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IIFM to wrap up #Sukuk Al Ijarah #standard suite this year

The International Islamic Financial Market (IIFM) expects to finalise capital market related “Sukuk Al Ijarah” standard suite of documentation later this year. The Perpetual Tier 1 and Senior Unsecured Sukuk Al Mudarabah standard suite of documentation is currently ongoing and is expected to be completed by the end of the third quarter of 2019. The standard-setting body also started translation work on its standards and is expected to come out with French versions by early 2020 to cater for French language jurisdictions. It is also looking to develop training material for its standards in collaboration with consultants and training institutes to offer technically oriented workshops to the users.

#Malaysia Explains New Cap On Interest Expense Deductions

The Inland Revenue Board of Malaysia has released new guidance on restrictions to the deductibility of interest expenses. The rules are based on the recommendations of the OECD in Action 4 of its base erosion and profit shifting (BEPS) Action Plan. The rules are intended to prevent tax base erosion through the use of excessive interest expense deductions to reduce domestic tax. There are parts that have been customized based on domestic circumstances. The Malaysian rules cap allowable interest expense deductions at 20 percent of a taxpayer's income before interest, tax, depreciation, and amortization (EBITDA). Disallowed deductions for one year can be carried forward to the subsequent year.

Wahed Invest launches Shariah-compliant US equity ETF

Halal-focused investment firm Wahed Invest has debuted its first ETF – the Wahed FTSE USA Shariah ETF (HLAL US). Listed on Nasdaq, the fund provides exposure to US firms that comply with Shariah principles. The ETF is linked to the FTSE USA Shariah Index which screens the constituents of the parent FTSE USA Index to determine their Shariah status. The most notable sector difference between the FTSE USA Shariah Index and the FTSE USA Index is that the former has zero allocation to financials stocks (vs. 18.5% in the FTSE USA). Consequently, the index has a larger allocation to technology (28.6% vs. 22.0%), healthcare (22.2% vs. 12.7%), and oil & gas (13.1% vs. 5.0%). While there are a few Shariah-compliant ETFs listed in Europe, with issuers DWS and BlackRock offering products, the space is relatively untouched in the US.

Islamic finance a main pillar for the Islamic digital economy

Muslim countries are increasingly working on establishing an ecosystem called "inclusive Islamic digital economy."
Such a concept aims at combining the core sectors of what today constitutes the digital economy under Shariah compliance, besides Islamic finance and investment products, also e-commerce, food, transportation and logistics, the sharing economy, as well as lifestyle, travel and entertainment. Forecasts say that the global Islamic digital economy will reach an estimated value of $277bn as of 2020. This data suggests that the Islamic digital economy is going to be a huge opportunity for businesses in the future and cannot be ignored by any market player. In Islamic finance, micro-financing, co-investment platforms and online investment advisory are currently the most prevalent services. However, there is still accumulated demand for online incubation funds and start-up financing, including Islamic crowd funding.

How Islamic finance can build resilience to climate change

Worsening climate change impacts are having a negative impact on agricultural food production, livestock value chains and livelihoods. To tackle Sustainable Development Goal number 13, financial inclusion can be used as a tool to provide much-needed access to financial services. This in turn can help vulnerable communities break a vicious cycle to better prepare and cope with climate change shocks such as droughts or floods. Islamic microfinance institutions can fill a vital gap not met by conventional microfinance institutions by targeting pastoralists. A social collateral approach is taken by Crescent Takaful Sacco. The microfinance institution lends money to groups instead of individuals. This group-based lending approach is similar to the concept of asabiyah, otherwise known as social solidarity.

A Closer Look at How Religious Restrictions Have Risen Around the World

Over the decade from 2007 to 2017, government restrictions on religion increased markedly around the world. Social hostilities involving religion also have risen since 2007. The latest data of the Pew Research Center show that government restrictions have risen in several different ways. Laws and policies restricting religious freedom and government favoritism of religious groups have consistently been the most prevalent types of restrictions. Government limits on religious activities and government harassment of religious groups have also been rising over the past decade. However, interreligious tension and violence has declined markedly since the baseline year.

Draft Bill Proposes Ban On #Cryptocurrencies In #India

India is considering a ban on cryptocurrencies. A draft bill explains that a Digital Rupee, which will be issued by the Reserve Bank of India (RBI), would be approved as legal tender, while all other digital currencies would be prohibited. However, the ban does not apply to anyone using distributed ledger technologies (DLT) or other related technologies for experiments or research, as long as cryptos are not being used for payments. The proposed penalty for violating the ban would be a fine or up to 10 years’ imprisonment, or both. The news comes after reports that RBI has been developing a blockchain platform for banking in its R&D branch. However, RBI has denied it had any involvement in the proposed legislation.

