#114 - April 2019

Dubai Technology and Media Free Zone Authority

ISSUE 114

ISSUE 114 EXPO 2020 AND THE ISLAMIC ECONOMY HE MAJID SAIF AL GHURAIR, CHAIRMAN OF DUBAI CHAMBER OF COMMERCE AND INDUSTRY

EXPO 2020 AND THE ISLAMIC ECONOMY HE Majid Saif Al Ghurair, Chairman of Dubai Chamber of Commerce and Industry, Board member of DIEDC speaks exclusively to Islamic Business & Finance

A CPI Financial Publication

PLUS:

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28 SUKUK:

The Sukuk industry and Aramco

32 NORTH AFRICA:

How Sudan attracted retail investors through Sukuk

44 ISLAMIC TECH:

Making Hajj and Umrah easier for travellers

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For generations, the better way to bank.

Over 40 years ago, Dubai Islamic Bank pioneered a way of banking that was truly better: Islamic banking. Since then, many generations of customers continue to enjoy world class products and services backed by the very latest in banking technology. For them as for you, this is still the better way to bank.

dib.ae

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CONTENTS

ISSUE 114

REGULAR SECTIONS

EDITOR'S LETTER

10

Greetings, all

W

elcome to Islamic Business

& Finance.

This is the 114th issue of the longest-running Islamic finance magazine in the world. I hope you all have had a productive first quarter ahead of Ramadan.

Expo 2020 is set to be one of the most important events in the history of the UAE. As the UAE is also set on becoming the capital of the global Islamic economy, I can’t help but wonder how the two will intersect, and how the Islamic economy will benefit specifically from Expo 2020. To find out, we spoke to one of the most important voices in the country, HE Majid Al Ghurair, Chairman of Dubai Chamber. He sheds light on the plan for Expo 2020, how the Halal business sector is developing, and the boost that it will likely provide.

Beyond that, there is plenty to peruse. I hope you enjoy digging into another great issue.

Till next time,

OPINION

6

16

The potential of consolidation

NEWS + ANALYSIS

8

News & Analysis

COVER INTERVIEW

10 Expo 2020 and the Islamic economy

20

ISLAMIC BANKING

16 The steady road ahead 20 How the UAE National Loans scheme will affect the UAE economy

William Mullally

24 The future of Islamic finance

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

www.islamicbusinessandfinance.net

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P.O. Box 502491, Dubai Media City, UAE Tel: +971 4 391 4681 Fax: +971 4 390 9576 islamicbusinessandfinance.com

CONTENTS

ISSUE 114

FEATURES

CHAIRMAN

SALEH AL AKRABI CHIEF EXECUTIVE OFFICER

STEVE LEE steve.lee@cpifinancial.net Tel: +971 4 391 4681 EDITOR - ISLAMIC BUSINESS & FINANCE

WILLIAM MULLALLY william@cpifinancial.net Tel: +971 4 391 3718 SENIOR EDITOR

MATT AMLÔT matt@cpifinancial.net Tel: +971 4 391 3716

BUSINESS DEVELOPMENT DIRECTOR

DANIEL BATEMAN daniel@cpifinancial.net Tel: +971 4 375 2526

EDITORS

NABILAH ANNUAR nabilah.annuar@cpifinancial.net Tel: +971 4 391 3726 ISLA MACFARLANE isla@cpifinancial.net Tel: +44 7875 429476

GROUP SALES MANAGERS

NEEMA SAJNANI neema.sajnani@cpifinancial.net Tel: +971 4 391 3717 NAP ESTAMPADOR nap.estampador@cpifinancial.net Tel: +971 4 433 5320

EDITORIAL ASSISTANT

KUDAKWASHE MUZORIWA kuda.muzoriwa@cpifinancial.net Tel: +971 4 391 3729

editorial@cpifinancial.net sales@cpifinancial.net

CONTRACT PUBLISHING EDITOR

ASSOCIATE PUBLISHER

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

JAMIE O'LOANE jamie.oloane@cpifinancial.net TEL: +971 4 433 5321

CHIEF DESIGNER

SENIOR DESIGNER

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

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

DIGITAL MANAGER

SIYA PAINAYIL siya@cpifinancial.net Tel: +971 4 391 3722 SHAIK MANSOOR shaik.mansoor@cpifinancial.net Tel: +971 4 365 4538

28

28 The Sukuk industry wants

a piece of the world’s most profitable company

32 How Sudan attracted retail investors through Sukuk Shehama

HALAL BUSINESS

40

36 Business coaching in the Halal industry

EDITORIAL

ADVERTISING

EVENTS MANAGER

SUKUK

EVENTS MARKETING MANAGER

CRIS BALATBAT cris.balatbat@cpifinancial.net Tel: +971 4 391 3725

CONFERENCE PRODUCER

HITESHWAR BHAKHRI hitesh.bhakhri@cpifinancial.net TEL: +971 4 433 5322

TAKAFUL

40 Insurtech will transform the Takaful industry

ISLAMIC TECH

44

44 Making Hajj and Umrah easier

ISLAMIC ART

48 Ancient treasures EVENTS

50 IB&F Innovation Summit

FINANCE & DATA MANAGER

SHAIS MEMON, ACCA, CMA shais.memon@cpifinancial.net Tel: +971 4 391 3727 HR & OFFICE MANAGER

RIZZA INFANTE rizza@cpifinancial.net Tel: +971 4 391 4682

ADMINISTRATION & SUBSCRIPTIONS

Get the next issue of Islamic Business & Finance before it is published.

Full details at www.islamicbusinessandfinance.com

CAROL BASA carol@cpifinancial.net Tel: +971 4 391 3709

ISSUE 114 Dubai Technology

ISLAMIC ECONOMY HE MAJID SAIF AL GHURAIR, CHAIRMAN OF DUBAI CHAMBER OF COMMERCE

Ibrahim Al Mheiri, Chief Executive Officer, Mashreq Al Islami, speaks exclusively to Islamic Business & Finance on his institution’s roadmap for the future

The Sukuk and Aramco

AFRICA: 32 NORTHattracted retail How Sudan Sukuk investors through

PLUS:

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TECH: 44 ISLAMIC and Umrah

28 MALAYSIA:

BNM’s 2019 vision

32 ISLAMIC BANKING: Outlook positive for Middle East banks

46 HALAL BUSINESS:

A bridge between the Islamic economy and China

A CPI Financial Publication

A CPI Financial Publication

: 28 SUKUK industry

A CPI Financial Publication

e and Industry, Chamber of Commerc Chairman of Dubai Islamic Business & Finance HE Majid Saif Al Ghurair, speaks exclusively to Board member of DIEDC

AND INDUSTRY

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FULFILLING VAST POTENTIAL

D THE EXPO 2020 AN OMY ISLAMIC ECON

PLUS:

NCB...IS THE EMPLOYER OF CHOICE Mutlaq Al Anezi, Senior Executive Vice President (SEVP) Head of Human Resources Group, The National Commercial Bank – Saudi Arabia

FULFILLING VAST POTENTIAL IBRAHIM AL MHEIRI, CHIEF EXECUTIVE OFFICER, MASHREQ AL ISLAMI

EXPO 2020 AND THE

Islamic Business & Finance | ISSUE 114

ISSUE 112

ISSUE 112

ISSUE 113

ISSUE 114

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

NCB...IS THE EMPLOYER OF CHOICE Mutlaq Al Anezi, Senior Executive Vice President (SEVP) Head of Human Resources Group, The National Commercial Bank – Saudi Arabia

Special Report: Ranking the top institutions from across the Islamic economy

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Making Hajj easier for travellers

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ISSUE 113

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OPINION

The potential of consolidation

T

he UAE banking sector is in a process of consolidation. First Gulf Bank and National Bank of Abu Dhabi became First Abu Dhabi Bank over a year ago, and more is set to follow.

The Abu Dhabi government is in the process of merging Abu Dhabi Commercial Bank (ADCB), United National Bank (UNB) and Al Hilal Bank following the successful tie-up of its two major banks after combining two of biggest lenders in 2017.

It seems that Dubai Islamic Bank is set to follow—it is, according to its top brass, considering acquiring Noor Bank, also based in Dubai.

“We’re in the early stages of that analysis.

