...Sukuk: General Review Challenges on Shariah-compliance & Accounting Implications Monsif MOUMNI Introduction The growth and popularity of the use of Islamic finance has been exceptional since the central bank of Bahrain issued the first sovereign sukuk in 2001. In fact, the size of the global Islamic finance market exceeds US$2 trillion. Although the sukuk market is still small compared to the conventional bond market, sukuk are considered as the most successful financial product among the Islamic financial institutions and also considered as one of the fastest industries in its growth in international financial landscape. Sukuk generally refers to Shariah-compliant bonds; the spread in a striking pace of sukuk in GCC1 and Muslim-majority countries in Asia has made from it a very important way for fund raising. Recently sukuk have also been attracting attention in non-Islamic countries in Europe, Asia, and Africa; for example in 2014, sovereign sukuk were issued by the United Kingdom, Hong Kong, Luxembourg, and South Africa (Lackmann, 2015). The main objective of this paper is to provide a panoramic picture describing the key elements characterizing sukuk from different perspectives combined. In this review we will first try to present the general context of sukuk i.e. the definition, types, and the basic structure of sukuk, and also to make a contrast of conventional bonds with sukuk to outline the main differences, and next we will discuss about controversy...
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...Islam is not the only driver for sukuk popularity By Eric Uhlfelder / Published: April 30 2007 Financial Times Before 9/11, in the year 2000, sukuk bonds were about as obscure as a debt-equivalent instrument could be. Complying with the tenets of shariah law, only three issues came to market, raising just $340m (€250m, £170m). Last year, a variety of banks – including ABN Amro, Barclays, Société Générale, Deutsche Bank and UBS – underwrote nearly 190 issues, raising more than $27bn. And Arul Kandasamy, head of Islamic Finance at Barclays Capital, projects the Gulf region will need $1,000bn in additional financing over the next decade, with a significant portion of capital demands projected to be met through sukuks. Sukuks differ from traditional fixed income in that technically, they do not pay interest – something that’s prohibited in Islam. Instead, investors are compensated through a cash stream typically generated from assets placed in special purpose vehicles. New-found demand for shariah-compliant products is especially evident in Saudi Arabia, where “the vast majority of retail investors have a clear preference for shariahcompliant assets,” says Ruggiero Lomonaco, head of Islamic Investment products at ABN Amro in London. “Currently, over half of all Saudi deposits are shariahcompliant, up from zero a decade ago.” In June of last year, even the US saw the issuance of its first sukuk in Texas by Houston-based oil and gas concern East Cameron Partners, which raised $166m...
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...Appendix * Exchange overview……………………………page 4. * Regulator……………………………………...page 4-5. * Listing and Trading Rules….............................page 6-8. * Improvements………………………………...page 8-9. * Listings…………………….............................page 10-11. * Performance………………………………….page 12-13. * Sectorial Analysis……………………………page 13-14. * Valuation…………………………………….page 14. * Bonds………………………………………..page 14-16. * Sukuk………………………………………..page 16-17. * Mutual funds………………………………...page 17-19. * Initial Public Offerings……………………...page 19-20. * SWOT Analysis……………………………..page 20-21. * Future Prospects……………….....................page 21-22. * Conclusion………………………………….page 23. * References………………………………….page 24. I. Exchange Overview: In mid 1990s, stocks were traded through some unlicensed and unspecialized offices acting as intermediaries. This resulted in lack of transparency, and unfairness of stock pricing. The pressing need for a regulated and organized stock market that guarantee the protection of investors' interests by adopting modern mechanism for settling stocks' prices according to demand and supply led to the issue of the Emiri Decree No. 14 of 1995, founding the Doha Securities Market (DSM). Two years after the Emiri Decree Issuance, Doha Securities Market commenced its operations in May 26, 1997 with 17 companies and approximately 6 billion QR in market capitalization. Today, the Doha Securities Market (DSM) is known...
