Channel Muslim Media

Wednesday, November 20, 2013

Unlocking Opportunities in Islamic Finance

With the recent statement by the UK Prime Minister, Mr. David Cameron, to make London the global hub of Islamic finance, Obinna Chima writes that the financial system may be entering a new era

The pallid state of infrastructure in Nigeria remains a major source of concern to everybody in the country. According to the African Development Bank (AfDB), Nigeria has an infrastructure deficit of $360 billion.
The inadequate physical infrastructure in the country has been identified as one of the major constraints to sustained and broad-based strong economic growth.

Addressing these challenges will require a substantially larger annual level of investment in infrastructure, a significant increase in annual allocations for routine and periodic maintenance to ensure reliable infrastructure services, and increased attention to the institutional arrangements that support the infrastructure network of the country and the related services.
A report by the AfDB also indicated that if Nigeria’s infrastructure are given a facelift, it could boost the country’s gross domestic product (GDP) growth by about four per cent. Some of the sectors that require attention in the country include power, road, rail, information and communications technology (ICT) and transportation.

However, access to finance, to fund the development of most of these critical sectors has remained a challenge.
With Nigeria’s total debt stock at N8.32 trillion as at September 30, 2013, analysts have warned that the growing domestic debt might result to a debt crisis if not checked. Others have advised the government to look for cheaper alternatives to finance infrastructure development. One of the cheaper alternatives today is Islamic finance, which is interest free.

While regular bonds are essentially debts to be repaid at a future date, with Islamic bonds, that is not the case.
In essence, Islamic finance can be described as finance under Islamic law. Islamic finance being an emerging sector of the overall economic system is rapidly expanding and is now considered to be worth over $1.2 trillion globally. The Islamic model uses money as a measuring tool for value and not as an asset in itself, so income is not received from money as this is seen as exploitative and usurious. Investment vehicles through the Islamic finance structure are based on shared business risk.

The growth of Islamic finance globally also means there is an increasing demand for new ways of identifying Islamic-compliant business activities. Presently, the London Stock Exchange is working on the creation of new indices. This means the creation of a new way of identifying Islamic finance opportunities - a world-leading Islamic market index.

Lessons from London

Speaking at the recently-concluded World Islamic Economic Forum, the Prime Minister of the United Kingdom, Mr. David Cameron, expressed his desire for London to be one of the greatest capital of Islamic finance
According to Cameron, steps had already been taken to open up London for more Islamic financing activities.

“Already London is the biggest centre for Islamic finance outside the Islamic world. But today our ambition is to go further still. I want London to stand alongside Dubai and Kuala Lumpur as one of the great capitals of Islamic finance anywhere in the world.
“And we are already taking big steps to open up the City of London to more Islamic finance. Today, we have more banks compliant with the principles of Islamic finance than any other Western country.

“We have over 25 law firms supplying services in Islamic finance and 16 universities or business schools offering MBAs or similar qualifications in Islamic finance, including the new programme for senior executives announced by Cambridge University last week,” he explained.

He pointed out the move was to attract more investment into London. The UK prime minister noted Islamic finance was growing 50 per cent faster than traditional banking, adding that global Islamic investment was set to grow to £1.3 trillion by 2014. As a result of this, he expressed his preparedness to make sure that a big proportion of that investment would be in Britain. He revealed that some of the infrastructure in Britain were developed through Islamic finance.
Cameron added: “Britain is a country ready to welcome your investment, a country that values your friendship and a country which will never exclude anyone because of their race, religion, colour or creed. But if investing in London is good for you, then opening up London to your investment is just as vital for our own success here in Britain.

“We are backing our businesses, seeking new markets and banging the drum for Britain to show we are a first class destination for trade and investment. Islamic investment is already fundamental to our success.”
He said further: “But we're not going to sit here and rest on our laurels. We know there is much more to do for London to reach its full potential as a great world centre of Islamic finance.

“This government wants Britain to become the first sovereign outside the Islamic world to issue an Islamic bond. So the Treasury is working on the practicalities of issuing a bond-like sukuk worth around £200 million and we very much welcome the involvement of industry in developing this initiative which we hope to launch as early as next year.”

Prospect in Nigeria
The use of Islamic finance in Africa could grow further as several north and sub-Saharan African countries including Morocco, Tunisia, South Africa and Kenya are laying the legal groundwork to be able to issue sukuk, an Islamic finance bond.
In Nigeria, Osun State recently floated the country’s first Islamic bond, taking a major step towards developing an Islamic finance industry in the country. Analysts said the Nigerian Sharia-compliant bond issued by Osun State while relatively small at $62 million, signalled the start of a trend.

Also, the Islamic Development Bank is also lending $150 million through Sharia-compliant facilities for the new Lekki port in Lagos.

To the Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, Islamic finance products also have the capacity for ensuring financial inclusion of significant segment of the population.
Sanusi stated that when properly harnessed, Islamic finance could contribute significantly in turning Nigeria into a major international financial centre.

The CBN governor explained: “Islamic finance has shown its potential in achieving financial inclusion in many economies by bringing in large under bank populations, especially Muslims into the urbanised financial sector.
“We have so far registered Jaiz bank, and we have given a licence to Stanbic IBTC Bank to operate some window.
“We have given an approval in principle to Sterling Bank to operate an Islamic window and a microfinance bank that has applied for Islamic banking licence.