There are a lot of synergies that we can see with an acquisition of Noor and should those synergies work, it would be beneficial,” said DIB Group CEO Dr Adnan Chilwan in a conference call.

In a statement, the lender said that the board also allowed the bank to hire financial advisers for due diligence and provide an opinion on the valuation.

The acquisition will create a lender with AED 277 billion ($75 billion) in assets.

What’s causing the consolidation? A response to the times. Banks are seeking opportunities to become more competitive, boost their capital and respond to the economic climate, which is not as superheated as it once was in the UAE. Investment Corporation of Dubai is the largest shareholder in DIB with a 28 per cent stake, and it is also one of the biggest investors in Noor Bank, a lender which was established in 2008, according to Bloomberg. DIB reported a 12 per cent increase in Q1 2019 net profit to AED 1,36 million, compared to AED 1,21 million the same period in 2018.

HE Mohammed Ibrahim Al Shaibani, the Chairman of DIB, said, “The banking sector remains resilient with strong capitalisation and rising profitability, DIB continues to progress with robust set of first quarter results with total income growing by 26 per cent to reach to AED 3.4 billion driven by consistent strong growth across our businesses.”

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The question remains—are these mergers a positive development for the Islamic finance industry?

While remaining competitive is the most important thing, as long as competition remains, the industry will need larger institutions that can take the big steps to push the whole industry forward—something that Dr. Chilwan and DIB are forever focused on. Mergers are ways to do that, and while each Islamic bank does different things well, combining their strengths could help pull market share away from the conventional space, something that Islamic finance will need in order to achieve its potential.

William Mullally

Editor

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An exclusive event focused on the top trends and innovations in the Islamic economy

Address Boulevard Hotel Dubai, United Arab Emirates

Join the Islamic Business & Finance Innovation Summit which will bring together leaders from across the Islamic finance industry to discuss where the most impactful innovations in the Islamic economy are developing, how best to harness the industry’s potential and foster further innovation to position it for a better future.

CONFERENCE TOPICS INCLUDE: Regulation I Sustainable Growth I Role of Technology in the Industry’s Development International Collaboration Opportunities I Wealth Management

Supported by

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NEWS & ANALYSIS

The UAE Banks Federation members endorsed the new UBF Board of Directors in the Annual General Assembly Meeting. The new Board will serve for the next three years from May 2019 to April 2022, and now comprises H.E. AbdulAziz Abdulla Al Ghurair – Chairman, CEO, Mashreq Bank; H.E. Khalifa Al Suwaidi – Vice Chairman, First Abu Dhabi Bank; Omran Abdulla Omran Taryam – Member, Investment Bank; Khamis Bu Haroon, Member, Abu Dhabi Islamic Bank; H.E. Mohammad Omran Al Shamsi, Member, RAKBANK; Dr. Sulaiman Mousa Al Jassim – Member, National Bank of Fujeirah; Amr Al Menhali, Member, Abu Dhabi Commercial Bank; Hamed Kazim – Member, Commercial Bank of Dubai; Abdulla Qassim, Member, Emirates NBD; and Mr. Jamal Saleh – Director General.

On behalf of UBF, I would like to welcome the new Board of Directors, and thank those who left us for their hard work over the last three years. We look forward to a new chapter as we build on our success, and continue to work towards creating innovative solutions that address prevailing market challenges and enhance the banking sector across the UAE.” H.E ABDULAZIZ AL GHURAIR, Chairman of UAE Banks Federation

Dubai Islamic Economy Development Centre (DIEDC) has signed an MoU with the Hong Kong Trade Development Council (HKTDC) to exchange knowledge, experience, and best practices in Islamic economy, as well as boost bilateral relations between Dubai and Hong Kong.

Through the MoU, the Centre and its key stakeholders aspire to maximise the potential of Islamic economy sectors, particularly Islamic finance, halal industry, and Islamic lifestyle, and contribute to increasing the number of businesses from the Far East that tap into these sectors. We aim to establish a productive partnership with HKTDC to boost halal trade and Islamic finance. In addition, we plan to develop joint research reports that will provide key insights into the Islamic economy sectors as well as useful reference points for investors and businesspeople.”

ABDULLA MOHAMMED AL AWAR, CEO, DIEDC

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AWARDS 2019

23 October 2019 Address Boulevard Hotel Dubai, United Arab Emirates

*7pm reception followed by dinner and the awards ceremony

Join over 200 senior Islamic banking and finance executives from across Europe, Middle East and Africa as we reward excellence and celebrate the achievements of the global Islamic finance industry.

Now in its 14th year, the IB&F Awards is recognized as the longest established Islamic banking and finance awards programme honoring outstanding performance in Shari'ah-compliant finance.

Nominations now open!

Islamic Business & Finance welcomes entries for the 2019 Awards. Financial institutions must highlight pioneering developments, innovative banking solutions, and achievements in the Islamic financial services industry.

To learn more about the Awards process, please email: neema.sajnani@cpifinancial.net

Supported by

Organised by

Entries must be submitted by 31st August 2019

For more information please contact us at Tel: +971 4 391 3717 or +971 (0) 50 724 1086

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COVER INTERVIEW

EXPO 2020

AND THE ISLAMIC ECONOMY 10

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COVER INTERVIEW

HE MAJID SAIF AL GHURAIR, CHAIRMAN OF DUBAI CHAMBER OF COMMERCE AND INDUSTRY, BOARD MEMBER OF DIEDC SPEAKS EXCLUSIVELY TO ISLAMIC BUSINESS & FINANCE

(Florante Magsakay/CPI FINANCIAL)

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HE MAJID SAIF AL GHURAIR, Chairman of Dubai Chamber of Commerce and Industry, Board member of DIEDC

ow has the Dubai Chamber contributed to Dubai’s mission to become the capital of the Islamic economy?

Dubai Chamber has supported Dubai’s rise to become the global capital of the Islamic economy since this vision was first unveiled in 2013 by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai.

Key pillars of this strategy include the Global Islamic Economy Summit (GIES) and the Islamic Economy Award which are organised by Dubai Chamber and the Dubai Islamic Economy Development Centre (DIEDC) and provide a platform to foster cooperation and recognise industry leaders that are advancing sectors of the Islamic economy.

To date, four editions of GIES have been held in Dubai and the summit has become the largest event of its kind. The summit examines all aspects of the global Islamic economy and covers everything from Halal food and travel, to modest fashion, Islamic finance and social entrepreneurship. The high calibre of participants, wealth of panel discussions and diverse array of topics addressed relating to the Islamic economy have created an event of scope

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COVER INTERVIEW

and range that is unsurpassed in the region. The Islamic Economy Award plays a crucial role in fostering a culture of innovation within the global Islamic economy. Winners of the prestigious award are given a prime opportunity to showcase their ideas, business concepts and solutions that aim to meet the changing needs of Muslim consumers around the world.

What would you say are the key sectors contributing to the growth of the Islamic economy?

Figures compiled for GIES 2018 from Thomson Reuters, Dubai Chamber’s strategic partner for the summit, revealed that Islamic finance is the largest sector of the Islamic economy in monetary terms, with its assets estimated at over $2.44 trillion (AED 8.96 trillion) in 2017. This figure is expected to reach $3.78 trillion (AED 13.88 trillion) by 2022. The Halal sector represents the most diversified component of the Islamic economy, with new entrants coming into the market and product offerings moving beyond meat-focused categories. Muslim populations globally spent an estimated $1.3 trillion (AED 4.7 trillion) on food and beverage (F&B) in 2017 and by 2022, this sector is forecast to reach $1.93 trillion (AED 7.09 trillion). Muslim millennials, especially women, are driving the modest fashion market, with the result that total spend on apparel and footwear was estimated at $270 billion (AED 992 billion) in 2017.

By 2022, this market is expected to hit $373 billion (AED 1.37 billion).

Muslim consumers spend on travel was $177 billion (AED 650 billion) in 2017 and by 2022, this sector is projected to reach $283 billion (AED 1.04 billion), buoyed by the fact that OIC and Muslimminority countries are investing significantly in the Halal tourism space.

How well do various sectors of the Islamic economy work together to create sustainable growth?

