the world’s global islamic finance news...

In this issue

Vol. 5, Issue 27 11th July 2008

T h e W o r l d ’ s G l o b a l I s l a m i c F i n a n c e N e w s P r o v i d e r

SOUTHEAST ASIAAlـAqeelah plans Islamic bankKuwait’s Al-Aqeelah Leasing, Finance and Investment Company will set up an Islamic bank in Malaysia next year to tap the growing demand for Shariah compliant products in the region.

Managing director Hamed Khajah said of the bank, with a paid-up capital of US$100 million and due to start business by January next year:

“Our approach is international. We are not here to take markets from Malaysian banks but attract the others into this market, from the Middle East.”

Vice-president for consumer fi nance Yaqoub Al-Ebrahim said the bank will focus on private equity and direct investment, cor-porate and structured fi nance and wealth management.

Islamic Finance Briefs ............................... 1

Takaful News .............................................12

Islamic Ratings Briefs ..............................13

IFN Reports ................................................15

Islamic Finance for Thailand: Opportunities and Challenges ................ 17

Shariah Compliant Financial Industry makes Headway in Thailand ...................19

German Infrastructure Projects Offer Huge Investment Potential .....................21

Sukuk Market at a Crossroad .................23

DFSA Takes a Common Sense Approach ....................................................24

Forum .........................................................26

Meet the Head ..........................................28Qudeer Latif, Partner (Head of Islamic Finance), Clifford Chance

Termsheet ..................................................29Jordinvest Shariah Compliant MENA Fund

Moves .........................................................30

Deal Tracker ..............................................31

Islamic Funds Tables ................................32

S&P Shariah Indexes ...............................33

Dow Jones Islamic Indexes .....................34

Malaysian Sukuk Update .........................35

Islamic League Tables .............................36

Events Diary...............................................39

Subscriptions Form ..................................40

Country Index ............................................40

Company Index .........................................40

MALAYSIAMIF 2008 UpdateOnly FOUR weeks left to be a part of the world’s biggest Islamic fi nancial event and most infl uential gathering, MIF 2008–Issuers & Investors Forum.

MIF 2008 continues to receive excellent response from the global Islamic fi nance industry. To date, over 1,000 delegates comprising world renowned Islamic fi nance

experts, high level executives from leading global Islamic banks, Shariah scholars and key regulators, have registered for this extended three-day event spanning the Issuers, Investors and Equity markets.

To participate in this FREE event, register online NOW at www.MIFforum.com to attend the day relevant to you!

UK

The UK has welcomed the educational initiative between the Islamic Finance Council and the Securities & Investment Institute, describing it as an excellent example of what the UK has to offer in terms of skills and professionalism.

Kitty Ussher, Economic Secretary to the Treasury, explained how London has become a global gateway for Islamic fi nance and how it could maintain its position. “The scholar professional development program is a ground-breaking move to develop the fi nancial skills of Shariah scholars from around the

world by enabling them to learn more about conventional fi nance,” she added.

Ruth Martin, managing director of SII, said: “We are delighted that the IFC is united with SII to support this initiative, further enhancing the skills of those working in Islamic fi nance.”

The SII has become the leading fi nancial services educational body in the area of Islamic fi nance. It fi rst announced the development of its benchmark Islamic Finance Qualifi cation (IFQ) in 2005.

UK backs SII/IFC move

www.islamicfi nancenews.comNEWS BRIEFS

© 11th July 2008

UAEAnother record quarter for FGBFirst Gulf Bank (FGB), one of the leading fi nancial institutions in the UAE, posted a net profi t of AED808 million (US$220 million) for its second quarter of 2008, representing an increase of 70% over the same quarter of last year and 20% higher than the fi rst quarter of this year.

Net interest and Islamic fi nancing for the second quarter was AED622 million (US$169 million), a surge of 112% from the previous corresponding period and 47% higher than the previous quarter. Non-interest income, including share of profi t of associates, at AED591 million (US$161 million) was 65% higher than the same quarter of last year. The total revenue for the quarter stood at AED1.21 billion (US$330 million), of which the contribution of the core banking operations represented 91%.

FGB’s CEO André Sayegh said: “In line with our strategy, we have been consistently outperforming quarter over quarter, and have witnessed strong growth in our core banking operations and in our subsidiaries and associate companies.”

UKIslamic assets worth US$1 trillion by 2010The Islamic fi nance industry will be worth US$1 trillion by 2010, with continuous expansion driven by increased global demand for Shariah compliant fi nancial products and services, said Kuwait Finance House-Bahrain (KFH-Bahrain) managing director, Abdulhakeem Alkhayyat.

“Islamic banking assets are currently estimated at US$750 billion in value and will top the US$1-trillion mark by 2010. KFH-Bahrain is strategically positioned and adopts a pivotal role in the growth of Islamic banking,” he said.

UAEKaizen offers global fi nancingStrategic urban developer Kaizen Developments is offering international Islamic fi nancing for its projects in both the UAE and Turkey.

Managing director Amir Salam said, “We are one of the only real estate development fi rms currently offering Islamic fi nancing internationally. We believe development is about providing unique and creative properties and investments while servicing the needs of the customers.”

Headquartered in the UAE, Kaizen Developments currently maintains a diverse portfolio of mixed-use, commercial and residential developments.

MALDIVESIslamic banking to debut soonThe Sunni Muslim island nation of Maldives will likely get its fi rst taste of Islamic banking in the next four months, following the signing of an agreement by the fi nance ministry with Dubai’s Noor Islamic Bank and the Islamic Development Bank (IDB) on Tuesday.

According to a report, the service will be introduced through an en-tity operating as Noor Islamic Maldives Bank, which will be 34%-owned by the Maldivian government. Noor Islamic and IDB affi liate Islamic Corporation for the Development of the Private Sector will have 33% each.

Finance minister Qasim Ibrahim said the bank will start its services with a paid-up capital of US$10 million and will provide loans for development.

UAEEIB introduces MENA CPPI NoteEmirates Islamic Bank (EIB) has launched the Emirates MENA CPPI Note, a three-year Shariah compliant structured note linked to the performance of the Emirates MENA Opportunities Fund, one of the various in-house managed funds launched by EIB two years ago.

The MENA CPPI Note was developed in conjunction with Deutsche Bank with the twofold aim of meeting the increasing demand for Shariah compliant structured products and providing a high degree of capital protection over the Emirates suite of funds. EIB said it offers potential investors an opportunity to invest in the Middle East and North Africa (MENA) region.

“The MENA CPPI Note has been designed in line with the current market scenario across the MENA region,” said Faisal Aqil, general manager of retail banking for EIB.

Like the other products unveiled by the bank, the MENA CPPI Note will also follow a Shariah compliant structure and will be professionally managed by a team of fund managers. The note aims to achieve long-term capital growth from a diversifi ed portfolio of Shariah compliant equity securities and other assets primarily in the Gulf Cooperation Council and the MENA region.

Requires

FREELANCE FINANCIAL TRAINERS

To conduct public training courses in Malaysia and GCC countries. Practical experience of working

within the Islamic fi nancial services is required, as is some experience of delivering training to the

banking sector.

If you would like to know more about this opportunity, please contact Andrew Tebbutt at [email protected]

or by telephone on: +603 2162 7802


© 11th July 2008

MALAYSIA/UAE/VIETNAMZico establishes presenceShortly after the launch of its affi liate ZI Shariah Advisory in June, law fi rm Zaid Ibrahim & Co (Zico) has established its presence in Vietnam and Dubai. Zico’s Vietnamese foray is in conjunction with Allen & Gledhill Singapore, and is the fi rst joint venture (JV) law fi rm of its kind to be licensed in the country. Dubbed “AGZI LCT”, the JV has offi ces in Ho Chi Minh City and Hanoi.

The main practice areas of AGZI LCT are banking and fi nance, corporate and commercial law, competition, construction and infrastructure, foreign investment, employment, intellectual property, mergers and acquisitions, real estate and tax.

Zico is also the fi rst Asian law fi rm to have the approval of the Dubai Financial Services Authority to provide services to local, regional and international clients in and from the Dubai International Financial Centre. The Dubai offi ce, due for launch on the 21st July, is said to be a natural progression of the setting up of its Middle Eastern desk in Kuala Lumpur last September.

SAUDI ARABIAAl Rajhi records profi t growthAl Rajhi Bank, the largest Gulf Arab bank by market value, turned in a net profi t of SAR1.74 billion (US$465 million) in the three months ended the 30th June 2007, an increase of 8.2% from the SAR1.61 billion (US$430 million) in the year-earlier period. The bank’s second-quarter profi t is near the top end of analysts’ forecasts.

www.maplesandcalder.com

Contact Tahir Jawed at +971 4 360 4070 or e-mail: [email protected]

Offshore expertisewith a local presence.

The world's leading offshore law firm and the first to establish an office in the Middle East. Maples offers clients around the Middle East an unparalleled range of Cayman Islands and British Virgin Islands legal services, including advising on offshore Islamic finance structures such as sukuk transactions, investment funds, trusts and securitisations.

UAEADIH fund beats targetAbu Dhabi Investment House (ADIH) has announced the fi nal exit of Al Arabi Investment Fund, generating an annual internal rate of return (IRR) of 20.2%. The fund’s subscribers were promised 20% annual return when it was launched in 2005. The announcement comes 30 months earlier than the expected date of exit.

Two partial exits for the fund were earlier announced during the year, the fi rst partial exit achieving an IRR of 25% and the second, 22%. The fund is a diverse range of GCC private equity positions, including underlying investments in a variety of economic sectors.

The realization of these investments was translated into an IRR of 20.2% per annum and a gross distribution of US$8.63 per share, which includes a profi t distribution of US$3.10 per share and partial capital repayment of US$5.53 per share.

BAHRAINIslamic fi nance needs new modelsThe Islamic fi nance industry needs to develop new models to with-stand economic slowdown, Central Bank of Bahrain (CBB) governor Rasheed Al Maraj said, adding that these business models ought to be more diverse, have stable income sources and feature more rigor-ous risk management and stress testing techniques.

He noted that newer entrants to the industry have tended to merely copy the strategies being successfully pursued by their more established rivals, hence there is a high degree of cloning of business models and this has resulted in a very high percentage of Islamic banks with strategies that are heavily weighted towards real estate and asset fi nance.

The governor cautioned that the asset-based business models favored by many Islamic banks have not been tested in a downturn, pointing out that a business model which looks robust in conditions of rising asset values and abundant liquidity may not be so when the economic environment changes.

HONG KONGPrudent and steady progressionHong Kong Monetary Authority (HKMA) executive director Edmond Lau said the Special Administrative Region will be prudent in its drive to become a platform for Islamic fi nance products, and does not see itself competing with existing centers. Lau, who is responsible for monetary management, said it is diffi cult to predict when Hong Kong will amend its tax laws to accommodate the fast growing asset class but added that the authorities will grant exemptions for Islamic fi nance transactions on a case by case basis.

“We don’t believe this is going to be a Big Bang event; it’s going to be a long drawn out process which takes years for an Islamic fi nance hub to form,” Lau said. “Even before we introduce any changes to the tax laws, it is possible under the taxation framework to grant exemptions in relation to certain types of taxes.”

In terms of attracting investments, Lau is confi dent: “We do not see, at least at this stage, the need to provide incentives. We believe the Hong Kong platform is attractive already.”


© 11th July 2008

www.IslamicFinanceTraining.com

FOR MORE INFORMATION, contact: Andrew Tebbutt Tel: 603 2162 7802;

Email: [email protected]

CALENDAR 2008

Accounting & Financial Reporting for Islamic Banking & Finance

14 – 16 July, KUALA LUMPUR

Takaful: Islamic Insurance6 – 8 August, KUALA LUMPUR

Structured Islamic Finance & Investment Products14 – 15 August, KUALA LUMPUR

Islamic Financial Markets, Treasury & Derivatives

6 – 8 October, KUALA LUMPUR

Key Legal, Documentary & Structuring Issues for Islamic Financial Products

6 – 8 October, DUBAI

Structuring Islamic Financial Products Workshop

13 – 15 October, MUMBAI

The Islamic Capital Markets & Investment Banking School

13 – 16 October, HONG KONG

Islamic Investment Funds: Mutual Funds, Hedge Funds & REITs

10 – 12 November, KUALA LUMPUR

Shariah Coordination for Financial Institutions

16 – 18 December, KUALA LUMPUR

Takaful Products, Markets & Operations21 – 23 December, MANAMA

presents

BAHRAINABG in US$30 million dealBahrain-based leading Islamic banking group Albaraka Banking Group (ABG) said subsidiary Al-Baraka Islamic Bank (ABIB) and the First Investment Bank have signed a milestone transaction — a US$30 million Murabahah facility for Al Khaleej Development Company (KDC).

KDC is a key player in the real estate industry in Bahrain and the GCC with diverse investments in sectors such as residential, tourism. offi ces and industrial. It is cross listed on the Bahrain and Kuwait stock exchanges. ABIB is one of the banking units of ABG which is a Bahrain joint stock company listed on the Bahrain and Dubai stock exchanges.

KUWAITBanking profi ts upBanks in Kuwait recorded a surge in profi t in the second quarter due to the booming economy in the Gulf region, shrugging off stricter lending restrictions imposed by the central bank to fi ght record infl ation, registered at 10.14% in February. Shares of National Bank of Kuwait (NBK), the country’s biggest bank which is expected to kick off the results season by next week, have fallen 7% since the new rules were unveiled in March compared to a 9% rise by the main Kuwait benchmark. However, as oil prices have soared seven-fold in the last six years and more than doubled in the past year, analysts said banks in the country still have plenty of business to feast on.

Al Joman Center for Economic Consultancy general manager Naser Al Nafi si said the rules will affect banks slightly as many have other growing operations, especially outside Kuwait. The fallout from the tighter lending restrictions which apply only to new loans will likely begin appearing in the fourth quarter. Awash with cash from the oil boom, Kuwaiti banks are jumpstarting expansion plans in the Middle East and Asia to offset rising competition at home. Kuwait Finance, whose profi t is set to soar 34.4% in the second quarter, has moved into Malaysia and plans to expand in Turkey and the Gulf to tap a boom in Islamic fi nance.

SAUDI ARABIAHigher profi t for Riyad BankRiyad Bank, Saudi Arabia’s fourth-largest lender by market value, saw its second quarter profi t increase by 6.8% to SAR906 million (US$241.6 million) from SAR848 million (US$226.45 million) in the three months ended the 30th June 2007.

UAEEIB unveils MENA notesEmirates Islamic Bank (EIB) has launched the Emirates MENA CPPI Note, a 3-year Shariah compliant structured note linked to the performance of the Emirates MENA Opportunities Fund.

It was developed along with Deutsche Bank to meet the increasing demand for Shariah compliant structured products and provide a high degree of capital protection over the Emirates suite of funds.

It offers investors an opportunity to invest in the Middle East and North Africa (MENA) region while offering 90% capital protection for investors at maturity as well as limiting exposure to volatile market conditions. The note’s exposure to the Emirates MENA Opportunities Fund at inception will be about 60% and is expected to increase to a maximum of 150% during periods of consistent out-performance, and is readily tradable in the secondary markets.


© 11th July 2008

MALAYSIAScholarship in Shariah fi nanceThe central bank is offering scholarships in Shariah fi nance in line with its commitment to strengthen the Islamic fi nancial industry. The scholarship award is part of the fund for Shariah scholars in Islamic fi nance which was established to enhance knowledge, research, talent and intellectual discourse in Shariah.

USInvestors moving away from US dollarInvestment managers Gartmore have revealed that issuers are beginning to choose the UAE dirham, Malaysian ringgit and Saudi riyal when pricing, moving away from the conventional US$.

The company cited the decline in asset quality in America as the main reason behind European and American corporations considering Shariah compliant methods to raise capital. Shariah principles of shared ownership and the prominence of “real assets” have also whetted investors’ appetite.

BAHRAINArcapita to sell Irish unitBahrain-based investment fund Arcapita seeks to put its Irish unit Energia up for sale in the coming days with a deal estimated at EUR1 billion — EUR1.5 billion (US$1.56 billion — US$2.34 billion.

According to a report, Arcapita took the decision after a recent review of its European operations. A formal announcement on the sale is expected in the next two weeks. Energia is an independent energy provider with 35,000 customers in Ireland. Its electricity pool is also generated from renewable sources and the company supplies gas to industrial and commercial customers.

UAEArcapita to invest US$2 billionBahraini Islamic investment bank Arcapita has formed a joint venture with a fi rm affi liated with Indian conglomerate Tanti Group to invest US$2 billion in developing wind farms in China. Arcapita, which owns Northern Ireland utility Viridian Group and Singapore-based Colossus Holdings, signed an agreement to acquire chinese wind energy generation fi rm Honiton Energy Holdings.