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...FINANCIAL RISKS OF SUKUK STRUCTURES Ali Arsalan Tariq M.Sc. International Banking Copyright AA Tariq, September 2004 A dissertation submitted in partial fulfilment of the requirements for the degree of Masters of Science at Loughborough University, UK. Acknowledgements First and foremost, I would like to thank my family – mother, father and my siblings – for their undying love. I would never have come so far without them. I would also like to take this opportunity to thank my supervisor, Dr. Humayon Dar, for his insightful guidance and for always being welcoming and patient with my unannounced visits throughout the year. This dissertation would never have been produced otherwise. Last but not least, I would like to thank my friends at Loughborough University that have made my summer of 2004 all the more memorable. For everything that is right, credit goes to all of the above. For anything that is wrong, I am culpable. Ali Arsalan Tariq September 2004 2 TABLE OF CONTENTS I. Introduction II. Islamic Financial Assets: Overview of Theoretical Aspects 2.1 Prohibitions 2.1.1. Prohibition of Riba (Interest) ` 2.1.2. Prohibitions of Gharar (Excessive Uncertainty) 2.1.3. Avoidance of Unethical Investments and Services 2.2 Alternative Basis of Financial Instruments 2.2.1 Partnership Contracts 2.2.2. Exchange Contracts 2.2.3. Financial Assets III. Evolution and Profile of Sukuk Structures and Markets 3.1 Types of Sukuk 3.1.1 Pure Ijarah Sukuk 3.1.2. Hybrid/Pooled Sukuk 3.1.3. Variable...
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...International Project Finance Globalization, large scale production and chains of multinationals have become very common in today’s world. Due to this, any business that has to survive and compete with others on a global level has to come up with new and innovative projects to give it an edge above its competitors. Here, we are not talking about projects on a small or medium scale. We are talking about huge multimillion dollar investments in a large scale project as only then can a business make its mark on the world economy. The main cause of people hesitating to do such huge projects is that they do not have enough financial back up to go through with plans involving such huge investments. Since, in the end, every brilliant project plan is dependent on the finance required to carry it through, financing of such a project becomes the primary concern of any planner. The financing must be done prudently so that the best of the financial instrument can be used while the negatives avoided as far as possible. Every financial instrument is applicable for certain projects. Choosing such instrument should be the focus of any project since the project will only remain on paper and never be carried out unless there is financial aid. In the present day, there are many unique financial law solutions for funding large scale projects. Following are some of them described in brief: * Project Finance Loans: Project Finance is a kind of loan structure wherein the repayment is dependent...
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...“… decisive action requires nothing less than a remaking of Malaysia Inc…” “The Government would like to see Khazanah emerge as one of the biggest and most dynamic investment houses in the region… emerge stronger, more nimble and able to create more value” Tun Abdullah Ahmad Badawi, Chairman of Khazanah Nasional 14 May 2004 Briefing for SCIC’S “EFFECTIVE MANAGEMENT OF STATE ASSETS & CAPITAL - INTERNATIONAL EXPERIENCES & PRACTICES IN VIETNAM” CONFERENCE 21 April 2009 Who We Are and Our Role investment arm, entrusted to manage the commercial assets held by the government, and to undertake strategic investments in new industries and geographies. shareholder value creation, efficiency gains and enhance corporate governance in companies controlled by the government, commonly known as Government-Linked Companies, or GLCs. Khazanah is set up as a company, and has a nine-member board comprising representatives from both the public and private sectors. Khazanah is also the key agency mandated to drive Khazanah is Malaysia’s strategic Prime Minister & Finance Minister Razak sits on the Board of Khazanah. Mohd Najib Tun Abdul Khazanah’s management team is headed by Managing Director Azman Mokhtar and the team comprises of professionals with backgrounds and experience in investments, finance and consulting. 1 Our Mandate Leading strategic investment house that creates sustainable value for a globally competitive Malaysia Accomplish Strategic Vision and Mission ...