ZICO Shariah lays groundwork to transform #Indonesia into an Islamic economics hub

Indonesia's Shariah advisory services provider, ZICO Shariah is planning and drafting the Islamic Economic Masterplan for 2019-2024 for the world’s largest Muslim country. Led by a team of economics experts, the masterplan project included 50 Indonesian and Malaysian consultants. It focuses on 14 areas of interest including halal food, tourism, and fashion, Islamic banking and capital markets, small and medium enterprises, digital economy, and social finance. The formal launching of the final masterplan took place at a significant Islamic economy event in Bandung on 26 April 2019 and in Jakarta on 14 May 2019.

#Malaysia’s position in the #fintech race

According to the Fintech Malaysia Report 2018, Malaysia had 166 fintech companies operating in the country as at July last year. Payments and e-wallets made up the majority at 19% and 17% of the fintech players respectively, followed by cryptocurrency players (12%) and crowdfunding companies (6%). While Malaysia appears to be well ahead of Vietnam and the Philippines in the fintech race, it’s still nowhere near Indonesia. Mohammad Ridzuan Abdul Aziz, president of the Fintech Association of Malaysia (FAOM), believes that instead of viewing fintech as a race against other countries, the focus should be on collaboration between the key stakeholders. He added that the government also provides a variety of monetary incentives and support programmes for start-ups, and is now recalibrating various agencies to improve awareness and efficiency.

Libra de Facebook : une question de "sécurité nationale" pour le Trésor américain

La future cryptomonnaie du géant des réseaux sociaux pourrait être "mal utilisée pour blanchir de l'argent ou financer le terrorisme" s'inquiète le secrétaire au Trésor américain. Le promoteur du projet chez Facebook, David Marcus, sera auditionné au Sénat. David Marcus a déclaré ne pas être "très à l'aise" avec l'idée de monnaie digitale mondiale de Facebook qui aura "fort à faire pour rassurer" le Trésor et la banque centrale américaine, le Fed. Marcus avait balayé les sujets réglementaires, faisant valoir que l'Association Libra ne serait pas en contact direct avec les consommateurs et que ce serait aux portefeuilles numériques en Libra, comme le futur Calibra que compte lancer Facebook, qui devraient être régulés, notamment au titre des obligations de connaissance client et de lutte contre le blanchiment.

ACCA hosts Dr Amjad, founder of Islamic micro finance

Dr Muhammad Amjad Saqib, the founder of the Islamic micro finance company, Akhuwat, met with Alan Hatfield, executive director for strategy and development at ACCA London headquarters. In Pakistan, micro finance is proving popular amongst the growing SME sector. The country’s SME development authority calculates that nearly 90% of companies are SMEs, most of them operating in the informal sector, so the demand for micro finance is also growing. Akhuwat has opened over 850 branches in 486 cities/towns across Pakistan, enabling over 3.5 Million families to become self-reliant by extending interest-free loans worth more than £400 million. Dr Saqib's latest initiative is called Akhuwat University, which will provide higher education without any tuition fee to support the upward social mobility in the country.

Bahrain Islamic Bank Swiftly Ready to Launch Open Banking Services

Bahrain Islamic Bank (BisB) announced the launch of open banking services starting from 1st of July 2019. This is the result of the Central Bank of Bahrain (CBB) and its directive to integrate all retail banks in the Kingdom with FinTech companies. The open banking services features two types of services. The Account Information Service grants customers access to their bank account data from different banks through a single unified platform. The second service entails transfers between different accounts through a single application. According to BisB CEO Hassan Jarrar, Open Banking is a game changer, offering new online payment channels without the need for credit cards or debit cards.

Reflections on legal barriers to cross-border #philanthropy in Europe

The European Union has rules implementing a single market for for-profit activities while nonprofit, philanthropic activities lack any comparable system. There is increasingly a 'closing space' for civil society organizations engaged in cross-border activities. The legal barriers to cross-border philanthropy represent complex issues in Europe, especially since they reflect the larger division over the extent of European integration and union. Addressing them therefore requires diligence, creativity, and an appreciation of the larger political context. The European organizations have all of these characteristics.
It is their efforts that have led to growing support for philanthropy, as demonstrated most recently by the European Philanthropy Manifesto and the European Economic and Social Committee’s opinion on 'European philanthropy: an untapped potential'.

Wealthy #philanthropists call on themselves to pay more tax

A group of wealthy Americans have written an open letter to the 2020 presidential candidates in support of a wealth tax. The letter is signed by 20 individuals including philanthropist George Soros, Facebook’s co-founder Chris Hughes, Disney heiress Abigail Disney and Blue Haven Initiative co-founders Liesel Pritzker Simmons and Ian Simmons. The group outlined six key reasons why they are in favour of a wealth tax, including using it to fight climate crisis, boosting the economy, improving public health and strengthening freedom and democracy. While the letter refers to arguments against a wealth tax, the signatories claim these are mostly technical and often overstated. The letter further shows that polls indicate that higher taxes for the wealthy is politically popular.

