Malaysian players maximize opportunities in the social-impact investment market

Rapids • Deals • News • Takaful • Asset Management • Ratings • Moves
10th June 2015 (Volume 12 Issue 23)
Facing facts At IFN we never shy away from asking the tough questions, and this week we face up to the biggest one of all – what actually is Islamic finance? How do we define ourselves, who are we: and what role do we play both for ourselves and in the wider global financial industry? Sometimes in order to move forward, we have to be honest about our flaws as well as positive about the future: and in this week’s cover story we take an unflinching look at the current situation and its prospects for realistic development. Our IFN reports look at the spur of activity in Malaysia's socially responsible investment market, while our correspondents cover South Africa, Nigeria, Oman, Turkey and India. Our special reports are brought to you by Millenia Global Research House; FAAIF; and INCEIF together with the College of Banking and Financial Studies (Central Bank of Oman) while our features look at Halal financing. Our analysis pieces also cover Halal financing and Kenya's Islamic finance landscape. As our IFN Europe Forum gets underway in Luxembourg this week and the industry is examined from all angles, the future remains both exciting and optimistic. As Khalil Gibran said: “Knowledge of the self is the mother of all knowledge.” Cover Story Islamic finance: Industry or asset class? Islamic finance may have started small but has grown into a sprawling, supranational behemoth spanning both borders and sectors. Yet with this very spread and sophistication comes increasing confusion as to its own identity. Can it really ever be a truly alternative option to the mainstream financial system — or would the sector be better off if it stopped trying to be all things to all people and instead focused on its strengths and differentiation as an alternative investment class for Shariah conscious participants in the financial markets? LAUREN MCAUGHTRY explores the options. IFN Reports • Malaysian players maximize opportunities in the social-impact investment market • Barwa Bank to join Sukuk issuer ranks • IFN Global Trendswatch • Fund focus: Malaysia’s pioneering global developed markets Islamic retail fund • ICD strengthens ties with potential counterparts in China • UK’s private rented sector gains traction • IFN Weekly Poll: Crowdfunding — the next big thing or just another fad? • Sovereign Sukuk: Indonesia and Sharjah • London’s Social Stock Exchange targets global players with Islamic Reporting Initiative IFN Country Correspondents • Newly-introduced cash reserve ratio (CRR) and its implication for non-interest banks in Nigeria • Signs of consolidation in Oman’s Islamic banking sector • ING and BNP Paribas among bidders for HSBC Turkey • India taking steps to increase Islamic finance awareness • The South African Islamic money market dilemma IFN Country Analysis • Kenya: Laying the groundwork IFN Sector Analysis • Halal financing: An area of ample opportunity Shariah Pronouncement An Islamic bank has a standard auto finance product for its customers. The product is based on the Murabahah structure under which the Islamic bank purchases the vehicle from the dealer and sells it to the customer on its cost plus profit on an agreed deferred payment. Case Study Pacific Controls’s foray into Islamic financing Pacific Controls, a Dubai-based global provider of end-to-end managed application services and solutions for machine-to-machine and Internet of Things applications, has successfully secured a financing facility worth AED750 million (US$204.15 million). A transaction that is part conventional and part Islamic, the deal is the company’s first involvement in Islamic finance. Speaking to Adil Hussain, a partner at Clyde & Co, the legal advisor to the syndication, NABILAH ANNUAR provides a more detailed account of the transaction. Special Reports Islamic finance: Challenges and the way forward This article is contributed by ABBAS MIRAKHOR and MUGHEES SHAUKAT based on the keynote address delivered by Professor Dr Abbas Mirakhor in the recent 1st Symposium on Islamic Finance arranged by the College of Banking and Financial Studies, Central Bank of Oman, Muscat, Oman. Feeling uncertain about Islamic finance? Unlike conventional finance, certainty is promoted in Islamic finance and banking. Gharar (uncertainty) originates from the Arabic word Gharra, which means ‘to deceive’. The word for gambling in Arabic, Maysir, comes from the word Yasira, which means ‘to be easy’ and Yassara, which means ‘lucky chance’ or ‘easy success at getting something of value without earning it’. CAMILLE SILLA PALDI delves into the world of certainty (and uncertainty) in Islamic finance. Islamic international trade finance – is it a possibility? In this article, HUSSAIN KURESHI provides an overview on whether Islamic international trade finance is feasible. Here are some extracts from the Bank of International Settlements’s Triennial Central Bank Survey of foreign exchange turnover in April 2013, showing preliminary global results. Features Financing the Waqf sector Waqf organizations continue to face challenges in developing their asset base to generate sustainable revenue streams that will help achieve the goals of these institutions. This is a bigger challenge for the growing Muslim populations in non-Muslim countries. In addition to the nature of the industry and a lack of human resources capacity and capability in the sector combined with complications of legislative environments and the localized focus they operate under, the biggest issue continues to be the lack of a source of funding to develop underlying asset bases and infrastructure. The inability to attract investment into vital projects that are needed in the community means the development of the communities are falling behind in many parts of the world. MOHAMED NALAR writes. Halal aspect of Islamic finance The Internet of Things, or device connectivity, is arriving – any similarities with the Halal aspect of Islamic finance? Connectivity is the efficient way to grow both markets, subsets of Muslim consumerism. RUSHDI SIDDIQUI explores.  CONTACTS Editorial: Sasikala Thiagaraja Direct Line: +603 2163 7800 ext 34 Finance: Faizah Hassan Direct Line: +603 2162 7800 ext 26 Sales: Dubai: Geraldine Chan Direct Line: +971 4 427 3628 Kuala Lumpur: Steve Stubbs Direct Line: +603 2162 7800 ext 55 Subscriptions: Dubai: Mithun Gangolli Direct Line: +971 4 427 3638 Kuala Lumpur: Siti Amilia Amir Amzah Direct Line: +603 2162 7800 ext 27