The joint venture, which is Arcapita’s fi rst investment in China, will develop wind farms with 1,650 megawatts capacity in the inner Mongolia region. Arcapita had said in February that it was in talks to buy up to three Asian utilities.

KUWAITCapital hike for Burgan Bank Shareholders of Kuwait’s Burgan Bank have approved raising its capital by KWD200 million (US$754.5 million). The move is related to its plans to acquire a majority stake in the operations of four commercial banking entities from United Gulf Bank for US$725 million.


© 11th July 2008

BAHRAINBank gains US$40.6 millionBahrain-based Al Salam Bank, one of the rapidly growing Islamic banks in the region, announced a net profi t of BHD15.3 million (US$40.6 million) for the half-year ended 30th June 2008. The total assets grew by 63% from BHD647 million (US$1.7 billion) as of the 31st December 2007. In a market marred by fi nancial crisis and tight liquidity, the bank increased its institutional and customer deposits and is working to enhance liability management.

Its gross operating income for the period rose to BHD21.3 million (US$56.6 million) from BHD19 million (US$50.4 million) in the corresponding period of 2007 and the net income represented a 19.8% annualized return on average shareholders’ equity. The bank was listed on the Bahrain Stock Exchange on the 27th April 2006.

MALAYSIAKFH seals private placementKuwait Finance House (KFH) has sealed a private placement via its Al-Nebras 2 fund, which caters to VIP clients, to fi nance a massive urban development project in the Iskandar development region in Malaysia’s Johor state. VIP department manager Talal Al-Nesf said the city by the seaside will offer many investment opportunities.

He said KFH looks forward to providing modern logistic services in the city, in addition to delving into industry, tourism, health and educational services, cultivation of land and residential units.

The VIP department, according to him, has a specialized team to serve clients effectively, privately and accurately to meet their banking, fi nancial and investment requirements. It also provides technical support such as advisory services regarding global markets, currencies, investment funds and shares.

BAHRAINJapan taps BahrainCentral Bank of Bahrain (CBB) Governor Rasheed Al Maraj met the Jap-anese prime minister’s special adviser, Hiroshi Okuda, on the develop-ment of the banking and fi nancial sectors in the two countries, with the focus on CBB’s experience and knowledge of Islamic fi nance.

Al Maraj outlined Bahrain’s pioneering role in Islamic fi nance and its precedence in setting up the necessary foundation for its development, saying that the country, as a well-established fi nancial center, has played a key role in making Islamic banking one of the fastest growing segments of the fi nancial services industry.

UAEAmlak Finance ups profi t outlookDubai Islamic mortgage company Amlak Finance raised its profi t out-look for this year after posting a record profi t in the second quarter driven by its home loan business and property investments. It saw a 74% jump in net income to AED142.3 million (US$38.7 million) in the three months ended on the 30th June. Revenues jumped 114% in the six-month period to AED620 million (US$168.8 million), of which 52% came from property fi nancing.

Amlak’s profi t more than doubled last year to AED301 million (US$81.94 million), helped by the sale of investments. The fi rm had a total portfolio of real estate investments worth AED6 billion (US$1.6 billion) at the end of June.

UAEEmcredit restructuredThe Privatization Company, wholly-owned by the UAE Ministry of Interior, has signed a MoU with credit information fi rm Emcredit that will lead to a new shareholding structure for Emcredit.

Emcredit has previously served on the technical advisory committee drafting a UAE Federal Credit Information Law which is being studied by the UAE cabinet.

JAPANJapanese banks courtedJapanese banks are being wooed to collaborate with Malaysian banks in Islamic fi nancial services, particularly to penetrate markets in Southeast Asia and the Middle East to help meet growing demand. Malaysian International Trade and Industry Minister Muhyiddin Yassin described his country as having among the best infrastructure for the sector and therefore being an ideal platform for Japanese fi nanciers to use.

They can tap into a growing trend — in two years Islamic fi nance will constitute more than 20% of the global banking industry — and help Malaysia positioning itself as an international hub for Islamic banking.


© 11th July 2008

MALAYSIADutaLand secures Islamic fi nancingDutaLand’s 100%-owned KH Land has secured from the Asian Fi-nance Bank Islamic fi nancing of RM85 million (US$26. million) to build 49 units of four-storey villas in a gated housing development in Kuala Lumpur.

UKShariah law to take rootThe Lord Chief Justice of England and Wales, Lord Phillips, has said the UK may introduce the principles of Shariah law into some aspects of its legal system. He said there is no reason Shariah law principles cannot be used in mediation. However, this will still be subject to the jurisdiction of the English and Welsh courts, he added.

SAUDI ARABIAJadwa gets Mecca contractJabal Omar Development has signed an agreement for Shariah compliant Jadwa Investment to provide consultancy for the SAR12.4 billion (US$3.3 billion) fi nance for the Jabal Omar mega real estate scheme in front of the Holy Haram in Mecca.

Jadwa chairman Prince Faisal Salman said his company’s efforts to win the contract refl ects the importance of the project, the fi rst of its kind in Mecca. Jabal Omar Development chairman Abdul Rahman Faqeeh said the project will be in two phases.

UAE‘De-peg from dollar’Gulf oil producers preparing for monetary union should reconsider keeping their currencies pegged to the weak dollar and look instead at a basket of currencies, an Abu Dhabi government body said. Saudi Arabia, the UAE and three other states in the world’s biggest oil exporting region have agreed to keep their dollar pegs intact until they achieve a single currency by the 2010 deadline.

The Abu Dhabi Department of Planning and Economy said that as oil prices soar, the dollar is tumbling to record lows against the euro and a basket of major currencies as infl ation spirals and hence, maintaining the policy has become problematic. It urged nations within the GCC to peg to a basket of currencies instead, taking into account the region’s big trade exposures to the euro.

MIDDLE EAST GCC records US$800 billion growthGross domestic product (GDP) in the Gulf Cooperation Countries (GCC) grew by about 5.5% to US$800 billion at the end of 2007. For Saudi Arabia, the numbers are about US$375 billion and about 4%. Currently, Saudi Arabia is probably bringing in about US$1 bil-lion a day in petroleum revenue.

This balance of payment surplus has fueled enormous growth in demand in the kingdom and the rest of the GCC. One consequence is the high infl ation rates now prevalent in the GCC economies, said Issam Zaid Al-Tawari, vice chairman and CEO of Rasameel Structured Finance Company. Another consequence is the growth of the sovereign wealth funds which he estimated at over US$2 trillion.

He felt some of the funds should be invested in infrastructure and non-petroleum sectors of the GCC economies but conceded it will be diffi cult to do this in a way that does not increase liquidity and the growth of credit.

UAEHospitality fund draws investorsShuaa Partners, the private equity arm of Shuaa Capital, said it has attracted US$165 million for its US$200 million hospitality fund. The fund, upon its fi rst closing on the 30th June, received interest in excess of US$240 million and over US$165 million in aggregate cap-ital commitments, and therefore anticipates the remaining US$35 million to be fully subscribed before the second and fi nal closing.

The Shuaa Hospitality Fund I is the third private equity fund spon-sored by Shuaa Capital. Shuaa Partners manages the US$200 mil-lion Shuaa Partners Fund I which has made fi ve investments within the Gulf Cooperation Council and exited two. It also manages the US$100 million Frontier Opportunities Fund I, which has completed its fi rst investment and hopes to make investments in Lebanon, Syria and Jordan.

The hospitality fund focuses on the MENA region, particularly Gulf countries, the Levant and Egypt. Shuaa said it will invest into the development of a diversifi ed portfolio of fi ve- and four-star hotels, resorts, serviced apartments and budget business hotel properties which will be managed by Rotana Hotel Management Corporation. An amount of US$53 million will be allocated to the Shariah compli-ant Shuaa Saudi Hospitality Fund I to develop 17 hotels with 5,000 rooms in Saudi Arabia ranging from fi ve stars to budget hotels.

B E R M U D A C A Y M A N B V ISince 1928, Conyers Dill & Pearman has consistently provided responsive, timely and thorough offshore law advice. The Dubai office provides advice on corporate and commercial law, with particular emphasis on private equity funds, mutual funds, capital markets, project financing, securitisations and commercial and private aircraft financing and registration.

Advising on the laws of

Conyers Dill & PearmanThe Offshore Law Firm

www.conyersdillandpearman.com

Advising on the laws of Bermuda, British Virgin Islands and Cayman Islands.

Anguilla & Bermuda & British Virgin Islands & Cayman Islands & Dubai & Hong Kong & London & Moscow & Singapore

Level 2, Gate Village 4Dubai International Financial CentrePO Box 506528Dubai, U.A.E.

Tel: +9714 428 2900Fax: +9714 428 2999Email: [email protected]


© 11th July 2008

SAUDI ARABIAPrivate real estate ownershipSaudi Arabia’s consultative Shura council has passed a full-fl edged mortgage law which is expected to boost Shariah compliant home fi nancing. The law, still to be approved by the Council of Ministers, is aimed at encouraging private real estate ownership. Only one in fi ve Saudis owns a home.

In Saudi Arabia, Islamic fi nance is the mainstream, with its biggest fi nancial institution, the National Commercial Bank, having passed almost completely into Shariah compliant banking two years ago. Islamic home fi nance is one of the fastest growing segments in the industry.

KUWAITIslamic fund launchedTharwa Investment Company, a closed Kuwaiti shareholding company established in 2006, has launched a new Shariah compliant fund. The Tharwa Islamic Money Market Fund provides liquidity and current income to investors to meet short term and medium term cash fl ow needs while aiming to maintain capital stability by investing in Shariah compliant instruments in Kuwait.

The Fund is also allowed to invest in other investment funds which invest in low risk products such as Murabahah. The minimum initial subscription is KWD50,000 (US$188,587) per investor without any subscription or exit fees and offers bi-weekly exit.

INDIABearys seeks partnerBangalore-based Bearys Group is scouting for a partner to raise some US$350 million to fi nance its two special economic zones (SEZ) in Ban-galore and Mangalore as well as a few other projects.

Bearys Amanah Investment CEO Shariq Nisar said the company is hold-ing talks with several Shariah compliant private equity players in the over-seas market and hopes to fi nalize one partner in the next three to four months.

He said the UBS Group of Switzerland, Dubai Islamic Bank and Gulf In-vestment House are among the entities the Bearys group is negotiating with. Bearys Amanah Investment is the real estate investment arm of the INR20 million (US$461,000) Bearys group.

MIDDLE EASTShariah mode fi ve-star hotelThe Al Awadhi Investment group plans to build a 300-room Shariah compliant fi ve-star hotel in Fujairah early next year with a total investment of AED350 million (US$95.3 million). Chief Executive Sharif Al Awadhi said the two-year-old company wants to tap the opportunities offered by Fujairah as a destination that attracts both foreign and domestic tourists.

The company, which is mainly involved in the real estate and industrial sectors in Fujairah and Dubai, is in talks with a European hotel management company. With an initial capital outlay of AED300 million (US$81.7 million), it has a number of investments in the industrial and fi nancial sectors apart from interests in the real estate sector in Fujairah, Dubai and Ajman.

MALAYSIANew Islamic fi nancial productsExport- Import Bank of Malaysia (EXIM Bank) is expected to roll out its Islamic fi nancial services products early next year. Targeting specifi c sectors and customers, they will include Takaful services.

The move is part of the bank’s strategy to add depth and breadth to its activities. Other measures include upgrading its information technology infrastructure to increase effi ciency and a corporate improvement program for a better overall delivery system.

QATARFirst retail bank for QatarAl Khaliji, Qatar’s newest bank, opened its fi rst retail outlet last month at Doha’s Q-post Center. By the end of 2008, Al Khaliji plans to have six branches, two service centers and 10 offsite ATMs throughout Qatar.

The bank was formed in Doha in January 2007 and completed its initial public offering and listing on the Doha Securities Market in August. The bank, which aims to become a major corporate and retail commercial bank across the Gulf; has recruited an international management team and nearly 240 employees.

UAENew fi nance fi rmMubadala Development Company, Waha Capital, A A Al Moosa Enterprises and Fullerton Financial Holdings have signed an agreement to incorporate a new fi nance company headquartered in Abu Dhabi, to be called Dunia Finance.

It will have a nationwide presence and focus on the retail and small business segments, providing a range of loans, credit cards and fi nancial planning services as well as deposits for non-individual customers.

USShariah fund goes LatinUS-based asset management fi rm Crescent Partners plans to launch a US$500 million Shariah compliant private equity fund aimed at placing Middle East liquidity into the Latin American region by the end of the year. The fund will be invested in a variety of sectors including agriculture, infrastructure and alternative energy.

Chief executive Paul Homsy said he sees a lot of potential for Middle East investors in the Latin American region and that the fi rm has already received a great deal of interest from Middle East investors. “One of the challenges of doing Shariah compliant private equity is that most deals are highly leveraged but, to fi t within Shariah guidelines, can have no more than 30% debt to equity ratio. But in Latin America most deals are done entirely with equity, which makes structuring them in a Shariah compliant way easier,” he added.


© 11th July 2008

SINGAPOREIBA’s fi rst innovative productThe Islamic Bank of Asia (IBA) has launched two Shariah compliant products, an innovative profi t rate swap structure and a foreign exchange (FX) forward purchase contract, respectively designed to help customers manage liability risks and maximize opportunities from currency market movements. Available in the G7 currencies, they help companies limit their exposure to fl uctuating funding costs and currency prices.

IBA vice president of product development Kareem Hussaini said users can do this with less time, less costs and less documentation. “These new structures can cut traditional transaction costs by as much as half,” he contended. IBA CEO Vince Cook said the bank is working towards launching its fi rst Shariah compliant Asian equities fund and real estate fund targeting special opportunities in the region later this year.

UAEDubai International Capital eyes AsiaDubai International Capital, an asset management fi rm with more than US$12 billion, has earmarked US$5 billion over the next two to three years for Asia, especially China and India, said Sameer Al Ansari, the company’s CEO. He said any new investments the company makes in 2008 will be in Asia because the economies in the region may be expanding faster than the global average this year.

UKCahn affi rms Shariah commitmentUK Trade & Investment CEO Andrew Cahn has spoken of the UK’s strengthened commitment to Islamic banking, highlighting the growing importance of Islamic fi nance around the globe and the need for the UK’s fi nancial industry to provide an open door to the thriving market. “The growth of Islamic fi nance in the past few years has been remarkable, and it has proven itself resilient to some of the recent shocks to the fi nancial markets,” he noted.

Richard Thomas, a member of the UK Trade & Investment Financial Services Sector Advisory Board and chairman of the sub-committee on Islamic fi nance, expounded on the need for an increase in Islamic fi nancing in the UK, saying: “2008 is off to a fantastic start. The Financial Services Authority has licensed two new Islamic banks as well as the fi rst stand alone Islamic insurance provider in Europe, and I am confi dent that more will follow. Investors want and expect their investments to be Shariah compliant and this demand is only going to become more prevalent in the near future.”

MALAYSIAMalaysian Sukuk on global pricing indexIslamic fi xed income content will be at the core of the evaluated prices for Malaysia’s Islamic and conventional bonds to be provided to investors in a tie-up between international news agency Thomson Reuters and local bond pricing agency Bondweb Malaysia. Although Malaysia is the world’s biggest Sukuk issuer, only 1% of the bonds is being traded on a daily basis, said Bondweb Malaysia’s chief operating offi cer, Meor Amri Meor Ayob.

He felt the arrangement will enable market players to have the pricing benchmark to rely on to further stimulate trading. Bondweb Malaysia will provide evaluated prices — calculated price based on certain criteria — for the bonds. “We do not set prices but give the best prices that they can look at. We can kick start the price discovery exercise for players,” he told reporters the signing the agreement on the strategic partnership.

Thomson Reuters managing director Simon Soo Hu said although its service provides conventional bond data, the agreement also tries to harmonize the different Islamic bond sectors across the globe. He noted that Islamic fi nance is set to grow because more fi nancial institutions are offering Islamic fi nance services while the number of funds available to the investors is also on the rise and Islamic countries are showing phenomenal fi nancial growth opportunities

SRI LANKAShariah compliant Visa cardCeylinco Profi t Sharing Investment Corporation, one of Sri Lanka’s leading Islamic fi nancial institutions, has launched the region’s fi rst stand-alone Shariah compliant Visa credit card to meet customer demand to conduct banking and fi nancial transactions in accordance with the Shariah.

