potential issuers, arrangers and investors. Whilst not all industr y recommendations have made their way into the Regulations – for example, the disapplication of the prohibition on issuing bonds in excess of issued share capital (in the context of Sukuk issuances), or related party approval exemptions (as the SPV will likely be a subsidiary of the Obligor), the Regulations do provide a number of key concessions not previously available under Oman law. The Regulations therefore mark a significant and positive step forward in the promotion of Sukuk issuances in a market that has grown by more than 50 per cent over the past year alone. There is certainly more to come and these legislative developments signal the much needed steps being taken to facilitate issuances in and from the Sultanate of Oman.
www.islamicbusinessandfinance.com
25/07/2016 16:08
TAKAFUL
(Zurijeta/SHUTTERSTOCK)
The origins of MicroTakaful
S
PROF. BADR EL DIN A. IBRAHIM, MICROFINANCE CONSULTANT, GIVES AN OVERVIEW OF THE PROGRESS AND CHALLENGES OF CONSTRUCTING SMALL-SCALE SHARI’AH-COMPLIANT INSURANCE
udan is the inventor of Takaful. The first worldwide Takaful insurer was the Islamic Insurance Company of Sudan, established by Faisal Islamic Bank in 1979. When Faisal Islamic Bank commenced its operation 1978, there was a problem of insuring its assets and operations in an Islamic way. The Shari’ah Supervisory Board of Faisal Islamic Bank allowed the bank to open an insurance company cont. overleaf
www.islamicbusinessandfinance.com
page 43-45_TAKAFUL.indd 43
ISSUE 98 | Islamic Business & Finance
43
27/07/2016 14:44
TAKAFUL
based on cooperative insurance and fully conforms to the principles of Shari'ah in 1979, according to Islamic Insurance in Sudan, a report by Salah El Din Musa and Mohamed Suleiman. Nowadays, there are 15 Islamic insurance companies in Sudan, supervised and controlled by the Insurance Supervisory Authority. The latter falls under the direct supervision of the Ministry of Finance and Planning. Each company should have a Shari'ah Advisory Board, to fully authorise to monitor the Shari'ah compliance of the operations of these companies.
The experience of insurance companies in relation to microfinance transactions has been limited, but diversified and is growing fast. PROF. BADR EL DIN A. IBRAHIM
In Sudan, most of the insurance covering protection of productive assets against accidental damage, theft, fire, civil havocs, natural hazards/disasters, death of animals, crop failure, and road transport risks etc., has been taken up by large enterprises. The experience of insuring the assets and goods of small and microenterprises, particularly in rural areas and traditional sector, is still limited compared with large enterprises. Nowadays, a number of insurance companies are offering Islamic insurance for microfinance clients (e.g. Shiekan Company, Albaraka Company, Islamic Insurance Company, Watania Cooperative Insurance Company
44
Islamic Business & Finance | ISSUE 98
page 43-45_TAKAFUL.indd 44
and United Insurance Company). However, Shiekan Insurance Company is taking a major role in this respect. Nevertheless, the experience of insurance companies in relation to microfinance transactions has been limited, but diversified and is growing fast.
