Issue 30

So if we call them Islamic banks, what about the banks we already have? Are they infidel banks? was what deposed Libyan president Muammar Gaddafi is reported to have said to Farhat Bengdara, his central bank governor dismissing the idea of developing Islamic finance in the country. But with Gaddafi and Bengdara gone, what are the prospects for Islamic finance in new Libya? Not bad, albeit with caveats Mohammad Khan, head of Islamic finance for PwC, told The Islamic Globe. He said: Libya is currently still going through a period of political instability. Once there is political stability there is no reason why Libya couldnt develop its Islamic finance potential. There had been some tentative steps towards the introduction of Islamic finance in Libya with the award of a license to operate a Shariah compliant bank to Qatar Islamic Bank, but this was a month before Libya descended into civil war. QIB did not respond to a request for comment about its proposed operations in Libya or the status of its license under the Gaddafi regimes replacement, the National Transitional Council. Under Gaddafi the banking system operated under very tight restrictions as the regime

Libya beckons
The futures bright: With Gaddafi deposed IF has room to grow in Libya

www.theislamicglobe.com

september 7, 2011

was keen on controlling the receipts from the estimated 1.6m barrels of oil pumped a day before the uprising started. For the average Libyan on the street, the banks offered a basic service of cash deposits and withdrawals. As one GCC-based banker, originally from North Africa, told The Islamic Globe off the record: Credit cards and asset management products were provided exclusively by private banks to a favored niche of the population. So before Libya even explores Islamic banking, its got to develop and modernize the whole banking system. Part of this modernization could be the

introduction of Islamic finance. The fundamentals for Islamic finance in Libya, however, are strong simply by the nature of the fact that the country has a population of 6.6m, most are Muslims, many are devout and well educated and compared to the rest of Africa enjoy a fairly high per capita income level. The personal view of another Islamic banker based in the GCC but originally from North Africa was: I believe that Islamic finance will grow in Libya following the end of Gaddafis regime, but it will take some time. I guess the situation will be very similar to what happened in Iraq years back. However, the consensus view

from the Islamic bankers The Islamic Globe talked to from the GCC, UK, Malaysia and Africa was that if Islamic finance is going to happen in Libya it needs at least four things to occur. First, large Islamic finance corporations need to invest there soon to help with the reconstruction. Some analysts predict that the civil war has done at least $15bn of damage to the countrys infrastructure so far. Second, the country needs to review, update and amend the banking sectors regulatory regime, international compliance, ICT and procedures. This needs doing whether Islamic finance is going to be a part of Libyas future on not. Third, the central bank must invest in Islamic finance human capital by bringing in foreign advisors and developing its own home-grown Shariah scholars and bankers. And finally the banking sector, led by the Central Bank, needs to raise awareness and education amongst the Libyan population about Islamic finance. As Harris Irfan, head of Dubai-based Cordoba Capital told this newspaper: the success of Islamic finance must depend on demand from the man on the street, not the Continued on p3

CIMB Islamic ups group contributions

BADLISyAH Abdul Ghani, CEO of Malaysias CIMB Islamic has said that his Islamic banking unit will be increasing its contribution to its parent companys loan book this year. Currently the Islamic subsidiary contributes 13.8% to CIMB Groups loan book, but Ghani said he was confident that this would increase to between 15% and 19% of the total. Ghani was talking to reporters at Halfest a Halal business expo taking place in Kuala Lumpur. He was also bullish on the outlook for the Malaysian economy, despite global fears of a double-dip recession as the economy was growing on the back of domestic demand. He predicted a boom for the countrys SMEs one reason why CIMB Islamic was involved in Halfest and the greater Halal business in Malaysia something he describes as a marriage between faith and economics.