There is certainly room for improvement for the various sectors of the Halal economy to work together and create more synergies within this space. For example, more Shari’ah-compliant financing options can be introduced and adopted by industry players and consumers alike, given growing popularity of Islamic banking products among consumers in Muslim and non-Muslim customers, according to new research.

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HE MAJID SAIF AL GHURAIR, Chairman of Dubai Chamber of Commerce and Industry, Board member of DIEDC

www.islamicbusinessandfinance.net

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(Florante Magsakay/CPI FINANCIAL)

COVER INTERVIEW

There is huge potential boost for the trade of Halal products on a global scale, and companies from around the world are already leveraging Dubai’s position as a re-export hub to expand their reach to markets across the Middle East, Africa and Asia. We expect to see more momentum and activity in this space as Halal standards and certifications are unified and developed. In fact, that is one of the objectives of the Halal Trade and Marketing Centre which was launched in 2018 by DIEDC and DAFZA, with Dubai Chamber serving as a strategic partner.

The Centre delivers a one-stop solution for the global Halal product manufacturers, suppliers, and distributors for all their growth needs, all while complementing Dubai’s efforts to facilitate business activity within various sectors of the Islamic economy.

How has the DIEDC progressed on its mission to aid the Islamic economy? What are the key initiatives for 2019 and beyond?

DIEDC has continued advancing its 2017-2021 strategy that revolves around three focus sectors — Islamic finance, Halal and Islamic lifestyle (encompassing culture, arts, and family-friendly tourism). The centre’s efforts are aligned with the leadership’s objectives to achieve the goals of the National Agenda of UAE Vision 2021 and reach the nation’s centennial as one of the top countries globally, as well as the world’s centre for the Islamic economy.

Strategic partnerships to advance the Islamic economy is a top priority. Recently, DIEDC signed an agreement with the Hong Kong Trade Development Council to create new channels of cooperation in the areas of Islamic finance, Halal food industry, and Islamic lifestyle, particularly Islamic arts and culture. This agreement will help raise awareness about business opportunities in the Halal economy sector which businesses in Dubai and Hong Kong can capitalise on.

Moving forwards, DIEDC will continue to look at new projects and initiatives with the aim of strengthening Dubai’s position as the world’s Islamic economy capital. The centre is working hard to unify standards globally and is committed to collaborating with partners towards building an infrastructure for the Islamic economy and creating an environment capable of addressing economic challenges around the world.

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Will the Islamic economy be a part of Expo 2020, and what role will it play?

Expo 2020 Dubai offers an unprecedented opportunity for Muslim and non-Muslim countries from various regions of the world to collaborate, innovate, and work towards an inclusive and brighter future. At the same time, the mega event is expected to boost Dubai’s global profile and showcase the potential that the emirate offers as an Islamic economy hub. We will be working closely with our members, our government colleagues and other key stakeholders throughout the six months of the Expo to showcase the emirate’s multitude of achievements and its fertile and nurturing business environment that has been responsible for so much of Dubai’s success.

How much of an effect do you see Expo 2020 having on Dubai’s Halal business landscape?

We believe that Dubai can capitalise on the global platform provided by Expo 2020 by positioning the city as an exporter rather than an importer of Halal goods and services. Dubai is ranked among the world’s leading hubs for F&B, retail, cosmetics, entertainment and more, positioning it perfectly as a centre for the Islamic economy.

If we could harness the emirate’s entrepreneurial spirit, its innovative outlook and its array of business initiatives aimed at promoting SMEs, the city could become a producer and net exporter of Halal products and services, as opposed to featuring an array of Halal options the majority of which are imported. In addition, with 25 million visitors expected to attend Expo 2020, there is also an opportunity to position Dubai as a major destination for Halal travel and familyfriendly tourism.

What were the main achievements of the GIES in 2018, and how can we build on those successes?

The Fourth Global Islamic Economy Summit held on 30-31 October 2018 attracted 3,000 attendees from around the world. Titled ‘A Shared Future’, GIES 2018 presented a packed programme of presentations, seminars and key note speeches dedicated to discussing the latest developments, opportunities and challenges in the Islamic economy.

Organised by Dubai Chamber in conjunction with DIEDC and Thomson Reuters as Strategic Partner, GIES 2018 focused on international partnerships that have the potential to enhance global financial

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(Florante Magsakay/CPI FINANCIAL)

COVER INTERVIEW

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security and socio-economic stability to drive the Islamic economy and pave the way for sustainable growth globally. Paying special attention to the role of technology in boosting the Islamic economy, the summit brought together industry players and experts to develop new solutions to address key challenges facing the Muslim world and create a more inclusive Islamic economy.

Dubai Chamber is committed to furthering the success of the summit and supporting the growth of businesses operating in various Islamic economy sectors. As a leading representative of the private sector in Dubai, the Chamber keeps a close watch on market conditions and trends that are reshaping the Islamic economy sector, and we will continue to work with stakeholders in the public and private sector to ensure its sustainable growth.

HE MAJID SAIF AL GHURAIR, Chairman of Dubai Chamber of Commerce and Industry, Board member of DIEDC

What are your thoughts on the general business landscape in Dubai in 2019 and beyond? What are you most focused on at the moment?

Business confidence in Dubai has strengthened considerably since the beginning of 2019 as stimulus efforts and business-friendly measures introduced over the last year begin to show a positive impact. Other key factors supporting the bullish outlook include strong government commitment to infrastructure spending and social development, a steady flow in the number of tourists, increased business activity and preparations related to Expo 2020.

Significant investments are being made by public and private sector entities to facilitate and benefit from the adoption of advanced technologies such as blockchain, artificial intelligence, and 3D printing and such innovations are transforming Dubai’s business landscape and enhancing the emirate’s economic competitiveness. Evidence of this progress can be seen in the UAE’s strong performance on the World Economic Forum’s Global Competitiveness Report 2018, placing 27th globally among 140 countries. Contributing to the UAE’s competitiveness were several key factors and strengths including the country’s excellent transport infrastructure, ICT adoption, and macroeconomic stability.

Dubai Chamber is currently implementing two of its own initiatives to support Dubai’s stimulus package. Among these are Chamber’s plans to coordinate with other government entities to review services and fees with the aim of reducing the cost of doing business, in addition to the formation of an advisory board joined by global companies with

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Business confidence in Dubai has strengthened considerably since the beginning of 2019 as stimulus efforts and business-friendly measures introduced over the last year begin to show a positive impact.

HE MAJID SAIF AL GHURAIR

the aim of helping businesses’ shape the regulatory landscape. These are all positive steps that will ensure a more favourable business environment in Dubai for many years to come.

This year, Dubai Chamber is exploring business potential in new regions and markets, with the aim of providing our 231,000 members with access to trade and investment opportunities. In fact, we just marked the official opening of our newest representative office in Buenos Aires, Argentina and announced plans to open additional offices in Mexico City and Shenzhen later this year.

We recently reached another milestone in our international strategy with the success of the third Global Business Forum on Latin America, the first forum of its kind to be held outside of Dubai. Held in Panama City in April 2019, the forum not only attracted strong support and participation but also provided an unprecedented opportunity to foster cooperation and build new partnerships between business communities across the GCC, Latin America and Caribbean regions.

Other major events on our radar for 2019 include the World Chambers Congress in Brazil this June, followed by the fifth Global Business Forum on Africa, set to be held in Dubai once again in November.

In addition, innovation, entrepreneurship, and e-commerce will remain a key part of our strategy going forward as the emirate makes headway in its mission to become a global smart city, knowledgebased economy, and strategic hub for future industries. As always, Dubai Chamber is looking to improve and expand the range of smart services that add value to our members and improve ease of doing business in Dubai.

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The steady road ahead 16

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REHAN SHAIKH, CEO, ISLAMIC BANKING, STANDARD CHARTERED SAADIQ WRITES FOR ISLAMIC BUSINESS & FINANCE ABOUT WHERE THE INDUSTRY STANDS IN 2019

GROWTH OF ISLAMIC FINANCE

(Sanjit Das/BLOOMBERG)

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ver the past few decades, the Islamic finance industry has seen significant growth and is now estimated to have crossed $2 trillion in assets. The ecosystem surrounding Islamic finance has also developed exponentially with the emergence of a full-suite of Shari’ah-compliant offerings, such as Takaful, Islamic funds, Shari’ah advisory firms, Sukuk and more.