The Ceylinco Profi t Sharing Visa card features include interest-free credit up to 51 days, supplementary cards, Takaful income plan at nominal fee, global acceptance and cash advances at over 800,000 automated teller machines around the world.

SWITZERLANDUBS moves into Saudi ArabiaSwiss banking group UBS’s Saudi Arabian unit is to begin operations by year end, focusing on the group’s global core securities businesses offering international and domestic clients comprehensive wealth management, asset management and investment banking services.

John Fraser, chairman and CEO of UBS Global Asset Management and group executive board member, will also become chairman of UBS Saudi Arabia while Mohammed Al Dhoheyan, currently CEO of the Development and Management House for Investments, will be vice chairman. UBS plans to have Mohamed Sammakia as CEO.

UBS has also sought approval to open a branch in the Qatar Financial Centre and also intends to expand its regional investment banking division and equity research coverage across the region.

BAHRAINCrediMax to launch Shariah cardsBahrain’s leading credit card issuer and acquirer CrediMax expects its Shariah compliant credit and debit cards, to be launched in the next three months, to add 10% to 15% to its business. It also hopes 20% to 30% of existing customers will convert to the Shariah cards within a year.

It has signed an agreement with Bahrain-based Shariah Review Bureau (SRB) to ensure that the design and launch of new products are in compliance with the Shariah. CrediMax is also fi nalizing a line of Islamic products and will release them after SRB’s endorsement of Shariah compliance.


© 11th July 2008

UAEAl Hamad Group gets Islamic fi nancingDubai Islamic Bank (DIB) has arranged Islamic fi nancing worth AED 824 million (US$224.34 million) for Al Hamad Group to fi nance a portion of the Remraam project coming up in Dubailand. The AED 3.37 billion (US$0.917 billion) project consists of 108 residential buildings, including facilities such as shopping malls, health clubs and mosques.

Ayman Kamal, DIB’s chief of investments and real estate for DIB said DIB plans to expand its Islamic fi nancing business among both regional and local contractors. Al Hamad Group Chairman Nashaat Sahawneh said DIB has supported the group in different projects worth over AED 9 billion (US$2.45 billion), most of which have been completed.

UKIBB pushes home planIslamic Bank of Britain (IBB) has launched its Home Purchase Plan (HPP) as a Shariah compliant mortgage alternative based on Ijarah and diminishing Musharakah. Under this arrangement, the customer and the bank jointly buy the home and over a set term, the customer makes monthly payments to buy the bank’s share.

IBB commercial director Sultan Choudhury said HPP is the only such product in the UK whose source of funds is 100% Shariah compliant. “It gives UK consumers a real alternative to conventional interest-based mortgages, which have suffered in the current fi nancial climate,” he added.

MIDDLE EASTBIB inks partnership with Yemeni bankBahrain Islamic Bank (BIB) and Islamic Bank of Yemen have entered into a strategic partnership under which BIB has a 43% stake in the oldest Yemeni Islamic bank. The deal enables the Yemeni unit to regain its stature and start competing with other Islamic and commercial banks operating in the country.

BIB chairman Khalid Abdullah Al-Bassam said his fi rm, having no branches outside its country, seeks to use its investment in Yemen to expand and meet the increasing demand for Islamic fi nancial and banking services in the Arab and Islamic worlds.

KENYANew branchesGulf African Bank of Kenya plans to open 25 branches throughout the country due to overwhelming response for its Shariah-oriented serv-ices. Its offi cials said that within three months of its operation, it had accumulated deposits amounting to KES1.1 billion (US$16.6 million).

Chief executive Najmul Hassan said the bank’s expansion program will reach every corner of the country. “We came from Pakistan with this Shariah compliant banking system and we have been overwhelmed by the response from both Muslims and Christians,” he added.

KUWAITGHC sees 59% rise in profi tKuwait-based Gulf Holding Company (GHC) turned in a net profi t of KWD18.72 million (US$71 million) for the fi nancial year 2006-2007, up 59% over the previous year. It plans a fi rst dividend of 20%, payable as 10% cash and 10% bonus shares. Vice chairman and CEO Ahmed Al Ameer said it was achieved against the backdrop of the global mayhem from the sub-prime crisis, rapidly rising global prices for raw materials and a near slowdown in some of the most advanced markets.

GHC chairman Abdul Rahman Al Jasmi said the group’s steady growth since its inception two years back and its rational approach, coupled with exclusivity, have ensured that retail and residential units in both its fl agship projects were sold in record time, with the substantial rev-enue to be refl ected in this year’s fi nancial result. GHC listed subsidi-ary Villamar Sukuk’s US$190 million Sukuk bond issue on the Dubai International Financial Exchange (DIFX) and trade in has begun.

BAHRAINGBCORP’s HQ relocatesBahrain-based investment bank GBCORP has relocated its headquarters to its new fully-owned GBCORP Tower in the Bahrain Financial Harbor. It said this marks its fi rst year of operations as an award winning, fast growing Shariah compliant investment bank and the beginning of its vision of ushering in a new era of global Islamic investment banking.

Chief executive Mark Hanson said: “Our new headquarters will enable the bank to effectively service the expanding needs of our investors and the continued growth of all of our functional units including wealth management, investment placement, investment banking and related operations. We continue to see extraordinary demand for our Shariah compliant investment products driven by our global expansion strategy.”

UAETamweel’s US$300 million SukukDubai’s Tamweel plans to issue a new dirham-denominated Sukuk by the end of this month. Although Tamweel and its advisers have not disclosed the target size, it is expected to be about US$300 million and is being arranged by Standard Chartered, Dubai Islamic Bank and Badr al-Islami, the Islamic banking arm of Mashreqbank.

Tamweel has been assigned an ‘A’ rating by Fitch Ratings and an ‘A3’ rating by Moody’s Investors Service.

UAE‘Enough banking licenses’Emirates NBD Chairman Ahmed Humaid Al Tayer hopes the UAE Central Bank will stop issuing new banking licenses until there is a real need in the market.

Expressing concern over the granting of three licenses for Islamic banks in one year, Al Tayer said the current developments in the banking sector require more mergers and acquisitions to create giant fi nancial institutions rather than licenses for small banks. The increasing number of small banks will not support high economic growth, he contended.


© 11th July 2008

INDONESIAShariah banking to grow 52% by 2010Shariah banking in the republic looks set to grow at a compounded annual growth rate of 52% from 2008 to 2010, said market research fi rm RNCOS in its analysis. The report said a large Muslim population, low penetration of Shariah banking and improvement in regulatory framework will drive the Islamic banking industry to cross IDR119 trillion (US$13 billion) by 2010. The central bank of Indonesia is following a blueprint aimed at strengthening the Islamic banking industry by 2015, focused on increasing the effi ciency of Islamic banking, integrating it into the Islamic fi nancial industry, and ensuring it conforms to global Islamic banking standards.

BAHRAINUnicorn disposes shares in OrimixIslamic fi nance player Unicorn Investment Bank has sold its controlling stake in Orimix Concrete Products to Kuwait listed investment group Al Safat Investment for US$44.9 million for a return on capital of 160% and an internal rate of return of 98%. It had bought the stake for US$17.2 million in November 2006 and placed it in its private equity fund, the Unicorn Global Private Equity Fund I.

Unicorn managing director of Global Private Equity Aamir Khan said: “The increase in value demonstrates the success of Unicorn’s private equity business model. Our team worked closely with the management of Orimix to almost double it in size by expanding capacity and improving profi tability. The sale of this single investment has allowed us to distribute over 50% of the Fund’s initial invested capital to unit holders in less than two years.”

KUWAITProfi t growth for biggest lenderNational Bank of Kuwait posted a 16% increase in net profi t for the second quarter. Kuwait’s biggest lender by assets boosted quarterly profi t to 93 million dinars (US$350.4 million) compared with 80.30 million dinars (US$302.79 million) in the same period a year ago. Return on assets was 3.1% in the fi rst six months while return on equity reached 23.5%.

SOUTH AFRICAJSE in partnership with FTSEThe JSE Securities Exchange, in partnership with global index provider FTSE Group, recently launched the JSE Shariah all share index and will launch the JSE Shariah top 40 index on the 21st July. An exchange-traded fund off the index is due by the end of September.

The Shariah top 40 index, unlike the Shariah all share which is a benchmark index, will be tradable. Ana Forssman, a senior general manager at the JSE said the move was to meet demand for Shariah compliant investment products.

She said the JSE will consider the rest of Africa as well, in line with its Africa growth strategy. The global market for Islamic investment products is growing at an annual 15%-20%, says the FTSE Group, which also predicts that equity fund assets will increase from US$15.5 billion to US$53.8 billion internationally by 2010.

QATARQatari banks “strong performers”Qatari banks and industries are expected to deliver strong results for the second quarter of this year, said investment bank EFG-Hermes. In its inaugural Qatar Results Review, it said Qatar Islamic Bank is predicted to have a year-on-year (y-o-y) earnings growth of a massive 89% as Islamic banking fi rmly takes root in the country.

On the industry front, Industries Qatar is expected to deliver strong results for its second quarter with EFG-Hermes forecasting 57% y-o-y earnings growth, while Qatar National Bank’s second quarter results would have strong growth as the underlining theme.

“On a y-o-y basis, we anticipate 45% earnings growth and 35% total income growth,” EFG said. “However, strong seasonality in the form of dividend receipts and high trading income is going to make quarter-on-quarter growth results diffi cult to beat. Spread recovery will likely continue as the credit crisis continues to restrain international competition.”

ARE YOU ON A CORPORATE SUBSCRIPTION?

60% cost savings to your company

Make Islamic Finance news available group wide through your intranet

UAEAldar, Sorouh sign deal with NoorDubai-based Noor Islamic Bank (NIB) has entered into a fi nancing agreement with Aldar Properties and Sorouh Real Estate, two of Abu Dhabi’s largest developers, to provide up to 90% fi nancing for their residential developments. NIB said it will provide home fi nancing for completed properties as well as for those which are under construction.

SINGAPOREShariah compliant REIT?A Singapore property trust is seeking to be Shariah compliant to draw investment from the Middle East. Real estate investment trusts (REITs) pay most of their rent as dividends, and these steady yields are permissible under Islam so long as their buildings do not house businesses involved in alcohol, gambling and other immoral activities.

Singapore-based Islamic Bank of Asia has been asked to conduct due diligence on Cambridge Industrial Trust (CMIT.SI) and an announcement that it is Shariah compliant is expected by next week. An initial report is said to have showed that few of the trust’s 43 assets broke Shariah principles.

www.islamicfi nancenews.com

© 11th July 2008

QATAR QIC’s profi ts leap by 66%Qatar Insurance Company (QIC) reported a 66% hike in net profi ts for its fi rst half to QAR408.32 million (US$112.14 million), based on faster growth in investment income.

Net premium income grew by 39% to QAR543.77 million (US$150 million), while its net earned premium was up 42% to QAR450 mil-lion (US$124 million) between January and June 2008.

Total assets were valued at QAR6.58 billion (US$1.8 billion), comprising investments worth QAR3.5 billion (US$961.27 million) in cash and cash equivalents of QAR1.43 billion (US$392.74 million), reinsurance contracts of QAR780 million (US$214.22 million) and insurance and other receivables of QAR550 million (US$151.03 million).

QATARQIIB posts 67% jump in net profi tQatar International Islamic Bank (QIIB), which plans to open two Takaful companies in Pakistan and Mauritania, posted a 67% increase in its net profi t to QAR350.8 million (US$96.43 million) in the fi rst six months of this year.

Chairman Sheikh Khalid bin Thani al-Thani said net fi nancing income rose 11% to QAR225 million (US$61.85 million) while assets grew by 37% to QAR12.6 billion (US$3.46 billion) for the same period.

He said the results refl ect the bank’s right direction in meeting customer demands and achieving growth. QIIB is also contemplating a branch in Kuwait and a fi nancing fi rm in Morocco.

MALAYSIAManulife keen to set up Takaful unitManulife Insurance is keen to venture into the Takaful sector. President/CEO Peter D Robertson said: “Our board of directors is interested in a Takaful subsidiary, maybe a few years down the road, although at the moment Bank Negara Malaysia is not issuing any new licenses.”

As at June, the central bank of Malaysia had issued only eight Takaful licenses, including four to local-foreign groups to establish Islamic insurance services in the country.

QATARQatari, Bahraini fi rms form JVQatari and Bahraini insurance companies have teamed up to form Qatar-Bahrain Takaful Insurance Company, a 50: 50 joint venture with a paid-up capital of QAR250 million (US$68.7 million). The company’s founders from both countries will hold a combined 40% stake, with the remaining 60% to be offered for public subscription to Qatari and Bahraini citizens.

Deputy chairman Sameer Ibrahim Al Wazzan said the Takaful insurer will be registered in Qatar and listed initially on the Doha Securities Market after the initial public offering, and later, on the Manama stock exchange. The insurer will start operations early next year and initially focus on the real estate, motor, energy and marine segments.

As for plans to open an offi ce in Bahrain, Sameer said this would be in Doha and later on, possibly in Manama.

UAEInsure Direct’s big car schemeInsure Direct, the insurance and reinsurance broking company under Dubai World, has developed a “niche-specifi c” product for high-performance/high-value motor vehicles valued at AED200,000 (US$54,000) and more. The high-yielding HPV Scheme is said to provide an easy and effortless insurance option for an exclusive category of clients.

Through this scheme, launched in compliance with the mandatory motor vehicle insurance requirements of the UAE, Insure Direct aims to provide insurance cover to a highly productive customer base in the country.

The HPV Scheme provides coverage in the UAE and is automatically extended to Oman. It will support three years’ agency repairs from the date of the fi rst registration of the vehicle, as against the industry standard of two years’.

UAEMethaq nets US$408 millionMethaq Takaful Insurance has gained US$408 million in net profi ts since its incorporation on the 11th March this year. The fi rm is set to release a detailed income statement on Thursday (17th July).

MALAYSIAEtiqa to educate in cyberspaceEtiqa Takaful is focusing on cyber communities to grow its local Takaful penetration, be it consumers or agents. Vice-president Izzudin Shah Othman said Etiqa is working with the energy, water and communications ministry to establish a community center in cyberspace to educate the public on Takaful products.

Etiqa currently offers general insurance products online such as personal accident, motor and travel, but will offer a wider range once the cyber community is in place.

“We will try to move to life products eventually, but they are more complicated and we need to emphasize on educating the cyber community fi rst,” he said.

www.islamicfi nancenews.comRATINGS NEWS

© 11th July 2008

MALAYSIAIPPs’ bonds face downgradeThe independent power producers (IPPs) face a possible downgrade of their bonds after a windfall profi t levy was imposed on them from the 1st July. Their association’s president, Philip Tan, said the value of their ringgit bonds and notes was estimated at about RM20 billion (US$6.13 billion) in 2006, making them the largest Sukuk issuers in the country.

The 30% levy is part of government measures to reduce fuel subsidies due to high oil prices. It kicks in when the return on assets exceeds 9% for each fi nancial year. Tan warned the levy will have an impact beyond the fi nancial position of the IPPs and adversely affect the overall economy and investor confi dence in the country.

UAETamweel gets an ‘A’Fitch Ratings has assigned long-term senior debt ratings of ‘A’ to Tamweel Sukuk (TSL)’s trust certifi cates due June 2013 and Tamweel Funding (TFL)’s US$300 million exchangeable trust certifi cates due January 2013. The fi nal rating for TSL trust certifi cates is contingent on the receipt of fi nal documentation.

The transactions involve the sale of Shariah compliant assets by Tamweel to TSL and TFL, which will then issue the certifi cates and make periodic distributions to certifi cate holders from income generated by the assets.

For both transactions, Tamweel is required to provide suffi cient funds to satisfy any outstanding periodic distribution amounts in full plus the dissolution distribution amount upon maturity, in the case of a dissolution event. However, the issuer/trustee and the certifi cate holders have no right to sell or dispose of the trust assets and related rights.

MALAYSIAKFHM is stableMARC has assigned long-term and short-term fi nancial institution ratings of ‘AA-’ and ‘MARC-1’ respectively to Kuwait Finance House Malaysia (KFHM). The outlook is stable.

The ratings are refl ective of KFHM’s banking franchise, healthy growth, strong profi tability, sound capitalization, robust fi nancial profi le as well as the support by its major shareholder, Kuwait Finance House, should it need any. Formed in 2005, KFHM is the fi rst foreign Islamic bank to be licensed in Malaysia.

At the same time, Standard & Poor’s also placed on CreditWatch with negative implications its “BBB-” debt rating on the senior secured Sukuk certifi cates due 2011 issued by Tabreed 06 Financing Corp., and its “BB” debt rating on the subordinated convertible Sukuk certifi cates due 2011 issued by Tabreed 08 Financing Corp.