“This is in addition to the work being done by National Insurance Commission to promote Takaful, an Islamic insurance product.”
Sanusi said many Islamic financial markets had established their presence in all the major financial centres and were playing key roles in deepening the financial markets with products across the globe.
“In the face of the growing interconnectedness of the global financial system and its integration, it is thus unrealistic for any existing or aspiring financial centre to be oblivious of this development.

“Prime Minister David Cameron announced his government’s plan to make London a capital for Islamic finance to the Western world. He said it would stand alongside Dubai and Kuala Lumpur as one of the great capital of Islamic finance. The UK is embarking on this plan, despite the fact that it is a non-Islamic country,” Sanusi argued.

wherever, whenever and however the consumers want them.”

The fifth World Islamic Retail Banking Conference

More than 200 global Islamic bankers will discuss Islamic banking market trends and insights at a conference to be held in Dubai next month.

The fifth World Islamic Retail Banking Conference will take place at the Shangri-La Hotel on November 26 and 27.

The conference, under the theme ‘Back to basics,’ aims to delve into the basic values of Islamic Finance and to take those values forward to newer markets, said a statement.

It will provide networking opportunities for bankers with key policy makers, Islamic scholars, global Islamic retail bankers and business decision makers, it said.

The conference will also host a gala dinner, setting the backdrop of the Global Islamic Finance Awards (GIFA), conceptualised and organised by Edbiz Consulting, with the aim to highlight the best practices in Islamic banking and finance, and celebrate the success of institutions and individuals, with a focus on promoting social responsibility, Shariah authenticity and commitment to Islamic banking and finance.

It will also features the ‘Exclusive CEO Roundtable,’ as eight CEOs from global Islamic retail banking sector, participate as panellists and brainstorm the potential of "Developing Islamic Retail Banking, reaching to the retail target segments: Back to Basics."

"The focused discussion on the Islamic finance and the new ideas that is brought in during each new gathering makes the WIRBC as one of the industrious forums in the region in addition to the ability of creating new networking business opportunity,” said Abdulrahman Turki, general manager retail banking, Bahrain Islamic Bank.

The ‘Annual Open Fatwa Session,’ another key highlights of the conference, will focus on the current challenges and identify opportunities, which will be explored by the participating renowned global Sharia scholars and experts.

It will also features dedicated sessions such as the ‘Islamic Retail Banking: Case Study Brunei’, ‘Islamic Retail Banking vs Conventional Banking – the Mashreq Al Islami Case Study’, ‘Islamic Micro-Finance Workshop’, and ‘Guru Panels’ involving IT and marketing aspects in retail banking.

The sponsors of the conference will showcase their services and solutions to aid the growth of Islamic retail banking. - TradeArabia News Service

The world bank will open its first centre on Islamic Finance

The world bank will open its first centre on Islamic Finance at Borsa Istanbul premises, the exchange market said Monday. A statement on Borsa Istanbul's website says a ceremony will be held later on Monday to inaugurate the world bank Global Islamic Finance Development Centre, the first of its kind. Deputy Prime Minister Ali Babacan, World Bank President Dr. Jim Yong Kim, Treasury Undersecretary Ibrahim Halil Canakci and Borsa Istanbul Chairman & CEO Dr. Ibrahim M. Turhan will participate in the ceremony, the statement adds. Istanbul has become more popular in recent months as a centre of finance, specifically in Islamic instruments. Turkey issued its first sukuk, Islamic equivalent of bonds, in September 2012, and this year in the same month Istanbul hosted an international forum on financial systems where the topic of Islamic finance featured prominently.

Qatar Hosts Seminar On Taxation Of Islamic Finance

A seminar was recently held in Doha, Qatar in which a group of experts examined the taxation of Sharia'ah-compliant financial products.

The seminar was backed by the Gulf Cooperation Council (GCC) branch of the International Fiscal Association. The topics discussed at the event included the Qatar Financial Center Authority's (QFCA) research project on the taxation of Islamic transactions.

Mohammed Desin, a partner at Ernst & Young, stated during the seminar that "Islamic finance is effectively the sharing of risk and reward and not ignoring the economics of the transaction. We say: 'We are partners with you.' The intention of the parties doing the transaction is critical."

The main speaker at the seminar, Islamic finance consultant Mohammed Amin, spoke about the QFCA-sponsored research he conducted earlier this year on the cross-border taxation of Islamic financial transactions in the Middle East and North Africa. The purpose of the research was to come up with tax policies for countries that wish to make their tax regimes more inclusive of Islamic finance.

Mr Amin highlighted the fact that "There's very little legislation for Islamic finance. Countries are at very different stages of development. For example, of the countries which responded to our study enquiries, only Turkey and the Qatar Financial Center have specific rules for Sukuk (Islamic bonds)."

The seminar was attended by tax experts from various GCC states, as well as lawyers, accountants, bankers and Ministry of Finance representatives. It was chaired by Ian Anderson, the CFO and director of the tax department of QFCA.

Mr Anderson commented: "Islamic finance is growing rapidly in many parts of the world, not least in the Gulf. Improving the understanding of taxation of Islamic finance is therefore increasingly important – and our seminar took significant steps in that direction...We will continue to support research and encourage debate to help advance knowledge in this area."

SOURCE :

http://www.taxnews.com/news/Qatar_Hosts_Seminar_On_Taxation_Of_Islamic_Finance____62746.html

Libya aims to issue three Islamic bank licenses in 2014, says central bank

Libya hopes to have its first three dedicated Islamic banks operating next year to satisfy unmet demand for sharia-complaint financial services, a senior central bank official said on Wednesday.