MicroTakaful in Sudan In Sudan, there were some microfinance insurance ideas set out before 2008, namely through four main events. First, credit insurance—called‘bond insurance’, which covers borrowers' default (regardless of reasons for default whether anticipated or not)—was suggested by Shiekan Insurance Company. However, the idea was not approved by the company's Shari'ah supervisory board, as the Board requires only a form of solidarity action, without collecting fees from borrowers. This issue remains debatable. In 2005, the Islamic Insurance Company tried another idea related to credit for procurement of vehicles or real estate (mainly less expensive houses) taken by employees of different institutions, called a Mortgage Protection Plan. Loans were insured to cover death or disability of the borrower. In such cases lenders would get hold on mortgaged assets, as the insurance company will make full repayment of the remaining loan balance. The idea was marketed to several lending institutions but no prompt response was received. Third, a proposal by the Microfinance Unit of the Central Bank of Sudan (CBOS) planned to establish a solidarity fund, Takaful Sandug, to protect microfinance clients. The proposed shareholders of the Fund were the CBOS, Ministry of Finance, Ministry of Social Welfare, Zakat Chamber and donors. The idea was approved by
the country’s Shari'ah Supervisory Board, but was later rejected by the Insurance Supervisory Board and the issue remains pending. Finally, the idea of a MicroFinance Guarantee Fund funded through the Zakat Fund, has lately been suggested without acceptance, according to Mustafa Abukasawi’s report, Micro Insurance: Opportunities and Policy Implications for Sudan. These four suggestions of the early micro-Takaful experiments in Sudan have not been in operation because they are still debatable or unaccepted by the Insurance Supervisory Board. However in 2008 nine banks and one social fund, the Social Development Fund of Khartoum, participated in an experimental wholesale microfinance programme launched by the Central Bank of Sudan. The funds allocated for the programme amounted to about $20 million using the current official exchange rate, increased to about $25.4 million. The number of clients covered also increased from 31,000 to 80,583 during the same period. Up to 2011, the number of clients covered increased to 129,905, which represents about 8.7 per cent of the potential demand in Khartoum State (1.5 million clients, according to estimates of PlanNet Finance’s 2007 market research report) and the percentage of coverage was around 3.2 per cent of potential demand, according to Abukasawi’s report. By June 2015, the accumulated wholesale finance in this programme was about $87 million, and the number of clients increased to 255,623. The Microfinance Insurance Fund project was implemented by
www.islamicbusinessandfinance.com
25/07/2016 16:09
TAKAFUL
(Frontpage/SHUTTERSTOCK)
Shiekan Insurance Company in 2008 in collaboration with all banks participating in the microfinance experimental wholesale project. According to this credit insurance scheme banks insure 20-25 per cent of their microfinance loans, in response to a CBOS circular issued in this respect in 2010. The bank pays full premiums of its covered clients to the insurer and charges them to their clients, who repay the amount (to the bank) in instalments. Three parties are involved in the insurance scheme: Shiekan (insurer), the bank (policy holder) and the bank microfinance client (who pays
the premium). According to the statistics of the Microfinance Unit of the CBOS value of insured loan transactions at the beginning of this microfinance experimental project amounted to about $9.2 million, representing 39.5 per cent of the active loan portfolio at that time. Towards this end, in 2011 the CBOS also issued the Comprehensive Insurance Policy (CIP) to act as Insurance and a guarantee, covering: money lend, assets and Takaful, for physical disability or death (this is covered more extensively in my 2014 article, MicroTakafulâ&#x20AC;&#x201D;a Guarantee for Microfinance
www.islamicbusinessandfinance.com
page 43-45_TAKAFUL.indd 45
in Sudan, in the Takaful & Mutuality Journal). Apart from a small number of individual microfinance projects financed by banks, the first comprehensive application of this micro-Takaful was a national project called Linking Small Traditional Agriculture Farmers with Markets in 2011. The project of linking farmers to market was first covered by a joint cooperative Takaful fund (Joint Comprehensive Policy, JCP) established in the year 2008 and administered by Shiekan insurance company, and later by Watania Cooperative Insurance Company.
Sudan is a hotspot for MicroTakaful, and important to its history.
ISSUE 98 | Islamic Business & Finance
45
25/07/2016 16:14
THE INSIDE STORY
Navid Akhtar,Founder & CEO, Alchemiya Media Ltd
46
A platform to celebrate Islamic culture
Islamic Business & Finance | ISSUE 98
page 46-49_The inside story.indd 46
www.islamicbusinessandfinance.com
26/07/2016 09:00
THE INSIDE STORY
NAVID AKHTAR,FOUNDER & CEO, ALCHEMIYA MEDIA LTD HAS CREATED A PLATFORM TO SHARE CONTENT TO CELEBRATE THE BEST THAT ISLAMIC CULTURE HAS TO OFFER FOR THE WHOLE WORLD
W
hat was your original inspiration for Alchemiya?