UAETabreed on CreditWatchNational Central Cooling’s (Tabreed) long-term corporate credit rating has been assigned ‘BB-’ on CreditWatch by Standard & Poor’s Rating Services with a negative outlook. The company’s senior secured Sukuk certifi cates were also rated at ‘BBB-’ debt rating, while its subordinated convertible Sukuk certifi cates’ debt rating is at ‘BB’. Both are placed with negative implications and are on CreditWatch as well.

The ratings are placed on CreditWatch due to Tabreed’s announcement of a new business model that may create a new asset holding company and divest existing and future assets into joint ventures. The company also revealed its revised fi nancial forecasts that may include an increase in its future capital expenditure program, another factor for the CreditWatch.

S&P is to meet with the Tabreed management to discuss the development of the new business model and get a clearer picture of the revised forecasts so as to resolve the CreditWatch status.

MALAYSIA‘A-’ for HSBCAT from FitchFitch Ratings has assigned an Insurer Financial Strength (IFS) Rating of ‘A-’ to HSBC Amanah Takaful (Malaysia) (HSBCAT) with a stable outlook which refl ects Fitch’s expectation that HSBCAT will show steady improvement in fi nancial results between 2008-2010 and break even for the shareholders’ account in this period.

Fitch regards HSBCAT as an important member of HSBC Holdings (Long-Term IDR ‘AA’). The HSBC group’s franchise value, distribution channel and management support were key factors in consideration of the rating. While HSBCAT is only 49% owned by the group at present, its results are fully consolidated into its parent’s fi nancial statements, refl ecting the HSBC group’s effective control over the entity’s management and board of directors.

The rating also refl ects HSBCAT’s low-risk product profi le and adequate capitalization. The company reported a net loss of MYR19.7 million (US$6 million) in 2007 compared with a net loss of MYR11.1 million (US$3.4 million) in 2006. Fitch expects that HSBCAT’s fi nancial performance will gradually improve in 2008-2010 as it achieves greater economies of scale. In consequence, Fitch believes that the company will remain securely capitalized over this period.

UAEFitch rates ‘AA-’ for Dubai Holding’s MTNFitch Ratings has assigned Dubai Holding Commercial Operations MTN’s CHF250 million 5.25% notes due 14th July 2011 and JPY10 billion fl oating-rate notes due 3rd July 2013 ‘AA-’ ratings.

These notes are issued under Dubai Holding Commercial Operations MTN’s US$8 billion debt issuance program that is unconditionally and irrevocably guaranteed by Dubai Holding Commercial Operations Group (DHCOG). The program is rated ‘AA-’. However, it should be noted that the program size was revised in June to US$8 billion from US$5 billion.

DHCOG is effectively 100%-owned by Dubai Holding, which in turn is 97.4%-owned by Sheikh Mohammed Bin Rashid Al Maktoum, vice president and prime minister of the UAE and ruler of Dubai, 2.5 % by MRSA Investment which is owned by the group’s executive chairman who is also a UAE cabinet minister, and 0.1% by Sheikh Rashid Bin Mohammed Al Maktoum.

www.islamicfi nancenews.comRATINGS NEWS

© 11th July 2008

THIS TIME LAST YEAR• The value of traded shares in Saudi Arabia dropped

by 43.49% at SAR1.11 trillion (US$295.94 billion), compared to 52.58% in 2006.

• Investment Dar and affi liated fi rms raised their stake in Boubyan Bank to 11.3% from an initial 10.2% for a 20% acquisition of the bank.

• Al Haramain Islamic began offering New Zealand’s fi rst Shariah compliant mortgage product to the country’s 36,000–odd Muslim population.

• Bear Stearns signed a letter of intent with a consortium of Saudi business leaders to form Bear Stearns Arabia Asset Management.

• Amlak Finance’s profi ts for the 1st half of 2007 surged by AED25 million (US$6.8 million), at 31% reaching AED106 million (US$28.85 million), while its revenue saw a 54% hike.

• Al Rajhi Bank opened its 14th branch in Malacca, bringing the bank closer to hitting its target of 50 branches in Malaysia.

• Abu Dhabi Commercial Bank revealed no near term plans to merge with any UAE banks.

• The Labuan International Financial Exchange listed its second Exchangeable Sukuk, with the induction of Khazanah Nasional’s US$850 million Sukuk.

MALAYSIAMARC revises rating on Tenaga’s notesMalaysian Rating Corp (MARC) has revised its rating outlook to stable from developing on Tenaga Nasional Berhad’s (TNB) AA+ long-term issuer rating and MARC-1ID/AA+ID Islamic debt issue ratings to refl ect the utility’s recent success in securing offsetting tariff increases effective 1st July 2008 to counter increases in fuel and purchased power expenses.

Concurrently, MARC has reaffi rmed the ratings for the following issues: MYR2.0 billion (US$616 million) Al-Bai’ Bithaman Ajil Bonds rated AA+ID; MYR1.5 billion (US$462 million) Murabahah Commercial Papers and Murabahah Medium Term Notes rated MARC-1ID/AA+ID; and MYR1.0 billion (US$308 million) Al-Bai Bithaman Ajil Notes Issuance Facility rated AA+ID.

The approved tariff hike dispels earlier uncertainties surrounding the impending gas price revision, particularly its implications on earnings and cash fl ow generation. The revised tariffs will provide TNB with improved certainty pertaining to generation cost recovery, as well as earnings and cash fl ow generation.

They refl ect TNB’s favorable demand characteristics, moderate gearing levels, solid operational record and considerable regulatory protection. The ratings also incorporate the utility’s dominant position in the domestic electricity generation and distribution industry.

SAUDI ARABIASEC rides on sovereign upgradeFitch Ratings has upgraded Saudi Electricity Company’s (SEC) long-term issuer default (IDR) and senior unsecured ratings to ‘AA-’ from ‘A’, with a stable outlook. The upgrade is in line with Saudi Arabia’s rating boost from ‘AA-’ to ‘A+’.

SEC’s ratings are aligned with the sovereign’s to refl ect the government’s strong tangible and intangible support for SEC.

UAEFajer ReTakaful gets an ‘A-’Al Fajer ReTakaful Insurance Company KSCC (Al Fajer Re), a subsidiary of Dubai Banking Group, has been assigned a fi nancial strength rating (FSR) of ‘A-’ and an issuer credit rating (ICR) of ‘A-’ by US-based rating agency A M Best. The outlook on both ratings is stable.

This refl ects the company’s excellent risk adjusted capitalization, well capitalized reTakaful fund, the capability of its regionally experienced management team and the strength of its principal shareholders, Dubai Group and Global Investment House.

Al Fajer Re is the fi rst independent reinsurance company to obtain an ‘A-’rating by a globally recognized rating agency and the fi rst reTakaful company to be granted an ‘A-’ as a start-up. The company provides Shariah compliant reinsurance protection, predominantly on a treaty basis, to non-life risks.

SAUDI ARABIAPositive outlook on kingdomSaudi Arabia’s long-term local and foreign currency issuer default ratings (IDRs) has received an upgrade from Fitch Ratings to ‘AA-’ from ‘A+’, with a positive outlook. The Country Ceiling has also been upgraded to ‘AA’ from ‘AA-’ and its short-term IDR upgraded to ‘F1+’ from ‘F1’.

Saudi Arabia’s main credit strengths are its very low indebtedness and large domestic and external assets. General government debt, all of it domestic, fell to 7.2% of GDP at end-2007 while the wider public sector, represented mainly by profi table state-owned fi rms, has little external debt. A strong banking system also makes for low contingent liabilities from that source, notwithstanding some acceleration in credit growth this year.

However, the ratings are moderated by volatile oil prices which constitute 90% of Saudi Arabia’s revenue, and a sharp drop in oil prices will threaten sovereign creditworthiness.

www.islamicfi nancenews.comIFN REPORTS

© 11th July 2008

Cagamas HKMC, which launched the world’s fi rst Islamic mortgage guarantee program (MGP) last week, will explore all Islamic countries if market conditions are feasible, said executive director Steven Choy. Cagamas HKMC is a joint venture between Cagamas Holdings and Hong Kong Mortgage Corporation.

The MGP, covering both Islamic and conventional mortgage fi nance, provides fi nancial institutions, particularly mortgage originators, a mortgage guarantee facility with a portfolio and risk management solution to manage the credit risk exposure of their mortgage portfolio while continuing to provide affordable mortgage loans to homebuyers.

“We have set a new industry standard. We are keen to look at markets in the Islamic countries if the opportunity is there and market conditions are feasible,” Choy told Islamic Finance news on Tuesday.

He expects the MGP to be well received by Islamic banking institutions in Malaysia in view of the capital relief to be derived from the program.

Choy said of the RM174.3 billion (US$54 billion) of housing loans outstanding in the banking industry as at the 31st December 2007, RM18 billion (US$5.5 billion), or 10.3%, was in respect of Islamic house fi nancing.

Cagamas’ outstanding housing loans (including Islamic house fi nancing debts) purchased with recourse amounted to RM12.6 billion (US$3.88 billion), or 7.2%, of the total housing loans outstanding in the banking system.

Cagamas’ outstanding Islamic fi nancing debts constituted about 15% of the banking industry’s Islamic house fi nancing.

Choy added that a total of RM48.1 billion (US$14.8 billion) of new housing loans (inclusive of Islamic house fi nancing) was approved in 2007. He said Cagamas will continue to issue debt securities as long as there is a need for Islamic banking institutions to raise funds through Cagamas.

“We are positive that this will happen but not certain of the quantum and timing of the transaction,” he said. Cagamas had issued RM200 million (US$62 million) of Islamic commercial papers in May.

However, according to Choy, demand for debt securities is expected to dampen as investors will likely demand higher yields amid rising infl ation globally.

However, investors are seeking quality papers and this augurs well for Cagamas debt securities, which constituted about 23.5% of the AAA private debt securities market.

“Our experience shows that Cagamas debt securities are sought-after, even during the Asian fi nancial crisis in 1997-99. We managed to attain our ‘AAA-’ rating during that challenging period, unlike the other ‘AAA-’ institutions,” Choy added.

By Dalila Abu Bakar

World’s fi rst Islamic mortgage guaranteeMALAYSIA PAKISTAN

Good returns for Islamic fundsAl Meezan Investments’ dividends distribution for its various open end funds for the year ended the 30th June 2008 demonstrates the remarkable success of Shariah compliant funds. The distribution of PKR10 per unit for Meezan Islamic Fund (MIF) means 16.7% return on the opening ex-div NAV of PKR59.89 and 20% on face value of PKR50 per unit). 1 Pakistan Rupee (PKR) is equivalent to US$ 0.013.

For Meezan Islamic Income Fund (MIIF) the fi nal distribution is PKR1.35 per unit, in addition to an interim dividend of PKR3.25 per unit, for a total payout of PKR4.60 per unit. This translates into a return of 9.19% on the opening ex-div NAV of PKR50.03 and 9.2% on the face value of PKR50 per unit for the year ended the 30th June 2008.

Al Meezan Investments, rated AM2 by JCR-VIS, currently has PKR17.4 billion net assets under management as compared to PKR12.2 billion as on the 30th June 2007, which refl ects a substantial increase of 42.62%. This success is refl ective of the confi dence and trust of both individual and institutional investors.

MIF is Pakistan’s largest open end equity fund in the private sector and has been rated 5-Star by both PACRA and JCR-VIS for its superior performance relative to its peers. At the close of the fi nancial year ended the 30th June 2008, MIF, despite recent downturn of stock market, has been able to outperform the Karachi Stock Exchange’s KSE-100 Index by 11.04%.

MIIF is the fi rst Shariah compliant open end income fund in Pakistan. It has been assigned fund stability rating of A(f) by JCR-VIS. The Fund has earned a total net income of PKR558 million. At the close of the fi nancial year net assets of the Fund increased 81.44% to PKR5.74 billion from PKR3.16 billion last year.

Meezan Capital Protected Fund-I, Pakistan’s fi rst Shariah compliant capital protected fund, was jointly launched with Meezan Bank in May 2008 to provide a long-term investment avenue to investors seeking protection of their capital along with potentially good returns of the stock market. Upon maturity on the 29th June 2011, investors will get their principal amount along with the profi t earned. The subscription of this fund remains open till the 31st July, 2008.

By Shabbir Kazmi

Ariful Islam, Chairman of Al Meezan Investments (middle) and COO of Meezan Bank and CEO of Al Meezan Investments Mohammad Shoaib (left) at the launching of a fund during a press conference in 2005.

www.islamicfi nancenews.comIFN REPORTS

© 11th July 2008

Opportunities galore for Islamic fi nance playersISLAMIC WORLD

When the Group of Eight Islamic Developing Countries (D-8) met in Malaysia this week, Islamic fi nance per se merited only a couple of sentences in the joint statement. Yet, it was obvious that the initiatives and measures Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria, Pakistan and Turkey agreed upon will spawn a host of opportunities for players in the Islamic fi nance sector.

Preferential tariff arrangements, enhanced trade, greater private sector involvement in the development process, energy and alternative energy development, expanded food production — these are some of the areas where funding will be a major factor. And with the D-8 being an offshoot of the Organization of Islamic Conference, Islamic fi nance will be the funding channel of choice.

NATO — No Action, Talk Only — is a notorious feature of most summit meetings of government leaders, but the D-8 meeting this time could be an exception in view of the intensity of the economic woes roiling the globe which have a real potency to derail national economies.

Besides the spiraling oil prices which have risen by 40% in this half-year alone, others include sharply higher food prices, shortage of food supplies, and continuously increasing consumer prices sparking stagfl ation — infl ation amidst an economic slowdown or even reversal. These issues have the potential to bring down leaders and governments, hence the seriousness at the D-8 meeting in making sure that words do indeed translate into action.

“Taking into account the adverse effects of the current global economic crisis, we agree to ensure the continued relevance of the D-8, promote the interests of developing countries and redouble our efforts to meet global challenges through innovative cooperation,” is how the leaders put it.

“We note with great concern the urgent need to address the current global shortage and skyrocketing prices of food items which pose a serious threat to socio economic stability and agree to deepen our cooperation, including joint ventures and private sector involvement, to produce fertilizer, animal feed and the creation of a seed bank to ease the supply side constraints in agricultural inputs to boost food production in short, medium and long term.”

A proposal to create a D-8 Food Fund is also to be examined. Malaysian Prime Minister Abdullah Ahmad Badawi said the group will promote joint ventures among their companies on projects to ease supply constraints in agricultural output. “We want to co-operate in food production. We want to increase food supply as we have land, plenty of good and fertile land,” he stressed.

The surging oil prices spurred the D-8 into making a fi rm commitment in the energy sector, to enhance capacity, transfer technology, explore new sources of supply and develop alternative fuels including renewable sources and even nuclear energy. It also recognized the intra-regional mobility of labor as an effective tool in poverty eradication and development. Promotion of the halal industry through joint ventures was also mentioned in the statement.

All these are in fact a call to the private sector to seek out investment and project opportunities in all these economic activities and thus help realize these aspirations. As the meeting statement noted,

“We acknowledge the efforts of the private sector to strengthen collaboration in the global halal industry, biotechnology and renewable energy as well as the potentials of Islamic banking and fi nance. These sectors can further contribute to our future collaboration in trade and investment.”

Intra D-8 trade expanded by over 200% in eight years, from US$14.5 billion in 1999 to US$60.5 billion in 2007. This is expected further increase with the coming into force of the D-8 Preferential Trade Agreement. The Summit said Islamic fi nance has an important role to play in trade and investment in D-8 countries, and in acknowledging Malaysia’s initiatives as well as those of others in developing Islamic fi nance, it called on member countries to foster greater understanding and cooperation in this fi eld.

In endorsing the D-8 Roadmap for Economic Cooperation for the next 10 years, the Group directed its secretariat to translate it into action plans in the various sectors as well as study the viability of a joint investment fund for D-8 projects. But work has been ongoing — for instance, the D8 Working Groups on Energy and Civil Aviation are already studying the use of biofuels for civil aviation as a direct result of soaring oil prices.

The D-8 has pledged to explore and develop various fi nancing mechanisms, including sourcing funds from outside the grouping, to implement development programs under the 2008-2018 Roadmap.

It will consider, in particular, the fi nancial products being offered by a number of development institutions such as Islamic Development Bank, Asian Development Bank, World Bank and its affi liate, the International Finance Corporation, as well as bilateral development agencies. The D-8 countries said such efforts are needed as the fi nancing requirements for the development of D-8 far exceed the resources available to the governments of the eight countries.