There are many variables which have contributed to the growth of Islamic finance worldwide.

Perhaps most important is the introduction of sophisticated regulatory regimes which have slowly built the confidence of customers, leading to an increased demand for Shari’ah-compliant financing. As well, the emergence of international bodies such as the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOFI) and the International Islamic Financial Markets (IIFM) have played a strong role in creating industry-wide standards and consistency.

Shari’ah scholars and governments have also played a vital role in the growth of Islamic finance. Over the past two decades, scholars have addressed industry challenges by working closely with industry stakeholders to provide practical and innovative Shari’ah-compliant solutions.

These solutions have received support from governments, specifically in Muslim-

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majority countries, through the introduction of legislative changes. For example, we have seen governments addressing liquidity challenges through the issuance of Sukuk, making Islamic financing a more appealing choice for government borrowings.

CHALLENGES FACED The Islamic finance industry has achieved many milestones since its establishment and has helped finance sovereigns, corporates and financial institutions. Nonetheless, it has been faced with several challenges which have impacted the industry’s growth rate.

The most obvious challenges are the limited number of existing Shari’ah scholars, lack of

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product standardisation, and shortage of skilled personnel to support the continuous growth of the industry. In fact, a recent study by Middle East Global Advisors found that 64 percent of industry executives believe that there is a limited number of suitably qualified staff for the Islamic finance industry. However, various initiatives are being put in place to overcome these challenges and exceed growth in the long run.

Some of these challenges are being addressed naturally, as an increasing number of young people are working and training towards becoming Shari’ah scholars. Additionally, with the growing interest in fintech, some markets have taken initiative to create a more stable and centralised system by implementing technology

REHAN SHAIKH, CEO, Islamic Banking, Standard Chartered Saadiq

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ISLAMIC BANKING

such as blockchain for a more efficient and secure transaction which also reduces costs.

ISLAMIC FINANCE IN SOUTHEAST ASIA AND THE MIDDLE EAST Looking at specific regions, there is a slight gap between the Islamic markets across Southeast Asia and the Middle East in terms of creating a more centralised framework. Some countries in the Middle East have had an established model for regulations, while others are actively implementing separate guidelines on Islamic finance. The UAE for example has taken the lead with the appropriate steps in setting up a regulatory framework with the establishment of the Higher Shari’ah Authority (HSA).

On the other hand, Malaysia continues to be the main driver for the Sukuk market and represented 51 percent of the $396 billion of total global outstanding Sukuk in 2017. Banks in Malaysia are also working towards standardising Shari’ah contracts over the next two years, which will impact almost all retail, business banking, and corporate products.

Malaysia continues to be the main driver for the Sukuk market and represented 51 percent of the $396 billion of total global outstanding Sukuk in 2017. Banks in Malaysia are also working towards standardising Shari’ah contracts over the next two years, which will impact almost all retail, business banking, and corporate products.

ROOM FOR GROWTH While there have been many advancements in Islamic finance, there is still room for growth.

Firstly, while the markets in Southeast Asia and the Middle East have made significant progress over the years, there is still opportunity for the market to grow in Africa. Islamic finance is expanding rapidly across the continent, spreading to 18 markets across Sub-Saharan Africa with great prospects for growth. In fact, a large population in Africa remains unbanked or under-served, which provides a solid foundation for Islamic banking assets to grow rapidly. Also, the issuance of Sukuk across Africa has recently picked up momentum due to an increased demand for funding by governments and quasisovereigns. Most of the issuances are currently in the local currencies, but they are expected to access the US Dollar International Sukuk market in the near future.

Secondly, adoption of new technologies and platforms will spur growth and expand the Islamic market beyond its traditional client base. A great example of this is the implementation of digital in Islamic finance. By leveraging innovative solutions in FinTech, such as blockchain, and artificial intelligence in payment platforms, Islamic banks

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will be able to take the lead in the banking and financing industry. These innovative solutions will provide more secure and convenient transactions with improved governance, which will appeal to various stakeholders.

In terms of knowledge sharing, there is still a huge progress to be made in educating people about Islamic financing, which would require a committed and collaborative effort from both financial and academic institutions.

CONCLUSION Overall, Islamic banking and finance is on a steady growth path, despite some hurdles and challenges.

As a bank with a major footprint across key Islamic markets in Middle East, Asia and Africa, Standard Chartered and its Islamic arm, Saadiq, are committed to working with various stakeholders to help expand and grow this industry further.

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ISLAMIC BANKING

How the UAE National Loans scheme will affect the UAE economy

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ISLAMIC BANKING

IBRAHIM AL MHEIRI, CHIEF EXECUTIVE OFFICER, MASHREQ AL ISLAMI WRITES FOR ISLAMIC BUSINESS & FINANCE ABOUT THE DEVELOPMENT

( Black Kings/SHUTTERSTOCK)

A

www.islamicbusinessandfinance.com

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s per the regulations by the Central Bank of the UAE, the National Loans scheme will come into play from 1 April 2019. UAE nationals can approach their banks to calculate their liabilities. This would include all monthly obligations such as personal finance, credit cards, auto finance, and overdrafts.

However, it is important to ensure that the aggregate sum of these customers ‘monthly obligations’, known as Debt Service Ratio (the DSR) is less than 50 per cent of the UAE national’s total monthly income.

Usually home financing and margin liabilities are also included in the DSR calculations, however for the purposes of Nationals Loans Scheme, these are excluded from this calculation of 50 per cent.

Once all the information is provided, the bank will assess the information in order to ensure all eligibility factors are met for the National Scheme Loan.

Once approved, the bank will offer the preferential pricing to the client to reschedule his or her long-term loan (taken before May 2011) to a three-month EIBOR pricing.

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ISLAMIC BANKING

STRENGTHENING THE BANKING SECTOR UAE nationals are an integral part of the economy as they are in involved in trade, business, banking, and government sectors. With the introduction of this initiative, there will be a higher certainty of payments, and banks will have a faster process to recover their capital. Customers will also be able to retire their debts faster.

The banks will have a clear direction on the mandate and how, as responsible financial lenders, to address the situation and help the Emirati clients achieve their financial goals.

Additionally, the banks can redirect their focus to be more responsive needs of their customers.

This would ensure that the individuals as well as the economy moves in the right direction.

While it would be difficult to put a number on the amount that falls under the scheme, our assessment is that this would be a sizeable number, and hence the regulator has decided to implement this scheme to help UAE nationals and the economy.

While the banks may witness a shortfall in profits in the short term, some decisions must be taken in the larger interest of the community and the financial health of the overall sector.

– IBRAHIM AL MHEIRI

THE BIG PICTURE While the banks may witness a shortfall in profits in the short term, some decisions must be taken in the larger interest of the community and the financial health of the overall sector. The balance sheets of banks will also see faster payments from the customers.

From a client perspective, offering the scheme would allow UAE nationals to relook at their financial obligations from a new perspective and banks would be able to offer them innovative solutions to assist them in reducing their liabilities.

From a broader perspective, banks will be inclined towards more responsible lending where a client’s profile will be carefully assessed before any loan facilities are offered to them.

Mashreq Bank is fully committed to fostering financial awareness amongst the Emirati population. Consequently, the bank is participating in various financial literacy initiatives in local universities, to nurture the feeling of financial discipline in students from a very young age.

From a product proposition, Mashreq’s Emirati & Islamic Segment is fully geared to assist and offer a wholesome banking experience to Emirati clients across the UAE. Through our efforts, we look forward to strengthening the relationships further within the community.

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IBRAHIM AL MHEIRI, Chief Executive Officer, Mashreq Al Islami

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Islamic Business & Finance

SOUTHEAST ASIA AWARDS 2019

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ISLAMIC FINANCE

The future of Islamic finance ISLAMIC FINANCE IS BECOMING INCREASINGLY POPULAR, CREATING SIGNIFICANT DEMAND FOR EXPERTS TO ENHANCE INDUSTRY STANDARDS AND DEVELOP MARKETLEADING INNOVATIVE SOLUTIONS. ABBAS BASRAI, PARTNER, FINANCIAL SEVICES, KPMG PONDERS THE STEPS THAT NEED TO BE TAKEN TO RETAIN THE MOMENTUM OF THE INDUSTRY’S EXPANSION

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ISLAMIC FINANCE

I

slamic financial assets were estimated to be valued at $2 trillion in 2018, and are expected to grow in excess of 30 per cent over the next two years, reaching $3.2 trillion by 2020. Some of the fastest growing economic hubs include the Gulf Cooperation Council (GCC) region, Indonesia and Turkey. Muslims constitute approximately a quarter of the world’s population, and this number is expected to grow to 29.7 per cent by 2050. Research indicates, however, that there is a significant opportunity worldwide to include Muslims in the formal financial system, and Islamic finance is also an attractive alternative for non-Muslims.