MIDF keeps mum on Al Rajhi #merger talks

Malaysian Industrial Development Finance (MIDF) remains tight-lipped about its negotiations with Al Rajhi Banking and Investment Corp (Al Rajhi Malaysia). Both banking groups announced on Jan 10 this year that Bank Negara Malaysia’s approval had been secured to commence talks on a potential merger. However, both parties failed to reach an agreement past the March deadline. The companies then requested for an extension and were given another three months, up to June 27 this year. A merger of the two banks would result in a combined banking group with RM13.17 billion in assets. The merger with Al Rajhi Malaysia will allow MIDF to become an Islamic financial institution as it currently does not have an Islamic banking licence. MIDF brought in RM76.86 million in revenue and RM12.11 million in net profit for 1Q19.

Why we need to embrace Islamic finance

In the Philippines the Senate approved a bill authorizing the expansion of the Islamic banking system, which shall be under the supervision of the Bangko Sentral Pilipinas and regulated by the Monetary Board. This measure can support families affected by humanitarian crises so that they may access formal banking systems and become more financially secure. Last May was the second anniversary of the Marawi siege; violence and conflict displaced 98% of the total population of the city. Recovery has been slow and full of challenges, particularly for those who could not access financial services. Agencies involved in the rehabilitation of Marawi conflict-affected communities can maximize assistance by considering an alternative financial system such as Islamic finance.

Moody’s upgrades AHB Sukuk Company Ltd.’s #sukuk programme to (P)A1 and its USD500 million senior note to A1 following guarantee by Abu Dhabi Commercial Bank

Moody's Investors Service upgraded to (P)A1 from (P)A2 the provisional foreign currency senior unsecured MTN rating of AHB Sukuk Company Ltd. The AHB Sukuk Company is a special-purpose vehicle established in the Cayman Islands by Al Hilal Bank. Moody's also upgraded to A1 from A2 the backed senior unsecured rating on AHB Sukuk Company Ltd.'s outstanding USD500 million senior unsecured note due 19 September 2023. The outlook on AHB Sukuk Company Ltd.'s senior unsecured note remains stable. The upgrades are driven by the issuance on 2 July 2019 by Abu Dhabi Commercial Bank (ADCB) of a guarantee covering AHB Sukuk Company Ltd.'s sukuk programme and its USD500 million senior note, and follows ADCB's acquisition of Al Hilal Bank on 1 May 2019.

Noor Bank raises over Dhs500m for Azimut’s fixed maturity fund

Noor Bank entered a successful collaboration with Azimut (DIFC) to launch the largest US-dollar Islamic fixed maturity plan (FMP) in the UAE under a Dubai International Financial Centre (DIFC) domiciliation. Raising Dhs507 million in subscriptions within two weeks of its launch, the FMP that will mature in four years is set to provide an income of 5% per annum through investing in sukuk portfolio. Noor Bank began operations in Dubai in 2008 as an Islamic financial institution. Azimut is Italy’s leading independent asset manager (active since 1989). The parent company Azimut Holding was listed on the Italian stock exchange on 7 July 2004 (AZM.MI) and, among others, is a member of the main Italian index FTSE MIB.

Banks' lending activity remains robust

According to CIMB Group Holdings group CEO Tengku Datuk Seri Zafrul Aziz, banks are doing as much as they can to balance lending to customers with responsible financing. He said commercial banks would want to grow their loans to maximise returns, but that must always be balanced against the banks’ risk metrics. To promote financial inclusivity, CIMB Bank Bhd and CIMB Islamic Bank Bhd have set aside at least RM12bil for the B40 group to access to facilities such as home, automotive, Amanah Saham Bumiputra and personal financing from 2019 to 2020. CIMB Bank and CIMB Islamic’s are assisting the B40 segment via the lowest-in-market financing rate of 2.9% per annum, under Bank Negara’s RM1bil Fund for Affordable Homes, to help those in the B40 group buy their first residential property. Based on data from Bank Negara, the industry’s loan growth rebounded slightly to 4.6% year-on-year in May from 4.5% in April, ending a five-month downtrend.

#Malaysia’s Islamic fund manager BIMB signs UNPRI to incorporate ESG into investments

Malaysian Islamic fund manager BIMB Investment has become an official signatory of the United Nations-supported Principles for Responsible Investment (UNPRI). BIMB Investment is the only bank-backed Islamic asset manager in Malaysia to be a UNPRI signatory. The UNPRI group works to understand the investment implications of environmental, social and governance (ESG) factors and supports its network in incorporating these factors into their decisions. BIMB Investment CEO Najmuddin Mohd Lutfi said that the company has integrated more than 250 ESG metrics in its investment process since 2015. The company currently manages over 1 billion Malaysian ringgit of ESG assets. At the moment there are around 2,300 signatories to the UNPRI. Other signatories from Malaysia include Xeraya Capital, Navis Capital Partners, the national retirement fund KWAP, sovereign wealth fund Khazanah, and Corston-Smith Asset Management.

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