For the private sector, this means funding will be made available, so there shouldn’t be any qualms in undertaking G-8 projects. For the Islamic fi nance players, the G-8 can be likened to a goose that lays golden eggs.

By S. Sivaselvam

“The surging oil prices spurred the D-8 into making a fi rm commitment in the energy sector, to enhance capacity, transfer technology, explore new sources of supply and develop alternative fuels including renewable sources and even nuclear energy”

www.islamicfi nancenews.comCOUNTRY REPORT

© 11th July 2008

Thailand has every intention to develop an Islamic banking and fi nance system. This may include both a retail banking sector, designed to assist small, medium and also large business enterprises, and also an investment banking capability to institute, develop and market project fi nance instruments. These are notably the well-known Sukuk issues that have gained such broad acceptance around the world.

In the case of retail banking, the Islamic Bank of Thailand already has a nationwide branch network providing retail banking products and services. These include savings accounts as well as personal, trade, real estate and housing loans. All these services are based on, and are compliant with, the Shariah.

In the second case of larger scale project fi nancing and capital market operations, Thailand still has some way to go. The organization of Sukuk issues, whether in the form of a national-level sovereign Sukuk or specifi c Sukuk issues for transport, energy or other infrastructure projects, requires international banking capability. This is required both for the design of the funding structure, and also for the mobilization of major international fund providers.

Thailand is fortunate to have good friends in the international banking community with the capability and interest in cooperating with it. But Thailand also has its own knowledge of Islamic fi nance. The Ministry of Finance has teams working on issues of Islamic fi nance in the Fiscal Policy Offi ce and the Public Debt Management Offi ce, as well as at the Islamic Bank of Thailand. The Bank of Thailand is also actively studying the regulatory aspects of Islamic fi nance.

Thailand’s Securities and Exchange Commission as well as the Stock Exchange of Thailand are working on the possibilities of creating secondary markets, as well as the inauguration of a Shariah Index specifying listed companies which are compliant with Islamic principles.

Hence, it is not a question of launching Islamic fi nance in Thailand but rather development of greater sophistication. It needs to train bankers, regulatory supervisors and, in particular, compliance and audit offi cials in these new skills.

For this upgrading process, Thailand welcomes support from its friends around the world. They could include experts from the London market, one of the most sophisticated in the world. They also include those from Malaysia, which has achieved so much to create, in a relatively short time, one of the leading systems of Islamic banking and fi nance in the world. Thai and Malaysian parties, rather than competing can work together to build a stronger base for Islamic fi nance throughout the ASEAN (Association of Southeast Asian Nations) region.

Malaysia has already gone far, setting up specialized Islamic banking and other fi nancial institutions. It has developed a fully operational capital market, making extensive use of Sukuk issues for the fi nancing of transport, energy and other infrastructure projects. With Thailand also implementing extensive infrastructure development projects, it could certainly benefi t from similar initiatives.

The scope and scale of Islamic fi nance in the world today is truly enormous and rapidly expanding. At the present rate of growth, the global market for Islamic fi nance services could soon reach US$1 trillion. But even that may be nowhere near full potential as Standard and Poors has estimated that the potential supply and demand for Islamic fi nance could readily reach US$4 trillion.

However, this estimate was made before the massive oil price escalation in recent times. This has hugely expanded the resource base of oil producing countries, many of which are in the Middle East. Although development is proceeding rapidly in those countries, their relatively small populations and territory size mean enormous fund surpluses are seeking solid and secure outlets with good returns. Increasingly these funds require a Shariah compliant basis for lending.

Nevertheless, there are many challenges facing Thailand, and indeed any country, in gaining access to this massive funding base. Five are particularly important:

• The legal and regulatory framework.• Financial reporting and accounting systems.• Shariah compliance.• Availability of education and skills.• Development of secondary markets.

On the legal and regulatory framework, Thailand recognizes that it is necessary to adapt tax, mortgage and fi nancial institution regulations to accommodate Islamic fi nance. Thanks to the initiatives of the then Chancellor of the Exchequer Gordon Brown, Britain was able to resolve these issues. As a result, an active, even world leading, Islamic fi nance market was developed.

Malaysia and now Indonesia have within ASEAN also achieved impressive results. Thailand has to study their experiences, both from an institutional viewpoint as well as in terms of tax, mortgage and other specifi c transaction issues.

In terms of fi nancial reporting and accounting, there is also a need for international standardization similar to the International Financial Reporting Standards (IFRS) which also forms the basis for

Islamic Finance for Thailand: Opportunities and ChallengesBy Sathit Limpongpan

continued...

“Hence, it is not a question of launching Islamic fi nance in Thailand but rather development of greater sophistication. It needs to train bankers, regulatory supervisors and, in particular, compliance and audit offi cials in these new skills.”


© 11th July 2008

Islamic Finance for Thailand: Opportunities and Challenges (continued)

the Thailand Accounting Standards (TAS). Progress has been made under the guidance of the Accounting and Auditing Organization for Islamic Finance Institutions (AAOIFI), but Thailand will need further cooperation with this and other institutions in order to achieve high standards of operation.

Shariah compliance is a diffi cult and complicated issue. There needs to be harmonization of legal opinions regarding the validity of products, operations and systems. This will ensure that all Islamic fi nancing products, general and specifi c, will gain acceptance universally.

Otherwise, a product which is judged Shariah compliant in one market will not gain acceptance in another market. As Islamic fi nance develops, no doubt experts in Islamic principles, laws and fi nance will reach consensus. But we have not arrived at that point yet.

Regarding skill shortages, Thailand recognizes its particular need for development. The country’s higher education system does not yet provide adequate opportunities to acquire such skills. However, neighboring Malaysia has developed an extensive skills base, with an expanding range of educational institutions and a widening resource of expertise.

Cooperation between Malaysia and Thailand has already commenced and will undoubtedly expand in the future. Islamic fi nance also needs specialized accounting and information technology services. These should not be neglected in the educational process.

Finally, the importance of the development of secondary markets for Islamic fi nance products must not be overlooked. This is where the Securities and Exchange Commission and Stock Exchange of Thailand will need to develop expertise, including study of the experiences of more developed markets. The main markets for Sukuk, which are usually denominated in US Dollar, are international.

However, it will also be important for Thailand to develop Shariah indices comprising locally listed stocks and bonds. These may thereby attract equity capital from Middle East capital markets.

The Second Thailand Islamic Finance Conference held on the 26th June, following from the fi rst event in September 2007, marked a second important step in bringing together interested parties from Thailand’s public and private sectors both inside and outside Thailand. The conference enabled them to gain and share knowledge about the Islamic fi nance sector as well as witness the ever-increasing level of interest in the subject in Thailand.

There is still a long way to go but Thailand has clear directions along the path as well as strong and knowledgeable guides for the journey. Thailand is still at an early stage but it can benefi t from the experience, and indeed, any shortcomings, of those who have traveled the path ahead of it.

Sathit Limpongpan is the deputy permanent secretary in Thailand’s Ministry of Finance. The article is based on excerpts from his keynote opening address at the Second Thailand Islamic Finance Conference.

In this issue

News Briefs

Capital Markets .......................................... 1Control infl ation, please

more inside...

Ratings ......................................................... 8TAQA outperforms more inside...

Malaysia: Turning the Vision into Reality................................................... 9

Interview ....................................................12John Doyle, UOB Asset Management

Ijarah Financing in Malaysia ...................14

Case Study – Dar Al-ArkanSukuk Ijarah ..............................................15

Mudarabah as a Fuel to Growth ............ 17

Key Trends in Islamic Funds, Part 2 .......18

Meet the Head ..........................................20Michael J. Zamorski, DFSA

Termsheet ..................................................21Alam Maritim Resources Sukuk Ijarah and Murabahah

Takaful News .............................................22AXA for Qatar Petroleum

more inside...Takaful Interview ......................................23Haji Syed Moheeb Syed Kamarulzaman, Takaful Ikhlas

Takaful Report ..........................................26Takaful Rating Methodology and Review Summary, Part 2

Moves ........................................................ 29

Deal Tracker NEW ........................................30

Eurekahedge .............................................31

Dowjones Islamic Indexes .......................32

Bondweb ....................................................33

Dealogic – League Tables .......................34

Events Diary...............................................37

Subscriptions Form ..................................38

Country Index ............................................38

Company Index .........................................38

Vol. 4, Issue 32 10th August 2007

T h e W o r l d ’ s G l o b a l I s l a m i c F i n a n c e N e w s P r o v i d e r

MALAYSIACagamas hits big timeAll-round success for Cagamas MBS (CMBS) yesterday as its residential mortgage-backed securities of RM2.41 billion (US$694.72 million) nominal value attracted a book size of RM9.10 billion (US$2.6 billion) from a diverse group of domestic and offshore investors, giving an over-subscription rate of close to four times.

Approximately 51.9% of the bids came from institutional investors, with the remaining

coming from government agencies (22.6%), asset management companies (13.9%), insurance companies (11%) and corporates (0.6%) (see Islamic Finance news, Vol. 4, issue 31, page 1 for more details).

Despite market jitters in the US sub-prime debt market, investor confi dence in the domestic asset-backed securities market was seen from both local and foreign fi xed income investors.

SINGAPORETrust withdrawnArcapita Bank has withdrawn the proposed S$300 million (US$198.29 million) IPO of Ar-capita Unit Trust in Singapore. The strength-ening of private markets for wind and water assets has caused a widening of the valua-tion gap between private and public markets, thus disrupting public market expectations.

Arcapita thus believe that divesting assets via a listing would be sub-optimal at present.

The IPO had already been registered with the Monetary Authority of Singapore, and was slated to be the fi rst Shariah compliant busi-ness to list in the country.

MAURITIUSGetting down to businessThe Mauritian ministry of fi nance has passed the 2007/2008 bill on tax measures, which encompasses Islamic banking services.

Rama Sithanen, the country’s minister of fi nance, elucidated: “Mauritius has a great opportunity to diversify its fi nancial sectors and provide foreigners with new services

in the fi elds of wealth management and investment. Existing and new banks will be able to provide such services.”

Rama added that Shariah compliant institutions are now able to carry out activities under the existing regulations and legal framework for conventional banks.

GLOBALAll-time Sukuk highAccording to latest reports, the global Sukuk market is valued at US$24.5 billion as at the end of June 2007. This marks a 75% growth over last year.

The Malaysian Sukuk market experienced a

growth rate of 71.4%, while the international markets have expanded by 83.3% over the last year. Sovereign Sukuk issues also grew by 521% to US$4.4 billion, with Malaysian ringgit-denominated Sukuk accounting for 70% of the market.

WHY SUBSCRIBE?• To receive the latest developments on the

global Islamic capital markets• Read exclusive research reports from

industry practitioners every week• Get to know the leaders in your industry• Keep abreast of latest deal fl ows and

funds performances• Exclusive online access to

www.islamicfi nancenews.com• Read exclusive articles and case studies

in our annual guides and supplements sent to you in hard copy

REPORT 2007 BAHRAIN

A Product


© 11th July 2008

Thailand, with a population of over 62 million people, is one of the most staunchly Buddhist countries, the religion being practiced by more than 90 % of the Thais. Islam is the second largest religion with over six million followers, most of them in the southern region mainly in the provinces of Yala, Pattani, Narathiwat, Satun and Songkla. The Islamic banking system in Thailand started when the Government Savings Bank (GSB) introduced an Islamic window in 1998, followed by the Bank for Agriculture and Agricultural Cooperatives (BAAC) in 1999. In 2001, Krung Thai Bank introduced its Islamic branch. The Islamic banking system expanded further when the Islamic Bank of Thailand was established by the Thai government in 2003.

Islamic Finance news spoke to Islamic Bank of Thailand’s Product Development Department Deputy Vice President, Tuansaleena Kubaha, on the challenges Thailand faces on the economic front, public acceptance, existing rules and regulations and the future.

1. Is Islamic fi nance a new phenomenon in Thailand?

The Islamic fi nancial system is not new to the Muslim community but may be so to Thailand. Thai Muslims in the southern region and whose way of life is according to the Islamic doctrine started having Islamic fi nance activity in the form of Islamic savings cooperatives since 1987. The fi rst saving cooperative, which operated on the Shariah principle, was established in Pattani, a southern province that has the most number of Muslims, with its main objective being managing and mobilizing funds among the Muslim community.

Then in 1994, the idea to set up an Islamic bank emerged when the government agreed to the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT). Almost 10 years later, the Islamic bank of Thailand was established under the Islamic Bank of Thailand Act 2002. Prior to that, the Thai government attempted to push the Islamic banking system by assigning state banks to have Islamic fi nancial services as a pilot scheme.

In 1998, the Government Savings Bank, which serves a small savings clientele, introduced an Islamic banking window to provide Islamic banking products and services, with the Bank for Agriculture and Agricultural Cooperatives following suit in 1999. The Krung Thai Bank opened the fi rst Islamic Branch in 2001, offering a full range of Shariah compliant banking products and services.

2. How is Malaysia co-operating with Thailand in developing its Islamic fi nance industry?

With plenty of experience to share, Malaysia gradually offered its assistance in developing Thailand’s Islamic fi nance industry. At last year’s meeting between the prime ministers of Malaysia and Thailand, cooperation in Islamic banking was high on the agenda. Prime Minister Abdullah Ahmad Badawi said Malaysia was prepared to offer the necessary assistance (including

on technical aspects) to establish Shariah compliant banks in Bangkok and southern Thailand. During the fi rst meeting of the Thailand-Malaysia Committee on Joint Development Strategy for border areas (JDS) on the 5th August 2004, both countries were keen to develop technical cooperation on the Islamic Education System through study visits to Malaysia as well as on the Islamic banking services, and had explored possible training cooperation between the Islamic Bank of Thailand and Malaysian Islamic fi nancial institutions. The Thai government is also likely to mandate a Malaysian bank as a fi nancial adviser to help structure the fi rst sovereign Sukuk in 2008 for an infrastructure project.

3. Neighboring countries such as Singapore and Hong Kong are going all out to develop their Islamic fi nance sectors. Will Thailand follow suit?

The opportunity is there. In its fi ve-year plan, the Thai government needs about THB1 trillion (US$29.7 billion) for mega projects which include electricity, road and mass transportation projects. This may be the push factor for Thailand in considering its fi rst sovereign Sukuk issuance to tap the vast liquidity available from Middle East investors.

However, according to Dr Chodechai, Director of Financial Development and Strategy in the Fiscal Policy Offi ce, there are factors such as government policy and the Thai economy itself that will affect the driving of Islamic fi nance in Thailand.

4. There are only 6 million Muslim in a country that is predominantly Buddhist. Do you face a lot of obstacles from the Thai people? What is their biggest apprehension?

It is not a matter of numbers. London has only 1.5 million Muslim population but it has become one of the leading Islamic fi nance centers in the world. It depends on the government’s sensitivity toward its own community as well as global surroundings. In fact, over 6 million people (some records say about 8 million) is not a small number when compared to our neighbor Malaysia which has about 14 million Muslims. The idea of Islamic fi nance development is now beyond only Muslim interest and more on creating a regulated Islamic fi nancial framework which will draw Middle Eastern investors, who are already looking to diversify their portfolios by investing in Asia, to Thailand’s capital market, thus benefi ting the Thai economy as a whole.

5. What can be done to overcome these obstacles?

The government’s commitment is the key success factor to promote the Islamic fi nancial system in Thailand. The Ministry of Finance, the Bank of Thailand and all parties involved must be clear on their role in strengthening the Islamic fi nancial industry in the country. That would include seeking advice from

Shariah Compliant Financial Industry makes Headway in Thailand

By Raphael Wong

continued...


© 11th July 2008

Shariah Compliant Financial Industry makes Headway in Thailand (continued)

Malaysia, which has more than 25 years experience in how to create a regulated Islamic fi nancial framework.

6. How far in the future do you forecast Islamic fi nance taking off in Thailand? What is holding it back at the moment?

I wish to see a comprehensive Islamic fi nancial infrastructure in Thailand as it is in Malaysia. Now people are talking about Sukuk but it is just a slice of the pie. There is a lot more to do in order to increase accessibility to the Islamic fi nance industry.

Legislation and taxation are the very fi rst issues that require reform in order to patronize the Islamic fi nance products structure and make them more effi cient. Islamic fi nancial products must not be a burden but be benefi cial to the players as well as the consumers, otherwise this will become an obstacle in expanding the industry.

Moreover, strong support from the government is essential to encourage new Shariah compliant fi nancial entities to

open up their services in various aspects — fi nancial market, money market as well as capital market — in order to create sophisticated instruments.