How have you altered your product based on the feedback you have gotten from users?
I have worked in mainstream UK Television for over 20 years, mostly at the BBC and recently a lot of it has been about the global problems around Muslims and Islam. It's not an accurate picture and as I travelled around the Muslim world I realised there was demand for a global service that 'celebrates' the best achievements and contributions that Islam has made to humanity and world civilisation. Art, culture, history, spirituality, business, scienceâ&#x20AC;&#x201D;everything we all love about Islam and the Muslim world on one platform. No one is offering this kind of content as a quality service, so it seemed an incredible opportunity, to combine my experience with my passion - the culture of the Muslim world. I called it Alchemiya as it's an Arabic word in use throughout the English world, and it symbolic for transformation, from lead to gold. The content has the potential to change how people see Islam and Muslims.
We are following a business strategy called The Lean Methadology, which means we have an excellent feedback loop and accurate data about our customer preferences. Alchemiya employs the same tactics as Netflix, and that helps us to constantly fine tune the product to improve user engagement and increase subscriptions. At the moment prospective customers want to see more titles, apps to make it easier to watch on phones, tablets, smart televisions and a monthly pricing model.
How did you begin? What work did you do behind the scenes to make this happen? My previous company produced a six-part series called The Best of British Islam, and I sold this to around 19 channels across the world. Many channels asked for more programmes as they do not know how to make TV content to this standard. I realised that it was going to be more of an opportunity to bypass them, disrupt their model and offer the customer direct access to the content. I had some very clever Malaysian Islamic finance experts help me, as well as some top UK Television executives who have launched successful channels and know what is involved. I joined forces with David Horne, Alchemiya CFO and he is also ex-BBC. I also worked within the key target audience to get good insight into what they want to watch, where they live, hang out and who influences them.
We have a 61 per cent retention rate on our 7 day trial and in one year, only 1 person has cancelled. NAVID AKHTAR, Founder and CEO, ALCHEMIYA Media LTD
Currently we are offering a two-year deal, while in beta. We have a 61 per cent retention rate on our seven day trial and in one year, only one person has cancelled.
Tell me more about the range of content that you have on the site. Alchemiya has everything from lifestyle programmes to films and documentaries. We avoid news and current affairs, politics etc but do highlight positive social change. Alchemiya's most watched programme is The Muslim Traveler's Guide to Granada, which is a brilliant guide presented by Hanna Whiteman who lives in Granada, about the best places to eat, shop, visit and the life of the Muslim community. There is a moving film about the Muslim Imam who saved the lives of many Jewish children from the Nazis during the Second World War cont. overleaf
www.islamicbusinessandfinance.com
page 46-49_The inside story.indd 47
ISSUE 98 | Islamic Business & Finance
47
25/07/2016 16:31
THE INSIDE STORY
cont. from pg 47
in Paris. Other titles include The History of Islam in Sicily, Islamic Art, and Circling the House of God, in which an English convert remembers his first Hajj in 1941 (the first year lightbulbs were used in Mecca!), all with archival footage. Alchemiya offers over 50 titles and has at least 500 ready to go in the pipeline. Our main customer at the moment is highly educated males and females over thirty years old, and our next target group will be children three to 10. All the content is in English or subtitled and all is watchable by non-Muslims. In fact Alchemiya has around 10 per cent non-Muslim customer base and now UK/US schools and colleges want the service to teach students about the positive aspects of Islam.
How did you find this content? Where is it produced? The content is a mixture of acquisitions and new productions which the team at Alchemiya commission. We are experts and award winners in producing quality television and so understand how to find the 'diamonds' within the endless sea of programmes, films and documentaries that
48
Islamic Business & Finance | ISSUE 98
page 46-49_The inside story.indd 48
have been produced about Islam. We then look at the gaps and think up ideas, work with talent and create new programmes. We are trained by the best in the world - the BBC and we follow the same methods.