INSIDE
P3 WHO NEEDS BANKS WITH BITCOINS? P5 LETTER FROM AMERICA P6 EDITORIAL: INSIGHT AND VIM PLEASE P8 MIzuHO MOVES IN P10 GFH STILL IN THE RED

The Islamic Globe

september 7, 2011 3
Continued from front page

Who needs banks Libya beckons with Bitcoins?

release. By the end of August it had entered into three Musharakah JVs, made 26 loans and paid its first dividends to shareholders all structured and transacted without regulators or institutional intermediaries. The Islamic Bank of Bitcoin resides exclusively online using the virtual peer-to-peer currency bitcoin. Bitcoin is the brainchild of computer programmer Satoshi Nakamoto widely believed to be an alias who in 2009 released software to facilitate the generation and exchange of bitcoins. Install the free open-source software, run it while on the internet, and you will be connected to the decentralized global network of bitcoin users. Each time your computer solves a cryptographic puzzle you earn 50 bitcoins, or BTC. A pair of unique mathematically linked keys provide security and identification. With each transaction the

new Islamic bank opened late June without so much as the aplomb of a press

software connects your private key to the other partys public key. The transaction is verified by the online network using a computation that matches both parties private and public keys. Once verified the transaction is stored on a global public registry. you could say the currency is generated without any work done but like traditional currencies, BTC attains value because people want to exchange it for something else. According to London-based Donald Norman, owner of bitcoin exchange platform Intersango.com, there are currently approximately 7.2m bitcoins in circulation, a current value of $60m. The online economys infrastructure and network has grown so rapidly that you can now exchange BTC for traditional currency. The growing list of mer-

chants accepting BTC, although primarily based online, also includes offline businesses. Malaysian student Hasif Uzir told The Islamic Globe that the BTC community has confidence in the Islamic Bank of Bitcoin, and he bought shares when the bank was listed on the bitcoin stock exchange GLBSE.com. China-based owner of GLBSE, James McCarthy, said the approximately 20 listed companies all received startup capital in BTC, with many paying dividends to shareholders. The bitcoin user who started the bank is choosing to remain anonymous, surfacing only when the bank is fully ready. For now the bank continues to offer 0% short-term loans for amounts of 2 BTC ($16.48) to 5 BTC ($41.20). Borrowers pay a small gratuity, while other sources of revenue include donations and returns from JVs. EAA

Brunei aims to be Halal Hub

FOR some time Brunei has been trying to diversify its economy away from hydrocarbons, which it has in abundance, and into more service-based industries. Its initial forays into financial services have been unspectacular although it is one of the few countries anywhere in the world to issue Shariah compliant debt instruments without first going through the learning process of issuing conventional debt. The tiny nations latest endeavors have been in the realm of developing a Halal brand or chop that could be used in a certification process by manufacturers of products aimed at a devout Muslim audience. Halal certification would guarantee that food products were fit for consumption by Muslims. What Brunei has identified is a cynicism amongst Muslim consumers about whether or not products that are labeled Halal have actually been produced and packaged in a Halal manner. This latest initiative goes under the name Brunei Halal. Brunei believes that it already has trusted Halal status and is one of the few countries outside the Middle East to have an internationally recognized Halal certifying body. It wishes to leverage this brand to build a multi-million dollar industry for Brunei. The Halal Journal estimates that the industry was worth $1.2tr in 2010 globally

with a customer base in the region of 1.8bn people. Noel Shield, interim chief executive officer of Ghanim International Food Corporation, the company handling the brand declined to speak to The Islamic Globe saying that Brunei Halal was, currently undergoing a substantial development program and that he would prefer to keep things under wraps until later. Last month Philippines trade secretary Gregory Domingo indicated Manila was looking to Brunei for help in a bid to capture a share of the global Halal industry. Domingo said: One of the things well have to do is talk to the Brunei government to see if they can help.