7. How can the Islamic Bank of Thailand play its role in promoting Islamic fi nance in country?

Islamic Bank of Thailand has been playing its role in promoting Islamic fi nance to the corporate sector like insurance companies, asset management companies, the Secondary Mortgage Corporation as well as the public sector such as the Stock Exchange of Thailand to draw their attention to collaboration with the Islamic Bank of Thailand in order to increase accessibility to Islamic fi nancial services.

Several institutions currently provide Islamic fi nancial products, including:

• Krung Thai Asset Management, offering Retirement Mutual Fund and Long-Term Equity Fund.

• MFC Asset Management, offering Islamic LTF and Islamic Fund.

• Finansa Life Assurance, offering family Takaful.• Dhipaya Insurance, offering general Takaful.• Krung Thai Panitch Insurance, offering general Takaful.• Muang Thai Life Assurance, offering general Takaful.• Kamol Insurance, offering general Takaful.

Soon, the Stock Exchange of Thailand and the FTSE Group will launch an Islamic index. Secondary Mortgage Corporation is also cooperating with Islamic Bank of Thailand to design a new Islamic product.

MIF2008Issuers & Investors Forum

11th – 13th August 2008Mandarin Oriental Hotel, Kuala Lumpur

After two consecutive years of success, MIF Forum returns, promising a whole new experience with refreshing dialogue and lively networking. MIF 2008 will prove to be bigger and better with an extended event schedule of three days. Further enhancing MIF Forum to be an international affair, the Equities day will take place on the third day which will educate and update the audience on the newest reports of the ever evolving Islamic equity capital markets. MIF 2008 will also be hosting more exhibition booths featuring the Islamic fi nance industry’s key market players.

In the last two years we have ensured that the quality of the delegates in attendance is our fi rst priority. As the event is by invitation only we determine who can and cannot attend. As a result we are not swayed by the revenue.

We look forward to meeting you at MIF 2008!

Online registration: www.MIFforum.com

STRATEGIC PARTNER

SPONSORS

TAKAFUL

OFFICIAL INFORMATION PROVIDER

LEAD MEDIA PARTNERS MEDIA PARTNER

MIF 2008 registrations are now open.

“Islamic fi nancial products must not be a burden but be benefi cial to the players as well as the consumers, otherwise this will become an obstacle in expanding the industry”

www.islamicfi nancenews.comSECTOR REPORT

© 11th July 2008

On the 26th June 2008, the German federal minister of transport, Wolfgang Tiefensee, presented eight new highway expansion projects in Germany that are to be realized via public private partnerships (PPPs) over the coming years. The total volume of investment will be approximately EUR1.5 billion (US$2.35 billion) and will affect 370km of the German highway (autobahn) network.

Some parts of the German autobahn network are now up to 75 years old and need renovation as well as expansion, especially for freight movement. Heavy truck traffi c has increased fi vefold since 1970, when most of the present network was already in place. Due to German reunifi cation and integration of eastern European countries in the European Union (EU), truck traffi c has increased by about 135% since 1990.

Geographically located in the heart of Europe, Germany is a central hub of international truck traffi c. As more countries are expected to become members of the EU, a further considerable increase of 55% in truck traffi c on the autobahn network is expected until 2025.

As of today, 20% of the 12,200km autobahn network is considered to be overloaded and chronically congested. In addition, one out of fi ve kilometers of the network will need repair in the near future.

Combining resources, sharing risksAs the costs for renovation and expansion of the autobahn network are expected to be considerably higher over the years than the budget of the federal ministry of transport, the idea of PPPs becomes more and more attractive.

By defi nition, a PPP means long-term, contractually regulated cooperation between the public and private sectors for the effi cient fulfi llment of public tasks by combining resources (for example, capital, know-how and personnel) and sharing risks.

Translated into infrastructure projects like renovation and expansion of roads, this means that the Federal Republic of Germany as the

public partner and a private partner enter into a 30-year contractual relationship.

The private partner, being in most cases a consortium of construction companies and capital providers, undertakes to renovate, expand and maintain a certain part of the autobahn network (for instance, 50km) for the duration of the contract.

As consideration, Germany (the federal state) grants the private partner the concession to levy user charges (street tolls) on that part of the autobahn. This generates a constant income stream for the private partner for 30 years and will ideally not only refi nance the investment and cover ongoing maintenance costs, but also generate a profi t for the private investor.

While the contract is in force, the federal state will remain the owner of the autobahn. Every type of material used for renovation or expansion (for example, ballast and tar) will, by operation of German law, immediately become the property of the public partner.

Upon expiry of the contract after 30 years, the concession will forfeit and the federal state will again be responsible for renovation and maintenance works, unless the concession is renewed.

More support for PPPThe whole autobahn network has been tolled under the brand name “Toll Collect” since the beginning of 2005 for trucks over 12 tonnes gross vehicle weight. As a service provider acting on behalf of the republic, Toll Collect has set up a toll system capable of calculating and collecting road use charges based on the distance traveled.

Cars and trucks weighing under 12 tonnes are exempt from the street toll. The average toll per truck and kilometer is currently 15 Euro cents (US$0.24), generating toll revenues of approximately EUR3 billion (US$4.71 billion) a year. An increase of the average toll per kilometer to 16.2 Euro cents (US$0.25), effective January 2009, has just been determined.

As a general rule, the federal state retains the right to fi x the street toll. However, the PPP agreement will contain clauses on a minimum toll per truck and kilometer, and also clauses dealing with the future increase of the street toll, giving the investor a basis to calculate the return on investment and profi ts.

Since 2000, political support for PPP projects has increased considerably. The pilot PPP project for autobahn construction was awarded to a private consortium in May 2007.

A second project followed in September 2007. It is expected that the constructed costs of these two projects will be refi nanced by the street toll in less than 20 years. Thereafter, the private investor would only have to pay for maintenance costs.

Don’t forget that these calculations are based on today’s traffi c and preclude a further increase in truck traffi c. The two existing pilot

German Infrastructure Projects Offer HugeInvestment Potential

By Dr Olaf Fasshauer

continued...

www.islamicfi nancenews.comSECTOR REPORT

© 11th July 2008

German Infrastructure Projects Offer Huge Investment Potential (continued)

projects as well as the eight future projects are therefore likely to become success stories.

The new projects should be interesting not only for conventional investors, but also for investors seeking investment opportunities that are in line with the Shariah: fi rst, the income-generating business, the levy of charges for the usage of a street, does not involve any activities that are prohibited for Muslims and is therefore halal. Second, no interest (riba) will be charged.

The street toll will be collected by Toll Collect and the pre-agreed share of such street toll will be forwarded to the private investor. And as the granting of the concession and the levy of user charges do not involve any speculative element, they are therefore not gharar. The concession granted by the federal state will contain clear guidelines for the investor and list the events when the concession will expire or can be revoked.

Country open to Islamic needsThe Islamic investor could enter into a Shariah compliant profi t and risk-sharing joint venture with one or several construction companies when applying for the concession. In effect, it might be sensitive to bring in a local partner when dealing with the federal state.

When structuring the fi nancing of the investment, the Islamic investor might think of a diminishing Musharakah structure: As the investment generates a constant income stream over 30 years, the Islamic in-vestor might bring in one or more Islamic banks into the Musharakah partnership, agree with them on a proportionate profi t and loss shar-ing scale and buy out the bank’s share in the partnership over the pre-agreed period by making use of the cash generated through the toll payments.

And last but not least, the Islamic investor might also think of a securitization of the income stream through Sukuk. As Shariah law requires that the asset involved (such as. the concession) is transferred to the issuer of the Sukuk bonds, this would require also the consent

of the federal state. In general, the concession will only be granted to the private partner under the PPP agreement and such concession is not transferable.

However, the federal state may consent to a transfer of the concession to the issuer of Sukuk bonds, thereby making these bonds asset-based. Generally speaking, the Federal Republic of Germany and its 16 states have proven to be open to new fi nancing structures, in particular to the needs and requirements of Islamic investors.

The East German state of Saxony-Anhalt was the fi rst to structure the fi rst European Sukuk in 2004 with a volume of EUR100 million (US$157 million). The intention was not only to make use of this structure for fi nancing purposes, but also to use it as a pilot project for future investments and to send a clear signal that Shariah compliant investments are welcome in Germany.

The roads in Germany are not paved with gold, but with lots of opportunities for Islamic investors.

Dr Olaf Fasshauer is a partner at Dechert LLP in Munich, Germany. He can be contacted at +49 89 2121 6328 or via email at [email protected]

ReprintsOrder your reprints today

Reprints of articles, case studies, interviews, Meet the Head and other special sections of the Islamic Finance news weekly newsletter and all reports and supplements are now available.

Printed on high-quality gloss paper, these reprints offer the perfect marketing tool and the ideal platform for you to showcase your achievements to your clients while reinforcing your dedication and commitment to the industry.

Along with the hard copy reprints, we’ll also provide you with the PDF version, which may be placed on your website or distributed electronically.

For more information, please contact:

Mohammed NadjmuddeanTel: +603 2162 7800 ext 38Fax: +603 2162 7810Email: [email protected]

“The new projects should be interesting not only for conventional investors, but also for investors seeking investment opportunities that are in line with the Shariah”

www.islamicfi nancenews.comMARKET REPORT

© 11th July 2008

With global Sukuk issuance reaching US$100 billion in 2007 it was widely felt that the Sukuk market was coming of age. The volume and variety of deals together with the growing appetite for GCC (Gulf Cooperation Council) issuers to tap debt markets were all seen as factors underpinning the development of the Sukuk market. More recently, the sub-prime crisis and the so called ‘Shariah challenge’ (see below) have dampened the level of issuances coming to the market. Is this just a blip or is it refl ective of something more fundamental occurring in this market?

The second annual London Sukuk Summit, held on the 25th and 26th June, attracted practitioners, issuers, regulators and others. Much of the discussions had focused on examining the implications of the credit crisis and the Shariah challenge. In November last year a prominent religious scholar active in the Islamic fi nance market issued a statement suggesting that two of the most common Sukuk types — Mudarabah (a form of trust fi nancing) and Musharakah (joint partnership) — do not conform to the Shariah. Although Sukuk are widely seen as the Shariah compliant equivalent of conventional debt securities, Sukuk comes in a number of different guises with an array of different economic and risk characteristics.

The underlying reason for the scholar’s concern was that while the Mudarabah and Musharakah Sukuk are essentially equity-type instruments, the market uses certain techniques such as repurchase agreements (at maturity or specifi ed default events) to guarantee the return of the Sukuk. This is at odds with the spirit of Islamic fi nance, where profi ts should be shared and interest is prohibited. This controversy is referred to as the ‘Shariah challenge’. It is estimated that over 80% of Sukuk are affected, but some Sukuk structures such as the Ijarah Sukuk (leasing) are not. In fact it is the Ijarah Sukuk which is the preferred structure for the UK government’s sterling sovereign Sukuk issuance.

The divergence in opinion between Islamic law scholars has caused concern in the market. In general though, the market has reacted positively to the Shariah challenge, considering the clarifi cation as being helpful. Confusion, a lack of clearly defi ned parameters and divergences of opinion between scholars may yet damage the credibility of the market.

An example is the move by the Japan Bank for International Co-opera-tion (JBIC) to issue a Sukuk. JBIC was preparing to issue its fi rst Sukuk in May 2008 to fund its activities in promoting trade and international development projects. JBIC had selected Citibank of Dubai and CIMB of Malaysia to arrange the deal but the Shariah boards of the two banks disagreed on the whether it was Shariah compliant. The transaction will need to be restructured — from the original Murabahah structure to the Musharakah version — adding to cost, time and frustration for the issuer. Such an outcome cannot be benefi cial to the market.

Although Sukuk are referred to as Islamic bonds, they often fall into one of two broad types; asset-based (where the credit risk of the bond is linked to the issuer) or asset-backed (the credit risk is linked to the underlying asset). The latter is similar to conventional asset- backed securities (ABS) which have risen in prominence in recent years. It was envisaged that the Shariah challenge may lead to a shift away from asset-based to asset-backed structures.

However, Geert Bossuyt, managing director and regional head of Middle East structuring at Deutsche Bank, indicates that this shift will probably not materialize for a number of reasons. Firstly there is a dearth of suitable underlying assets for issuers to use in asset-backed transactions (although in a few instances third parties are leasing assets to issuers for this purpose).

Secondly, many markets especially those in the GCC do not currently have a legal structure that can support the securitization market. Property rights; trust law; insolvency law etc. are often rudimentary or non-existent. Related to this, the enforceability of contracts in these and other emerging markets maybe uncertain and untested.

He also indicated that even if these issues are resolved there are more fundamental issues to consider. Essentially, issuers demand products that mirror conventional debt in terms of risk and economic substance. ABS Sukuk simply does not fulfi ll these requirements. Mutlaq Al-Morished, vice president of corporate fi nance at Saudi Basic Industries Corporation, one of the largest Sukuk issuers in the world, echoed these sentiments, adding that issuers will use Sukuk only if it makes economic sense.

The market is at an important juncture: it is clear that there is a desire among scholars and certain practitioners to focus on more ‘authentic’ asset-backed structures. Yet it was clear at the Summit that issuers are fundamentally driven by cost and there is preference for instruments which closely resemble conventional debt. At fi rst glance this may seem an insurmountable gap. However, the market seems to have an infi nite capacity to innovate within the guidelines laid by the scholars. Recent evidence suggests that a new round of innovation could yet boost the fl edgling market.

For example, Shaikha Al-Sudairy, manager at HSBC Amanah in Riyadh, talked about two recent deals pioneered by her bank — the SABIC-I and SABIC-II Sukuk and the Saudi Electricity Company (SEC) Sukuk — which use innovative new asset classes such as pools of petrochemical marketing contracts and electricity meters and the tariffs due on them, which were then securitized.

These examples demonstrate that there is a wider range of assets that are acceptable from the perspective of Islamic law. This will be benefi cial to the market as previously only tangible fi xed assets such as aircraft, shipping or real estate were considered as being acceptable.

From November 2007 till February 2008 the Sukuk market suffered; in this period no international, dollar-denominated, rated Sukuk came to the market. The impact of the recent credit crisis and the Shariah challenge infl icted a deep wound. Innovative deals like SABIC and SEC Sukuk indicate that human ingenuity and imagination may yet help this market fl ourish.

Sukuk Market at a CrossroadBy Ali Ravalia

Ali Ravalia has written extensively on Islamic capital markets and banking. He currently works for a prominent Western fi nancial regulatory agency. He has a Masters in Economic History from the London School of Economics. He can be contacted at [email protected].

www.islamicfi nancenews.comFOCUS

© 11th July 2008

The Dubai Financial Services Authority (DFSA) is the integrated regulator of all fi nancial and ancillary services in or from the Dubai International Financial Center (DIFC). Its responsibility includes ensuring that the DIFC is one of the best regulated fi nancial centers in the world.

DFSA is unique in that it had been established as a world-class regulator from the outset unlike many other regulatory bodies that arose from a country’s fi nancial crisis.

Using a risk-based framework, DFSA oversees the full range of fi nancial and ancillary services in the DIFC, including wholesale banking, asset management, reinsurance as well as securities, derivatives and commodities exchange activities undertaken by exchanges including the Dubai International Financial Exchange (DIFX). DFSA also authorizes, licenses and registers institutions and individuals to operate within the DIFC upon fulfi lling stringent requirements and even has the power to hold to account those who fail.

Islamic Finance news secured an interview with DFSA’s managing director (supervision) Michael Zamorski (pic) on the regulator’s recent activities. He had joined DFSA in April 2006 after a 29-year career with the US Federal Deposit Insurance Corporation (FDIC). As FDIC’s director of the division of supervision and consumer protection, he had been responsible for overseeing the FDIC’s bank supervisory ac-tivities for safety and soundness as well as compliance and consumer protection for the 5,200 institutions under its jurisdiction.

Zamorski was a member of the Basel Committee on Banking Supervision, the prudential standard setter for large, internationally-active banks, from 2000 to 2006. He has a degree in economics, conferred cum laude, from Villanova University, Pennsylvania, and is a graduate of the American Bankers Association’s Stonier Graduate School of Banking.

Would you share with us the recent activities of the DFSA?The DFSA is in full operational mode, supervising 267 entities — 206 authorized fi rms, 45 ancillary service providers (lawyers and

accountants), and 16 auditors — the DIFX and the Dubai Mercantile Exchange (DME).

Last year was a signifi cant year in its growth and recognition. The International Monetary Fund (IMF) and the World Bank conducted a fi nancial sector assessment program (FSAP) on the UAE, including a separate review of the quality of the DIFC jurisdiction and the quality of its regulator, the DFSA.

