The Council

The Council December 2011

Feroz Dean

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2010 - 2011 Executive Team

Feroz Dean

Mohammad Yasin

Tassaduk Ali

Bob Ibrahim

Sharina Khan

Daud Ismail

Otmane Madrane

Alanna Dean Burk

Zinnat Ali

Sponsers:

Design & Layout:

‘avee’ Magazine Compiled by:

Bob Ibrahim/M.Yasin

Participating Countries

Fiji

Indonesia

Canada

Libya

British Columbia

Pakistan

Contents: Messages fromPage 5: The Premier Page 6 : The Honorable Harry Bloy Minister of State for Multiculturalism Page 7 : Dianne L. Watts - Mayor of Surrey Page 8 : Feroz Dean, Chairman - Muslim Business Council Page 9 : Jitendra Singh - Fiji’s Trade Commissioner (The Americas)

Articles Page 18: Globalization

Page 40: Transparency and Charitable Organizations

Page 20: International trade

Page 42: Family Transactions

Page 24: Canadian International Income Tax Rules

Page 44: Corporate social responsibilities

Page 28: Competing and Winning in International Markets

Page 48: Dos and don’ts of business strategy

Page 30: Trade and Investment – B.C. Government

Page 50: The changing world of real estate

Page 32: SFU Students help drive change in INDIA

Page 52: A day in Vancouver

Page 34: Muslim women in business

Page 54: Trading Foreign Currencies

Page 36: Islamic Finance in a Turbulent Economy

Page 58: Advice for Organizations applying for Registration

Page 38: Does your portfolio have the discipline it needs?

Page 62: Canada keeps AAA Credit-Rating

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Message from

The Honourable Harry Bloy Dear Friends, Congratulations to the Muslim Business Council of BC on its event, â&#x20AC;&#x153;Letâ&#x20AC;&#x2122;s Talk Trade,â&#x20AC;? which brings together men and women from several countries to create and maintain business relationships. In these trying economic times, opening markets and fostering open trade with as many countries as possible is key to our economic prosperity, and I would like to recognize the Muslim Business Council of BC for doing its part. As we look to attract investment from other countries we can truly appreciate our multicultural and multilingual society as one of our strengths. Best wishes to the Muslim Business Council of BC and everyone attending this event. Sincerely,

The Honourable Harry Bloy Minister of State for Multiculturalism 6 The Council

C ITY OF S UR RE Y OFFICE OF THE MAYOR

Muslim Business Council of BC December 3, 2011

On behalf of Surrey City Council I am pleased to welcome everyone to the Muslim Business Council of BC’s “Let’s Talk Trade” conference. Tonight’s event is an exciting time for dialogue on key business topics affecting both Surrey and the wider region.

D IA N N E W A T T S mayor p 604 591 4126 f 604 591 5175 mayor@surrey.ca

www.surrey.ca

I am proud to see groups like the Muslim Business Council of BC stepping up and strengthening our business community as we work together. Surrey is well known for our outstanding growth and investment opportunities. For consecutive years we have been named the best place to invest in BC, and this year we were ranked fourth on this list of top Canadian investment cities. It is my hope that this Business Council will be an encouragement and cooperative resource for the business community as a whole. I trust that tonight’s event will be both informative and enjoyable for all in attendance. Have an excellent time and let’s talk trade! Sincerely,

Dianne L. Watts Mayor

14 2 45 – 5 6 A V E N U E

SURREY

BRITISH COLUMBIA

CANADA

V 3X 3 A 2

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n this turbulent time when the entire world community is facing extreme hardship with their economy and uncontrollable debt, citizens are losing their jobs and there does not seem to be any end in sight for the ordinary citizen., The Muslim Business Council is bringing businesses, professionals and the community together with the purpose of networking and information sharing. Several countries will provide presentations on trade opportunities that are available, for the enterprising entrepreneur. As Canadians we have to be positive in our outlook. Each citizen must play his or her part to contribute to the country’s economic prosperity. While the rest of the world countries are in a deep financial mess, Canadians have been spared the taste of hard times for the time being, because we have been able to manage our affairs in a responsible way. A word of caution though. All is not well in Canada either. Our personal debts are getting out of hand the and right measures have to be put into place by the Government, the Banks, and each family so that we are conscious of our financial responsibilities. The Finance Minister in Ottawa, has represented us in a number of economic and financial forums. Canada has much to offer the world in the area of financial reforms. However, we are not

8 The Council

- Feroz Dean - Chairman immune to power and authority by government officials. This does not sit well with the Canadian people. The media and the Canadian public have been the watchdog to ensure this does not continue. For the last ten to twelve years, we all have been living beyond our means, in every country. Personal debts have been mounting and with the availability of cheap money, goods and services have been hoarded by ordinary citizens. Payments will be made when the bill arrives. Yes if it does not get paid on time , it accumulates with high interest. Marketers of goods and services target their prey with fancy and catchy advertisements. The Impulse buying is a habit we are soon captured by the Buying Trap. “LETS TALK TRADE” in an evening event for the invited countries to come and showcase the products, services, technology, raw materials, etc. that they are providing on the world market and what it is that they are looking for in return. In return they will share How can we work together to help each other’s economies. They will inform how successful have they been in connecting with the Canadian businesses and the strategies that have worked for them. Sharing of knowledge is also a valuable tool for the growing business and this information is only available when you participate in forums of this nature. Times are changing. With the

explosion of technology and the ease of communication today, we have to be on our toes to connect and reconnect for the business opportunity that is lurking around the corner . If we snooze, we lose. Our trade in the world market can be far greater than what it is today. Ten years ago we were complacent because our neighbour to the south was and is still our preferred trading partner. Today we are more vigilant but not vigilant enough. The trade regulations that our neighbour is implementing to safe guard their economy will hurt us in the long run. Canadians have to be vigilant in order to find new customers offshore. China, Europe, South America, Asia and the Middle East, offer us unique opportunities and the time is ripe to harvest these opportunities. It is not only the responsibility of the Federal or Provincial Governments to take the lead role but as businessmen and women we need to do our part as well. The Muslim Business Councils idea of organizing an event of this nature is for the governments to grab the opportunity and organize a Trade Symposium and invite the world. We are well positioned with the infrastructure from the Olympic 2010 in place to hold the venues throughout the entire lower mainland. I hope this idea will come to fruition on a large scale where we will once again be Host to the World Community.

A Message From

Fiji’s Trade Commissioner (The Americas) Mr. Jitendra Singh

I congratulate the Muslim Business Council of British Columbia, Canada, on the occasion of their business event, the Mini Trade Talk. The idea of bringing the business community together and exploring an opportunity to increase trade and business opportunities is indeed commendable in such trying times. As we know, the global economic and financial landscape was transformed significantly in 2009 for the worse and its effects have been unexpectedly long-lasting. In such challenging times, everyone is looking forward to good economic news. Unfortunately, this has been evading us. Despite everyone’s firm efforts to rebuild their economies, it is becoming more established that a much bigger and concerted effort is necessary to pull us out of this decline. An event such as this is indeed a step in the right direction. It gives us a chance to augment everyone’s efforts to grow bi-lateral and global business and pave the way for higher economic growth for our countries. As an office of the Fijian Government tasked with promoting Fiji as an investment destination and a source of premium goods and services, our participation at this event is both timely and appropriate. We believe it is an excellent opportunity to showcase Fiji’s distinctiveness on these fronts. Fiji is an island group located in the South Pacific Ocean, about two-thirds of the way from Hawaii to New Zealand. By flight, it is about 10 hours from Los Angeles. Several foreign businesses have already invested in Fiji and many are in the process of investing in sectors such as tourism, communication, transportation, renewable energy and agriculture to name a few. Fiji is actively seeking foreign investment in agricultural and livestock production, agro-processing, renewable energy, manufacturing and various other areas. To attract foreign investment into Fiji, the Government is offering a range of investment incentives, including tax holidays for certain industries. Please visit our website www.fijitradela.com for more information. I welcome you to visit our booth at the event and talk to us on a business opportunity with Fiji. I thank the Muslim Business Council of British Columbia for their invitation to participate in this Mini Trade Talk and wish them every success in this event.

]|àxÇwÜt f|Çz{ The Council 9

The Birth of the Muslim Business Council Serving Business, professional and Student Interests

Background

he Muslim Business Council (MBC) was born on November 7th, 2007. This represented the culmination of exhaustive consultation with the senior community leaders and professionals. There was resounding support for the idea of a council to represent and promote the aims and interests of Muslims in the global work place. The founding of MBC marks an historic milestone for the Musilms of British Columbia. Our community is one of the fastest growing communities in all of Canada, especially in the three larger provinces Ontario, Quebec and British Columbia. Business is thriving and the entrepreneurial spirit is flourishing through the influx of the new immigrants. Aldhamdolollah, original organizations such as the BC Muslim Association, the Islamic Society of British Columbia, the Islamic Information Center and Masjid-al-Noor have been very successful creating the infrastructure to support our Muslim community with the establishment of mosques, school, madrassas and burial facilities. With all these achievements and our significant contribution to the economic growth of British Columbia, we nevertheless remain underrepresented in important institutions such as the provincial and federal governments, boards of trade, task forces, and local and international expositions. This is not the fault of these institutions, but rather our lack of visibility and participation in these forums. The MBC aims to change this status quo.

Founding Contributors

s with any successful endeavour, there are many individuals whose enthusiasm, vision and encouragement must be acknowledge. The following people were enthusiastic when I spoke of my idea to form a business council to bring all Muslim businesses together. Without their determination, this project would never have gotten off the ground. Mohammed Yasin, Co-founder, is one of the hardest working members of this community. Daud Ismail, Co-founder, is past president of the BCMA and a man with great vision and idealism. Syed V. Madani is the most senior member of our Muslim community, a trustee and an ambassador od the BCMA, and a successful entrepreneur. He understood that this venture was timely thereby urged the working committee to move forward without delay. Saheda Dean is a financial consultant whose vision for the pivotal role that women will play in this organization is infectious.