Islamic finance has become widely accepted in global financial markets with Sukuk issuance totaling $44.2 billion worldwide in the first half of 2018. Several conventional banks have set up Islamic windows. The UAE’s vision is well defined to establish its position as the global capital of the Islamic economy.

With significant growth over the last 30 years, Islamic finance is well established as an alternative finance offering in global markets. As the sector matures, however, there are a number of areas requiring attention in order to sustain and accelerate this growth. These can include the ‘form over substance’ debate, the need for increased transparency, a requirement for harmonisation of standards, more Islamic banking experts, and reinforcing the public’s confidence that the products and services being offered conform to Shari’ah principles.

(Sumala Chidchoi/SHUTTERSTOCK)

TOWARDS COMPLIANCE

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External Shari’ah audits can address the last challenge. Compliance with Shari’ah is the backbone of the global Islamic financial industry and a unique value proposition offered by the industry to its stakeholders. Generally, internal Shari’ah auditors have the task of providing assurance over whether the financial institutions’ activities are performed in accordance with the rules set by the institution’s Shari’ah board. While this model has provided an additional layer of control, details are not typically disclosed to the public.

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and the Islamic Financial Services Board (IFSB) has already made significant strides in enhancing standards.

Some local regulators have implemented more robust governance frameworks and several have

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ISLAMIC FINANCE

created a central Shari’ah authority. A centralised model is increasingly being adopted across the industry, with Oman, Bahrain, Malaysia, Indonesia and Pakistan having established unified, government-established Shari’ah boards in recent years. This is a trend that is anticipated to spread to other jurisdictions, which are likely to learn from one another.

We believe greater Shari’ah governance efforts will be high on the agenda of regulators as the industry becomes systemically important in certain countries. This will in turn increase the credibility of the industr y and boost stakeholder confidence.

TOWARDS HARMONISATION Increased transparency is likely to help address the ‘form over substance’ debate. In theory, deposit holders are entitled to share not only the profits related to the activities that their deposits finance, but are also required to shoulder their burden of the losses.

This principle has likely not been applied consistently in the past and no Islamic bank has transferred any losses to customers over the past 30 years.

Nevertheless there has been steady progress towards the implementation of this principle in recent years.

An example is the Malaysian authorities’ decision to make such accounts truly loss absorbent from June 2016, giving customers the option of choosing between loss-absorbent accounts and non-loss absorbent accounts.

In addition, we understand that only a handful of Islamic banks disclose their profit and loss sharing formulae, profit equalisation reserves, or investment risk reserves. The latter were created to help smooth the return on deposits during volatile economic conditions and reduce liquidity risk.

If the Islamic finance marketplace is to achieve a measure of global unity as regards its legal framework, the standards should be harmonised.

At present, basic transactions, including Sukuk issuance, can be complex and time consuming due to a lack of standardised legal and Shari’ah documentation. This is made more challenging by the fact that different markets may have different definitions of what is and is not Shari’ahcompliant. This means Shari’ah documentation cannot be easily applied across borders. The process of issuing a Sukuk should be as straightforward as issuing a conventional bond but this is not usually the case at present.

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TOWARDS INNOVATION The shortage of Islamic banking experts and a possible lack of innovation have created a gap in the market for the creation of new products that do not have a similar counterpart in conventional finance. There seems to be a strong imperative for new blood in the industry. Innovation requires expertise, including dedicated and well-trained personnel to research new ideas, their commercial application and the development of novel concepts.

Necessity can be the mother of invention: a problem may encourage stakeholders to exert every creative effort to solve the problem. The Muslim world is ready for pioneering banking solutions that will fulfil their financial requirements while allowing them to remain true to their religious values. It is the collective responsibility of scholars, regulators, bankers and government legislators to take heed of and respond to its needs.

ABBAS BASRAI, Partner, Financial Sevices, KPMG

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23 SEPTEMBER 2019 Address Dubai Marina Hotel Dubai, United Arab Emirates

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CONFERENCE TOPICS INCLUDE: Digital Transformation | Efficient Compliance Practices | Technological Disruption | Big Data, AI & Machine Learning | Blockchain Banking | Innovation and Synergy with Fintech Organisations Supported by

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SUKUK

The Sukuk industry wants a piece of the world’s most profitable company

Simon Dawson/BLOOMBERG

MOHAMMED KHNIFER, DEBT CAPITAL MARKETS (DCM) BANKER AT SUPRANATIONAL BANKING INSTITUTION WRITES FOR ISLAMIC BUSINESS & FINANCE

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SUKUK

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SUKUK

B

y now the world has heard of the most profitable ‘corporate empire’ in the world and its successful bond issuance. Aramco is in a league of its own when we compare its financial matrices with super-major oil companies. Saudi Aramco made a net profit last year of $111 billion, more than five times that of Exxon Mobil Corp (rated AAA). Aramco’s balance-sheet carried out all the characteristics of AAA-rated firms but its actual rating is A+.

The Islamic finance industry, however, is waiting to see if Aramco would ever consider issuing a dollardenominated Sukuk—but would Islamic finance investors, outside Saudi Arabia, have a chance to get exposure to an issuer who almost generates $10 billion as net profit every month?

On October 9, 2011, Saudi Aramco issued a Sukuk for SAR 2,344 at par value with semi-annual payments from 20 December 2014 to 20 December 2025 that provide a rate of return above SAIBOR. – MOHAMMED KHNIFER

Aramco, of course, is no stranger to Sukuk. The oil giant shared its bond prospectus, weighing in at almost 500 pages. The offering circular sheds some insights on Sukuk-related issuance by either Aramco or its subsidiaries. The issuance, nevertheless, is in local currency (SAR).

THE HYBRID STRUCTURE On 10 April 2017, SAR 11.25 billion ($3 billion) in Sukuk were issued under the Sukuk programme.

The Sukuk will mature on 10 April 2024 and, subject to early redemption, the principal is payable in full upon the final redemption date. The Sukuk were issued by Saudi Aramco Sukuk Company, a Saudi joint stock company and an indirect subsidiary of the issuer that was incorporated to act as issuer under the Sukuk programme.

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MOHAMMED KHNIFER

The Sukuk issuance provides a return based on Saudi Arabian interbank offered rate (SAIBOR) plus a pre-determined margin (paying 25 basis points over SAIBOR) payable semi-annually on 10 April and 10 October. In accordance with the terms of the Sukuk, 51 per cent of the proceeds from issuance are invested in Mudarabah assets and the remaining 49 per cent are used in a Murabahah arrangement.

THE PRE-/POST- CONSTRUCTION On 9 October 2011, Saudi Aramco issued a Sukuk for SAR 2,344 at par value with semi-annual payments from 20 December 2014 to 20 December 2025 that provide a rate of return above SAIBOR. The Sukuk was structured as Istisnah for pre-construction and Ijara for post-construction of the project.

GUARANTEE TO PROJECT FINANCE SUKUK Sadara is a joint venture between the company and DowDuPont that was established in October 2011.

Sadara is the world’s largest integrated chemicals complex built in a single phase. In 2013, Sadara conducted a project Sukuk issuance in Saudi Arabia for approximately SAR 7,500 with a final maturity in December 2028. Saudi Aramco provided a guarantee for 65 per cent of the Sukuk on a limited recourse basis, which may be called at any time, upon the occurrence of certain trigger events prior to the project completion date.