The highly-qualifi ed assessment team gave us high grades and this is available in a public report. One of their primary conclusions is that they consider us to have regulatory rules and practices on par with Hong Kong and Singapore, and recognize us as an onshore jurisdiction.

The FSAP involved a detailed assessment of the DFSA’s observance of the objectives and principles of securities regulation developed by the International Organization of Securities Commissions (IOSCO). Out of 29 standards, we had 27 fully implemented and two largely implemented.

The report concluded that we have established an impressive set of laws, regulations and rules as well as policies and procedures for our regulatory regime. This was one of the highest assessments the IMF has accorded in the past fi ve years. However, we want to avoid complacency and continue to be vigilant in our regulatory approach.

We have been fortunate to be able to design our regulatory system and build our corporate culture with a clean slate.

Our staff are experienced regulators from many well-regarded jurisdic-tions including Australia, the US, the UK, Germany and Canada. This obviously gives us a great diversity of regulatory opinions and an ability to choose best practices.

We also benchmark our standards againts other respected centers like Hong Kong, Singapore, London and New York.

Please explain how you implement risk-based supervision.To me, risk-based supervision means imposing a level of regulation appropriate to control and prevent excessive risk to achieve desired

DFSA Takes a Common Sense ApproachBy Shabnam Mokhtar

continued...

“The FSAP report concluded that we have established an impressive set of laws, regulations and rules as well as policies and procedures for our regulatory regime. This was one of the highest assessments the IMF has accorded in the past fi ve years.”

www.islamicfi nancenews.comFOCUS

© 11th July 2008

regulatory outcomes. It is important to remember that fi rms are in the business of taking risk.

The role of a regulator is to ensure that the risk remains within prudential bounds. In other words, the risks a fi rm is taking should be identifi able, measurable and controllable. In this process, we make a conscious effort to avoid unduly prescriptive, detailed regulations and procedures in an attempt to minimize regulatory burdens.

Since we have invested in the quality of our staff and we have large internationally active fi rms and high-quality regional fi rms with higher degrees of competence in their risk management under our supervision, we do not need to be as prescriptive as some other jurisdictions.

Simply put, risk-based supervision means having regulation to ensure fi rms do not engage in excessive risks that would bring about systemic risk?Supervision by risk means that we will allocate greater resources to areas of greatest risk. We are certainly concerned about systemic risks, but we are also concerned with reputational risk to the mission and objectives of the DFSA, DIFC or other fi rms in the jurisdiction.

For risk-based supervision to work in an effi cient manner, we need to invest time and resources to understand the operations and inherent risks of the fi rms we supervise. They should not need to invest the time and resources necessary to understand an 8,000-page regulatory rulebook. Open and unfettered communication between our team of relationship managers and the authorized fi rms is critical to this process.

What do you do in the outreach program?An outreach program is an integral part of the communication process I have alluded to above. Outreach programs allow us to communicate horizontally with fi rms in an environment other than an inspection. Typically, this type of environment allows more open communication to occur.

For example, we periodically meet with our compliance and money laundering reporting offi cers (MLRO) to discuss anti-money launder-ing (AML) and counter terrorist fi nancing (CTF) issues as well as other issues arising in the DIFC without disclosing confi dential information. If we see issues arising in one fi rm, it is often good to alert other fi rms as a group so they can be aware of the issue or patterns and look into their own operation so as to prevent the same problem.

Are fi rms in the DIFC exposed to the sub-prime crisis?The subprime lending boom happened largely before most of our fi rms were authorized. However, some of our fi rms were indirectly impacted because the subprime issue affected affi liates in other jurisdictions.

One of the biggest challenges at the DIFC is keeping up with the demand for space. When I arrived a little over two years ago, we had 40 fi rms. Now, we have more than 260 supervised entities. Most of the top 70 largest global fi rms have offi ces in the DIFC and we continue to receive strong interest.

I think the reason for this is the uniqueness of the DIFC. It is in the time zone between Asia and Europe. Importantly, fi rms operating in the DIFC are offered enhanced legal certainty through the common

law court system, which is unique to the Middle East and North Africa (MENA) region. Additionally, a critical mass has developed with the number of high-quality fi rms coming into the DIFC.

With the explosion of the subprime crisis, there has been a call for greater regulation for investment banks due to their off-balance-sheet activities. Do you agree with this approach?One of the fi rst reactions to any fi nancial crisis seems to be a call for increased regulation. We agree with efforts to increase transparency in the fi nancial sector; however, we would offer words of caution in thinking that increased regulation is the ultimate solution to this problem.

Are fi rms at the DIFC bound by Basel II?We have given a great deal of thought to the risk-based application of Basel II capital standards. Our board of directors has taken the decision to focus our attention on Pillar II (supervisory review) and Pillar III (market discipline) of Basel II for the time being. We have not yet focused considerable attention on Pillar I because we have adopted Basel I on a ‘super-equivalent’ basis.

We have a number of fi rms to which Basel II capital ratios do not di-rectly apply because they are merely branches. For example, we have 90 branches of fi rms which are under the supervision of the UK FSA. The UK FSA would ultimately be in charge of Basel II implementation for a branch of one of their fi rms as our rulebook states that these fi rms are bound by home country capital requirements.

Additionally, fi rms conducting banking business in the DIFC are all well capitalized and are not taking a signifi cant amount of on-balance sheet risk. The strategy of the DFSA is to evolve as the fi rms evolve. In short, I would say we are adopting Basel II appropriate and proportionate to the nature and complexity of risks in the DIFC.

What would be your last note to our readers?The DFSA and the DIFC have enjoyed signifi cant success and we will continue our efforts to support sound, sensible regulatory oversight that meets or exceeds international standards.

DFSA Takes a Common Sense Approach (continued)

“Since we have invested in the quality of our staff and we have large internationally active fi rms and high-quality regional fi rms with higher degrees of competence in their risk management under our supervision, we do not need to be as prescriptive as some other jurisdictions”


© 11th July 2008

It is far from clear that standardization is always necessary for market development. Indeed, many fi nancial markets thrive because of regulatory differences. Diversity results in greater innovation than standardization. Furthermore, as any economist knows, ultimately all profi ts get competed away with perfect competition involving standardized commodities whereas with differentiated products, profi t margins remain.

With Sukuk, the major security in Islamic capital markets, there are differences in opinion among the scholars about what securities are Shariah compliant. In particular, there is concern that Musharakah and Mudarabah Sukuk have been issued with debt rather than equity characteristics, with the investors getting the nominal value of their capital refunded on maturity. The sole risk is of default with market risk virtually eliminated, which is welcome to investors, but not to some scholars.

Introducing standardized criteria for Musharakah and Mudarabah Sukuk will only kill the market for these products and ensure that Ijarah Sukuk continue to be dominant. This will limit the choices faced by investors and issuers.

In my view, it is better to allow diversity and hope that over time, better products will emerge as a result of debates among the scholars and between them and fi nance professionals. This process should not be rushed as short term fi xes are seldom satisfactory in the longer run.

I hope your readers fi nd this response provides food for thought.

PROFESSOR RODNEY WILSON: Director of postgraduate studies, Durham University, UK

The debate is superfl uous! The convergence of Shariah standards has existed since the Quran and the Hadith came into being more than 1,400 years ago. These same two main sources of Shariah are available and accessible around the globe (such as one Shariah standard for all). However, the

interpretation and application of these same or standard Shariah principles differ, depending on the prevailing circumstances in a locality at a particular point in time.

In practice, the same Shariah principle has been applied differently by each of the four Great Imams (Shafei, Maliki, Hambali and Hanafi ) in different localities at one time or another. Just ask any of the Shariah scholars or experts and they will be able to give examples. These differences in application and interpretation are enshrined in the Shariah as allowed and considered a blessing from Allah as stated in the Quran. It is also an enshrined Shariah principle to respect and accept these differences.

Notwithstanding the ‘allowability’ and God’s blessing for the differences in Shariah approach, there are really very few differences in existence. More often than not, the application and interpretation of Shariah principles are similar globally, and the majority agrees that 90% to 95% of Shariah application and interpretation worldwide are the same. What this means is that, in effect, we already had a global Shariah standard and similar Shariah applications (in the majority) in the past, now in the present and we will continue to have a global Shariah standard because the Quran and Hadith have not, do not and will not change. Moreover, everyone agrees that Islamic banking and fi nance, including the Islamic capital market as an industry, is ‘mazhab-less’ (i.e. all interpretations and applications of the Shariah are accepted).

So, if we already have a global Shariah standard as per the Quran and Hadith that is accessible everywhere, those few differences that we have in Shariah interpretation are allowed and are a gift from God; and if everyone (including the Shariah experts) agrees our industry is ‘mazhab-less’, then why is there such a big hullaballoo about standardization in Shariah?

Let’s just concentrate and do Islamic banking and fi nance to build up the Islamic economy for the good of the ummah and everyone the world over based on the Shariah standard that is already in existence. More action and less talk.

BADLISYAH ABDUL GHANI: CEO, CIMB Islamic, Malaysia

The debate over the necessity and likelihood of convergence for the development of the global Islamic capital markets will undoubtedly continue for many years to come. However, what standardization is required in the

short term and how can this be achieved?

continued...

The views expressed in Islamic Finance forum are those of our panelists, and not necessarily those of Islamic Finance news.


© 11th July 2008

Next Forum Question

The rapid growth of the Islamic fi nance industry at a rate of 15% to 20% per year is currently worth between US$150 billion and US$250 billion. However, the shortage of qualifi ed Islamic scholars who can assume positions of responsibility is proving to be a stumbling block for the industry. How can Islamic fi nancial institutions overcome

the skills shortage to sustain the growing demands of the industry?

If you would like to air your views on the next Islamic Finance Forum Question, please email your response of between 50 and 300 words to Christina Morgan, Forum Editor, at: [email protected] before Wednesday, 23rd July 2008.

To my mind, this is a wrong position and is akin to throwing a stone in the pool: Standardization is already there. The products are already in the market, they behave in investor-acceptable ways and meet fi nancial market standards. The market will develop further and nuance and change will be introduced naturally. Sometimes it may be slow and organic, sometimes fast and sudden.

There is no real liquid secondary market yet and the reason for that is publicly known. There simply is no suffi cient number of issues and by consequence the investors cling to their portfolio. A fi rst real secondary market probably must be organized at more local levels and then slowly develop and mix with the other markets. If we keep focusing now on the convergence of the world market, there simply is no depth. And that probably will remain so for some time. Local markets initiate faster.

Provided that no one rocks the boat too much, the market will develop constantly as it is doing now and at some point, a further internal boost will trigger and pave the way for it to go global.

PAUL WOUTERS: Partner, Bener Law Offi ce

Convergence or unifi cation is one of the key factors that will take the Islamic fi nance industry towards sustainable growth. The need for standardization of certain documents and products, which are critical for a broader market development, has been raised at almost all the forums that have taken place in recent years.

The private sector as well as development institutions are making efforts in this direction though such efforts require time, patience and, more importantly, the participation of the majority of the market players.

International Islamic Financial Market’s efforts in the area of documentation and product (broader market) will certainly play a critical role in achieving the objective of standardization in the short term. The key is the participation and support of the industry.

IJLAL AHMED ALVI: CEO, International Islamic Financial Market, Bahrain

I think the push for standardization, in a general sense, has dominated the industry’s thinking for too long. There must be something else we can talk about in our conferences. We need to be more specifi c and focused in such efforts and there appear to be many other fundamental issues that do not get suffi cient airing or the same degree of attention.

Differences at a local market level exist in almost every human activity and this heritage is something to be celebrated, not squashed. However, when activities become cross-border in nature, it is helpful to have a common basic set of principles that work across national boundaries to facilitate effi cient transactions. This has to be the priority.

Structurally, we have a number of industry-wide bodies whose infl uence is sadly subordinate to each national regulator and/or legal framework, and who do not carry the weight of, say, the BIS in Basle. This situation creates a patchwork quilt of regulations and works against the growth of cross-border fl ows. Until this is resolved, we will always be pushing from the bottom up without top-down reinforcement.

VINCE COOK: CEO, The Islamic Bank of Asia, Singapore

BENER LAW OFFICEIstanbul – Turkey

www.islamicfi nancenews.comMEET THE HEAD

© 11th July 2008

Islamic Finance news talks to leading players in the industry

Could you provide a brief journey of how you arrived where you are today?

As part of the Clifford Chance global network I’ve been fortunate enough to have lived and worked in many jurisdictions, including London, Riyadh and Dubai. I have been actively involved in structuring and documenting Islamic fi nance products since 2001. Clifford Chance has been advising on Islamic fi nance transactions for more than 20 years, however while in London in early 2003 I was tasked with coordinating the fi rm’s global efforts in building an Islamic fi nance practice, a task that has led me to Dubai where I have been based since March 2006.

What does your role involve?Within the fi rm I work closely across a number of the traditional practice areas such as project fi nance, capital markets, asset fi nance, corporate fi nance, funds and derivatives to structure Islamic fi nance products. Given the increase in activity in this industry across the globe, I also work closely with our other offi ces and associate offi ces in the global network to structure and deliver Shariah compliant instruments. As information and know-how sharing is critical for the development of our fi rm and global practice, I also spend time educating other lawyers internally within the network.

What is your greatest achievement to date?It’s a great time to be working in Islamic fi nance at Clifford Chance. We advised on more than US$25 billion worth of Islamic fi nance transactions last calendar year (2007) and have reached US$20 billion for the fi rst half of this calendar year (2008) and this does not include any of the work we have done in relation to fi nancial instruments and risk management products. This is a great achievement for the fi rm and one that we should rightly be proud of. The global deal list for the fi rst half of 2008 includes a number of the leading Sukuk deals from the Gulf and Malaysia, most of the groundbreaking project fi nancings in the Gulf region including Saudi Kayan and Ma’aden as well as the largest Islamic fi nancing in the UK to date for the Chelsea Barracks acquisition.

Which of your products/services deliver the best results?

Our lawyers are well trained to look at all sides of a problem and provide the best solution considering the commercial and legal ramifi cations. By adding our ability to analyze and guide on Shariah issues we are able to offer clients additional value when it comes to structuring

and documenting Shariah compliant transactions across any of the traditional asset classes.

What are the strengths of your business?We have an excellent global Islamic fi nance group that includes people in a number of jurisdictions including Dubai, London, Singapore, Hong Kong and New York as well as people in our associated offi ces such as in Riyadh. All members of the group are well versed in Islamic fi nance principles and structures in addition to having a thorough understanding of how the international banking and fi nance markets work. We have very good internal training programs that are critical to building strength, depth and consistency in the practice. We also collaborate very effectively across the global network to provide the best solutions to our clients.

What are the factors contributing to the success of your company?

Undoubtedly, the people who work for Clifford Chance are responsible for our success. The quality and commitment of our people means that we are able to deliver high quality and innovative products to our clients.

What are the obstacles faced in running your business today?

Although a number of Islamic fi nance instruments are still bespoke and therefore require unique documentation, there are now a number of ‘commoditized’ products where standard form documentation would be of invaluable benefi t as it would allow a quicker turnaround time for transactions with a lower cost base. Standard documents for simple Islamic instruments such as the Murabahah are also likely to increase liquidity in the secondary market. It is therefore imperative that all entities working in this industry support the initiatives of industry bodies such as the IIFM based in Bahrain.

Where do you see the Islamic fi nance industry in, say, the next fi ve years?

Over the next fi ve years I would envisage a wave of consolidation of Islamic fi nance institutions across the Gulf and the Far East. I think there will also be growth in certain asset classes such as Islamic securitizations and the Takaful industry and greater use of Islamic fi nance instruments by European and U.S. based entities as an alternative way of raising capital.

Name one thing you would like to see change in the world of Islamic fi nance?

A movement away from trying to replicate conventional products in a Shariah compliant manner and the development of Shariah compliant products that involve risk participation between all the parties.

Name:

Position:

Company:

Based:

Age:

Nationality:

Qudeer Latif

Partner (Head of Islamic Finance)

Clifford Chance

Dubai

32

British

Clifford Chance is one of the world’s leading law fi rms that has legal resources across

the three key markets of the Americas, Asia as well as Europe and focuses on the core areas of commercial activity.

www.islamicfi nancenews.comTERMSHEET

© 11th July 2008

STRUCTUREAn open-ended “all-equity” collective investment scheme registered under the laws of Bahrain and created by Jordinvest Shariah compliant MENA Fund Company.