A platform to celebrate Islamic culture.
What has been your marketing strategy for Alchemiya? We work in two ways: online marketing and on the ground. On the ground is important as it helps for customers to see the passion our team have for what we do. Customers today are looking for real people and want to understand the motives and mission behind the service. It makes our job harder but we get a lot of loyalty and support in return. There is a global network of cultural, artistic and spiritual groups, educational institutions, museums and galleries and Alchemiya works with them to present their content and market our service. Online we have fantastic support from Facebook management who love what we do and we get a brilliant ROI, when we target consumers through Facebook.
www.islamicbusinessandfinance.com
25/07/2016 16:31
THE INSIDE STORY
Alchemiya calls its customers 'global urban Muslims'; we identified who they are and so we have been able to produce detailed customer avatars, and insights on how to engage them as subscribers. We have now seen the term being used by others and it's a good thing.
of our beloved Prophet (pbuh) in how we treat staff, customers and each other. A Halal business for us has to follow his example. He returned growth for his investor, he made money for himself, and he provided goods that customers loved at a reasonable price.
How are you financing the business? What are your plans for the future? Alchemiya has just celebrated its first birthday and now has paying customers in 39 countries. There has been some interest from big global investors (non-Muslims) as the VOD sector is primed for growth, as is the Muslim consumer market. We are now working to meet their criteria and feel confident we can secure investment that allows us to invest money into content production and marketing. Alchemiya has been built to work well with commercial sponsors - airlines, hotels, hospitality, leisure, clothing and we have customers who are actively looking for goods and services that understand them as Muslims. Given the target audience (45 per cent have Masters degrees) they earn more, spend more and want quality - not Halal chicken nuggets. So we are open to marketing partnerships with anyone looking to target this group. Finding an investor is not difficult, but finding the right investor, someone who shares our values, mission and cares about what we do, is a little harder, but we know God connects good people.
H o w d o yo u r u n A l c h e m iy a a s a Halal business? The Alchemiya team is made up of Muslim and non-Muslim members. We do not in anyway impose religious values on anyone, but we do uphold a universal code of fairness, honesty, charity and respect for others. In essence it works well within the guidelines of Halal, and our non-Muslim team members have taken time to learn about Islam. Despite the long days of fasting in Ramadan last year, our CFO David Horne fasted with us, to experience and share what Ramadan is about. He is a humanist and we respect his belief and do not in any way impose our beliefs on him. All the business dealings are in accordance with Shari'ah rules and we avidly follow the example
www.islamicbusinessandfinance.com
page 46-49_The inside story.indd 49
Alchemiya's first seed round was through advanced subscribers who liked the concept on paper. We then raised around GBP 120,000, through crowdfunded equity on Crowdcube.com. In addition we have generated revenue and kept our core costs real tight. Experience in this industry and automation has allowed us to fund the business with very little money.
What else would you like to see improved in the Islamic economy? What other areas do you feel are under-serviced? I have personally sat with some of the biggest names in the Islamic economy and believe the promised potential that is being predicted, but the general consumer is still behind in grasping the need and value of these services. The industry is still made up of silos of sectors. I call them the three Fs, food, finance and our sector, FUN! We are going to need a lot more cross over between these groups to help create and develop the wider Islamic economy, and Alchemiya plays a role in that by educating the consumer on what they should be buying and investing their money in. At the moment too much focus has been given to property and too little attention paid to the opportunities of the digital economy. The whole world is moving over to doing business on the internet.