Founding Team - Feroz Dean (Founder) - Mahmood Awan - Imaad Ali - Syed V. Madani - Mohammed Yasin (Co-founder) - Liaqat Ali Khan - Massood Joomratty - Bob Ibrahim - Sharif Senbel - Daud Ismailm (Co-founder) - Izaz Azad - Irshad Koya - Sahida Dean 10 The Council

First Executive Team - Feroz Dean - Irfan Ali - Imaad Ali - Izaz Azad - Sadaf Baig - Mohammed Yasin - Mahomed Taibo - Reza Samar Baf - Ishrad Koya - Bob Ibrahim - Massood Joomratty - Daud Ismail - Tassaduk Ali - Alanna Burk - Razi Mohammed - Ardeil Shoeker

Aims and Purpose

he Muslim Business Council was formed to unite under one banner to support our member business, to add to their growth, to connect with professionals whose ideas can be kindled to further the community’s ideals. The council will provide mentorship, leadership inspiring our youth and women, and encouragement for newcomers to participate in all that their adopted counter has to offer while remaining very proud of our identity as Muslims. The growth and quality of our members’ lives will enrich the growth and quality of Canada as a whole.

Power of Five

s the saying goes the “power of five” is strong. Fiver fingers create a fist. Islam is built on five pillars and the Business Council as five guiding principles: -Business and Economic Networking -Social Integration -Cultural Diversity -Humanitarian Concerns -Political Participation

Accomplishments These dedicated visionaries have in a short time been able to provide several programs.

Constitution

Our constitution incorporates noteworthy provisions such as term limits and gender equality. The Chair may only serve for one two year term. Women are strongly encouraged to take leadership roles in the council.

Membership Base

The membership continues to grow through many networking events, advertising and word-of-mouth recommendations. MBC Website: www.MBCouncil.com Now that we are in the 21st century it is essential that any organization be digitally represented. Our website provides members with updates on MBC events, announcements, and articles on business topics, community affairs, and business tools.

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Social Activity

In order to provide networking events we have has a networking banquet, and a membersâ&#x20AC;&#x2122; banquet. We have honoured our faith b holding a Ramadan iftar and a celebration of Islam during the month of October 2008.

Professional Development Events

Our members have provided events in the areas of will and estate, taxation, and RRSP information. Those buying and selling homes were treated to information sessions as well. Financial information regarding life insurance, marketing and understanding the share market was also shared by our members.

Social Issues

We have hosted fund raising socials to benefit some of our less fortunate and those of the rest of the world. We have provided disaster response planning sessions as well to ensure that we do not suffer the fate of other areas of the world.

The Role of Women

ne of the most controversial aspects of Islam has been the role of women. We have taken the example of the prophet, PBUH and his wife, Khatija (RA). They used the caravan of business to spread the message of Islam. Prophet Mohammed, PBUH, recognized that women are not only the teachers, but also partners with their husbands. This organization has as one of its founding principles to enable women to lead other own by example through their ingenuity, determination and focus. The MBC will specifically invite out entrepreneurial sisters to participate and share their expertise.

Future Vision

hroughout history, Islam and the business world have never been mutually exclusive. Trade and commerce have always been a part of the Muslim identity. From pre-Islamic days, the Holy City of Mecca has been the center of commercial activities. It was indeed the annual trading center of Mecca that provided the Prophet Mohammed a forum for delivering the message of Islam. The early Muslims were not engaged in trade but they wanted to distant lands linking the orient and the accident. Muslim civilization was a trading civilization; it was open to world, and open to new ideas. As Muslim business leaders, we help maintain the tradition. Not only will the Muslim Business Council be a force economically, but also we will provide a voice for the community on social and political matters and engage in cultural and humanitarian projects which will benefit the Muslim community for the long-term. Our goals include creating community service projects, including a seniorsâ&#x20AC;&#x2122; Care Facility for our elders who require the availability of 25-hour nursing care and supervision. Without again population, this project is a must, and the business community is the best place to start this cause. We will also look into creating a Chair in the business faculties of our local universities. We will work with the different levels of government to help focus attention on the needs of our members businesses. Muslims have never been an integral part of international trade summits or missions and we intend to work to make changes in these areas. We intend to host major trade shows, conferences, conventions and educational seminars to strengthen Muslim businesses and to foster professional development among the community sectors. Our success will be driven by the entrepreneurial energy and spirit of our council members, and the belief in Allah, which unites us all.

Where do you want to go? For more info, go to our website: www.MBCouncil.com Magazine Compiled by:

Bob Ibrahim/M.Yasin

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Where do you want to go? Eager to meet new Prospects and Expand your network?

Come Join Us !!!

and be ready to Expand your Network

Who are We? We are Muslim Business Council of British Columbia We Raise the profiles of muslim businesses and Professionals.

For more info, visit our website: www.MBCouncil.com 14 The Council

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Feature and Prospects of Indonesian Economy

ndonesia is the 4th most populous nation in the world. Apart from its remarkable fiscal and political transformations during the last decade, Indonesia is also undergoing a major structural shift in terms of demographics. Of the 240 million people, over 50% of the population is under 29 years old, and 60% of the population is under the age of 39, with around 52% of the population living in urban areas. This provides for dynamic labour market participation, growing at 2.3 million per year. A rapidly urbanizing population also provides for strategic

pools of labour force in centers of investment. Coupled with this demographic bonus is Indonesia’s commitment to improve productivity and the education level of its youth, with 20% of total government expenditure on education. This expenditure is higher than any other sector. Currently, the majority of university graduates are trained in technical fields such as finance and economics (28%) or engineering and sciences (27.5%). Indonesia has a large domestic market to offer, over 53% of which lives in urban areas and adopts a modern lifestyle. A growing and affluent middle class supports GDP growth with approximately 56.7% of GDP accounting for private consumption in 2010; while Consumer Confidence in Indonesia is at an all-time high, consistently reaching over 110 points until May 2011. The service sector in Indonesia has also grown over 16% points from 1998 to 2009 and continued to grow at a pace of 6% in 2010 from the previous year. Economic Size 16 The Council

Having a GDP size of nearly US$ 707 billion in 2010, Indonesia is the largest economy in Southeast Asia. Much less affected by the global financial crisis than its neighbouring countries, Indonesia’s economy grew by 4.5% in 2009, 6.1% in 2010 and is expected to reach 6.4% this year, providing a case for Indonesia’s inclusion in the so-called MIST economies. Future economic expansion is expected to include more inclusive growth as nominal per-capita GDP is expected to quadruple by 2020, according to a Standard Chartered report. A large part of our economic success is a result of prudent fiscal stewardship that focused on reducing the debt burden. Indonesia’s debt to GDP ratio has steadily declined from 83% in 2001 to 26% by the end of 2010; the lowest among ASEAN countries, aside from Singapore which has no government debt. As a result, in January 2011 Moody’s raised Indonesia rating to Ba1 and in April 2011, Standard & Poor’s had improved Indonesia’s credit rating to BB+, the last of the three major credit rating agencies to upgrade sovereign debt to one notch below investment grade. The rating reflected Indonesia’s resilience to the global financial crisis, improving government and external credit-metrics, and an ability to manage domestic political challenges to the reform agenda. These achievements have increased the frequency with which Indonesia is being compared to middle-income developing nations like Brazil, India and Mexico. Economically strong, politically stable, reform minded, Indonesia is an emerging global powerhouse in Asia. Political Stability Underlying Indonesia’s vibrant economy is po-

litical stability. A decade ago, many analysts envisaged that certain breakaway provinces would bring about Indonesia’s “balkanization”. In 2001, Indonesia embarked on an ambitious and challenging decentralization effort. While it has been

challenging journey, today Indonesia is one of the most decentralized countries in the world with substantial funds and authorities devolved to the regions. Significantly, Indonesia is the only country in Southeast Asia that has bucked the trend of a democracy in trouble. Democracy is blossoming in a country that was once ruled with an iron hand for 30 years. Indonesia has gracefully transformed from an authoritarian state to a regional role model. Recently, and for a third time in a row, Indonesia completed nother round of peaceful and successful legislative and presidential elections. The election confirmed the people’s confidence in President Susilo Bambang Yudhoyono’s leadership, who won more than 60% votes from 176 million registered voters. President Yudhoyono’s party, Partai Demokrat, controls over 25% of plenary votes, providing him with a stronger mandate to lead Indonesia in the next five years. Stronger Investment Climate Indonesia’s economic policies are on a firm footing. So are its measures to attract foreign investment. Below are a few of Indonesia’s latest improvements of its investment climate: Investment Law No. 25/2007: This updated investment law redefines “capital investment” as all investments, whether by domestic or foreign investors, for the first time offering equal treatment to all investors. There is no longer a limit of 30 years on foreign investment permits, and gone is the provision in Law 1/1967 for there to be divestment. Additionally, the new law allows for the unimpeded reparation of capital. One-stop-shop (PTSP) and National Single Window (SPIPISE) : The Indonesian Investment Coordinating Board (BKPM) has launched a one-door integrated service (PTSP) and an electronic automation platform for investment licenses and non-licensing services (NSWi) to not only reduce the number of procedures and amount of documentation needed to invest in Indonesia, but also to bypass the need to physically come to our offices to apply for certain services. The new system has revamped internal processes and rec-

tified human resource constraints to increase the speed and improve the quality of investor services. The system was first launched in January 2010 in the Free Trade Zone and Free Port of Batam.