Under former dictator Muammar Qaddafi, overthrown in 2011, the growth of Islamic banking was not encouraged and the entire financial system was kept undeveloped, as four state-controlled institutions dominated the industry.

Libya is now trying to build a modern financial system and has passed rules to cover Islamic finance, although political instability and a chaotic security situation are slowing its progress.

Authorities have decided to issue three Islamic banking licenses and the central bank has received five applications from local investors, which are currently being evaluated, said Abdulmajeed Almaguri, deputy director of the central bank’s banking supervision department.

He did not name the potential investors but said the evaluation process would be completed after four to five months.

“There is good demand for Islamic banking and we want a balance between conventional and Islamic banking,” Almaguri told Reuters on the sidelines of an Arab central bankers conference in Abu Dhabi.

Currently the 16 banks operating in Libya, including seven foreign banks, offer mainly conventional banking services with some providing interest-free Islamic banking through sharia-compliant windows, he said.

Abdullah Yaamin Elected President of the Maldives

After a period of uncertainty, a winner finally emerges.

Abdullah Yaamin, a conservative candidate related to former autocratic ruler Maumoon Abdul Gayoom, is the new president of the Maldives. The development brings to an end the looming political uncertainty that has been plaguing the archipelago for the last three months.

In the run-off vote, Yaamin won 51.3 percent of the vote while his opponent, former president Mohamed Nasheed's Maldivian Democratic Party (MDP), received 48.6 percent. In the first round of elections held earlier this month, the MDP polled in at 46 percent while Yaamin's Progressive Party of Maldives (PPD) secured 30 percent. The third contender, Gasim Ibrahim, a businessman, managed just 24 percent. The difference between the first round and the run-off is stark, but in the former, Nasheed's opponents put forth a concentrated front against the former president, who had become the first democratically elected leader of the archipelago in 2008 after defeating Maumon Abdul Gayoom – an autocrat who had been ruling the country for 30 years.

The Maldives' nascent democracy suffered a major jolt in 2012 when Nasheed was removed from his post, creating political uncertainty in this strategically significant archipelago. The decision was controversial and is considered a coup by the MDP leader.

Since September this year, there have been three attempts to conduct elections. In the first vote on September 7, Nasheed secured 45 percent of the vote but the Supreme Court annulled the result and cancelled the second run-off vote after it found some irregularities in the elections. However, independent observers and the general public had generally found the poll free and fair.

The Election Commission of Maldives has certified the most recent election results and even former president Nasheed has accepted the verdict. Despite these initial encouraging signals, questions abound regarding the political stability of the young democracy.

Commenting on recent political developments in an interview with The Diplomat, the chief editor of Dhi TV, a local television channel, said "the political situation will stabilize only after the parliamentary elections, due in January or February next year. A government's stability depends on the strength of the party in the lower house."

However, he feels that "with the election of a new president, the political vacuum and constitutional crisis facing the country has disappeared."

But the challenges before the country have risen. On the one hand the country faces the daunting task of reviving its sagging economy and reinvigorating its tourism industry, which generates 30 percent of the country's revenue. On the other hand, the island nation is faced with increasing religious conservatism and growing support for political Islam.

However, the Dhi TV editor says that “Islamic radicalism is not an issue in the country. But, for sure, the new government will not be as pro-West as the previous regime had been. It will rather focus on strengthening ties with India and Gulf states."

Despite this, the very fact that conservative forces came together to thwart the march of the secular movement led by the MDP signals a simmering tension in the archipelago between secular and religious parties.

India, which sees the Maldives as part of its sphere of influence and has a very strong strategic interest in the island nation, is sure to be relieved after the elections. Political uncertainty has been a matter of concern in this crucial archipelago. New Delhi does not want the island nation to become a bastion of political Islam and religious extremism. The South Asian democracy is also wary of growing Chinese interests in the island nation.

Delhi-based political analyst Dipanjan says that "for India it is a matter of satisfaction that the political vacuum has come to an end. The popular perception is that New Delhi has been promoting Nasheed, but the biggest democracy knows how to play its cards well. It does not have any permanent friends or foes in Male; it has only permanent interests."

200 delegates to attend Islamic banking forum

Monday, November 18, 2013

Three cities fighting for Islamic finance crown

When the British government said last month it would issue its first Islamic bond, the implications went far beyond the debt market: it was a signal that London will not back down in an escalating tussle among cities for Islamic financial business.

London has long been the default centre for international firms to issue Shariah-compliant bonds, part of a fast-growing Islamic finance sector that will be worth $2tn globally next year, according to consultants Ernst and Young.

But it faces a mounting challenge from two centres: Dubai and Kuala Lumpur.

Dubai, at the heart of the wealthy Gulf, announced a push into Islamic finance this year. It has an entrepreneurial culture which has already made it the Middle East’s top conventional banking centre, and big state-run firms which can be expected to support the government’s strategy.

The Malaysian capital has a reputation for efficient regulation of Islamic finance and a huge domestic market for local-currency Islamic bonds, which is now starting to attract foreign issuers.

The final result of the three cities’ rivalry may not be known for years, but thousands of jobs and large amounts of direct investment in companies and real estate are likely to depend on the outcome.
“You need a critical mass of borrowers and investors,” said Khalid Howladar, senior credit officer at Moody’s Investors Service. “You have multiple centres that are looking to establish their pre-eminence in the Islamic space.”

Islamic banking, which obeys religious principles such as bans on interest and pure monetary speculation, is still dwarfed by conventional banking with over $100tn of assets.