ultra-high net worth builder of seven star skyscrapers. The man on the street knows that Riba is not allowed; he just doesnt know how to avoid it. The GCC-based Islamic banks might have competition in what is a blank slate market from Africa though. The fastest growing region in the world for Islamic finance is sub-Saharan Africa, and although many of the new pioneers of Islamic finance are from fledgling organizations, they are fast learners and looking to exploit new markets outside of their traditional homelands. Libya offers bankers from east, west and southern Africa great opportunities. Amman Muhammad, managing executive of Absa Islamic Banking in South Africa, told The Islamic Globe: Islamic finance has enjoyed strong growth in sub-Saharan Africa underpinned by economic, political and regulatory stability. While conflict and uprisings pose immediate challenges to any economy, the African Islamic finance industry remains one of the faster growing industries, driven by the demand from large Muslim populations. Libya was one the fastestgrowing economies in Africa and the Middle East and challenging all odds to attract foreign firms to participate in the development of its private sector. During that period, the political regime of Gaddafi was the main obstacle. Today, with a new regime and global support the re-construction of Libya and the promise Libya offers especially in the high value hydrocarbons sector will attract international investors. Islamic finance can play a vital role in the rebuilding of Libya. As Haissam Arabi, CEO of the UAEs Gulfmena Investments, said: Institutionalization, democracy and a better distribution of wealth should lead to further development of Arab capital markets and as a result the demand for Islamic finance and Shariah compliant products in Libya should increase as the demand for investment products will increase in general. JF

The Islamic Globe

september 7, 2011 5

LETTER FROM AMERICA

S-BASed Reit UdR, has expanded its joint venture with Kuwait Finance House (KFH) by acquiring a 217-unit luxury apartment community in Arlington, Virginia Twenty400 for $84m in cash and debt. This is the second buy by the JV since it began two years ago with the total investment made being $132m. The deal included $49.5m in interest-only debt from Fannie Mae, alongside equity contributions of $24.2m from KFH and $10.4m, under the 70:30 terms of the joint venture. The Fannie Mae debt will mature in five years and carries a profit rate of 3.39%, 250bps over comparable maturity T-bonds. A spokesman for UDR confirmed to The Islamic Globe that all the debt used to finance the joint ventures acquisitions was Shariah-compliant, but would

Fannie Mae in KFH Arlington deal

The original expectation by KFH was to become fully invested within a two-year period
Arlington: Home to the Pentagon and now a beachhead for Islamic finance in the Washington, DC area. not elaborate on the structure used. Its first acquisition was a $43m Portico at Silver Spring Metro The original expectation by KFH was to become fully in the Maryland suburbs in May 2010. However, UDR said it has invested, up to $450m in total investment value, within a continued to make progress on deploying the capital, but did two-year period. yet now, two years from the August annot provide a set period over which the investments would be nouncement of the JV, it only has two properties, both located completed.

BLAKE

GOUD

blake@eaglemontmedia.com

So far, the JVs acquisitions have focused on the DC Metropolitan area, but there is nothing in the agreement limiting geographical scope. UDR said that it is monitoring several markets for potential acquisition targets, but favored the DC market because it has been very resilient with job creation and stable rents, in contrast to poor employment markets and falling rents in other areas since the end of the financial crisis. If UDR is right, then it may have found the first good thing to come out of Washington, DC in a while.

Building skills for Canada in Dubai

THe Canadian University of dubai (CUd), which describes itself as: A portal to Canadian education, has recently begun to offer an Islamic banking-focused MBA. The program, which will be launched later this year, is focused on the domestic market, but with the strong links between CUd and several universities in Canada, where there is an acute shortage of people with Islamic banking skills, it seem likely that the program will attract Canadians looking to build skills in Islamic finance to take home to Canada.

Unicorn sells Victon to OnCore

UNICORN Investment Bank, a Bahrain-based Islamic investment bank is continuing its exit from the US with the sale of its 80% ownership of the complex electronics manufacturing services (EMS) company Victron, a prominent US-based EMS company. The exit of Unicorn from the US market was attributed to a decision to focus on the companys core markets in the GCC, according to a press release.

New offering: CUD unveils Islamic banking-focused degree

6 September 7, 2011

The Islamic Globe

The Globe Says Must try harder

editorial@eaglemontmedia.com
I have a plea to make. Now that Eid is behind us we are back into the working part of the year, which means that the Islamic finance conference circuit is starting up again soon. Indeed The Islamic Globe will be present at a number of events in the coming months in Dubai, Bahrain, Kuala Lumpur, Abu Dhabi and London. The plea is a simple one and is geared towards speakers at these events: can you please put some real effort into your presentations? The industry is on the cusp of something major and attendees at conferences deserve something better than rehashed twaddle that many speakers have been peddling for the past four years. Add some truth. Some insight. Some vim. Some vigor. If you are privileged enough to have been asked to speak it is because someone thinks you have something to say. Prove them right.