Global Profile All the improvements that have been and continue to be applied have placed Indonesia as #1 country for entrepreneurship in the recent 2011 BBC survey. It has also managed to jump 10 places to 44th from a total of 139 ranked countries in the World Economic Forum’s Global Competitiveness Report in 2011. Moreover, Indonesia has also been listed as one of the top 10 most attractive destinations for FDI in UNCTAD’s World Investment Prospects Survey in 2010. Strategic Location and Expanding Global Influence Indonesia lies at the intersection of the Pacific Ocean, along the Malacca Straits and the Indian Ocean. Over half of all international shipping goes through Indonesian waters. Increasingly, Indonesia is playing a more dominant role in global affairs. It is Southeast Asia’s only member of the G-20 and an active voice for developing world’s concerns. Standard Chartered sees Indonesia’s inclusion in the G-7 by 2030, projecting that Indonesia’s economy could be the 10th largest in 2020 and the 5th largest in

2030. Indonesia has also become part of a new grouping called “Growth Markets” by Goldman Sachs’ Jim O’Neill, the man who coined the term BRIC, has introduce the new term “MIST” which stands for Mexico, Indonesia, South Korea and Turkey. Each MIST countries representing 1% of the total world’s GDP. Being the current chair and a leading member of ASEAN, Indonesia shapes integrative approaches in the region for security, trade and commerce, and will be the integral part of the ASEAN Economic Community in 2015. Finally, Indonesia is emerging as a key player on cross-cutting international policy issues as climate change and the global financial architecture, which will have direct and indirect impacts on business and investment decisions. Prepared by the Consulate General of the Republic of Indonesia 1630 Alberni Street, Vancouver, BC, Canada V6G 1A6 www.indonesiavancouver.org For further info please contact: arief@indonesiavancouver.org

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Globalization Economics

he historical origins of globalization are the subject of ongoing debate. Though several scholars situate the origins of globalization in the modern era, others regard it as a phenomenon with a long history. Perhaps the most extreme proponent of a deep historical origin for globalization was Andre Gunder Frank, an economist associated with dependency theory. Frank argued that a form of globalization has been in existence since the rise of trade links between Sumer and the Indus Valley Civilization in the third millennium B.C. Critics of this idea contend that it rests upon an over-broad definition of globalization. An early form of globalized economics and culture, known as archaic globalization, existed during the Hellenistic Age, when commercialized urban centers were focused around the axis of Greek culture over a wide range that stretched from India to Spain, with such cities as Alexandria, Athens, and Antioch at its center. Others have perceived an early form of globalization in the trade links between the Roman Empire, the Par-

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- Courtesy from Wikipedia, the free encyclopedia

thian Empire, and the Han Dynasty. The increasing articulation of commercial links between these powers inspired the development of the Silk Road, which started in western China, reached the boundaries of the Parthian empire, and continued onwards towards Rome. With 300 Greek ships a year sailing between the Greco-Roman world and India, the annual trade may have reached 300,000 tons. The Islamic Golden Age was also an important early stage of globalization, when Jewish and Muslim traders and explorers established a sustained economy across the Old World resulting in a globalization of crops, trade, knowledge and technology. Globally significant crops such as sugar and cotton became widely cultivated across the Muslim world in this period, while the necessity of learning Arabic and completing the Hajj created a cosmopolitan culture. The advent of the Mongol Empire, though destabilizing to the commercial centers of the Middle East and China, greatly facilitated travel along the Silk Road. The Pax Mongolica of the thirteenth century had several other nota-

ble globalizing effects. It witnessed the creation of the first international postal service, as well as the rapid transmission of epidemic diseases such as bubonic plague across the newly unified regions of Central Asia.These pre-modern phases of global or hemispheric exchange are sometimes known as archaic globalization. Up to the sixteenth century, however, even the largest systems of international exchange were limited to the Old World. The next phase, known as proto-globalization, was characterized by the rise of maritime European empires, in the 16th and 17th centuries, first the Portuguese and Spanish Empires, and later the Dutch and British Empires. In the 17th century, globalization became also a private business phenomenon when chartered companies like British East India Company (founded in 1600), often described as the first multinational corporation, as well as the Dutch East India Company (founded in 1602) were established. The Age of Discovery brought a broad change in globalization, being the first period in which Eurasia and Africa en-

gaged in substantial cultural, material and biologic exchange with the New World. It began in the late 15th century, when the two Kingdoms of the Iberian Peninsula – Portugal and Castile – sent the first exploratory voyages around the Horn of Africa and to the Americas, “discovered” in 1492 by Christopher Columbus. Global integration continued with the European colonization of the Americas initiating the Columbian Exchange, the enormous widespread exchange of plants, animals, foods, human populations (including slaves), communicable diseases, and culture between the Eastern and Western hemispheres. New crops that had come from the Americas via the European seafarers in the 16th century significantly contributed to the world’s population growth. The 19th century witnessed the advent of globalization approaching its modern form. Industrialization allowed cheap production of household items using economies of scale, while rapid population growth created sustained demand for commodities. Globalization in this period was decisively shaped by nineteenth-century imperialism. After the First and Second Opium Wars and the completion of British conquest of India, vast populations of these regions became ready consumers of European exports. It was in this period that areas of sub-Saharan Africa and the Pacific islands were incorporated into the world system. Meanwhile, the conquest of new parts of the globe, notably sub-Saharan Africa, by Europeans yielded valuable natural resources such as rubber, diamonds and coal and helped fuel trade and investment between the European imperial powers, their colonies, and the United States. The first phase of “modern globalization” began to break down at the beginning of the 20th century, with World War I, but resurfaced after World War II. This resurgence was partly the result of planning by politicians to break down borders hampering trade. Their work led to the Bretton Woods conference, an agreement by the world’s leading politicians to lay down the framework for international commerce and finance, and the founding of several international institutions intended to oversee the processes of globalization. Globalization was also driven by the global expansion of multinational corporations based in the United States and Europe, and worldwide exchange of new developments in science, technology and products, with most significant inventions of this time having their origins in the Western world according to Encyclopedia Britannica. Worldwide export of western culture went through the new mass media: film, radio and television and recorded music. Development and growth of international transport and telecommunication played a decisive role in modern globalization.

These institutions include the International Bank for Reconstruction and Development (the World Bank), and the International Monetary Fund. Globalization has been facilitated by advances in technology which have reduced the costs of trade, and trade negotiation rounds, originally under the auspices of the General Agreement on Tariffs and Trade (GATT), which led to a series of agreements to remove restrictions on free trade. Since World War II, barriers to international trade have been considerably lowered through international agreements – GATT and its successor, the World Trade Organization (WTO). World exports rose from 8.5% in 1970, to 16.2% of total gross world product in 2001. In the 1990s, the growth of low cost communication networks allowed work done using a computer to be moved to low wage locations for many job types. This included accounting, software development, and engineering design. In late 2000s, much of the industrialized world entered into a deep recession. Some analysts say the world is going through a period of deglobalization after years of increasing economic integration. China has recentlybecome the world’s largest exporter surpassing Germany.

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e ad

Inte

n o i a t l a T n r r

- By Mohamad Rachid

nternational trade is very natural to the universal religion of Islam. Islam is a comprehensive system for life. As such it includes political, social, and economic principles and rulings. This article explains how Islamic values, concepts, and history encourage international trade and business, and it highlights some principles to be observed. Main Islamic Ideas and Events • Allah SWT created mankind to construct the earth. And He made the heavens and earth, night and day, land and sea to serve him achieve that goal. After all, man is Khalifa on earth and must fulfill his responsibility. • Construction of earth requires people to interact with one another. Allah tells us in the Quran that: O mankind, indeed We have created you from male and female and made you peoples and tribes that you may know one another (49:13). Doing business is a great way to know one another. • Allah knows that buying and selling are basic instincts to humanity, that is why Allah utilizes them in the Quran to invite people to do well. “O you who have believed, shall I guide you to a (business) transaction that will save you from a painful punishment. [It is that] you believe in Allah and His Mes20 The Council

senger

and strive in the cause of Allah with your wealth and your lives. That is best for you, if you should know” (61:10-11). And in another verse: “Indeed, Allah has purchased from the believers their lives and their properties [in exchange] for that they will have Paradise…” (9:111). • The city of Mecca, the birthplace of Islam, was a market and centre for commerce with international connections. Allah reminded the Quraish, the main tribe in Mecca, of His favour upon them for their business trips during the winter (to Yemen) and the sum-

mer (to Syria) (Surah Quraish; 106). • The Messenger peace be upon him was a trustworthy trader, and he married Khadija, the successful businesswoman from Mecca. • Trade and commerce played a key role in the expansion of Islam. This is a great path for Dawa through showing good ethics and akhlaq. There are several Hadiths that emphasise the honour accorded to honest traders: “A truthful and trustworthy merchant will be in the company of the Prophets, the upright and the martyrs” (reported by Tirmidhi). • The Arab-Muslims merchants continued their trading with other nations and introduced Islam to East and South-East Asia and Africa. Major Economic Principles Everything we do is a test and part of worshipping Allah. Hence, there are certain principles that ought to be complied with when engaged in business/ trade. Here are some of them. First, Promote fairness and equity. “Deal not unjustly, and you shall not be dealt with unjustly” (2:279).“God loves those who are fair and just.” (49:9). “Eat not up each other’s property by unfair and dishonest means.” (4:29). “Give just measure and weight, nor withhold from the people the things that are their

dueâ&#x20AC;? (7:85). Second, promote social justice. International trade should aim at creating opportunities for producers and workers in disadvantaged markets. Islam emphasizes the value of taking care of the poor and needy; the best way is to create jobs. Third, promote sustainable development. This includes the promotion of better environmental practices and

the application of responsible methods of production. Allah has given mankind stewardship over the earth. Stewardship implies taking care to manage, preserve and protect the natural environment for future generations. In the Hadith: one should not overuse water even if making Wuduâ&#x20AC;&#x2122; at the ocean. Conclusion Islam promotes international trade by stressing the value of knowing

one another, by allowing man to utilize the universe to achieving his mission of being Khalifa, by making buying/selling instinctive in humanity, and by giving real examples in the Messenger peace be upon him and the city of Mecca being a center of trade. All of Islamic values must be followed while doing business especially being just and fair, advancing social justice, and preserving the environment.