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...should be sponsored by the government like other public institutions such as public health and education.2 His view was based on the point that the bank could neither pay any interest to account holders nor charge any interest on loans advanced. He also suggests the possibility for both Islamic banks and entrepreneur to create a partnership. No mention was made of profit-sharing.” Other economists were come up with different ideas at earlier stages such “the principle of mudarabah was appealed systematically by Uzair (l955). His main contribution lay in suggesting mudarabah as the main premise for 'interest less banking'. However, his argument that the Islamic bank should not make any capital investment with its own deposits rendered his analysis somewhat impractical. Al-Arabi (l966) also suggested a banking system with mudarabah as the...
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...RISK MANAGEMENT IN ISLAMIC BANKING AND FINANCE: THE ARAB FINANCE HOUSE EXAMPLE Bilal A. Fleifel A Thesis Submitted to the University of North Carolina Wilmington in Partial Fulfillment of the Requirements for the Degree of Master of Business Administration Cameron School of Business University of North Carolina Wilmington 2009 Approved By Advisory Committee Howard Rasheed Cetin Ciner William H. Sackley Chair Accepted By DN: cn=Robert D. Roer, o=UNCW, ou=Dean of the Graduate School & Research, email=roer@uncw. edu, c=US Date: 2010.01.21 15:02:51 -05'00' ________________________ Dean, Graduate School TABLE OF CONTENTS TABLE OF CONTENTS ..................................................................................................... ii ABSTRACT........................................................................................................................ vi ACKNOWLEDGMENTS .................................................................................................. vii DEDICATION .................................................................................................................. viii LIST OF TABLES .............................................................................................................. ix LIST OF FIGURES...............................................................................................................x GLOSSARY .............................
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...ISLAMIC BANKING SYSTEM & PRODUCTS Name Course Instructor Institution Date Islamic banking Introduction Over the past decades, Islamic banking has expanded into a distinctive and fast growing competitive substitute to conventional banking in many countries. Despite the rapid expansion of the Islamic banking system in recent years, little is however understood of how it differs from conventional banking systems, especially in the non Muslim world. Although Islamic banking works in accordance with the Islamic laws (shariah), in other countries, they are allowed to operate incomparably with the conventional banks that are interest based. The desire of Muslim communities to reorganize their social economic activities, and revival of financial institutions such as Zakah on an interest free basis can be said to be the main drivers to the development of Islamic baking over the past (Wilson, 1994: 110). Nevertheless, Islamic banking is not a religious product as it may insinuate, but it can rather be understood as a series of growing financial products that are developed with the aim of meeting the requirements of Islamic culture and its people (Sole, J. A., 2007: 6). Thus theses systems have developed so as to enable Muslims to invest savings and equally raise finance without compromising their religious and ethical practices. In order to comprehend the fundamental principles of operation of the Islamic banking system, it is thus necessary to understand what it is. There is...
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...of United Growth Berhad (Company No: 739648-W) (“UG” or “Issuer”) and UEM Group Berhad (Company No: 6551-K) (“UEM” or “Obligor”) and UG and UEM accept full responsibility for the accuracy of the information contained in this Information Memorandum. UG and UEM, after having made all reasonable enquiries, confirm that this Information Memorandum contains all information with respect to UG and UEM which is material in the context of the Islamic medium term notes programme of RM2.2 billion (“Programme”) and the offering of the Islamic medium term notes (“Sukuk”) under the Programme. The opinions and intentions expressed in this Information Memorandum in relation to UG and UEM are honestly held, have been reached after considering all relevant circumstances and are based on reasonable assumptions and there are no other facts in relation to UG and UEM or the Programme the omission of which would, in the context of the Sukuk issue, make any statement in this Information Memorandum misleading in any material respect and all reasonable enquiries have been made by UG and UEM to ascertain such facts and to verify the accuracy of all such information and statements. No representation or warranty, expressed or implied, is made such that the information remains unchanged in any respect as of any date or dates after those stated herein, with...