But the top 20 Islamic banks have been growing 16% annually in the last three years, far outpacing their conventional rivals, according to Ernst and Young. That makes Islamic finance tempting for many non-Muslim institutions.

In an unstable global market environment, the conservatism of Islamic financial structures may be helping the industry. Its access to big pools of Islamic investment funds in the Gulf oil-producing states and southeast Asia is certainly a factor.

Over the past year, the industry has been expanding from its traditional bases in those two regions across many nations with significant Muslim populations, from North Africa and Kazakhstan to Nigeria and Djibouti. European financial firms have tapped Islamic funds by issuing Sharia-compliant bonds, known as sukuk.

That promises big rewards for the financial centres which arrange issues of sukuk and other Islamic products, employ the experts who structure them, and host the scholars who vet them for religious permissibility.

“The pent-up demand for short-term papers to manage liquidity in Islamic finance is huge, and to meet this will require other market players to come in,” Malaysia’s central bank governor Zeti Akhtar Aziz said.

Dubai laid claim to such business in January this year when its ruler, Sheikh Mohamed bin Rashid al-Maktoum, announced a drive to develop the emirate as an Islamic financial centre.

Its main competitors responded. In March, Britain launched a publicity campaign involving government junior ministers and private sector executives to burnish London’s Islamic credentials.
In May and June, Malaysia took steps to strengthen its regulation of the industry while making it easier for its Islamic insurers to invest their money overseas.
The most high-profile - and most cut-throat - area of competition between the three centres is arranging sukuk. London has led in attracting issues by big international companies because of the massive size of its conventional financial markets and its globally respected legal system.

Malaysia, however, has the advantage of a vibrant market in local-currency sukuk, thanks to a Muslim-majority population; Kuala Lumpur has accounted for about two-thirds of all sukuk issued globally this year. That is persuading some foreign firms, from as far afield as Kazakhstan, to issue in Malaysia.

Dubai lists relatively few sukuk on its exchanges; traditionally its state-owned companies have gone to London to issue. But a determined campaign by Dubai’s government is now convincing its companies to issue at home, and could attract business from firms in neighbouring Gulf states.

British Prime Minister David Cameron appeared to be trying to head off that threat last month with his plan for Britain to become the first Western country to issue a sovereign sukuk.

“The UK sukuk announcement has really helped to galvanise the market,” said Farmida Bi, European head of Islamic finance at law firm Norton Rose Fulbright in London, predicting the sovereign issue would help to trigger corporate issues.

However, Dubai won a victory this month when the Jeddah-based Islamic Development Bank, which has long operated sukuk issuance programmes in London and Kuala Lumpur, said it would set up a $10bn programme on the Nasdaq Dubai exchange.

“I do believe Dubai can reach a leadership position, although progress has been slow and it will take a few years to reach the level of Malaysia,” said Apostolos Bantis, emerging markets credit analyst at Commerzbank in London.

Because London is not located within a natural pool of sukuk issuers and European customers will remain a limited group, its position looks weakest among the three centres from a long-term perspective, Bantis added.

Other areas of competition include Islamic insurance, known as takaful, and asset management. Once again, London’s sheer size gives it an advantage, while Kuala Lumpur benefits from its location in a vast, predominantly Muslim area of southeast Asia.

British-based firm Cobalt struck a blow for London earlier this year by developing a novel syndication model for takaful. The model offers A-rated capacity which most carriers in the Gulf lack, said chief executive Richard Bishop.

This could clash with Dubai’s plans to expand in takaful. Abdulaziz al-Ghurair, head of the authority overseeing Dubai’s financial centre, said last month that since there were only 19 Islamic re-insurance firms globally, takaful firms were forced to transfer some of their risk to conventional re-insurers.

That creates a window for Dubai to set up Islamic re-insurers, he said without detailing how this would be done.

Ultimately, much will depend on which financial centre can establish “thought leadership” in Islamic business, creating standards and structures which come to be accepted across regions and, ideally, across the global industry.

Traditionally, Malaysia has been influential because of its centralised model of regulation, which minimises disputes among different boards of Islamic scholars. But some Gulf scholars view Malaysian regulation as too liberal, arguing that it permits structures which too closely mimic conventional finance.

Dubai has a chance to chart a path between these two camps; it has said that after consulting the industry, it will issue sukuk standards that are more detailed and comprehensive than others, hopefully resolving conflicts between the regions.

“This is very important. We think it’s a basic requirement but it doesn’t exist as we speak. But this will not come from the sharia scholars - it has to come from the industry,” said Hamed Buamim, director-general of the Dubai Chamber of Commerce & Industry, which is promoting the emirate’s Islamic push. – Reuters

Saturday, November 9, 2013

Qatar ‘Slashes’ Gas Prices To Keep Competition At Bay

Qatar is sweetening its gas sales pitch to lock-in long-term Asian buyers before a wave of new suppliers from the United States, Australia, and east Africa snatch market share and deflate prices. Up to now, importers like Japan and South Korea have had few major supply alternatives to the tiny Gulf state, whose liquefied natural gas exports represent about a third of global supply. But in a growing market for LNG, gas condensed for shipment to markets pipeline supplies do not reach, nearly 30 million tonnes a year (mtpa) of US gas is already sold to Asia. Some 350 mtpa more will come on stream from the United States, Canada, east Africa, Russia and Australia in the years ahead — more than doubling worldwide output. Buyers in the Pacific have shunned Qatar’s high asking prices, and China and India are also hesitating over plans to sign new long-term deals.