North Africa: Revolution or Evolution? w

ITH the domino effect of regime change eventually toppling Muammar Gaddafi in Libya, as The Islamic Globe reports this By John Foster week, the question arises is this a good thing? He follows the former president of Egypt, Hosni Mubarak and Zine el-Abidine Ben Ali, president of Libyas other neighbor Tunisia into political exile. So the Arab Spring has sprung and with it promises, or so analysts predicted, of another revolution, this time in Islamic banking across the Middle East and North Africa. However, come the onset of fall 2011, is Islamic banking in the MENA region, especially the NA bit of that acronym, any better than in the spring? Id say no. Although there is huge potential, especially given the demographics of the NA region, there is a long way to go to create a functioning conventional finance system, never mind an Islamic banking system. Now would be the time for the industry to strike, but given the ongoing political, and arguably economic turmoil in the ME part of the equation there has not been a concerted push to develop Islamic finance in the NA region. One would have expected Bahrain to be in the vanguard of this expansion of the industry, but Bahrain is itself experiencing political and civil turmoil, the symptom of which has been an erosion of the Business-friendly Bahrain faade it has striven so hard to create. In fact some of the less kind economic and regional analysts The Islamic Globe has spoken to since February 14 have been predicting the end of Bahrain as a financial hub. The Islamic Globe does not share this prognosis, and believes that Bahrain still has a lot to give to the global Islamic finance industry. However, its got a mountain to climb if its to fight off local competition from the likes of Dubai, Qatar, Kuwait and Saudi Arabia as thought-leader and rainmaker in terms of Islamic finance; never mind vie with Malaysia for the leadership of the emerging markets of Islamic finance in Africa, Central Asia and South East Asia; and if successful will only put it back to where it was before February 2011. As for the rest of the ME, despite a shared language and religion and economic ties with many North Africans working as expats in the Gulf states, the two regions are distinct and separate and the ties that bind the two regions intangible. Despite the supposed political changes in the region and the argument that the Arab Spring will see the development of moderate democratic Islamist governments, an Islamic finance industry springing up in the mold of Islamic finance in Dubai or Qatar is unlikely, and if the industry is going to take root and grow in the NA region, it will have to be from the bottom-up, with a firm foothold in the retail space. This would be the best model, as it would offer greater sustainability. However starting at the ground level is the hardest way to grow a business and it remains to be seen if there is a political will, economic rationale or popular call for the introduction of Islamic finance in Egypt, Libya and Tunisia. But then again, this time last year Gaddafi, Mubarak and Ben Ali were the entrenched strongmen of the region.

The Puzzler
Answers to The Puzzler will be available from September 13 at www.theislamicglobe.com. Please send an email to the puzzler@ eaglemontmedia.com for a chance to win a copy of Case Studies in Islamic Banking & Finance by Brian Kettell.
Across 2 Join Up (6) 4 Loan [IF] (5) 7 Spoken, or with the mouth (4) 8 Painful/inflamed (4) 9 Loss of voice (7) 11 Gambling [IF] (5) 12 Approval (8)
1 4 5 6 7 2 3

13 Observed (4) 15 Supernaturally perceptive (7) 17 Particle (4) 18 Economic Transaction [IF] (8) 20 Wasteful Spending [IF] (6) 21 A contract between two people [IF] (7) 22 Immoderateness, exaggeration & waste [IF] (5) Down 1 The whatever years (5) 3 Act of piling-up (8) 4 Head Honcho (7) 5 Thriving [IF] (5) 6 Debt [IF] (4) 9 Downpayment [IF] (5) 10 Political union of Germany & Austria (9) 14 Wielded (7) 16 The World (5) 17 Tangle (3) 19 Commission/fees [IF] (2,4)