What advice do you have for those who want to start their own business to join the growing Islamic economy? Take time to perfect your skills and experience. Make sure your product or service has a built in attitude of excellence, and do not fall into the trap of thinking that every Muslim on the planet will buy what you have. Do not just stick a Halal label with green writing on any product.Ask yourself, it really Halal? Is it good for you, for your family? Finally, remember business people are the true ambassadors of Islam, treat everyone fairly and conduct business with manners and a goodness that everyone will remember.
ISSUE 98 | Islamic Business & Finance
49
25/07/2016 16:31
SPECIAL FEATURE
ISLAMIC FINANCE’S MOMENTUM IN RUSSIA INCREASING
(Elena Mirage/SHUTTERSTOCK)
WITH LARGE INSTITUTIONS FORMALLY ASSERTING THEIR INTEREST IN PURSUING GREATER ACTIVITY IN THE ISLAMIC FINANCE SPACE, THE EYES OF THE ISLAMIC FINANCE COMMUNITY HAVE TURNED TO RUSSIA
W
ith the many challenges Russia’s economy is currently facing, now is the time to shore up relationships with regions in which Russia has had continued success. With that in mind, Russia has set off on a path towards greater participation in Islamic finance and the broader Islamic economy. Three major banks—Vnesheconombank, Sberbank and Tatfondbank—all signed memorandums of understanding with the Islamic Development Bank (ICD) in order to formalise their support for that participation. This comes after the Central Bank of Russia signed a similar agreement with the same institution. Speaking at the Eigth International Economic Summit of Russia and OIC countries Kazan Summit 2016 in the city of Kazan on 20 May 2016, Vnesheconombank Chairman Sergei Gorkov shed more light on why he would like his organisation to start Islamic financial activity, as well as giving support for more in his nation to do the same. “Vnesheconombank is interested in developing competences in Islamic finance, sharing business experience in this area and using instruments
50
Islamic Business & Finance | ISSUE 98
page 50 Special Feature-98.indd 50
A mosque in Kazan, Russia.
of Islamic banking in the Bank’s activity. As a developing institution that invests in projects in the real economy, we embrace philosophy of the Islamic financial system which is based on assetbacking and refusal from unfounded capital gains. Even now we are working on the issues of using Islamic financing instruments to support exportimport transactions and fund projects,” said Gorkov. Robert Musin, Chairman of the Board of Management of PJSC Tatfondbank, echoed those sentiments after the signing of their own memorandum. “It is necessary to develop partnership banking in Russia. It will give us an opportunity to broaden cooperation with Eastern countries and extend the product line. Partnership banking is interesting from the point of view of business, because customers obtain better understandable financing,” noted Musin. Though large institutions are urging greater participation, this does not mean there is no Islamic finance in Russia. In 2011, The Waqf fund of the Republic of Tatarstan, a region of Russia, was established under the Muslim Religious Board of the Republic of Tatarstan for the purposes of restoring the institution in Russia. The main task of the fund is the legislative recognition and regulation of activity of Waqf funds, return of property of Muslim communities, development of cooperation with Muslim countries, formation of economic basis for implementation of social, charitable, cultural, and educational programmes. Even so, there is no current official definition and regulatory framework for Islamic finance in Russia, so though institutions are looking to get more involved, there is still a long way to go. Perhaps with all of this positive sentiment, we are well on our way to the Russian Government officially recognising Islamic finance as a promising path forward towards greater economic recovery.
www.islamicbusinessandfinance.com
24/07/2016 16:42
Islamic AD july (2127).pdf
1
7/13/16
12:02 PM
Respecting your values
Partnering you in your success NBF Islamic is a suite of banking solutions guided by the principles of Shariah law and uniquely designed to meet the requirements of modern life. Place your trust in National Bank of Fujairah, the award-winning local bank that is not only dedicated to partnering you in your personal or business goals, but also committed to honouring your traditions. NBF Islamic. Modern banking inspired by traditional values.
8008NBF(623)
bleed guide.indd 1
20/07/2016 13:12
K
MY
CY
MY
Y
CM
M
20/07/2016 13:17 C
bleed guide.indd 1