Qatar now hopes to lure leading buyers back by offering cheap teaser deals lasting a few years, backed up by more strategic 20-year sales, sources familiar with the negotiations say. “The Qataris have made good money over the years, but the joy ride is over,” said one source of the world’s lowest cost LNG producer. LNG pricing is still closely tied to oil. It is expressed as a “slope” based around a $100 per barrel oil price, where a million British thermal units (mmbtu) of LNG costs a percentage of that per-barrel price, plus a small fixed dollar amount.

Deals“They are now offering three-year deals priced at 13.5 percent slope, while their long-term price is more around the 14.6-14.7 range,” an industry source with knowledge of the matter said. Long-term LNG deals have been priced at a slope of 14.85 percent in recent sales from Australia and Papua New Guinea — more evidence Qatar is looking to undercut rivals. Poor demand and oversupply has driven gas prices down in Europe while in South America’s subsidised energy markets, a lack of creditworthy buyers makes direct 20-year deals risky. The United States, a market which much of Qatar’s LNG production capacity was built to supply, has already become virtually self-sufficient thanks to a glut of shale gas, and will soon be competing with Qatar in the Asian market. Beijing’s desire to improve air quality and a disaffection with atomic power in the region since Japan’s Fukushima nuclear plant disaster in Japan in 2011 are helping to drive demand.

Asian demand is the prize for LNG producers — Qatar has even agreed to supply additional LNG to Chinese and South Korean buyers this winter.

Despite the US competition, Doha remains set on oil-linked pricing and resists contractual devices used by Australian suppliers that protect buyers from oil price spikes. In 2009, Qatar sold China 5 million tonnes per annum (mtpa) of LNG at a 16.2 percent slope to the Japanese Crude Cocktail (JCC) — one of the highest priced long term deals ever struck. But sources say China has since put off taking up an option to buy a similar further amount, prompting Qatar to drop prices. “The Chinese signed up to a very expensive deal, Qatar may be offering cheaper prices to prevent Beijing from trying to renegotiate that first deal,” a trade source said. The latest deals clinched between Russia’s Novatek -operated Yamal LNG project and Chinese and Spanish buyers provide further evidence of downward price pressure.

Premium Yamal last month sold 3 mtpa to Chinese buyer CNPC at an estimated slope of 12.2 percent plus a high fixed premium. Last week, the Arctic project gave Spain’s Gas Natural Fenosa dual-pricing for its 2.5 mtpa, linking supply to prices at the UK’s NBP gas hub and Brent crude oil at a 12 percent slope, an industry source said.

Asian buyers now want hybrid pricing deals that take the sting out of costly crude by linking them to freely-traded gas as well. China’s National Development and Reform Commission (NDRC) has told its LNG buyers not to pay above 14 percent of crude oil for long-term supply, and to go for hybrid agreements where possible, several sources said. LNG provider BG Group’s recent deal with China’s CNOOC last year has a hybrid price structure, Credit Suisse managing director of equity research David Hewitt said, with 70 percent oil-linked and the rest tied to US gas benchmark Henry Hub. Long-term LNG deals linked purely to US gas prices tend to come with a higher fixed premium to oil-linked arrangements — often around $6-7/mmBtu. Japan’s energy ministry has also moved to cap prices, warning utilities that they will not be able to pass costs on to electricity customers beyond a new ceiling.

For the fiscal years 2013/14 and 2014/15, that ceiling — called the top-runner price — will be set based on the cheapest outcome of contract reviews for those two years. Those reviews are under way with suppliers such as Australia’s North West Shelf and Pluto projects, Malaysia LNG Satu, Russia’s Sakhalin 2 and Abu Dhabi. From April 2015, the import price is to partly reflect gas-linked prices amid the projected start of US shale gas exports to Japanese buyers. One industry source put the 2013/14 and 15/16 ceiling price at $13.00/mmBtu. Others said it could be one or two dollars higher. Whichever is the case, the message to utilites is clear: bring down the price, or lose profits.

Although the emergence of new export hopefuls has affected Qatar’s tactics, potential buyers know Doha will be their main option for five years or more yet until new supplies come. Buyer reticence to sign up for long term deals has also affected the next generation of LNG projects to feed expected demand growth beyond 2020. After a spate of go-aheads in the period 2009-2011, not a single one outside the United States has been sanctioned for almost two years. Some developers warn of a looming shortage in future. “Realism is creeping back into negotiations and buyers realise they need the LNG and that they can’t necessarily afford to wait around for new exporters to get started,” an industry source said. As another source put it: “If you need LNG now you have to go to the Qataris.”

KFH-Research Wins Best Islamic Finance Research Firm Award

KUWAIT CITY, Nov 8: KFH-Research LTD, a subsidiary of Kuwait Finance House “KFH” was awarded the Best Islamic Finance Research Firm Award from IFN, a leading Global Islamic Financial Magazine and News Service. This award was voted by the Islamic finance industry practitioners, clients, leading corporations, financial investors and issuers of sukuks. As such, the award is prestigious because KFH-Research was voted by KFH competitors and clients as Best provider of Global Research, beating other Global consultants and leading Banks in the GCC. This award is the 15th award of Excellence bestowed on KFHR since inception 6 years ago.