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Canadian International Income Tax Rules - Mohammed Yasin B.A. C.G.A.

anadian International tax provisions adhere to the international tax principles promoted by the Organization for Economic Co-operation and Development (OECD). In particular, Canada’s international tax rules are based on the principle of taxation of residents with priority to tax given to the source country. Canadian international tax rules are based on three broad principles: • Worldwide taxation: A Canadian resident is liable for tax on its worldwide income. This is also called residence taxation. A corporation is resident in Canada for tax purposes if its central management and control are located in Canada, or if it is incorporated in Canada. • Elimination of country double

24 The Council

taxation: A Canadian resident is entitled to relief from double taxation in the form of a foreign tax credit or exemption from tax in respect of foreign source income. This relief is intended to prevent economic double taxation that would otherwise occur from subjecting the same income to tax both in the source and residence countries. This corresponds to the international norm, which gives priority of taxation to the country in which the income is generated. • Permanent establishment: A foreign entity operating in Canada through a permanent establishment (i.e., an entity not legally separate from its parent corporation) is liable for tax only on income generated in Canada. Subsidiaries Foreign investors undertaking business activities in Canada through a separate legal entity (i.e., subsidiary) are considered residents in Canada and they are taxed as such. That is, income tax is applied to their worldwide income and appropriate relief is provided for taxes paid in foreign jurisdictions if the subsidiary also carries out business abroad (see below). In addition to income taxes, Canadian residents, including corporations controlled by non-residents, are subject to withholding taxes on payments that they make to non-resident persons, including foreign shareholders. Such withholding taxes can be viewed, in part, as proxy for the income taxes that shareholders would pay if they were residents of Canada. However, the totality of invested capital can be repatriated tax-free before any withholding taxes start to apply. The statutory withholding tax rate is 25%. However, the applicable withholding tax rate is usually reduced in the extensive network of tax treaties entered into with other countries. The rates may

vary according to the type of payment (e.g., interest, dividends, royalties). For example, the Canada-United States tax treaty provides for withholding tax rates of 10 percent on interest and royalties and 5 percent on dividends paid to non-resident corporations with a significant ownership in the corporation. Canada is following the Organization for Economic Co-operation and Development (OECD) worldwide thrust to reduce withholding taxes. Branches A non-resident person carrying out business activities in Canada through a permanent establishment (e.g., branch) rather than a separate legal entity is liable for income tax in Canada on income attributable to the business conducted by it in Canada. In addition, a branch tax is imposed on the non-resident corporation’s after-tax source income to the extent that the income has not been reinvested in Canada. The statutory branch tax rate is 25 percent and may be reduced by tax treaty (the rate is 5 percent in the Canada-U.S. tax treaty). The branch tax is a proxy for the withholding tax that would have been imposed on dividends if the business of the branch had been carried on in a subsidiary.

Taxation of Canadian Investment Abroad

Branch Income When the foreign operations of a Canadian resident are conducted through a branch (a permanent establishment located in a foreign country), the branch’s income is included in the resident’s income to arrive at Canadian taxable income. A foreign tax credit can be claimed in respect of foreign taxes levied on income and profits that are attributable to the branch. The credit is limited to the Canadian tax payable on the foreign-source income

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The Council 25

computed on a country-by-country basis. While Canadian taxation cannot be deferred when a branch structure is elected, foreign losses are deductible against Canadian source income. Subsidiary Income Where foreign operations are conducted through a subsidiary, the income earned by the subsidiary is generally not subject to taxation in Canada until profits are remitted to Canadian shareholders in the form of dividends, or when a Canadian corporation dispose of its foreign subsidiary. The tax treatment of foreign subsidiaries depends on ownership: if ownership is less than 10 percent of common shares, then the income is portfolio income; if it is equal or greater than 10 percent but less than 50 percent, the foreign corporation is a foreign affiliate (FA); if it is greater than 50 percent, the corporation is a controlled foreign affiliate (CFA). Portfolio income Portfolio income (for example, dividends, interest, rent and royalties) is taxable in the hands of the Canadian resident in the year received. Foreign taxes imposed on foreign portfolio income, whether levied by assessment or by withholding, are creditable against Canadian tax payable subject to the same per-country limitation appli26 The Council

cable to foreign branch income. However, the foreign tax credit for individuals, with respect to foreign-source income from property other than real property, is limited to 15 percent; any foreign taxes imposed in excess of 15 percent are deductible, rather than creditable, in computing income. • Foreign Affiliate and Controlled Foreign Affiliate income The taxation of FAs and CFAs depends on whether the income earned is “active business income” or “passive income” and on whether Canada has a tax treaty with the country in which the FA or the CFA operates. The concept of active business income refers to income earned from the active conduct of a business as opposed to the earning of passive investment income. • Active business income - The tax treatment of active business income depends on whether or not this income is earned in a country with which Canada has a tax treaty. • Active business income earned in a treaty country is classified as “exempt surplus”. The “exempt surplus” of a foreign affiliate also includes inter-affiliate dividends received out of the “exempt surplus” of other foreign affiliates, the exempt portion (25 percent) of all capital gains, and certain

taxable capital gains. Dividends paid out of the “exempt surplus” of a foreign affiliate can be received free of additional taxes in Canada, since the profits out of which they are paid are considered to have borne a rate of tax in the treaty country comparable to that of Canada. • Active business income earned in nontreaty countries is “taxable surplus.” The “taxable surplus” of a foreign affiliate also includes certain taxable capital gains and dividends paid out of the taxable surplus of another foreign affiliate. Dividends paid out of taxable surplus are taxable in Canada, subject to a tax credit for non-resident withholding taxes and the underlying income tax paid by the foreign affiliate in the source country. • Passive income - Passive income earned by a FA or a CFA in any country is “foreign accrual property income” (FAPI) and is included in the “taxable surplus” of a taxpayer. The FAPI of a CFA must be included in the income of Canadian shareholders on a current basis, subject to a foreign tax credit. The immediate recognition of FAPI in the taxable income of Canadian shareholders, regardless of whether or not the profits were repatriated, is intended to remove the tax advantage of earning passive income in low-tax countries.

The Council 27

Competing and Winning in

INTERNATIONAL Markets

- Courtesy from Business Development Bank

or many small and mediumsized Canadian companies, going international is not just about expanding; it’s about survival in an increasingly competitive economy. But how do you compete internationally? Is it even the right step for your business? Those dilemmas are top of mind for many business executives who approach the Business Development Bank of Canada (BDC) for assistance. “Many entrepreneurs see immense risks, and it makes them hesitate,” says Carl Gravel, BDC’s National Director of Global Competitiveness. “Our job is to show them that yes, there are risks, but you can manage them.” Gravel heads a support team that helps Canadian companies seeking to build their businesses internationally. Before heading into international markets, Gravel says, companies must ensure their fundamentals are in order, in areas such as financing, sales

28 The Council

and marketing, innovation strategy and operational efficiency. The importance of efficiency shouldn’t be underestimated, he says. “If you’re not competitive locally, it’s going to be hard to work internationally.” That means investing to boost productivity even when things are tough, Gravel says. He also encourages companies to look at countries beyond the U.S., including emerging markets, which have shown high rates of growth in the economic recovery. Another potential market: multinationals operating in Canada. Going global doesn’t necessarily require exporting directly to international markets, he says. It can also mean selling into global supply chains. This can eventually open doors to new markets where these multinationals operate. However, before you start eyeing a lucrative new international market for your business, you need a plan. Poor planning and execution are the culprits

in the vast majority of failed corporate expansions. Here are some important elements of a globalization plan. 1) Fundamentals—You should be sure your fundamentals are in good shape and can be replicated from country to country before embarking on an international expansion. You also need to be sure you’ve got the financial capacity to stay the course until sales start rolling in. 2) Strategy—Are you expanding as part of a carefully thought-out growth strategy—or just for growth’s sake? Good reasons for going global can include diversification, pursuing market leadership, acquiring complementary assets, developing new competitive advantages and creating synergies with current operations. 3) Tenacity—Entrepreneurs who successfully navigate international waters often have a specific mix of personal qualities—tenacity, ambition and an appetite for risk.

The Premier’s Mission: Securing Jobs for British Columbians. remier Christy Clark has announced that British Columbia will expand its trade and investment presence in India and is working with the federal government to co-locate in Mumbai and Chandigarh. The Premier made the announcement to an audience of business and government leaders in Mumbai, as part of the BC Jobs and Trade Mission. “India’s middle class is growing at an unprecedented rate, and we want to ensure that B.C. has the best opportunity to market its products and services here,” said Premier Clark. “By increasing the number of trade representatives, we will be supporting our province’s companies and sectors to build the relationships and access the information they need to build their business. It’s part of our BC Jobs Plan commitment to double our international presence, to create jobs at home.” The Province will have its official trade and investment representatives located in the Consulate General of Canada in Mumbai and the Consulate General of Canada in Chandigarh offices in the spring of 2012. The trade operations in Mumbai and Chandigarh will help businesses and organizations from British Columbia connect to opportunities across India, promote the province as a destination for investment and tourism, as a location for international education, a source of information on natural resources and the provision of professional services.