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...International Islamic University Islamabad Subject: Commercial Bank management An Over View Of Bank Al-Islami Submitted to: Sir. Ismat Ullah Butt Submitted by: Muhammad Mahmood Khan (group leader) 103-se/bsef(4)/F08 Email address: mmkaries2@hotmail.com Other members: Malik hammad anwar 121-se/bsef(4)/f08 Umair Hassan khawaja 122-se/bsef(4)/f08 Jehanzeb saeed khan 130-se/bsef(4)/f08 Stephen kingori Introduction: Bank-Al Islami The Idea: The epochal idea of Bank Al-Islami was conceptualized by Jahangir Siddiqui & Company Limited and DCD Group in late 2003. Mr. Hasan A. Bilgrami was appointed as Adviser to the sponsors on March 16, 2004 to formalize the idea. He presented the concept paper of Bank Al-Islami to sponsors on March 24, 2004. A detailed business plan was then prepared and a formal application was submitted to the State Bank of Pakistan on May 26, 2004. On September 26, 2005, Dubai Bank joined the Sponsors and became one of the founding shareholders of Bank Al-Islami by investing 18.75% in the total Capital. Accreditation by State Bank of Pakistan: The State Bank of Pakistan issued a No Objection Certificate in no time on August 19, 2004 and Bank Al-Islami Pakistan Limited, the second full-fledge Islamic Commercial Bank in Pakistan, was incorporated on October 18, 2004 in Pakistan. Bank Al-Islami Pakistan Limited was the first Bank to receive the Islamic Banking license under the Islamic Banking policy...
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...Corporate Bond What Does Corporate Bond Mean? A debt security issued by a corporation and sold to investors. The backing for the bond is usually the payment ability of the company, which is typically money to be earned from future operations. In some cases, the company's physical assets may be used as collateral for bonds. Corporate bonds are considered higher risk than government bonds. As a result, interest rates are almost always higher, even for top-flight credit quality companies. Investopedia explains Corporate Bond Corporate bonds are issued in blocks of $1,000 in par value, and almost all have a standard coupon payment structure. Corporate bonds may also have call provisions to allow for early prepayment if prevailing rates change. Corporate bonds, i.e. debt financing, are a major source of capital for many businesses along with equity and bank loans/lines of credit. Generally speaking, a company needs to have some consistent earnings potential to be able to offer debt securities to the public at a favorable coupon rate. The higher a company's perceived credit quality, the easier it becomes to issue debt at low rates and issue higher amounts of debt. Most corporate bonds are taxable with terms of more than one year. Corporate debt that matures in less than one year is typically called "commercial paper". Capital Markets What Does Capital Markets Mean? A market in which individuals and institutions trade financial securities. Organizations/institutions...
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...Banking“ in den verschiedenen arabischen, mittel-, und südostasiatischen und auch westlichen Ländern. Danach diskutiere ich den zentralen Begriff der Zinsfreiheit empirisch mithilfe eines Modells. Zins ist im Koran, auf dessen Lehre das islamische Bankwesen aufbaut, verboten. Folglich müssen alternative Produkte geschaffen werden, die ohne Zins auskommen und trotzdem für den Kunden interessant sind. Diese verschiedenen Bankinstrumente und praktizierten Methoden werde ich im Zusammenhang mit dem oben genannten Modell erläutern. Insbesondere das Instrument der Aufteilung von Gewinn und Verlust – Profit-Loss-Sharing – werde ich verstärkt thematisieren. Die theoretische Wirkungsweise dieses und weitere Geldmarktinstrumente, wie zum Beispiel Sukuk und Ijara, stehen in dieser Arbeit im Vordergrund. Die empirischen Ergebnisse werde ich im Folgenden ausarbeiten und recherchieren inwieweit die geschaffenen Instrumente in der Realität umgesetzt werden und in welchen Fällen Probleme auftreten können. Am Ende meiner Bachelorarbeit gehe ich kurz auf die Kritik am „Islamic Banking“ ein und werde die prognostizierte Entwicklung dieses Bankwesens, einschließlich der Instrumente und Methoden, kritisch betrachten. Literatur: Chong, B. S. & Liu M.-H. (2007): Islamic Banking: Interest-Free or Interest-Based? Darrat, A. F. (1988): The Islamic interest-free banking system: some empirical...
