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INTERVIEW: Major Gulf sovereign wealth funds gear up for ESG investing

Four Gulf countries are laying the groundwork to be aligned to Environmental, Social, and Governance (ESG) standards through their sovereign wealth funds’ undertakings. Abu Dhabi Investment Authority (ADIA), Kuwait Investment Authority (KIA), Qatar Investment Authority (QIA), and Saudi Arabia’s Public Investment Fund (PIF) are among founding members of 'One Planet Sovereign Wealth Funds'. The aim is to accelerate integration of financial risks and opportunities related to climate change in the management of long-term asset. A recent Moody’s report said that ESG risks are becoming more significant as regulatory policies, market developments and social attitudes change rapidly, putting the banks under growing pressure to integrate ESG considerations into their investment decisions.

IIRA reaffirms credit ratings of Al Baraka Banking Grp, upgrades its Fiduciary Score to highest among Islamic financial institutions in region

Islamic International Rating Agency (IIRA) has reaffirmed the international scale credit ratings assigned to Al Baraka Banking Group (ABG) at BBB+ / A3 . IIRA also reaffirmed the national scale ratings of ABG at A+ (bh) / A2 (bh) with a Stable outlook. The Group’s fiduciary score has also been raised to the higher level of “81-85”, the highest among the Islamic Financial Institutions in the region. IIRA recognized the substantial contribution of the Group’s four key subsidiary banks based in Turkey, Jordan, Egypt and Algeria. Moreover, IIRA said that the Group benefits from a wide geographic diversification with most jurisdictions possessing a low economic correlation, thereby improving the overall risk metrics.

Ant Financial-backed startup Dana rides #Indonesian #fintech wave

Fintech startup Dana is looking for another strategic investor. Currently backed by Ant Financial, Dana offers services such as QR-code based transfers and online credit-card transactions for individuals as well as merchants. Dana is considering expanding its footprint in Indonesia by offering other financial services such as insurance. The startup is wary of becoming labelled a shadow bank operating outside of regulatory jurisdictions. Indonesia’s internet economy, the largest and the fastest growing in the region, reached $27 billion in 2018 and is poised to grow to $100 billion by 2025, according to a report by Google and Temasek Holdings Pte.

Bank Islam top domestic #sukuk #broker in 1H19

Bank Islam Malaysia is the top domestic sukuk broker for the first half of the year (1H), after helping issue US$5.15 billion (RM21.21 billion) worth of sukuk in the market. Bank Islam’s market share of the sukuk issued accounted for 29.03% of the total ringgit-denominated sukuk issued in the 1H. The bank advised on 10 issues for the period. The second-largest issuer in the 1H is Maybank Investment Bank, which was ranked first last year for the same period after having helped issue US$4.1 billion of sukuk. Analysts expect the local sukuk market to remain active driven by capital raising by government and corporates for major construction works such as the East Coast Rail Link, Light Rail Transit Line 3 and Mass Rapid Transit Line 3 projects.

Lendo enlists SRB for Sharia supervisory services

Saudi-based Lendo has engaged Shariyah Review Bureau (SRB) to help support its Shariah supervisory function by overseeing its offerings, crowdfunding structures and operations. Lendo has been working to acquire its license in Saudi Arabian Monetary Authority’s sandbox regulation while continuing to focus on developing peer to peer funding practices in light of Shariah compliance. Lendo CEO Osama Al Raee expects Shariyah Review Bureau to contribute to the further optimization and improvement in Sharia supervisory oversight and optimize their Sharia risk management system. SRB founder Yasser S Dahlawi said the focus will be to evaluate and optimize existing Sharia control procedures and business processes to ensure well-grounded Sharia structural guarantees.

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.

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