30 The Council

British Columbia The Prov- China is now British Columbia’s second ince, through Canada Starts Here: The largest trading partner after the United BC Jobs Plan, has pledged to double States with bi-lateral trade totaling $12.8 British Columbia’s international pres- billion in 2010. Compared with 2001, ence in key and expanding markets. exports from B.C. to China have inPremier Clark made the announcement creased by more than 420 per cent. at a dinner of business and government B.C. exports more goods and commodileaders organized by the Asia Pacific ties to China than any other Canadian Foundation of Canada and India Gate- province – over 31 per cent of the naway House. tional total. The Premier is leading the larg- Pulp exports worth $1.3 billion est trade mission in the province’s his- were shipped from B.C. to Mainland tory to promote B.C. as a safe harbour China in 2010, an increase of 65.3 per for investment. The BC Jobs and Trade cent from the previous year. Mission is focused on strengthening B.C. shipped $668 million existing relationships between B.C. and worth of lumber to China in 2010, more Asian markets, opening doors for new than double the value shipped a year relationships and setting the stage for earlier. future opportunities in China and India. Premier Clark, along with Ministers Bell and Thomson, departed Vancouver Nov. 4 for China. Areas of focus in China are transportation, international education, mining, forestry, liquefied natural gas, seafood promotion, and technology. The Premier met with government officials and business leaders in Beijing, Shanghai, and Guangzhou. The Premier departed for India on Nov. 10, along with Health Minister Mike de Jong. In India they met with government and business leaders in Delhi, Mumbai, Chandigarh, Amritsar and Bangalore. While in India, the focus will be on mining, life sciences, technology, green energy, international education, and forestry.

The Council 31

SFU Students helps drive change in

his past weekend was especially momentous – in reference to my last post. Two very important receptions took place. The first, on Saturday evening, was hosted by my em-

has really motivated me to do even better! The highlight of this evening was when the cocktail reception traveled to the Four Seasons’ rooftop lounge, AER. This is probably the most luxurious and authen-

ployer, the Canada India Business Council. The event was a Forum Reception, with guests from the C-IBC and prominent industry professionals here in India. The event was also accompanied by two other very important delegations, Premier Christy Clark with her team and President Petter from Simon Fraser University. The evening started with a cocktail reception at the Four Seasons Mumbai. It was here where I was able to meet with my employers, the Premier’s team and the SFU delegation. Each of these moments were very important because I was reminded quite simply why I am here in India and where my market knowledge will go following my return. Alongside Mr. Petter, was another very important person to me, the Dean of the Beedie School of Business, Daniel Shapiro. To no surprise, with the hundreds of students under his belt, he was unaware that a fellow Beedie was going to be there at the reception in Mumbai. The work I am doing here generated a lot of interest among the SFU delegation and

tic lounge I have ever seen or been to, with a glass of wine for about 40 dollars, I definitely felt a bit out of place. Then I had one of those moments, where I thought “ is this

AER though. It turned out that that same moment happened to be highlight for President Petter as well! He has his own blog, and he posted following the event about his experience in meeting his own students abroad. As if this wasn’t enough, another event the following night blew my mind. Hosted by the International Indian Film Academy, a cocktail reception to forge a relationship between British Columbia and the Indian Bollywood industry. I was unsure what kind of event it would be or who would be there. Backtracking a bit, 3 weeks ago I had watched Slumdog Millionaire – and I really enjoyed it. Sitting across from me at this reception was Mr. Anil Kapoor, the international Bollywood sensation, who played the host of Who Wants to be a Millionaire in the film, and has an upcoming role in Mission Impossible 4. Life has taken me on many twists and turns, and many times I wonder how

where I am supposed to be and what I am supposed to be doing?” Of course, there is no answer to this right now, because there is still so much uncertainty ahead of me. I definitely enjoyed every moment up in the

I get to the places I have been. But never will I wonder about how to appreciate every single moment and take it all in. I am loving life right now, and am finding happiness in the details.

32 The Council

The Council 33

Muslim Women in Business:

from 67.9 percent in 2008) and Latinas’ earnings were $27,181, 57.7 percent of men’s earnings (a slight drop from 57.9 percent in 2008). Asian American women’s earnings in 2009 were $42,331, 90 percent of men’s earnings, a drop from 91 percent in 2008. And that was in 2009. We still have a long way to go. As more and more Muslim women enter into business, more and more eyebrows are being raised. What people seem to forget however, is the fact that the Qur’an states that what is truly important is the character of a person, not whether they are a man or a woman: “Whoever works righteousness, man or woman, and has faith, verily to him/her we will give a new life that is good and pure, and we will bestow on such their reward according to the best of their actions” (Qur’an 16:97). And again, “I shall not lose sight of the labor of any of you who labors in My way, be it man or woman; each of you is equal to the other (Qur’an 3:195)”. - Alanna Dean Burk Yet differences of opinion continue to exist. There are those who insist that the Qur’an mainpete with that.” Despite the ongoing push for tains that the best place for a woman to equality among the sexes in all worlds be is… at home. And that she prefer(professional, personal, and spiritual), ably be a mother. Yet in actual fact, the a sense of balance has not been estab- Qur’an says nothing of the fact. One lished. The Coalition of Labor Union must not confuse culture for religion. Women (an organization that, among Nor must one lose sight of the fact that other desires, seeks for pay equality) religion itself was created by humanity. Maulvi Waris Mazhari, a Muslim jourstates that in the United States: Census data shows that women nalist, writes: “There is even early Islamic who work full-time still earn, on aver- age 77 cents for every dollar men earn precedent for Muslim women working for performing the same work. This is outside their homes. For instance, the based on the most recent data released Caliph Umar appointed a woman, Shifa September 16, 2010 for earnings in 2009 Bint Abdullah, as the administrator of and shows that there was virtually no the market in Madinah. Obviously, for change from the previous year. Based on her work she had to regularly visit the median earnings of full-time year round market, inspect how people were conworkers, women’s earnings were $36,278 ducting their businesses and interact and men’s earnings were $47,127. Me- and talk with the businessmen, most of dian earnings for most women of color who must have been men.” Fortunately, there is evidence are even lower. In 2009 the earning for African American women were $31,824, which suggests that common stereo67.5 percent of men’s earnings (a drop types and delusions are being broken.

Recognizing our collective strength

eing a woman in business has its share of hurdles. Being a Muslim woman in business, has an added dimension. Especially when there exists an incredible amount of delusions regarding the role of a woman in Islam; fallacies which exist even amongst Muslims. Shahla Haeri, the director of the Women’s Studies Program and an Associate Professor of Cultural Anthropology at Boston University, has explained that: “There is this misconception of Muslim women as being passive, oppressed, [and] unintelligent. This has been an assumption that, as soon as women wear the veil, they lose their brain, whereas we see now in Iran that the veil in fact has enabled women to be a lot more active politically, economically, professionally, educationally, what have you. But, still, the dominance of media is such that really it doesn’t allow other images to com-

34 The Council

In fact, there is a great majority of Muslims throughout the world who live in countries that have, at some point, elected women as their leaders. Indonesia, the most populous Muslim-majority country, elected Megawati Sukarnoputri as president. The second most populous Muslimmajority country, Pakistan, twice elected Benazir Bhutto as their prime minister. And Bangladesh, ranking as the third most populous Muslimmajority country, elected Khaleda Zia and Sheikh Hasina as Prime Ministers. And on a strictly business standpoint, in 2007 Forbes listed 10 Muslim women from the Middle East amongst their, “World’s 100 Most Powerful Women”. Hope does exist. Sahar El-Sallab, at one time the second in command at one of Egypt’s largest private banks says, “Just being a woman in our part of the world is quite difficult. But if you have the proper education, credibility and integrity in the way you handle your job, intelligent men will always give you your due.” Education is essential in all subjects, not just academia. Eyes need to be opened, the traditionally cultural way of doing things needs to be questioned, and the truth of Islam and the Qur’an must be revealed.

The BC Muslim Association, the largest religious organization representing Sunni Muslims in B.C. was incorporated on Nov 17th, 1966 (5th Sha’ban 1386). The Association comprises of Branches and Chapters located in in B.C. which provide the following services: - Religious Services - Education Services - Planning & Development Services - Public Relations and - Communications Services - Funeral and Burial Services - Social and Welfare Sevices - Youth Development Services - Sports & Recreational Services

Womens Branches/Chapters

Earlier this year, Sarah Jessica Parker starred in the movie, “I Don’t Know How She Does It” a drama/ comedy centred on the life of a top female executive juggling the demands of motherhood, marriage and a high stress job. She was pulled in a multitude of directions every second, yet stayed true to her heart and her love for her family. Isn’t

that what’s important? Does it really matter if a woman (Muslim or not) decides to enter into business as long as she maintains her beliefs and her love for her family? In the biblical Old Testament book of Micah, it states, “He has shown you, O mortal, what is good. And what does the LORD require of you? To act justly and to love mercy and to walk humbly with your God” (Micah 6:8). Is that too much to ask?