Mohammed Khnifer can be reached at mkhnifer@gmail.com and on twitter at @mkhnifer

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SUKUK

How Sudan attracted retail investors through Sukuk Shehama 32

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SUKUK

MAGDA ISMAIL A. MOHSIN, ASSOCIATE PROFESSOR, INCEIF AND DR ISHRAGA KHATTAB, DIRECTOR OF RESEARCH PUBLISHING AND CONSULTANCY CENTRE, SUDAN ACADEMY FOR BANKING AND FINANCIAL SCIENCES WRITE ABOUT THE HISTORY OF SUKUK IN THE REPUBLIC OF SUDAN

T

he issuance of Sukuk in Sudan started since 1998 as an alternative Islamic instrument for liquidity management. In 1998 the Central Bank of Sudan established the Sudan Financial Services Company SFSC as the SPV with the aim to manage the issuance of these Sukuk. The main objective of this company is to achieve sustainable economic and social development through the provision of Islamic financial services, and satisfying the desires of the society.

The SFSC is set to exercise all its business transactions in accordance with Shari’ah rules, hence all financial products are subject to supervision by the Shari’ah Supervisory Board. Since then, three types of certificates have been issued by the Government to inject liquidity into the market and to be managed by the SFSC namely, the Government Investment Certificates (GICs), the Central Bank Ijarah Certificates (CICs) and the Government Musharakah Certificates (GMCs). The most active type are the Government Musharakah Certificates (GMCs), also known as Shehama, which is issued every three months and is structured as Musharakah. Sukuk Shehama is issued for the purpose of government lending to cover the budget deficit as well as for liquidity management.

and 500,000 dinars, so that different categories of investors can buy any number of certificates of any amount. The profit is distributed to the owners of the Sukuk Shehama based on their shares in the net equity over the period of the partnership. Shehama Sukuk is the most famous and successful compared to the GICs and CICs mentioned above. According to the Sudanese financial market, in 2017, the turnover of this Shehama Sukuk increased to SDG 1.049 billion Sudanese pounds ($152 million) from SDG 14,131 million Sudanese pounds ($60 million) in 2013.

SUKUK SHEHAMA

Some of the features of the Shehama certificates are that the certificates are legitimate and fulfill all the requirements of the Shari’ah contracts.

Moreover, it is invested in a low risk proposition, as it is anchored in assets in economic units which are characterised by high profitability and distinct management in different economic sectors. In addition, it can be liquidated through selling it at any time in the Khartoum Stock Exchange.

Furthermore, it can be used to settle financial transactions as a guaranteed payment method.

The beauty of purchasing Shehama certificates is that they are open for all Sudanese banks, Sudanese investment funds, insurance companies besides the vast majority of retail investors.

Sukuk Shehama is a financial instrument based on a legal framework issued by the Sudanese Ministry of Finance and National Economy against real assets owned by it on behalf of the Government of Sudan.

It is marketable through Sudan Financial Services Company Limited, which was established by the Central Bank of Sudan. Each certificate carries a nominal value that is calculated in dinars and represents a share of the net investment allocated by the Government for this purpose from the selected investment units. Sukuk Shehama is issued at different times from six months to one year. Such Sukuk is issued in multiple categories including 50,000 dinars, 100,000 dinars, 200,000 dinars,

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SUKUK SHEHAMA FEATURES a. Fixed short-term maturity (one year) b. Listed on and traded in the stock exchange (transferable and fully negotiable) c. Accessible to all d. Provides financing for Government’s budget deficit through a non-inflationary instrument e. Can be used as a tool for open market operations

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SUKUK

SUKUK SHEHAMA STRUCTURE

Investors

Sukuk Issued

Musharakah Contracts between Government and Investors

Cash

Sudan Financial Services Co. (SFS) is the SPV that: • Hold and manages the equity fund • Maintain registry of the Sukuk • Manage sales and redemption of certificates

Clearing & Settlement of Traders

Funds

Khartoum Stock Exchange List & trade certificates

Flow of Cash

Transfer of Equity Claims into a Fund managed by SFS

Flow of Sukuk

Contracts Central Bank or Ministry of Finance

OBJECTIVES OF SUKUK SHEHAMA The main objective of issuing Sukuk Shehama is to enhance liquidity management at the macroeconomic level through what is known as ‘open-market operations’, controlling liquidity either domestically or under Islamic law. Moreover, another objective is to cover part of the deficit in the budget, as it is usual to cover the printing of cash or so-called indebtedness, as the Central Bank of Sudan is unable to do this as the printing of these papers has an inflationary effect on the national economy. In addition, it is aimed at compiling national savings and encouraging investment by spreading savings awareness among the public, which in turn leads to increased investment. Furthermore, it creates Islamic securities that serve as a nucleus to help develop local capital markets.

IMPACT OF SUKUK SHEHAMA Sukuk Shehama has great impact on both economic and social development.

With reference to economic impact, Sukuk Shehama managed to finance the deficit in the Government budget since its issuance. It also partially

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helps in reducing the inflationary impact of other financing options by providing stable funding to the government that is highly linked to the real economy.

Moreover, it helps finance many development projects especially in the medical sector. Furthermore, it helps to develop the Sudanese capital market.

Regarding social impact, Sukuk Shehama aids the masses in terms of financing small projects, or paying school fees or medical bills, acting as a saving channel for individuals that helps them during emergencies.

Source: IIFM (2016)

DESIGN Sukuk Shehama is an instrument based on a profitand loss-sharing contract. It is an asset-based security issued against a certain percentage of Government ownership in more profitable and joint-venture enterprises. Its returns are determined by the expected return on the underlying asset where a pro-rata share of the income stream is distributed between the partners.

The authors can be reached at magda@inceif.org and iadlan@yahoo.co.uk

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HALAL BUSINESS

Business coaching the Halal industry MURTAZA MANJI, FOUNDER, KAIZEN BUSINESS COACHING, ON THE UNIQUE NEEDS AND PLACEMENT FOR THE SHARI’AH-COMPLIANT BUSINESS COMMUNITY

W

hy is business coaching important to Halal business professionals?

In this digital age, there’s no shortage of information that is available to companies and business leaders. Therefore, underperformance does not occur because people don’t ‘know’ any better. The disparity between knowledge and results comes when there is a lack of implementation of that knowledge.

Think of it like a personal trainer at the gym. The role of the trainer or coach is not just to have the know-how, but also to create a tailored programme based on your required outcomes, implement accountability so that you do achieve the results you want, and to help overcome any challenges that come up along the way. For companies that are looking to achieve significant, sustainable growth, an external coach can provide tremendous value because they can (and will!): challenge the norms, ask the right questions, bring clarity to business challenges, contribute strategic insight and honest feedback, and hold the business leader and team accountable.

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(Myvisuals/SHUTTERSTOCK)

HALAL BUSINESS

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HALAL BUSINESS

A business coach is the sparring partner that every business leader needs to achieve great results. In the global Halal industry, companies are simultaneously creating a market, and going up against reputed, well-established organisations with a lot of resources available. It won’t be an easy or straight-forward entry into the market, and the leaders of Shari’ah-compliant companies need to be well-prepared for that.

Do you think different practices should be applied within different industries or are the rules of business coaching universal and relevant to all industries no matter how specific its nature is?

While every business is unique, there are general business best practices that don’t change regardless of industry, size or geography. Some examples of these best practices include tracking key business numbers and anomalies, having a strong company culture and values, inclusion of diverse viewpoints, a clear decision-making process, addressing changing market needs through constant innovation, as well as other general best practices around leadership, people, finance, operations, and strategy.

The role of the business leader and executive team is to work with the company’s unique strengths, whilst knowing the business best practices, and blend them together to create long-term, sustainable business success.

The UAE and the broader region is going through relatively challenging times. As a business coach, what are your top three pieces of advice for industry leaders to get through these tough times?

First, there may be a general slowdown in specific industries, but certain markets are doing stronger than ever. Businesses need to be aware that if they do not establish themselves as specialists, when the market has a niche requirement, they will not be considered.

Businesses need to stop creating a “jack-of-alltrades” identity, and instead focus on a few key competencies for which they can be known as market leaders. The more niche your target market, the better.

The businesses that we work with adhere to this approach, and have seen record numbers in terms of revenue and growth, in the same years that their competitors were going out of business and shutting down.

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Second, if you’re facing an issue at a macro level (not internal to your company), chances are your competitors are facing similar challenges. Every business has a different degree of preparedness for problems, and, sad but true, many are just hanging on by a thread.