8 9 11 12 10

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eAGLeMonT MedIA dUBAI London MeLBoURne BRUneI John Foster Managing Editor & Founder john@eaglemontmedia.com +44 7540 268 784 Paul McNamara Editor, Founder & CEO paul@eaglemontmedia.com +971 505743263 or +61406309736 Kunal Wadhwani Publisher & Founder kunal@eaglemontmedia.com +971 55 5537290 Shaun Hoon Marketing Director & Founder shaun@eaglemontmedia.com +673 223 3630 or 717 4286

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8 September 7, 2011

The Islamic Globe

SLAMIC private equity has been a rip-off over the last 10 years, where: much of it was fraudulent, or nearly so. Investors were duped. A lot of money was lost on one side, but gained unscrupulously on the other, so says John Sandwick, a Geneva-based Islamic wealth and asset management specialist. Sandwick [pictured] thinks that the growth of Islamic private equity to a $50bn industry by the end of 2007 was a product of abundant cheap credit thrown around in the run up to the global financial collapse which led to the formation of a vast bubble. He said: This bubble collapsed. There is going to be

Islamic PE a fraud
I
a lot of pain for a long time. During this painful period investors are gun shy. They cannot tolerate more high-risk investing. In conventional finance private equity accounts for less than 3% of assets under management, whereas mutual funds make up 35%. In the

Islamic finance industry Shariah compliant mutual funds are also worth some $50bn and Sandwick asks if private equity is a small niche category in the conventional world, why did it take an unprecedented position in the Islamic banking world? He thinks it was part of a general public madness that pervaded at the time with the growth and development of the asset class being unsustainable. He concluded: I am praying Islamic private equity does not return any time soon or at least never returns to its over-hyped, over-glorified position of the past. It is a marginal area of banking and should remain there. JF

BIB & BMI in SME tech drive

BAHRAIn Islamic Bank (BIB) and BMI have gone into partnership with Tamkeen in an initiative to promote the ICT uptakes by the private sector in Bahrain to transform their businesses and increase their productivity. Information and communications technology spending in the GCC is low in comparison to the worlds largest industrialized countries and is vital for business to grow in a digitized 21st century world. The joint venture is targeting 50 local firms with its ICT initiatives. Mohamed Amin, Tamkeens private sector support manager, said: ICT applications improve information and knowledge management inside the firm and can reduce transaction costs and increase the speed and reliability of transactions for both business-to-business (B2B) and business-toconsumer (B2C) transactions. In addition, they are effective tools for improving external communications and quality of services for established and new customers. The SMe sector in Bahrain has found it difficult to upgrade its technology and communications facilities to compete in a globalized marketplace due to the lack of financing options and limited or non-existent budgets for ICT. To help address the need for local ICT investment, the JV has established a program to help bridge the financial gap by providing financing at a 0% profit rate and up to 25% discount on the principal amount.

BLME bullish over UK property deal

UK-based Bank of London & The Middle East has announced the agreement of a 14m ($22.6m) facility with The Brewery Square Development Company to develop phase two of an 11-acre site in Dorchester, Dorset. The project, the redevelopment of the site of the former Eldridge Pope Brewery, is in partnership with Resolution Property and Waterhouse. The development will comprise of six phases. Phase one is already complete. Phase two will be comprised of 64 residential units and 14 commercial units. Jervis Rhodes, head of corporate banking for BLME told The Islamic Globe: Despite the well-publicized real estate collapse since 2008 and the scaling back of new development property, the UK is still a vibrant market if you can find the right deals. BLME is willing to look in all markets in all parts of the UK and this deal proves we can find exciting projects, structuring finance in a Shariah compliant manner and compete toe-to-toe with the larger conventional players in finding great opportunities for the bank and our clients.

Mizuho set to enter IF arena

JAPANS second largest financial service group, Mizuho is on the cusp of entering the Islamic finance arena. Keizo Ohashi, chairman of the banks Malaysian outfit told reporters in Kuala Lumpur that it had applied for an Islamic banking license from Bank Negara. Mizuho started its conventional commercial banking operations in Malaysia on Monday, its move into the third largest economy in South East Asia coming hot on the heels of opening shop in Indonesia last month. The entry of Mizuho into Islamic finance is a significant move, as for the last five years Japan has been exploring opportunities in the sector but no one has dared dip their toe in the water. Japan is still the largest financial trading market in Asia, but has no experience of Islamic finance and is increasingly finding itself supplanted, in banking terms in key Middle Eastern markets and closer to home in the Muslim-majority markets of South East Asia, by Malaysias Islamic banks. For more than half a decade the government bank, Japan Bank for International Cooperation, has led a research group comprising of Japans financial titans, which has worked to strengthen the countrys relationships with Islamic banks around the world. However with this move Mizuho has broken free of the collaborative effort, hoping for first-mover advantage.