The Council 35

Islamic Finance in a Turbulent Economy - Otmane Madrane Investment Advisor National Bank Financial

he last fours years have been catastrophic for the finance world. The 2008 meltdown will be remembered in the annals of history as the perfect storm that ravaged not only Wall St. but also Main Street. It seems that the ripple effect has yet to stop as sovereign default, especially in the Eurozone, seems more and more imminent. Anyone who says that the problem

36 The Council

started in 2008 is grossly misinformed. The problem is a structural one; conventional finance as we know and practice, is deeply flawed. In recent years, there has been a surge of interest in Islamic finance following the credit crisis. Rating agency Moodyâ&#x20AC;&#x2122;s states that the Islamic Finance sector, which has been growing at almost 20% yearly, is worth $700 billion today but has the potential of being worth $4 trillion. This growth would not be driven by Muslim consumers, but largely by mainstream consumers as well as conventional financiers. Islamic finance, contrary to popular belief, is not driven by faith but by justice and fairness. It is a system that not only prohibits the charging of interest but also puts equitable responsibility on both the borrower and the lender. Conventional finance can be very biased, favouring the lender over the borrower. Islamic Finance seeks to level the playing field between the parties involved and is thus more ethical. It should not come as a surprise that although Islamic financial institutions were affected by the ripple effect of the global crisis (e.g. mass unemployment which lead to a shrinkage in deposits), they were unaffected by the

initial default problems that triggered the meltdown. Not only did their balance sheet not contain any toxic assets (e.g. Mortgage Backed Securities, Credit Default Swaps) as these are prohibited by Islamic jurisprudence, but their lending practices were structured in a way that was much less risky than in conventional banking. Here is an example of the difference between Islamic and Conventional Financing: Much of conventional bankersâ&#x20AC;&#x2122; profits are generated from fractional lending, which are based on the ability of conventional banks to lend any money beyond the reserve requirements imposed by the Central Bank. This leads to an artificial growth of funds that in reality do not exist except on paper. In 2006, the measured economic output of the entire planet was $48.6 Trillion. In the same year, the notional value of financial derivatives (many of which were at the heart of the global credit crisis such as CDSs) was a whopping $400 Trillion. It is essentially creating money out of thin air, but you can imagine the problems that may arise if that money cannot find a real asset to be matched up with. Islamic Finance, on the other hand, turns borrowers and lenders into buyers and sellers respectively. Simply

put, the bank buys whatever property the client wishes to acquire, ads a mark-up to it, and sells it to the client on a deferred basis, fully divulging the added markup. This is called Murabaha structure. Another popular practice involves the property being jointly owned by the bank and the client. The client then pays rent to the bank in lieu of interest and slowly purchases shares of the property from the bank until they take full ownership of the asset. This is known as Dimishing Musharaka Structure. Both gains and losses are usually shared between both parties, as opposed to being born solely by the client. This of course means that profit potential from Islamic banking isn’t as “attractive” as in conventional banking, but let us not forget that it’s that same greed that brought us here in the first place. It should be noted that Islamic Banking isn’t without problems of its own, the most popular of which is the labelling of conventional banking products as halal or islamically permissible prod-

ucts. Such a practice may lead to a loss of trust in the system, and the adoption of conventional banking as there would be no perceived difference or benefit from one system over another.

For the time being, the Islamic Finance industry continues to enjoy healthy growth, which will eventually lead to higher quality of service, better product offering, and greater oversight to keep the industry on the straight path.

The Council 37

Does your have the discipline it needs? - Harold Bakke. BComm, CFP,Wealth Advisor, ScotiaMcleod

f the markets have taught us anything over the past few years, it’s that, a disciplined investment process will always be vital to achieving long-term investment success. A disciplined investment process means having a thorough understanding of your risk and return objectives, and sticking to an appropriate investment mix for your portfolio. Yet, for many investors, this timetested strategy is often abandoned when the markets get volatile whether going up or down. “It’s different this time” It is often said that these are the most expensive words in the English language. Speculative stock market booms can’t change the basic laws of business… but fantasy can take over, for a time. One only has to look back to 1999 when investors had bid US stocks up to an all-time record five-year return of 26.3%. However, mere months later, they were blindsided when the technology boom came to a crashing halt. In general, the investors who avoided the worst losses were those that had a disciplined investment process. Get balanced Studies have consistently shown that asset allocation can account for more than 90% of a portfolio’s over-

38 The Council

all volatility. That’s why the first step in a disciplined process it to design a wellbalanced portfolio. This means defining your need for growth, and your tolerance for risk.

F r o m there, you can intelligently diversify your assets among the major asset classes - cash, fixed income and equities - and also among a range of international markets and investment management styles. Stay balanced Balancing your portfolio is easier than keeping it balanced. Why? Because rebalancing means that sometimes you will have to sell a strong-performing investment in order to buy more of a weaker-performing investment. Your portfolio is designed based on your personal risk and reward

profile, as well as a clear understanding of the long-term performance characteristics of a variety of asset classes and investment styles. Rebalancing simply keeps you on track to the goals you set in the first place. It may take discipline to sell a top-performing investment when it pushes your portfolio allocations out of line, but it’s also a strategy that could save you from an unexpected drop in the markets. That’s not the only benefit of disciplined rebalancing. Let’s say your portfolio has a target international equity allocation of 20%, but international equity markets perform poorly and drag your portfolio allocation down to 10%. At this point, if you buy more international equities and bring your weighting back up to 20%, you will be in a very good position to profit when international equities rebound. On the other hand, if you don’t rebalance, it could take twice as long to recover your investment in that sector. The bottom line: avoiding pitfalls and smoothing out the financial path to your goals is all about following a disciplined investment process. Harold has been helping clients manage their financial affairs for more than twenty-five years. He specializes in providing investment and retirement planning advice to individuals over fifty. Visit haroldbakke.ca to learn more.

The Council 39

Transparency &

Charitable Organizations - Mohammed Yasin, BA. CGA.

ransparency can be interpreted as providing relevant and reliable information to stakeholders in a way that is free from bias, comparable, understandable and focuses on stakeholders’ legitimate needs It is important that interested parties can easily obtain relevant and reliable information on a charity’s financial position and performance, deployment of resources, organizational structure, policies, priorities, activities and achievements A high level of transparency is achieved when accounting for performance allows the directors to:

40 The Council

• Demonstrate that resources are being used wisely and for stated purpose • Show that the charity is being organized and managed properly • Demonstrate that the charity is carrying out its activities efficiently and effectively • Attract new resources to enable the charity to continue its activities The charities Act creates an environment which enables (Not for Profit Organizations) NPOs to flourish. Thus it has established a regulatory framework within which NPOs can conduct their affairs and encourage NPOs to maintain adequate standards of governance, transparency, and public accountability. In recent years, non-profit organizations have faced unprecedented change and increased public scrutiny. Non-profits are very broad and diverse groups, ranging from non-profit associations and foundations to charitable organization. Some organizations have experienced a decline in membership and a shrinking pool of volunteer leaders. Public charities are dealing with slowing contributions from the public and reduced government funding. At the same time, there has been an increase in regulatory

oversight. Reputable management is essential for all non-profits. As a result, governance and compliance issues are highly visible. The current economic crises have ushered in an era of greater demand for governance, transparency and accountability from non-profit organizations. The result is heightened awareness surrounding a strong system of internal control and assurance provided to constituents that funds are managed and used efficiently, effectively and appropriately. Donors who give money to these groups now more than ever are not just looking for basic financial information, but what impact their giving might have in achieving the NPOs missions. Financial transparency is important especially in the present times when the public is more skeptical of institutions in general and closely scrutinize where they are putting their money. A charitable organization (NPOs) should make information about its operations, including its governance, finances, programs and activities, widely available to the members. Charitable organizations should also consider making information available on the methods they use to evaluate the outcomes of their work and share the results of those evaluations. NPOs are the stewards of the community’s resources and must act in ways that justify and sustain that important confidence. Accepting the hard earned dollars of community members means standing accountable for how each of their dollars are spent.

The Council 41

Family Transactions Do them Properly, No Shortcuts Please

- Raziya Sattar, Lawyer

eople often neglect to document transactions between family members because of issues of trust, respect, etc. However, it is much more important to document financial transactions when it comes to family and friends because if any issues arise at a later time, the relationship can be irreversibly damaged. This is too big a risk to take with loved ones. Loans and Gifts Loans and gifts of money to children for the purchase of a house are commonplace, however, everyone should be very clear about the intention of the parties. Are the parents taking an ownership share for their contribution? For example, if the parent contributes $10,000 and the child contributes $20,000, is the parent a ⅓ owner? Or has the parent given a gift or loan? For gifts, a deed of gift should be prepared to evidence the gift. If it is a loan, what are the terms of repayment? Does the loan get forgiven if the parent dies or does the parent’s executor need to collect? If no payments are made for a period of 6 years on a loan that is a demand loan, the parent may not be able to take court action to collect because the limitation period has expired. What happens if a parent gave money and then the child and his spouse separate? Do the parents want their contribution returned before property is divided or does the inlaw child take half of what the parents gave? Is the loan to be secured? If people actually take the time to discuss the possibilities and document their agreement, 42 The Council

it would be better for all concerned. Adding Seniors on Title to Save on Property Taxes Some people think it is a good idea to add an older parent on title to a property to save a few hundred dollars on the property tax bill every year (by claiming a Senior’s Grant). The complication this creates is that the parent will always have to be involved in transactions dealing with the property (e.g. refinance or sale), you will have to make sure that you have a power of attorney in place if the parent’s mental capacity declines and a will to transfer the parent’s interest on death to the proper parties. If the parent is not a real owner, a trust declaration clarifying who the real owners are is also very important. All parties should be very clear as to why the parent is being added. Legal advice to the parent may also be advisable. When you think of all the documentation and complications that arise in this type of scenario, it may not be worth it in the overall scheme of things. If you do this type of tax savings manoeuvre, please ensure all the other documents are in place. First Time Homebuyer’s Exemption on Purchase of Property In BC, many people buying a modest home for the first time get an exemption on the transfer tax payable. For example, on a $400,000 purchase, they can save $6,000. Some couples choose to put title in one person’s name only to preserve the other spouse’s entitlement for a future purchase. Sometimes, if one of the spouses has owned a property already, they give that person a minor ownership interest (e.g. 1%) and the spouse who

qualifies for the exemption, the larger ownership share (e.g. 99%). However, in both scenarios, in the couple’s mind, they are both equal owners and there should be documents in place that confirm this. This protects all parties. The minimum documents would include a trust declaration, Form A Transfer, Will and Power of Attorney. Many people don’t even think ahead at what they might need and their families encounter more problems because of trying to save some money. The lesson is, it is okay to try to save some money on taxes, etc, but it is not wise to do a partial job, enjoy the savings and then have to pay more because you didn’t complete the paperwork. No shortcuts please. You may end up losing more in the end. Disclaimer The information contained in this article is general legal information and should not be construed as legal advice to be applied to any specific factual situation. Please consult a lawyer to get proper legal advice about your particular planning needs. Raziya Sattar is a Lawyer and Notary Public in the Newton area of Surrey with a special interest in Estate Planning and Probate. She also handles all real estate matters, uncontested divorces, notarizations and corporate transactions. She was born in Fiji, raised in Canada and has been a lawyer since 1995. She is fluent in “Fiji Hindi”. She is also available to do seminars in the community.

