» Standardizing regulation 'key to Islamic finance'

 Standardizing regulation 'key to Islamic finance'
LONDON: Standardizing regulation of the Islamic finance industry is vital, the Crown Prince said.
“This will ensure universality of application to keep the industry attractive, reliable, and trusted, and able to meet the ever-growing demand," said His Royal Highness Prince Salman bin Hamad Al Khalifa, Crown Prince, Deputy Supreme Commander, First Deputy Premier and Economic Development Board (EDB) chairman in his speech to the ninth World Islamic Economic Forum (WIEF) which was opened in London yesterday.
The Crown Prince encouraged the development of new asset classes within Islamic finance, covering private equity, infrastructure and liquidity products, while also calling for greater supply of existing products such as sukuk.
To facilitate the growth of the industry, the Crown Prince called for existing organizations to adopt and respect the standards.
"We have organizations like the Accounting and Auditing Organization for Islamic Financial Institutions and others, capable of aiding the industry's development by protecting its fundamental attribute - the ability to deploy capital for Muslim and non-Muslim investors in a Sharia-compliant fashion," said his Highness.

$124bn to enter UAE Islamic banking by 2015
Funds worth about $124 billion could potentially enter the UAE Islamic banking system by 2015; creating approximately 7,800 new jobs at Islamic banks if the current asset concentration ratios remain similar, stated the  report.
Additionally, 500 jobs will be created in anther Islamic financial services segments, according to a recent analysis by Tahseen Consulting, a specialized advisor of strategic and organizational issues in the Arab world.
By 2015, the Islamic financial services sector will have been doubled in size from approximately 10,000 employees currently to 20,000, stated the report released at a senior level debate organized by Dubai International Academic City (DIAC) in collaboration with the organizers of the Global Islamic Economy Summit, Thomson Reuters.

Islamic finance has recently received growing attention in Indonesia. Its resilience during the global financial crisis has positioned the Sharia-based financial system as a strong alternative to commonly acceptable conventional banking system.
Indonesia started to tap into Islamic financial sector in 1992, after acclaiming dual banking system which allows the establishment of Bank Muamalat Indonesia as the first full-fledged Islamic bank in November of that year.
Since then, Islamic banking sector has experienced rapid development, doubling the rate of growth as quickly as their conventional counterparts. As of now, there are eleven full-fledged Islamic banks, 23 Islamic banking units (special unit in conventional banks serving Sharia banking operations) and 153 Islamic rural banks (BPRS).

Zimbabwe is set to introduce Islamic banking, which has certain rules on profits and additions, as it seeks to attract its Muslim community, which says it wants to contribute to the country's economic revival.

Talks between the central bank, the Finance ministry, and the Islamic community have started with an official from the Muslim community, Ashirai Mawere saying their members are eager to boost the southern African country's economy through Islamic funds.
Simultaneously, the international Islamic finance sector is expected to be worth $2,6 trillion within four years.

Muscat: Takaful Oman Insurance, which has opened its initial public offering (IPO) of OMR4 million for subscription on October 30, expects to achieve break-even by the end of the first year of operation and plans to distribute dividend from fourth year onwards.
Top-level officials of Takaful Oman, who addressed the media here yesterday, said that the company would start operations immediately after completing all formalities that include consultative general meeting.
The company's initial public offering presents an opportunity for widespread participation offering 40 million shares at 102 baisas per share, including a nominal value of 100 baisas and two baisas as issue expenses.
Takaful Oman -being one of the first companies in the Takaful insurance space in Oman-  has the strong backing of established promoters; the expected growth of the sector itself, the company's robust business strategy and product portfolio and a strong distribution channel serving customers through multiple distribution channels and business units, a network of branches, brokers, and Bank of takaful.

The Saudi Arabian and Malaysian cooperative and Islamic insurance (takaful) markets are the only two that are seeing growth especially in new policies and profitability.
In the shocking report “Global Takaful Insights 2013” issued by Ernst & Young-the international ccounting and advisory firm- it has stated that apart from Saudi Arabia and Malaysia, “most other takaful markets and smaller Takaful operators appear to be struggling.
The compound annual growth of GWC, according to Ernst & Young, decreased to an alarming 16 percent in 2012 from 22 percent year-on-year from 2007 to 2011.Saudi Arabia uniquely operates a cooperative insurance model, which is Shariah-compliant.

A gap between global supply and demand for Islamic bonds is likely to peak in 2014 and then shrink gradually for several years as issuance grows, a study by Thomson Reuters predicted.
Potential demand for sukuk among cash-rich Islamic investors in the Gulf and Southeast Asia has exceeded supply for at least several years, analysts estimate.
Companies and banks have taken time to acquire the expertise to issue sukuk, while many companies have been repairing their balance sheets since the global financial crisis and have not been in a hurry of issuance.
The imbalance has helped to produce very low yields for sukuk at issue — in some cases, sukuks have priced inside conventional bonds.
The image may start to change after next year as issuance picks up, the report said. It forecasts that the supply-demand gap would rise to $229 billion in 2014, from $211 billion this year, but then edge down to $187 billion by 2018. The report assumes among other things that Islamic institutions aim to allocate around 30 percent of their funds to sukuk.

Oman is perceived to be the most attractive emerging Islamic finance market for sukuk investment, a survey says while Saudi Arabia and the UAE lead in terms of GCC sukuk issuances for 2013, looking ahead, Oman is interestingly perceived to be the most attractive emerging Islamic finance market for sukuk investment, according to Thomson Reuters Zawya Sukuk Perception and Forecast Study 2014. In fact, the major organizers expect that most sukuk will be issued from the Sultanate.
“Oman simply doesn’t appear within the balance sheets of most Islamic financial institutions unlike the other Gulf states which have had longstanding Islamic finance investment opportunities” Saed Farouk, the Global Head of Islamic Capital Markets at Thomson Reuters, told Gulf News in an email. “Hence, there is a natural desire to invest and allocate some portion of their investment to Oman.”
Besides, he added that Oman has many infrastructure projects in the pipeline and the government has indicated that it would utilise sukuk structures to fund these projects and support the industry in its initial years. In addition, the country has significant liquidity which remains untapped by local investors who would support the issuance of sukuk.