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10 September 7, 2011

The Islamic Globe

dear diary,
I have never been so excited in my life! I am sitting in a posh three star hotel in Kowloon which is in Hong Kong! No, I am not on holiday; I am a core part of the Banks Sukuk Roadshow according to General Manager who is here with me. Well, when I say with me, General Manager, CEO and Chairman are in Hong Kong too but they are staying over on the island in a very old hotel called The Mandarin which doesnt sound half so much fun as the Leigh Marvins Garden Hotel where I am staying. I feel so honoured to be here. We all flew over together. Well, when I say together I mean on the same flight since there is no way, Jose that General Manager could have fitted into the seats in the economy section of the aircraft beside me since she is Quite Wide. And of course Chairman and CEO took their own little plane in order to save the bank money on the airfares. Even the flight was exciting since instead of cutlery we got to eat with little wooden sticks. you should try Eating Raspberry Jelly With Little Sticks! Its so funny! I shall be away from home for a whole week since we are seeing major investors in all the core markets and this means lots of travel. Sadly we are not going to London since I would love to have seen it, since I know it like the back of my hand from watching Mary Poppins (my favourite movie)! But perhaps the most exciting thing of the lot is that after we arrived in Hong Kong I went to a night market and I managed to get myself a Genuine Rolex Submariner with a Green Unidirectional Bezel for only $15. That was an incredible deal since the fellow selling it wanted over $100 but I managed to bargain him down. The Sukuk Roadshow itself was less exciting than I had hoped and mostly involved me handing out booklets, or prospectuses as we call them, to shabby looking men in dandruffy suits. Then some of the staff gave little speeches while showing PowerPoint presentations and then we all had Chinese tea and spring rolls. I found it quite hard casually to show off my new Green Rolex without spilling the Chinese tea all down my front but towards the end I got the hang of it. I was amazed at how many spring rolls General Manager could eat, and I think the Chinese waiters were quite astonished too since they ended up giving her a tray of her own followed by another. I chatted to her for a while, hoping that she would notice my new watch, but she was too busy chewing to say anything that I could understand. We leave tomorrow on the Sukuk Roadshow for Australia! Can you imagine? All those Koala Bears, Crocodiles and Lions and things! I shall be sad to leave this hotel, mind you, although it is a bit noisy and a bit cockroachy but it has so much life!
Follow Aboubakar online at www.theislamicglobe. com where he helps solve readers marketing problems

nCe the darling of the Islamic finance industry, Gulf Finance House is now an apocryphal tale of a remarkable rise and fall of an institution that over-extended itself with ambitious real estate adventures before the collapse of the world economy in 2008. The Bahraini banks latest results, an $11.2m second quarter loss, doesnt make easy reading for many who regarded GFH as the Blackstone of Islamic finance. The filing on the Bahrain Bourse reported that the second quarter losses were: mainly due to higher finance expenses and exchange rates. However, the banks backers might take some crumbs of comfort in that this time last year GFH was reporting a loss of $40.2m. But as they say, one swallow doesnt make a summer and the GFH team has a long way to go if they want to turn the performance of the bank around. The paring of the banks losses saw it turn a modest profit of $700,000 for the first half of the year with total income climbing 27% to $32.8m on the back of asset sell-offs, including exits from investments in Bahrain Financial Harbor, Qinvest and Saudi Real Estate Company which raised some $300m and the settlement of liabilities. And as The Islamic Globe reported in June, the bank was also casting around for help from the Islamic capital