“...Serving

Humanity”

“...Serving Humanity”

Muslim Food Bank

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Corporate

Social

Responsibility - Sharif Senbel

orporate Social Responsibility is generally defined as initiatives undertaken by companies and businesses for social welfare to benefit employees, customers, and the community at large as well as programs that promote environmental sustainability. These efforts are usually beyond what is required by law, regulators or environmental protection agencies. Such initiatives do not necessarily provide an immediate financial benefit, but instead promote positive social and environmental change. There is no single objective for this social engagement of companies. Some companies are motivated by ethical reasons in trying to promote the development of their workforce and their families, the local community and society at large. Other companies view this as a way

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to pre-empt regulatory or governmental interference in their activities by presenting themselves as good corporate citizens. Finally, others use this for superficial reasons by trying to increase their exposure or customer base by marketing that they give back to their communities.

benefit

pluralistic society. The best initiatives would be endeavors that benefit all Canadians and that do not explicitly publicize that they are Muslim owned. Corporate and business ownership is generally public knowledge and maximum impact would clearly be derived from a program that does not appear to be self-promoting.

For Muslims the idea of corporate social responsibility should not be a new concept. After all Islam is a theological as well as a social belief system. It requires both a personal spiritual commitment and a social responsibility in the practice of the faith. Therefore companies that are owned or majority owned by Muslims should have a clear ethical mandate to give back to the community with social, cultural and environmental initiatives. In Canada, corporate social responsibility for Muslim owned businesses would provide the additional

demonstrating commitment to the development to our

Award winning architecture since 1998

Creativity

â&#x20AC;˘

Sustainability

â&#x20AC;˘

Quality

www.studiosenbel.com â&#x20AC;˘ 604 605 6995 The Council 45

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Tel: 604-580-3275 Fax: 604-580-3203

10230-120 Street, Surrey, BC V3V 4G1 www.WestCoastTruss.ca | info@WestCoastTruss.ca The Council 47

The

Do’s & Don’ts

Business Strategy

- Fatimah Yasin (SFU 4th year business and Arts candidate)

uiding the room’s attention with his candid advice, management consultant Glenn Wong embodied a particular flare that spoke to the Do’s contributing to his own success. In conversing with the crowd, his modesty about his achievements was well-kept as he jokingly said to a member in the audience, “You seem like you know what you’re talking about more than I do, maybe you should be up here.” Glenn believes that every organization has a latent energy that’s waiting to be released; he acts as a catalyst in channelling and releasing this energy. In order to effectively do this, a business strategy has to be used which according to Glenn, comprises certain

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dos versus don’ts: DO have a definite strategy. Glenn defines strategy as a collection of ideas about how we are going to win. Without one, there is no control over an organization’s destination. Developing a strategy involves addressing certain questions such as: •What’s our purpose? •What’s our business model in the future? •Do we have a big idea or a ‘secret sauce’ that will differentiate us from others? DON’T be afraid to say no to customers. An organization has to be in a position of strength to confidently do this by “building themselves up, so they don’t have to sell on their knees.” Leveraging through contact with prospective clien-

tele complements this process. DO have a clear idea of the destination itself. The strategy has limited meaning if this is unknown. Establishing this en-

tails bridging the gap between competing views within the organization, namely the management and the board. DON’T lose focus. An organization must figure out what they do well, and focus all their energy in performing this job well. As equally important is creating a successful match between your quality service/product and who you’re selling to. DO shine the light. If public attention is drawn to problem-solve relevant issues that an organization is challenged by, (e.g. taking preventative measures to control costs of the Vancouver police board by shining light on mental illness) interest might be taken in actually doing so. DON’T forget to have a unique selling proposition. With Glenn’s help, Nabob created an appealing advertising slogan that is used to this day, ‘Better beans. Better coffee. Better planet’. The company culture practically entailed worshipping the bean; they both understood and embraced it. People will believe you have a better product if you consistently claim and advertise to have one. Winding down on his discussion, Glenn eased his way into expressing the underlying motivations that inform his own personal strategy to success. He likes a challenge, one that for example, might involve empowering an organization to open their eyes to new ideas and directions. Once he has assisted in resolving a problem, Glenn moves on to the next challenge that lies ahead. Some additional take away points for future leaders of tomorrow: If you haven’t already, look within yourself and realize what it is that gets you really excited. When you do, Rudyard Kipling said it best: “fill the unforgiving minute with sixty seconds worth of distance run” just as leaders like that of Glenn have and continue to do.

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THE CHANGING WORLD OF

REAL ESTATE

eal Estate is an industry which used to be quite flat from the 50s to 70s. Real Estate was the basic exchange of properties whether commercial, industrial, residential or any other piece of property which fell in the category of Real Estate. Those who knew the true value of buying a property and holding it as an investment for the long term continued to thrive in it and went on to become wealthy by todayâ&#x20AC;&#x2122;s standard. Having a roof over head was a priority and keeping up the pay-

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ments to the financial institutions was very important. Every penny earned was saved to pay off the biggest debt; the mortgage. Those who migrated from around the world to settle in Canada, came with different cultural and financial values. Many knew the value of money and strived to save for rainy days. Today, Real Estate has become a priority in the lives of every young adult. With the changing life styles, young adults do not live at home after the age of 20 and with the changes taking place in the lives

- Feroz Dean of young people who have attained good education and have landed good paying jobs, are looking and thinking ahead in terms of investments .Often the help of parents enables young adults to buy their first property . The early nineties brought some key changes in the Real Property Industry. The changing demands enabled the cities and municipalities to make provisions with new zoning and relaxed requirements for developers. The market place has changing demands in terms of innovative living requirements and luxury in design, quality and comfort. Open spaces , walking and cycling routes cater to peopleâ&#x20AC;&#x2122;s needs, proximity to parks and gardens, living in clean environment are the values of today. These added value design have resulted from public input in decision making at all levels of government. CONDO LIVING: Location, affordability, quality

and comfort is what todayâ&#x20AC;&#x2122;s developers are offering. The availability of cheap financing has a positive effect on todayâ&#x20AC;&#x2122;s Property Market. The increasing demand for homes is because of continuing increase in population, from new comers plus internal migration. Down sizing is also a positive factor. The elderly are selling their family homes and choose to move into a Condo or a town house. As we age, keeping up with home maintenance and garden becomes more of a bother than a pleasure. Condos provide safety, security and ease of mobility for seniors. TOWNHOUSES: This type of facility is ideal for the young family who are unable to afford a house. First time buyers buy town houses or condos to build some equity. Two to three bed rooms when you have three to four members in the family, town houses feel like a house on two levels, although they are attached accommodation. The family gains amenities close b, schools, recreation facilities as well as the proximity to other families with young children. HOUSE SWEET HOME A single family home is on a piece of land which is free and clear of any attachments or strata fees. The majority of us would like to have our own house someday where families can grow in their own environment without any attachments as in a condo or a townhouse. Although a single family home has its own challenges, it offers much more privacy and comfort depending on its upkeep and the feeling of belonging. All property needs to be maintained just like a car. A regular maintenance program will ensure the longevity of the product with the highest investment one will ever make in their life time. The innovation in architectural design as new and innovative construction materials from around the world are making their own mark in terms of quality, design and finishing. New products are hitting the market place on a daily basis and builders and developers are creating HEAVEN ON EARTH for some. Having Your own back yard with flower beds , dog house, storage shed etc are another added bonus in a house. Technology has brought about a great change in housing and house constructions. New measures are being implemented by all levels of government to ensure that the products and materials are safe for health lifestyle. With the new home explosion, the need for a matching interior design is required .Modern appliances, furniture, electronics, artwork, cookware and designer utensils and dinner ware all go together. The two to three car garage needs to be occupied and hence that is an added expense but a necessity. Modern family insistis on a two car garage. On of our most challenging life decisions is where and how we live. Affordability keeps us in check because tomorrow is a new day and no one knows what it will bring. Keep on smiling and enjoying your home whether it is a HOUSE, a CONDO or a TOWNHOUSE, it is your HOUSE SWEET HOME.

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Perfect day in

Vancouver

ancouver needs more than a day, but its bite-sized neighborhoods – easily reached by metro or bus – allow plenty of experience with a single day to explore. Just give yourself time to look up – even long-time locals are swooned by the glimpse of snow-capped mountains peeking between downtown skyscrapers.

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- Bob Ibrahim COFFEE & BREAKFAST Vancouver’s a big coffee town. West of the center, Commercial Drive, is the epicenter of java, but opt for arty Granville Island to start the day. Just south of downtown (and reachable by bus), Agro Café (tel 604-669-0724; 1363 Railspur Alley) is a tucked-away place loved by locals for its heaping and hearty Organic Brekkie.