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...Is Islamic Finance A Solution to the Financial Crisis? | Is Islamic Finance A Solution to the Financial Crisis? Lecturer Ms Tahira Jaffery Prepared by Mohammed Haider Hassan Mohammad Javed Najwat Rehman Mehdi Maloof December 30, 2009 Contents THE GLOBAL FINANCIAL MELTDOWN AND ITS IMPACT ON PAKISTANS ISLAMIC BANKING SECTOR 4 The Root of All Cause: What Caused the Financial Crisis? 4 THE ISLAMIC BANKING MECHANISM 7 Roles of Different Players 7 Modes of finance 9 CONVENTIONAL AND ISLAMIC BANKS AMID THE CRISIS IN PAKISTAN 14 Differences Between Islamic and Conventional Banks 14 GROWTH OF ISLAMIC BANKING INSTITUTIONS 18 Prevailing Trends in the Past Year 19 ISLAMIC BANKINGS CAPACITY TO WITHSTAND RECESSIONARY PRESSURES 21 CHALLENGES AND OPPORTUNITIES 24 Problems With Islamic Finance 24 Opportunities 28 Bibliography 30 THE GLOBAL FINANCIAL MELTDOWN AND ITS IMPACT ON PAKISTANS ISLAMIC BANKING SECTOR The Global Financial Crisis took the world by storm in late 2007 and has since then has created all sorts of nuisances around the world. Economists consider it to be the worst financial crisis ever since the Great Depression of the 1930s. The crisis caused losses worth trillions of U.S dollars throughout the world resulting in the failure of businesses, decline in consumer wealth, government deficits, and an overall decline in economic activity. The Root of All...
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...PT ADHI KARYA (Persero) Tbk PT ADHI KARYA (Persero) Tbk DAN ENTITAS ANAK Daftar Isi AND SUBSIDIARIES Halaman/ Page Surat Pernyataan Direksi Table of Contents Directors’ Statement Letter Laporan Auditor Independen Independent Auditors’ Report Laporan Keuangan Konsolidasian Untuk Tahun-tahun yang Berakhir pada Tanggal 31 Desember 2012 dan 2011, serta Laporan Posisi Keuangan Konsolidasian pada Tanggal 1 Januari 2011/ 31 Desember 2010 Consolidated Financial Statements For the Years Ended December 31, 2012 and 2011, and Consolidated Financial Position as of January 1, 2011/ December 31, 2010 Laporan Posisi Keuangan Konsolidasian 1 Consolidated Statements of Financial Position Laporan Laba Rugi Komprehensif Konsolidasian 3 Consolidated Statements of Comprehensive Income Laporan Perubahan Ekuitas Konsolidasian 4 Consolidated Statements of Changes in Equity Laporan Arus Kas Konsolidasian 5 Consolidated Statements of Cash Flows Catatan Atas Laporan Keuangan Konsolidasian 6 Notes to the Consolidated Financial Statements R-1/079.AGA-S/4.1/2011 PT ADHI KARYA (Persero) Tbk DAN ENTITAS ANAK LAPORAN POSISI KEUANGAN KONSOLIDASIAN PT ADHI KARYA (Persero) Tbk AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION Per 31 Desember 2012 dan 2011 Serta 1 Januari 2011/31 Desember 2010 (Dalam Rupiah Penuh) As of December 31, 2012 , 2011 January 1, 2011/December 31, 2010 (In Full...
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