GFH stays in the red

o
markets, issuing a $500m convertible Murabahah. However, past form has not diminished GFHs appetite for foreign ventures, with Esam Janahi [pictured], the firms executive chairman recently signing a partnership agreement with Wadhwa Group of India to develop the Mumbai Economic Development Zone. In July Janahi sold 7m of his GFH shares, valued at BD527,800 ($1.4m) to Al Ahlia Bahrain. Trading in GFH was suspended last month because the company had not disclosed its financial reports for the first half of the year in time. The bank had not responded to a request for comment by the time the newspaper went to press. JF

Public launches Sukuk fund

PUBLIC Mutual, Malaysias largest private unit trust company has announced that is launching a Sukuk fund. The new fund, one of three launches this week by Public Mutual, will invest at least 75% of its net asset value in a portfolio of Sukuk taking positions in both sovereign and corporate Sukuk with the balance invested in Islamic money market instruments. Interestingly for a Malaysian fund, the PB Sukuk Fund has the mandate to invest up to 30% of its NAV in foreign Sukuk in markets which include Singapore, Japan, Hong Kong, Australia, UK, Indonesia, US and South Korea. Many of these markets have yet to authorize Islamic finance instruments, and Public Mutual might be trying to get the jump on its competitors by creating a Sukuk fund that has a true global outlook. The firm is also launching a conventional Asian emerging growth equity fund, which will have a small-cap Asian emerging market focus and a conventional global bond fund. The minimum investment in the Sukuk fund is RM1,000 ($335). Public Mutual had not responded to requests for comment by the time The Islamic Globe went to press.

Takaful News
All eyes on Saudi
SAUDI Arabia, one of the worlds top three Takaful markets may be in for a considerable shake-up in terms of the way it operates. Unconfirmed reports have reached The Islamic Globe that the Saudi Arabian Monetary Agency, SAMA, is soliciting opinion amongst Takaful operators about changing their operating model over to one of cooperative insurance. It is understood that a delegation of senior Takaful shareholders from the industry in Saudi Arabia met with the SAMA governor recently to discuss this same issue and that more work is being done to reach a conclusion that will be satisfactory to all parties. Naturally any decision that affects one GCC country has the potential to have an overspill effect into neighboring countries where Takaful is prevalent.
enyAS insurance regulator has said that there has been a sharp increase in the number of conventional insurers enquiring about setting up Takaful windows to tap the growing demand for Islamic finance in the country. The number of enquires has gone up from a very few to more than 10 this year and we are having discussions with those companies, Sammy Makove [pictured], CEO of the Insurance Regulatory Authority (IRA) told The Islamic Globe. He said, however, that the IRA is taking its time to give the go ahead to these companies because of the shortage of Takaful regulation skills in the country. We have to be ready and have adequate skills

Everyone wants to be in Takaful

compliant insurance products. He said the IRA is advising conventional insurers to form conventional Takaful subsidiaries instead of windows because the experience of countries like Malaysia has showed Takaful consumers prefer buying from companies that do not have any conventional attachments. Takaful regulation skills gained by IRA workers will also be used to help other East African countries set up their Takaful regulation departments. We have signed an agreement with all the East Africa Community (EAC) countries on cooperation regarding Takaful, he said. The EAC includes Kenya, Uganda, Tanzania, Rwanda and Burundi. South Sudan has observer status. SB

to regulate this new line of business, he said. The IRA is currently training its own staff to improve their understanding of Shariah

Prospects dim for Qatari Takaful

THe Qatari insurance and Takaful market is undergoing a slowdown with local firms, mainly operating in the non-life sector. According to reports, total profits for the whole market only grew by 2% in the first half of 2011, compared to a 9% rise in 2010 in the same period. The report, which includes Qatar Islamic Insurance and al Khaleej Takaful, as well as conventional firms, Qatar General Insurance & Reinsurance, Qatar Insurance and doha Insurance, was aggregated by Qatar exchange. one of the primary reasons cited by the insurers with regards to the lower than expected profits in the first half of 2011 is due to the rise in premiums yielded to reinsurance companies. Reinsurance premium yielding has risen by 8% for Qatars insurance companies in 2011, with three companies actually yielding more than 55% of total written premiums to reinsurers.