GRANVILLE SHOPPING Shopping’s good around the area, and a seaside promenade rimmed with houseboats circles the small island. One stop is the covered Public Market has stalls serving tea, artisan items – and you can take a snacking tour with Edible BC. Galleries line Cartwright Street, while backstreet Railspur Alley is named after an old train line still embedded in its sidewalk. SOMA SHOPPING Walk or bus south a couple blocks into South Granville and take Bus No 84 into South Main (SoMa), the city’s hippest indie shopping scene – start around the intersection of Main St and 20th Ave. Smoking Lily (3634 Main St)

goes for an art-school cool clothes, while Twigg & Hottie (3671 Main St) fancies its fashions as distinctly BC in style. DOWNTOWN LUNCH & ART Head northwest into downtown, grabbing an organic burger at downtown’s favorite counter-stool, jukebox-at-the-table diner Templeton (tel 604-685-4612; 1087 Granville St), then walk a couple blocks north to see the Vancouver Art Gallery, the city’s leading art space. The space hosts blockbuster shows, plus many innovative exhibits from its own 10,000 artworks – and has a great alfresco café as well. Notable is its quarterly late-night party called FUSE. CHINATOWN DINNER Vancouver’s Chinatown is Canada’s best – thus North America’s best. It’s great on weekend nights for the night market along Keefer St, a tight bazaar with live music, noodles and bubble tea – great for a quick, cheap meal. If you want something more sit-down and formal, Hon’s Wun-Tun House (tel 604688-0871; 268 E Keefer St) is a China-

town legend for 300 menu items including dim sum, dumplings and congee rice porridge. GASTOWN PUB CRAWL Just northwest of Chinatown, Gastown is a historic, cobblestone-street area east of downtown that’s undergoing a long-awaited comeback and is now home to Vancouver’s best water-

ing holes. The landmark Steamworks Brewing Company – made from a converted warehouse – is one of the city’s few brewpubs, and the only subterreanean one. Smaller-scale (and hipper) is the patio seating at Six Acres, a couple blocks east at Maple Leaf Square, by the neighborhood’s first bar owner ‘Gassy’ Jack Deighton.

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TRADING FOREIGN CURRENCIE$ T

- Daud Ismail

he FOREX or FX is the Foreign Exchange market where the currency of one country is exchanged or traded against another. These transactions include trading between large banks, central banks and governments, currency speculators, multinational corporations, and other financial markets and institutions. It is, by far, the largest financial market in the world with a daily trading volume in excess of $3.9 trillion. This daily volume is approximately 20 times larger than all of the worldâ&#x20AC;&#x2122;s stock markets COMBINED. Most major currencies of the world that are traded in-

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cluding the Canadian Dollar, US Dollar, British Pound, Euro, Japanese Yen, Swiss Francs, NZ Dollar, Australian dollar etc. A currency is commonly traded at financial institutions at posted rate plus a commission for the service. Since 1997, due to the advances in internet technology, access to the Forex market has broadened extensively. Today individual traders of every size have access to one of the most significant opportunities of our lifetimeâ&#x20AC;Śthe ability to make money by trading money. A privilege that most of us think is reserved only for the banks. Today, anyone can acquire the education, knowledge and skills that

when combined with personal discipline and mentoring will allow one to trade the Forex Market. There are training companies with proper tools and technology to help an individual get on the Fast Track to start trading profitably from the comfort of their home, office or wherever one travels to. The tools include recorded and Live online training, Live Trading Room coaching and guidance during active trading market hours. During the training period, demo accounts that exactly emulate the live markets allow the student trader to learn to trade without risking their precious capital. . It is not a get-rich-quick

system and if one is not careful, it could cost dearly. The important thing is to acquire the skills, have proper mentorship, and become part of a team of successful traders. The FOREX is unique because: ▪ It is the crossroad for global capital, international trade & commerce, and investment. ▪ It is so huge that no government, institution or individual can control it. ▪ The huge volume makes it extremely liquid allowing traders to easily enter and exit trades at the price that they want. ▪ It is open 24 hours a day, 5 ½ days a week. ▪ It has no physical location. The market is a 100% electronic network of banks, brokers and other financial intermediaries geographically dispersed across every corner of the globe. ▪ Trades are executed and settled immediately. ▪ It is a Trader’s Market. Trading the FOREX allows the trader to profit from both rising and falling currency prices and this market is not subject to reces-

sions. ▪ Low Margin Requirements and High Leverage. The FOREX market gives traders the ability to leverage their returns by up to 400:1 times the capital in their trading account. ▪ Ease of Entry. FOREX brokers typically allow traders to open accounts with as little as $300. ▪ Traders Pay No Commissions. Brokers charge a small Bid/Ask spread when tak-

ing a trade, NOT both going in and out. For anyone aspiring to take control of their financial future through Forex Currency Trading, an opportunity now exists for a business that allows one to work from home, wherever in the world one wants home to be and enjoy success in life. A market that the banks and brokers found so lucrative and kept to themselves is now available to the public.

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JAI FIJI

TV PRODUCTIONS on SHAW MULTICULTURAL CHANNEL Channel 116 & Channel 51 Delta/Ladner/Tsawwassen Tuesday 10:30 am Wednesday 12:00 midnight Saturday 06:30 am Channel 4 Lower Mainland Thursday 5 am Sunday 07:30 am

Vincent Puran & Vina Prakash Cell: 778.688.8462 | Tel: 604.434.3920 E: jaifiji@yahoo.com | W: www.jaifijitv.com The Council 57

Advice for Organizations

ecently, the charities directorate has been making improvements to forms and guides and designing new tools and resources to help applicant organizations through the application process, and to help currently registered charities meet their obligations. The primary advantages of being a registered charity are; • It can issue official donation receipts for gifts it receives. Donation receipts reduce an individual donor’s income tax payable and reduce a corporate donor’s taxable income. • It is exempt from paying income tax under part 1 of the income tax act. • It is eligible to receive gifts from other registered charities, such as foundations, and • It has increased credibility in the community, as registered charities must follow rules and guidelines Once an organization is registered as a charity it must; • Devote all of its resources to charitable objects (purposes) and activities. • File its annual form T3010, registered charity information return, within 6 months of its fiscal period and • Maintain adequate books and records and make them available for audit upon request by CRA • Continue to meet all other requirements of the Income Tax Act, including regulations on issuing official donation receipts and • Keep the charities directorate updated on changes to the charity eg. Change to its address, directors, legal or operating name, objects (purpose), activities or structure. Application Process Applications must be submitted using the prescribed form T2050,

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applying for Registration - Mohammed Yasin, CGA, BA application to register a charity under The Income Tax Act. An application must include detailed information and documents that clearly explain your organizations charitable objects, purposes and demonstrate how your organization will achieve these objects through its charitable activities. Delays in processing applications occur for a variety of reasons, most commonly because of missing information. The charities directorate

provides as much assistance to applications as possible, however, applications that do not contain complete information will be returned to the applications with a letter explaining that a determination regarding registration cannot be made based on the information submitted. What can be done to improve an application? Complete, straightforward applications can be processed more efficiently. The following tips will help you prepare a complete application that can be processed in a timely manner; • Limit the scope of your objects • Draft governing documents

• If your organization is carrying out activities outside of Canada, familiarize yourself with guide RC4106, registered charities operating outside of Canada. • Keep CRA appraised of any change to your contact information Checklist for new applicants An organizations application should include the following; • A thoroughly completed form 2050, application to register a charity under The Income Tax Act • A complete copy of your governing documents • A constitution or trust (if applicable) with all the required elements, “what are the minimum requirements of a governing document”. • A thorough statement of activities supporting your purposes • Complete financial information, including a copy of the financial statements for your organizations most recent complete fiscal period. • If you are established under a religious societies Land Act, a declaration of incorporation containing all the elements of a constitution, or a separate constitution. Many applications for charitable registration are returned, delayed, or ultimately denied because they simply do not contain enough information. Charities Information Sessions Every year, in the spring and fall, the Charities Directorate provides free Charities Information Sessions for registered charities. Information on a number of topics is presented at these sessions to help charities maintain their registered status. They also provide an opportunity for charities to ask questions and share information and best practices with others in the charitable sector.

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Canada keeps

“AAA” credit rating

- Courtesy the Montreal Gazette

s the debt spectacle continues in Washington, Moody’s Investor Service renewed Canada’s AAA credit rating on Thursday. While all eyes are on the United States as it tries to hammer out a deal to raise its borrowing limit by Aug. 2, avoid a debt default and a possible debt downgrade, Canada sailed through its annual credit checkup with flying colors. Moody’s said the country’s high resiliency, government financial strength and low susceptibility to risk were key to the top marks. Here’s a breakdown of the reasons why Moody’s says Canada deserves the highest possible credit rating: Economic strength: Very high. Canada missed the worst of the financial crisis because of the financial strength of its banks and only a mild downturn in the housing market. The country had a stronger rebound from the recession, with a 3.2-per-cent rise in gross domestic product, compared with 2.9 per cent south of the border. Moody’s said monetary policy and Ottawa’s stimulus program helped the recovery. There are important differences between the Canadian and U.S. economies that affected Moody’s evaluation of Canada’s strength, including the fact

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that trade in goods and services makes up more than half of Canada’s GDP, compared with less than one- third in the U.S. This points to a greater degree of openness in the economy, it said. Canada also has lower federal debt and a stronger banking system and housing market, as well as a higher domestic saving rate, resulting in less reliance on external financial markets. Institutional strength: Very high. Fiscal discipline at the Bank of Canada, inflation control, government effectiveness and rule of law all rank highly. E c o nomic and fiscal policies have remained stable for the past 15 years under Liberal and Conservative governments. Some tax differences exist, but the overall goal of fiscal balance and declining debt has been a constant. While the proportion of total government debt credited to provincial, territorial and local governments is the highest among major countries, and Moody’s judges the risk of the federal government having to step in to

assist these governments with their debt payments as high, it said local ratings indicate little risk that such assistance would actually be needed. Government financial strength: Very high. This evaluation is based on a well-established pattern of budget surpluses at the federal level, except during exceptional circumstances such as the financial crisis, leading to declining government debt and debt ratios since the 1990s. Susceptibility to event risk: Low. The most important risks are

related to the housing market and to separatism in Quebec, although the probability of either affecting Canada’s rating is quite low.

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