Downturns, whether local, regional or global, take a lot of bad players off the field. By 'bad players' I refer to the businesses that bring bad reputation to a respected market — these exist in every single industry — from financial advisories to logistics companies.

How do you combat this? Make sure your business is prepared to take on the challenges, and solidify your internal resources and systems, so that your company can withstand the downturns and still come out on top.

Complacency is a silent killer. Everything is fine, ticking along, steady… and suddenly there’s a business-threatening issue looming over you.

The role of the business leader and executive team is to work with the company’s unique strengths, whilst knowing the business best practices, and blend them together to create long-term, sustainable business success.

MURTAZA MANJI, Founder, Kaizen Business Coaching

Downturns force you out of your comfort zone, throw you head-first into the deep-end of an existing problem. There’s no time to assemble a committee, have 18.5 useless and 1.5 useful meetings, and come up with a 62-point list of ‘recommended actions’ (which, conveniently, no member of the committee is willing to stake his reputation on).

Challenging times make you roll up your sleeves, grab your gear and get into the trenches. Few battles are lost in the war room, most are lost at the front line. Conversely, the same applies for battles won.

Getting out of the boardroom and onto the shop floor is perhaps one of the best solutions I can offer to businesses facing difficult circumstances.

www.islamicbusinessandfinance.net

28/04/2019 17:14

HALAL BUSINESS

Are the UAE and the Middle East in general markets where every Halal company has to be in?

Well, yes and no. The UAE and Middle East are not just logical markets for Halal Foods, but — more importantly, are the gateway to the global markets.

These companies should definitely consider being present in the Middle East.

Having said that, it is important to note that the global demand for Halal products is rising tremendously. The Global Islamic Economy Report by Thomson Reuters recorded a 12 per cent increase in Halal certified food products, and this number will continue to grow in the next five to 10 years.

From your perspective, how can any of these companies stand out of competition?

MURTAZA MANJI, Founder, Kaizen Business Coaching

How can leaders of Shari’ah-compliant companies drive their businesses to success? What is the educational role they have and how does it affect their resources and the end of year results of the company?

The role of the leader in any entity is to guide the team towards success. In companies, leaders should exist at every level, not just in the C-suite.

These leaders are looked up to by people within the organisation for guidance, motivation and support, and from people outside the organisation for education, business results and reputation.

The Halal industry is still in its early stages, and there is a tremendous amount of potential still to explore. The leaders of the Halal companies today have a direct, major impact on their bottom-lines by positioning the business correctly in the market and minds of their customers. This includes expanding the awareness of Halal products. It is not limited to food and drink bought from a supermarket or restaurant, but even in ingredients manufacturing, energy drinks, baby products, and even with regards to Halal tourism.

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Businesses are like trees. They are either growing or dying. Any business that isn’t constantly changing is falling behind, and risking failure. Changing markets are not new. The only different factor is the speed at which the markets and business landscape are involving.

The most successful businesses are the ones that develop the ability to not just keep up with the change, but to always be one step ahead. These are the businesses that will become market leaders and will come out on top. In the Halal industry, there will also be a higher standard expected of the players.

How to stand out from the competition? Have a laser-focused niche, develop a great product, craft a story and brand that resonates, run numbers-based marketing strategies, and track everything.

What key learnings can Halal professionals take from last year?

Halal lifestyle making big leaps, from fashion and sportswear to holiday destinations.The Halal market is becoming a major player globally.

Halal food players need to up their game in terms of educating the general public on their processes and practices, creating niche products in keeping with trends (healthy-eating, diets, etc.), and be more approachable, including making human brands.

Lastly, understand that business is a science, not an art. All external factors remaining equal, it is possible to replicate success. We have seen doubledigit growth for our clients in years that there was a double-digit closure rate of their competitors. Use resources available, invest in your team, think big. The prizes are huge, if someone is really willing to play.

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TAKAFUL

Insurtech will transform the Takaful industry

(L-R) Industry Leaders from Milliman, U.A.E. Insurance Authority, Capital Market Authority, Bank Negara Malaysia and Central Bank of Bahrain at the Regulator's Rendezvous Panel at the 14th WTIC.

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TAKAFUL

THE 14TH WORLD TAKAFUL & INSURTECH CONFERENCE SAW ATTENDANCE FROM OVER 300 INDUSTRY LEADERS TO DISCUSS HOW TAKAFUL WILL MOVE FORWARD

T

he Takaful industry is at a critical point.

Just as technology has begun to transform the conventional insurance world, Takaful, already an innovative solution, must transform too in order to best deliver a superior product to its customers. At this year’s World Takaful & InsurTech Conference, previously known as the World Takaful Conference and rebranded to reflect the changing industry, 300 key industry leaders gathered from various markets comprising the GCC, Asia, Africa, Europe and the United States for the 14th edition, convened by Middle East Global Advisors,.

The forum spearheaded a series of discussions among policymakers, industry leaders, regulators and stakeholders addressing the theme of ‘Reinforcing Customer Engagement and Operational Agility through Digital Transformation’.

Abdulla Mohammed Al Awar, CEO, Dubai Islamic Economy Development Centre (DIEDC), delivered the opening keynote address, discussing areas of development for Takaful and establishing an environment for growth.

“According to the Islamic Finance Development Report 2018 by Thomson Reuters, the global Takaful industry reached $46 billion in 2017. However, at just two per cent, it still remains the smallest contributor to the Islamic finance industry in terms of assets,” Al Awar said.

“This, despite that fact that currently close to 324 operators around the world offer Takaful. It is quite evident then that the Takaful sector has tremendous potential to expand its role in the Islamic finance industry”, Al Awar continued.

Hamad Darwish, Business Development Manager, Al Etihad Credit Bureau (AECB), spoke about how the credit bureau could support insurance companies to better manage their receivables and offer customised pricing to low risk customers.

Undertaking business transformation by integrating innovative technological solutions is an essential move, according to Reena Vivek, Chief Operating Officer, Zurich International.

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TAKAFUL

“We must embrace new ideas to deliver superior customer experiences. Ultimately, it’s about connectivity, being more connected to our customers, and technology can enable us to connect. Sometimes it’s the smallest thing that will have the biggest impact,” expressed Ms. Vivek.

Speaking as part of the panel on calibrating leapfrog strategies for TakafTech, InsurTech and innovations in claims and healthcare insurance, Fatou Assah, Manager, Finance, Competitiveness & Innovation, World Bank Group, spoke about how insurtech has already helped the developing orld.

“Recently in Africa and Asia, insurtech has helped accessing the unbanked and uninsured, especially low-income population living in rural areas, through mobile phone technologies or e-vouchers. The use of satellite data or drones in product design and claim processes have also significantly helped the insurance industry address some key challenges,” said Assah.

Customer engagement is also integral for Takaful operators according to, Parvaiz Siddiq, Chief Executive Officer, SALAMA Islamic Arab Insurance Co. “It is important for global industry practitioners to converge at platforms like the World Takaful & InsurTech Conference where they can deliberate on key industry pain-points and gaps and identify new growth opportunities whilst coming up with

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a clear and effective road-map for the future. This year’s WTIC focused on addressing the key issue of customer engagement and operational agility through digital transformation. As a leader in the field of Shari’ah-compliant solutions, and owing to the massive disruption in the market, it becomes all the more critical to discuss the importance of developing competitive and diverse Takaful solutions that meet the ever-changing market demands, a topic I was happy to contribute my insights to at this year’s edition.”

WTIC 2019 also hosted dedicated sessions on evaluating rating standards and financial strength of insurance companies; embracing innovation & technology in the insurance industry to achieve industry-wide transformation, building internal talent and leadership of skilled and qualified personnel within the insurance industry; the challenge of progressing to profitability for Takaful operators and assessing the challenges of corporate governance in Takaful, among others.

The WTIC 2019 was held in strategic partnership with the Dubai International Financial Centre Authority and supported by the UAE Insurance Authority (IA) and the Dubai Islamic Economy Development Centre (DIEDC) on first and second of April at the Address Dubai Mall Hotel in Dubai.