KFH-Research Chairman Eng Fahad Khaled Al-Mukhaizeem stated in a press release that bagging such award from a prestigious entity attests to the outstanding researches and reports that the company does and marks the unmatched global coverage, analysis, accuracy of forecasts and talent of the team at KFHR, based in Malaysia and Kuwait. Al-Mukhaizeem explained that the company is working to strengthen the links between the bodies, economic research and statistical institutions in Kuwait and the Middle East with their counterparts around the world. This will effectively support collaboration, and lead to expand and develop data study. He went on to say that the company also plays role in achieving institutional integration, and benefiting from the economic researches to meet the challenges and better understand the capital markets referring to the memorandum of understanding MoU inked with the Central Administration of Statistics (CAS) as an attest to the development of Islamic finance and research, not to mention the preparation of studies, statistics, and reports.

Moreover he mentioned the awards bagged which are Best Islamic Finance Research Firm 2013 - IFN, Best Islamic Research House 2013 - The Asset , Best Consulting Service 2013 - The Asset, Best Islamic Research House 2012 - The Asset, Best Consulting Service 2012 - The Asset, Best Islamic Finance Research House 2011 - The Asset, Best Islamic Research Firm 2011 - IFN, Contribution to Islamic Finance - International Islamic Finance Forum 2010, Outstanding Contribution to Islamic Finance - Failaka-Amanie Symposium 2010, Best Islamic Research Company 2010 - IFN, New Provider for Islamic Finance Research - KLIFF 2008, Contribution to Research in Islamic Finance 2009 - International Islamic Finance Forum 2009, Best Islamic Research Company 2009 - IFN, Best Islamic Research Company 2008 - IFN, Best Research in Islamic Finance - Master of Islamic Funds Award 2007. It is worth noting that Kuwait Finance House (KFH) has established KFH-Research in Malaysia, in order to enrich the Islamic banking field through offering a base of specialized researches and studies.

Tuesday, November 5, 2013

Sharjah reports impressive 10% increase in tourist arrivals in 2013

The World Tourism Market 2013 got off to a colourful start at Excel London with Sharjah Commerce and Tourism Development Authority making a strong pitch for the Emirate’s tourism sector which has been growing at a steady pace.

This is the tenth year of Sharjah’s participation in the premier tourism and travel expo being held from November 4 to 7 in the British capital.

Meanwhile, on the sidelines of the London exhibition, the Authority today released the statistics of Sharjah’s hotel industry performance during the first nine months of the year. The tourism market in the Emirate has witnessed a healthy 10% growth, according to the latest statistics. A total number of 1,391,632 international tourists visited the Emirate until September this year whereas the number of visitors in the same period last year stood at 1,263,908.

While the Emirate received a total of 455,489 European tourists forming 33% of its total international arrivals, the tourists from the GCC countries stood at 509,481 tourists commanding 37% of Sharjah’s tourist numbers.

The Arab tourists at 178,268 constituted 13% of the Emirate’s tourism market whereas the Asian tourists at 192,715 took a share of 14%. The rest came from the Americas, Asia Pacific and Africa, forming 4% of the total arrivals. The hotel room nights during this period stood at 2,474,270. The number of hotel properties in the Emirate now stands at 103 (48 hotels and 55 hotel apartments).

The total number of rooms has reached 9,573. With a number of new hotels and luxury resorts coming up in Sharjah and investments pouring into the hospitality sector, the number of hotel rooms is expected to reach 12,000 hotel rooms by 2015 keeping pace with the growth of tourist numbers.

Welcoming the encouraging trend of Sharjah’s tourism sector growth, SCTDA Chairman HE Mohamed Ali Al Noman underscored the sustained and steady growth of Sharjah’s hospitality industry and its strong fundamentals.

He said that Sharjah is looking forward to putting up its best performance yet at the prestigious London Exhibition with a strong focus on its heritage and family-focused tourism experience as well as the unprecedented growth and developments the tourism sector has seen in the past few months and years.

Al Noman emphasised that the London exhibition has over the years helped the Emirate bolster its presence in the European tourism market.

“Europe has emerged as a key tourism feed market for the Emirate. The number of arrivals from the Continent have consistently grown in recent years,” said the SCTDA Chairman said emphasizing that Sharjah figures high on European tourist itineraries today because of the diversity of its natural landscape and cultural and civilizational heritage complemented by numerous museums, beaches, mountains and nature reserves.

Headed by the SCTDA Chairman, the Sharjah delegation to the London expo includes representatives from Shurooq (Sharjah Investment and Development Authority), the Sharjah International Airport, Sharjah National Hotels, Ramada Sharjah, Arabian Link Tours and Sharjah Media Centre.

The striking Sharjah pavilion at Excel London celebrates the Emirate’s unique cultural identity, its traditions, tourist attractions and modern infrastructure. Also on offer are a number of publications, brochures and other promotional material offering an insight into what awaits international visitors in Sharjah.

Al Noman noted that this year’s participation in the WTM comes on the eve of international celebrations of Sharjah as the Capital of Islamic Culture for in 2014.

“In view of the 2014 celebrations, the Authority expects the number of international arrivals to significantly go up as interest in Sharjah, its authentic Arab and Islamic cultural heritage and a wide range of world-class events and entertainment grows,” he said.

The Sharjah Light Festival, the first of its kind in the region, is organised by the Authority across the Emirate illuminating a number of landmarks and historical buildings celebrating the Emirati history and heritage. The Emirate also takes pride in the Sharjah Heritage Days festival, Sharjah International Book Fair and numerous other events.

Al Noman said that both public and private sector stakeholders of the Emirate are keen to provide superior, world-class services to international visitors and the development of major infrastructure projects in recent years and investments by international hotel majors in the sector are a testimony to the fact.

The WTM brings together the who’s who of the global travel and tourism industry, including international tourist destinations, tourism bodies, travel and tour operators and prominent names in international hospitality industry and media. More than 3,000 journalists representing European and international media are covering the global event.

Monday, November 4, 2013

Shariah-compliant solutions: Government must devise Islamic finance strategy to attract investment

At the recently concluded World Islamic Economic Forum in London (October 29-31), a Pakistani delegation headed by Finance Minister Ishaq Dar and Punjab Chief Minister Shahbaz Sharif presented investment opportunities in Pakistan, especially in the power sector in the province of Punjab.

The technical presentation presented by the delegates was impressive and there was some obvious interest from the representatives of different business and financial groups present on the occasion.

There is no doubt that the energy sector in Pakistan provides an excellent opportunity to local and foreign investors to invest in the power deficit sector. Most of the projects identified by the Pakistani delegation offer a return on equity of 17-20%, with adequate guarantees against different types of risks, including foreign exchange risk in the wake of fast depreciating Pakistan rupee.

Dr Abdulaziz Al Hinai, Vice President of Islamic Development Bank (IDB), who was also present on the occasion, reminded the potential investors that his bank was also behind the government of Pakistan to offer additional guarantees to the investing parties in the country. Furthermore, Mumtaz Khan, a seasoned private equity guru and CEO of IDB’s $2 billion infrastructure fund, also confirmed that the opportunities in the energy sector in Pakistan were lucrative enough for the funds like his own.

Ishaq Dar, the Finance Minister, also stated that some of the top British investment funds are looking into investing in Pakistan’s energy sector.

One thing, however, that was missing in the pitch was relevance of Islamic finance in attracting investments into the country. While other governments, particularly that of Britain and Malaysia, were pitching Islamic finance as a strategic tool for attracting investments into their countries, the government of Pakistan seemed at best indifferent to the use of Islamic finance in its endeavour to bring most wanted investments into Pakistan.

British Prime Minister David Cameron was most eloquent in presenting his country as a friendly host to Shariah-compliant investments. On the other hand, Pakistani delegation seemed completely unaware of the potential of Islamic finance in solving the serious economic and financial problems.

Apart from a passing remark by Prime Minister Nawaz Sharif in his speech at the opening session of the World Islamic Economic Forum, the Pakistani delegation’s almost complete silence on the issue must indicate the attitude of Pakistani government towards Islamic banking and finance.

Also, the brief document, “Pakistan Investment Guide 2013”, which was distributed by the government of Punjab, was unimpressive and lacked a theme, design and depth. It was certainly a good initiative by the government of Punjab to present investment opportunities in the province, lack of representation of other provinces was seriously noted by many delegates.

While other countries presented their cases in the most impressive ways with carefully designed documents, printed on high quality papers, with in-depth details about the projects, Pakistani documents were not impressive at all. It cannot be denied that some of the information in the documents was useful, but they cannot be deemed as impressive marketing material.

There is a definite need on the part of the government to seek advice from internationally reputed consulting firms to raise its image and profile in Islamic banking and finance.

While Shahbaz Sharif mentioned in his speech that the Chinese Exim Bank was investing in the Punjab’s energy sector, it seemed as if the government delegation was completely unaware of the potential and relevance of the global Islamic financial services industry to bringing required investments into Pakistan.

The total size of the Islamic banking and finance is $1.63 trillion (according to Global Islamic Finance Report 2013, published by the London-based Edbiz Consulting), and countries like Malaysia have immensely benefited from it in terms of attracting international investments. It should not be a problem at all for the government to raise at least $5 billion from global Islamic financial markets, if it carefully structures an Energy Sukuk to be sold internationally.

There is a definite need on part of the government to devise an Islamic finance strategy to attract foreign direct investment into the country. While there are reports that a committee on Islamic banking and finance is being formed by the government to promote Islamic banking and finance, there is a need to bring some internationally reputed experts in Islamic banking and finance to advise the government how Islamic finance can be used as a strategic tool in solving economic and financial problems faced by the country.

The writer is an economist and a PhD from Cambridge University

Published in The Express Tribune, November 4^th, 2013.

Friday, November 1, 2013

Khazanah opens regional office in Istanbul

Khazanah Nasional Bhd today announced the opening of its fourth regional office in Istanbul to facilitate investments in Turkey and the region, which are of strategic interest to Khazanah, its investee companies and Malaysia.

"To date, Khazanah and several of its investee companies have invested a total of more than US$1 billion (RM3.18 billion) in Turkey," Khazanah said in a statement.

Khazanah said these investments have demonstrated a profitable and steady rate of growth as reflected in increased market value.

Managing director Tan Sri Azman Mokhtar said the establishment of the Turkey Regional Office was another milestone for Khazanah as the government's investment arm strategically expanded its operations into growth markets and seek opportunities overseas that can help create sustainable value for Malaysia.

"Turkey and the surrounding regions provide tremendous potential that Khazanah and its investee companies can tap into," Azman said.

The regional office was opened by Turkey's Deputy Prime Minister, Ali Babacan. Also present at the event was Khazanah's deputy chairman Tan Sri Nor Mohamed Yakcop.

Khazanah also has regional offices in Beijing, Mumbai and San Francisco.

Khazanah Nasional is the strategic investment fund of the Malaysian government entrusted to hold and manage the commercial assets of the government and to undertake strategic investments.-- Bernama

London aims to become Islamic finance hub: Cameron

London (AFP) - British Prime Minister David Cameron said Tuesday he wanted London to become one of the world's major capitals of Islamic finance as the city played host to the first World Islamic Forum outside the Muslim world.