ABDULLA MOHAMMED AL AWAR, Chief Executive Officer, Dubai Islamic Economy Development Centre (DIEDC), delivering the opening keynote address at WTIC 2019.

www.islamicbusinessandfinance.com

28/04/2019 17:16

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9 - 10 September 2019 Dubai, United Arab Emirates Financial Regulation Technology Summit presents an exclusive opportunity for the Middle East banking industry to bring the focus back to business by creating a more proactive and effective compliance approach.

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Executive Vice President FinTech Hive at DIFC

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ISLAMIC TECH

Making Hajj and Umrah easier

(BiksuTong/SHUTTERSTOCK)

AHMED AND AYMAN SHADY, FOUNDERS OF MUTAMER, AN APP AND WEBSITE THAT HELPS VISITORS IN PLANNING HAJJ AND UMRAH TRIPS, SPEAK TO ISLAMIC BUSINESS & FINANCE AHEAD OF THEIR LAUNCH TO THE PUBLIC

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ISLAMIC TECH

www.islamicbusinessandfinance.net

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ISLAMIC TECH

W

hat was the idea behind your company?

Every Muslim around the world tries to do Umrah. But if you are in Europe or the US and try to do Umrah, how will you do it? You have to ask your friends, search for Islamic centres. But people aren’t sure how to do Umrah, which companies provide visas, how the process works—people are very unsure about it from top to bottom. People end up asking friends rather than looking to any particular service.

Currently, we are the first platform that provides these services. Through our application, you can check all the available packages, check the trip information, the hotel locations, compare prices from different companies, and do the full reservation process, finalise your booking, and pay for your trip from your home. This is a problem, and we have tried to find the solution.

What was the problem other than the difficulty in finding information? Were there also companies that provided poor services for Hajj and Umrah?

There is no evaluation for these companies—there is no scoring. When you go to booking.com to reserve a hotel, you check the hotel score to see how people evaluate the hotel, and get an indicator on the service that will be provided to you. This is missing from the Hajj and Umrah market. No one knows about the Umrah companies, and the evaluation is missing.

We are trying to build a cumulative evaluation and scoring system for Umrah companies, so that when you check your trip, you check the company evaluation from others after they do their Umrah with that company.

How did you get involved in this project?

We are software consultants, and we have a big background in software engineering. We built software for banks, telecom companies, healthcare organisations and hospitals. We have a strong history in these sorts of projects. When we faced a problem and tried to contact Umrah companies, we found that they faced a lot of problems as well.

They can’t market themselves. If there is a company operating in Saudi Arabia working in Umrah and want to market themselves in the US, Australia or Europe, it is difficult for them. They don’t have the right knowledge, or the right tools.

We provide companies with a full solution, automation for their business, and give this to

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them for free. We just want them to work with us. If you have multiple offices in one or more countries, you can synchronise your offices with this platform. We will also do marketing for those companies and help sell their packages. We take a commission from the Umrah companies from each reservation.

Have you debuted the project yet?

We have already launched a pilot for 20 days in Riyadh and in those 20 days we had about 6,000 registered users. The review from the customers was very good, the review from the companies was very good, and the feedback is good thus far from both the companies and the end users. We plan to launch it fully before Eid 2019.

As a Halal business, what are the challenges of that in Saudi Arabia? Is it difficult to get investment?

Saudi Arabia is universally Halal, but the problem is to find the right investors to help you grow your business. We try to describe our solution for the investors, describe the problems and how we solve that, and how it could impact the economy. Saudi Arabia is trying to double or triple the number of visitors to Saudi Arabia, and there is no reliant solution to book these trips, We provide that solution, and this the right time for this project. We are trying to catch the moment both with investors and with the market at large.

AHMED and AYMAN SHADY, founders of Mutamer

The two of you are brothers. Have you always been business partners?

We’ve always been brothers of course, but this is our first project together alone. We have worked as consultants in many companies, but we have now decided to finally team up for this project.

What’s the next step?

We have three or four full-time engineers working at our research and development offices in Egypt.

We need more offices in the Gulf, and to expand officially into the US and Europe. We need to be a big multinational company and work across borders.

Do you work with the Ministry of Hajj and Umrah in Saudi Arabia?

Not directly. We work with agencies, and the agencies maintain contact with the Ministry.

During our next period it would be very good for

www.islamicbusinessandfinance.net

28/04/2019 17:17

ISLAMIC TECH

Saudi Arabia is trying to double or triple the number of visitors to Saudi Arabia, and there is no reliant solution to book these trips, We provide that solution, and this the right time for this project. We are trying to catch the moment both with investors and with the market at large.

– AHMED and AYMAN SHADY, founders of Mutamer

www.islamicbusinessandfinance.net

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us and for them, as they are looking for initiatives like this, but we don’t know exactly when we will make that contact.

How’s the landscape for Halal businesses, especially on the technology side, in Saudi Arabia? What’s the sentiment amongst your peers? Is it a supportive environment?

It’s better than one year ago, which was better than two years ago. Every month, there are more initiatives, and more pushing in this direction in Saudi Arabia. The situation now is very good, and better than ever before. They are trying to encourage technology start ups, and for the first time, technology companies can be 100 per cent foreign owned without a Saudi investor with you.

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ISLAMIC ART

Ancient treasures INSIDE ONE OF THE FINEST PIECES IN SOTHEBY’S LATEST ARTS OF THE ISLAMIC WORLD AUCTION

I

n May, Sotheby’s holds its latest Arts of the Islamic World auction, featuring some of the finest pieces found across the Middle East, Southeast Asia and beyond, from various times since the founding of Islam.

The auction includes a number of rare Qur ’ans, including one exemplary fine and rare miniature Qur’an on vellum, North Africa, Near East or Persia, 10th century CE, estimated to sell at GBP 70,00090,000.

This fascinating miniature manuscript is an extremely rare and early example of Eastern Kufic script written in a vertical format on vellum.

The size of the manuscript made for a considerable degree of difficulty, especially due to its intricacy and exemplary design, which was very difficult to execute on a material such as vellum, which was incredibly special material to use in this manner at the in the 10th century.

“Vellum is thicker than paper. Vellum was expensive— the moment you chose to write a Qu’ran on vellum meant you had a big budget,” said Chiara de Nicolais, Cataloguer at Sotheby’s.

As sheep were expensive at the time of the Qur’an’s production, the process of

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ISLAMIC ART

compiling the manuscript was done with extreme care, using a special folding technique that made use of the otherwise superfluous ends of the sheepskin, allowing the full skin to be utilised without anything being wasted, making it easier to make each folio and to sew together the different sections of the manuscript, ultimately giving it a stronger build.

“It was a very productive use of the vellum,” says de Nicolais.

The Qu’ran also has other rare features. Written in a special news script, it also adds dots above the words, which is rare for manuscripts of this kind, allowing the text to be read more easily if the reader doesn’t know the Qu’ran by heart, according to de Nicolais.

The Islamic world auction is set to be paired with paintings from the Orientalist movement, including many with Islamic themes and depicting Islamic rituals, from some of the most renowned masters in history.

The auction will take place in London, but investors will be able to participate remotely, with many expected collectors to come from the Middle East, as these collections have become increasingly popular in the region at large.

www.islamicbusinessandfinance.net

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EVENTS

Announcing our first ever forum, coming this October to Dubai FOR THE FIRST TIME EVER, ISLAMIC BUSINESS & FINANCE WILL, IN CONJUNCTION WITH THE ISLAMIC BUSINESS & FINANCE AWARDS AND THE ISLAMIC BUSINESS & FINANCE SOUTHEAST ASIA AWARDS, HOST ITS FIRST FORUM THIS 23 OCTOBER AT THE ADDRESS BOULEVARD HOTEL

I

slamic Business & Finance has always been committed to staying not just on the pulse of the industry, but to look forward. The industry has grown and changed a lot since its birth, and at this pivotal point, there are many moves that the industry needs to make in order to achieve its full potential moving forward, and to gain market share across its many pillars.

Join the Islamic Business & Finance Innovation Summit as we bring together leaders from across

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the Islamic finance industry to discuss where the most impactful innovations in the Islamic economy are developing, how best to harness the industry’s potential and foster further innovation to position it for a better future.

Topics will include regulation, sustainable growth, the role of technology in the industry’s development, international collaboration opportunities, and wealth management.

We look forward to seeing you all there.

www.islamicbusinessandfinance.net

28/04/2019 17:20

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