"Already London is the biggest centre for Islamic finance outside the Islamic world. And today our ambition is to go further still," Cameron told more than 1,800 political and business leaders at the ninth forum, dubbed the "Davos of the Muslim world".

"I don't just want London to be a great capital of Islamic finance in the Western world, I want London to stand alongside Dubai and Kuala Lumpur as one of the great capitals of Islamic finance anywhere in the world," he said.

"Investing in London is good for you and opening London up to your investment is good for us."

More than 20 UK banks currently offer Islamic financial products, while 49 Islamic bonds -- called sukuks -- with a total value of $34 billion, have been listed over the last five years on the London Stock Exchange.

But Cameron aims to expand well beyond this.

â€œWhen Islamic finance is growing 50 percent faster than traditional banking and when global Islamic investments are set to grow to Â£1.3 trillion by 2014, we want to make sure a big proportion of that new investment is made here in Britain."

As part of realising his ambitions, Cameron announced a new "Islamic Index" on the London Stock Exchange and revealed plans for Britain to release an Islamic bond.

"This means the creation of a new way of identifying Islamic finance opportunities -- a world-leading Islamic Market Index," he explained.

The index will identify companies that meet traditional Islamic investment principles.

A foundation of Islamic investment is that it should be structured on the exchange of ownership or real assets, with money being used only as a method of payment.

Islamic financial principles also prohibit the payment of interest, so Islamic bonds pay investors a fixed return based on the profit generated by an underlying asset.

"It is another global first for the City of London," said Cameron.

Afghanistan's President Hamid Karzai said the comments from the British prime minister marked a "very welcome step", and added he hoped Islamic finance could play a role of "reinforcing ethical and moral values" in the financial world after the economic crisis.

Pakistan's Prime Minister Nawaz Sharif also welcomed the news that Islamic finance was "no longer confined to the Muslim world".

Islamic finance has already helped to transform London's skyline, with Qatari money part-funding the Olympic village used at last year's games and the 310-metre Shard building now towering over the River Thames.

Thursday, October 24, 2013

Brunei's sultan announces strict Islamic penalties

A new criminal law that could include penalties like amputation for theft and stoning for adultery will be enforced for Muslims in Brunei in six months, its ruling sultan announced.

Brunei's Shariah Islamic court had previously handled mainly family-related disputes. The sultan has been hoping to implement the new law for years to bolster the influence of Islam in the tiny, oil-rich monarchy on Southeast Asia's Borneo island.

Sultan Hassanal Bolkiah said the Shariah Penal Code should be regarded as a form of "special guidance" from God and would be "part of the great history" of Brunei.

"By the grace of Allah, with the coming into effect of this legislation, our duty to Allah is therefore being fulfilled," the sultan said at a legal conference in Brunei's capital.

'Guarantees justice for everyone'

The law would apply only to Muslims, who comprise about two-thirds of the population of nearly 420,000 people. The others follow mainly Buddhist, Christian and indigenous beliefs.

Brunei's Mufti Awang Abdul Aziz, the country's top Islamic scholar, told Tuesday's conference that the Shariah law "guarantees justice for everyone and safeguards their well-being."

"Let us not just look at the hand-cutting or the stoning or the caning per se, but let us also look at the conditions governing them," Awang said. "It is not indiscriminate cutting or stoning or caning. There are conditions and there are methods that are just and fair."

Under secular laws, Brunei already prescribes caning as a penalty for crimes including immigration offences, for which convicts can be flogged with a rattan cane. Awang said there should be no concerns that foreign travellers might end up avoiding Brunei after the law is implemented

The implementation of Shariah criminal law is not expected to face vocal opposition in Brunei, which has long been known for conservative policies such as banning the public sale of liquor."Please listen to our answer. Sir, do all potential tourists to Brunei plan to steal? If they do not, then what do they need to fear," he said. "Believe me when I say that with our Shariah criminal law, everyone, including tourists, will receive proper protection."

Sultan Hassanal, who has reigned since 1967, is Brunei's head of state with full executive authority. Public criticism of his policies is extremely rare in Brunei.

Thursday, October 10, 2013

Malaysia to Host 8th Islamic Tourism Exhibition in Nov

Selangor Matta Chairman Datuk Helmi Daud said the target was based on the 20,000 visitors expected to visit the exhibition and sign up for the umrah package during the exhibition at Anggerik Mall here.

"This year, the exhibition will focus on the umrah package as more than 30 agents will be offering the umrah package to visitors intending to perform the umrah between December this year and the Holy month of Ramadan next year," he told Bernama Tuesday.

Helmi said umrah package would be the thrust of the exhibition to enable Muslims to opt for the package from registered agents so that they could perform the umrah at the Boly Land smoothly.

"Of late, many people were cheated by dubious agents, incurring losses amounting to thousands of ringgit.

"We've gathered agents registered with Matta and the Tourism and Culture Ministry to offer a genuine umrah package to Muslims planning to perform the umrah," he said.

Advising Muslims to be cautious with umrah packages being offered, Helmi said the minimum cost was about RM6,000, inclusive of airfare and accommodation.

He said umrah package offered cheaper than the amount was doubtful.

"Muslims planning to perform the umrah must be careful in order not to fall prey to unscrupulous agents.

Besides umrah package, several Islamic tourism packages will also be on offer to visitors at attractive prices from 63 participating tour agents.

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