FUND MANAGER Jordan Investment Trust (Jordinvest)

SHARIAH ADVISERS Dr Hussein Hamid Hasan, Dr Abdulazeem Abozaid and Dr Mohamed Abdel Hakim Zuhair.

ADMINISTRATOR/CUSTODIAN

HSBC Bank Middle East Bahrain

REGISTRAR Keypoint Consulting Bahrain

PLACEMENT AGENT Jordinvest

VALUATION DATE/SUBSCRIPTION DATE/REDEMPTION DATE

Twice a month, on the business day which immediately follows the 14th day of each calendar month, and the last business day of each calendar month.

SUBSCRIPTION/REDEMPTION AMOUNT

Multiples of 10 units.

SHARE CLASSES (AMC) Retail and institutional.

BOARD OF DIRECTORS OF JORDINVEST SHARIAH COMPLIANT MENA FUND COMPANY

Ahmad Hamza Ahmad Tantash, Hani Al Ali, Alaa Barakat and Ammar Jarrar.

BACKGROUNDThe fund is Jordinvest’s fi rst Islamic fund. To ensure Shariah compliance, investment decisions will be based on the sound fundamentals of the underlying companies and will take account of future fi nancial, economic, regulatory and social factors, a process that will be supported by an in-house research department.

PURPOSE OF THE FUND

The primary objective is to seek medium- to long-term capital appreciation by investing in Shariah compliant securities including equities, and other investment products issued by Shariah compliant companies or entities in the Middle East and North African (MENA) region.

SUBSCRIPTION PRICE PER UNIT

US$100 + 0.75% subscription fee/unit.

MINIMUM SUBSCRIPTION

Initial subscriptions must be for a minimum of 10 units, with additional subscriptions by an existing unit holder being in increments of 10 units.

INITIAL INVESTMENT PERIOD

Started on the 9th March 2008.

ENDEDThe 8th June 2008. After the last day of the initial period, there will be a closing period of six months in which one can buy units according to market price but will not be able to sell.

FUND SIZE Target is US$100 million, with a minimum fund size of US$5 million.

RISK FACTORS

The risks associated with the fund are those inherent in open-ended collective investment schemes with a long-term capital appreciation objective, including market fl uctuations and other risks associated with listed equity investments.

Accordingly, investors considering investment in the fund should understand that there is no assurance that the fund will meet its investment objective and should be able to bear the economic risks of their investment in the fund. It is possible that adherence to the Shariah will cause the fund to perform differently from funds with similar objectives that are not subject to the Shariah

Jordinvest Shariah Compliant MENA Fund

For more termsheets, visit www.islamicfinancenews.com

www.islamicfi nancenews.comMOVES

© 11th July 2008

AMANAHRAYA-JMF — Malaysia

Sharizad Jumaat is now managing director of AmanahRaya-JMF Asset Management. She joined as CEO in 2004. Following the merger between AmanahRaya and JMF Asset Management, Sharizad was appointed executive director and chief investment offi cer. She has over 18 years of experience in fund management, in particular fi xed income and equities.

Sharizad began her career at Permodalan Nasional as a research analyst, later joining the Employees Provident Fund, where she served in various capacities.

HSBC — UAE

Shaker Zainal has been appointed head of branch management while Samira Abdulrahman has been promoted to senior manager of HSBC’s Jebel Ali branch.

Shaker has been with the bank for over eight years and was senior manager of the Dubai branch. He also headed regional operations and has held senior positions in the bank’s network services department and the regional call center in Dubai Internet City. In his new position, Shaker will oversee management and smooth delivery of products and services across branches in the UAE.

Meanwhile, Samira will oversee day-to-day operations as well as manage key client relationships. Prior to this, she was manager of the Sharjah branch.

SCHRODERS — UAE

Schroder Investment Management has recruited Maha Soueissy as a Middle East equity analyst, to be based in Dubai. The former associ-ate with Shuaa Capital will work with Rami Sidani, who was appointed head of MENA at Schroders last month. Soueissy has four years’ ex-perience in the funds industry, covering the MENA region.

KFHM — Malaysia

Raja Teh Maimunah, chief corporate offi cer and head of international business at Kuwait Finance House Malaysia (KFHM), sent shockwaves through the industry with her departure from the bank this week.

The move comes barely two years after her exit from Unicorn Investment Bank (Malaysia). Citing family obligations as the main reason, Raja Teh was instrumental in the setting up of KFH’s Singapore and Australia offi ces. She was vice president of investment banking at RHB Bank, and before that, was at CIMB.

JIFB — Jordan

Jordan Investment & Finance Bank (JIFB)’s board of directors has appointed Basheer Jardaneh as the company’s new chairman with immediate effect, to succeed Basel Jardaneh.

EIIB — UK

European Islamic Investment Bank (EIIB) has appointed 44-year-old Keith George McLeod as executive director and fi nance director at the bank. McLeod has held senior positions at Schroders, Credit Suisse First Boston, Morgan Stanley and HSBC.

FIRST ENERGY BANK – Bahrain

First Energy Bank has named Esam Janahi, known worldwide for his contributions to the energy fi eld, as Chairman of its Board of Directors.

MORGAN STANLEY — Middle East and Africa

Henry Stewart is now Morgan Stanley’s head of consumer investment banking team for the Middle East and Africa. Stewart replaces Benoit Renon, who is returning to the Paris offi ce.

Stewart, a senior mergers and acquisitions banker, was with UK asset manager Schroders. He will work with Mark Warham, chairman of UK investment banking and his colleague at Schroders.

BIsB — Bahrain

Jaffer Saleem Badwan has become a member of Bahrain Islamic Bank (BIsB)’s executive management team as general manager for investment and treasury.

With over 27 years’ industry experience, Badwan held several man-agement and executive positions in various fi nancial institutions and banks outside Bahrain, including Abu Dhabi National Bank, UAE Cen-tral Bank and Kuwait Investment Company.

LINKLATERS — UAE

Linklaters has appointed Sarosh Mewawalla as managing partner and local head of fi nance at its Dubai offi ce, after being transferred from Milan where he was co-managing partner.

Ewan Cameron, who has been managing partner of the Dubai offi ce since it opened in 2006, will become senior partner of the Middle East region. The reshuffl e follows the recent relocation of two partners to the Dubai offi ce — capital markets partner Richard Callaghan and Islamic fi nance partner Luma Saqqaf. It is part of the fi rm’s new strategy, dubbed emerging markets in Europe, the Middle East and North Africa.

DUBAI INTERNATONAL CAPITAL — UAE

The investment arm of Dubai Holding has appointed David Smoot as the managing director of private equity.

He has 14 years of experience in investment banking and private equity. Smoot spent three years at Salomon Brothers, specializing in energy and chemicals investment banking before moving on to Morgan Stanley. He stayed for 11 years before shifting to Dubai International Capital.

BNL — Bahrain

Fathalla Ebrahim has been promoted as general manager of Bahrain National Life Insurance (BNL) effective from this month. He succeeded Patrick Byrne.

Fathalla was previously the assistant general manager in the insurance company. Prior to joining BNL, he was attached to the Arab Insurance Group since 1993 in various technical and managerial positions in insurance and reinsurance.

www.islamicfi nancenews.comDEAL TRACKER

© 11th July 2008

Islamic Finance newsAdvisory Board:

Mr Daud Abdullah (David Vicary)Chief Operating Offi cer

Asian Finance Bank

Dr Mohd Daud BakarChief Executive Offi cer

International Institute of Islamic Finance

Prof Dr Mohd Masum BillahGroup Executive ChairmanMiddle Eastern Business

World Group of Companies

Dr Humayon DarChief Executive Offi cer

BMB Islamic

Mr Badlisyah Abdul GhaniChief Executive Offi cer

CIMB Islamic

Ms Baljeet Kaur GrewalGroup Chief EconomistHead, Global ResearchKFH Research Limited

Mr Sohail JafferPartner

International Business Development FWU International

Dr Monzer Kahf Consultant/Trainer/Lecturer

Private Practice

Mr Mohamed Ridza AbdullahManaging Partner

Mohamed Ridza & Co

Prof Bala ShanmugamDirector of Banking & Finance Monash University Malaysia

Mr Muhammad Nejatullah SiddiqiAuthor, Scholar, Speaker, Trainer

Mr Rushdi SiddiquiGlobal Director

Dow Jones Islamic Indexes

Mr Dawood TaylorHead of Takaful Taawuni Division

Bank Aljazira

Mr Abdulkader ThomasPresident & CEO

SHAPE – Financial Corp

Mr Paul WoutersPartnerBener

Prof Rodney WilsonDirector of Postgraduate Studies

Durham University

Mr Sohail ZubairiVice President & Head Shariah

Coordination Dubai Islamic Bank

Another Islamic Finance news exclusive

ISSUER SIZE (million) INSTRUMENT

B u m i p u t r a - C o m m e r c e Holdings

US$1.84 billion Islamic and conventional CP/MTN program

Islamic Bank of Thailand US$178.77 Ijarah

ETA Star Property Developers

Up to US$150 Sukuk

Abu Dhabi Commercial Bank US$1.07 billion Islamic MTN

Dewa Minimum US$500 Sukuk

Philippines Up to US$1 billion Sukuk

BTA Bank Up to US$150 Sukuk

Bahrain Central Bank US$500 Sukuk

Qatar Islamic Bank US$300 Sukuk

Barwa Real Estate US$800 Sukuk

Doha Bank US$1 billion Sukuk Ijarah

RAK Properties US$2 billion Sukuk

Tabreed Up to US$500 Sukuk

Dubai International Financial Center

US$200 Sukuk

Amlak Finance US$260 Sukuk

Al-Rajhi Cement Investment US$595 Sukuk

Al-Zamin US$11.15 Mudarabah

Muhibbah Engineering US$125.41 Mudarabah

Indonesia up to US$2 billion Ijarah

Orient Technology Indonesia US$120 Islamic and conventional

Perisai up to US$47.03 2 tranches in 6 series

Glomac US$18.83 Murabahah MTN

First Fidelity US$2.9 Diminishing Musharakah

Aneka Gas US$26.5Ijarah alongside US$8.5 million worth of conventional bonds

Prolintas US$187US$93.5 million senior Ijarah, US$93.5 million junior Musharakah

Monetary Authority of Singapore

TBA Sukuk

For more details and the full list of deals visit


Deal trackerKeeping you abreast of the world’s upcoming Shariah compliant deals

www.islamicfi nancenews.comFUNDS PAGE

© 11th July 2008

Monthly Returns for ALL funds (as of the 9th July 2008)

FUND MANAGEMENT COMPANY Performance Measure FUND DOMICILE

1 Jadwa Aggressive Allocation Fund Jadwa Investment 10.72 Saudi Arabia

2 Al Shamekh Islamic Portfolio Riyad Bank 9.54 Saudi Arabia

3 AlAhli Small Cap Trading Equity Fund The National Commercial Bank 8.75 Saudi Arabia

4 Thahabi Ijara Fund I Wafra Investments Advisory Group 7.88 Kuwait

5 AlAhli Global Trading Equity Fund The National Commercial Bank 7.49 Saudi Arabia

6 Islamic Ijara Fund III Wafra Capital Partners 7.13 Kuwait

7 Thahabi Ijara Fund III Wafra Investments Advisory Group 7.00 Kuwait

8 SWIP Islamic Global Equity Fund (Class A) Scottish Widows Investment Partnership Limited 6.73 United Kingdom

9 Al Shuja’a Islamic Portfolio Riyad Bank 6.34 Saudi Arabia

10 Jadwa Balanced Allocation Fund Jadwa Investment 6.18 Saudi Arabia

Eurekahedge Global Islamic Fund Index* 2.87

DisclaimerCopyright Eurekahedge 2007, All Rights Reserved. You, the user, may freely use the data for internal purposes and may reproduce the index data provided that reference to Eurekahedge is provided in your dissemination and/or reproduction. The information is provided on an “as is” basis and you assume and will bear all risk or associated costs in its use, and neither Islamic Finance news, Eurekahedge nor its affi liates provide any express or implied warranty or representations as to originality, accuracy, completeness, timeliness, non-infringement, merchantability and fi tness for any purpose.

Contact EurekahedgeTo list your fund or update your fund information: [email protected]

For further details on Eurekahedge: [email protected] Tel: +65 6212 0900

Eurekahedge Global Islamic Fund Index

Monthly returns for Global funds (as of the 9th July 2008)FUND MANAGEMENT COMPANY Performance Measure FUND DOMICILE

1 Al Sanabil Fund (A) Global Investment House 22.21 Qatar

2 Al-Beit Al-Mali Fund Qatar National Bank 21.64 Qatar

3 Jadwa Saudi Equity Fund Jadwa Investment 13.90 Saudi Arabia

4 FALCOM Saudi Equity Fund FALCOM Financial Services 13.18 Saudi Arabia

5 Al Fursan Fund Banque Saudi Fransi 12.77 Saudi Arabia

6 Jadwa GCC Equity Fund Jadwa Investment 12.37 Saudi Arabia

7 Al Qasr GCC Real Estate & Construction Equity Trading Fund

Banque Saudi Fransi 11.76 Saudi Arabia

8 Al Rajhi India & China Equity Fund Al Rajhi Bank 11.37 Saudi Arabia

9 Global GCC Islamic Fund Global Investment House 11.34 Bahrain

10 Jadwa Arab Markets Equity Fund Jadwa Investment 11.14 Saudi Arabia

Eurekahedge Islamic Fund Index* 2.77

Apr-0

4Ju

l-04

Oct-04

Jan-

05

Apr-0

5Ju

l-05

Oct-05

Jan-

06

Apr-0

6Ju

l-06

Oct-06

Jan-

07

Apr-0

7Ju

l-07

Oct-07

Jan-

08

Apr-0

8

60

70

80

90

100

110

120


SHARIAH INDEXES

© 11th July 2008

Index Code Index Name 09/07/08 June-08 May-08 Apr-08 Mar-08 Feb-08 Jan-08

SPSHX S&P 500 Shariah 1085.819 1117.006 1191.671 1159.136 1101.027 1102.059 1113.559

SPSHEU S&P Europe 350 Shariah 1456.19 1484.523 1561.127 1527.614 1447.319 1469.692 1433.38

SPSHJU S&P Japan 500 Shariah 1159.626 1215.95 1298.106 1256.791 1183.592 1242.786 1245.302

S&P Shariah Indices Price Index Levels


SPSHAS S&P Pan Asia Shariah 994.643 1043.774 1181.396 1213.284 1128.294 1179.878 1125.301

SPSHG S&P GCC Composite Shariah 1243.27 1267.31 1275.791 1300.94 1217.617 1341.97 1261.967

SPSHPA S&P Pan Arab Shariah 1292.444 1315.524 1326.664 1346.319 1265.531 1365.488 1277.606

SPSHBR S&P BRIC Shariah 1393.214 1491.666 1618.083 1490.222 1339.677 1434.744 1329.801


SPSHGU S&P Global Property Shariah 706.383 714.774 846.205 897.914 832.467 870.938 858.447

SPSHIF S&P Global Infrastructure Shariah 105.085 107.07 113.133 111.336 108.755 112.966 110.419

The S&P Shariah Indices. Creating opportunity for Islamic investors.To learn more, contact [email protected].

09/07/08 May-08 Apr-08 Mar-08 Feb-08 Jan-08Jun-081000

1100

1200

1300

1400

1500

1600

1700

1800

1900

2000S&P 500 ShariahS&P Europe 350 Shariah S&P Japan 500 Shariah

1000

1100

1200

1300

1400

1500

1600

1700

1800

1900

2000S&P Pan Asia ShariahS&P GCC CompositeS&P Pan Arab ShariahS&P BRIC Shariah


0

120

240

360

480

600

720

840

960

1080

1200S&P Global Property ShariahS&P Global Infrastructure Shariah


www.islamicfi nancenews.comMARKET INDEXES

© 11th July 2008

DESCRIPTIVE STATISTICS Market Capitalization (US$ billions) Component Weight (%)

IndexComponent

numberFull

Float adjusted

Mean Median Largest Smallest Largest Smallest

DJIM World 2404 17904.21 14467.63 6.02 1.13 453.76 0.02 3.14 0

DJIM Asia/Pacifi c 1085 3407.23 2248.83 2.07 0.46 128.35 0.02 5.71 0

DJIM Europe 336 4688.51 3519.34 10.47 2.35 205.67 0.23 5.84 0.01

DJIM US 637 7980.37 7495.01 11.77 2.98 453.76 0.19 6.05 0

DJIM Titans 100 100 8261.71 7292.71 72.93 55.24 441.76 12.57 6.06 0.17

DJIM Asia/Pacifi c Titans 25 25 1222.15 776.05 31.04 24.32 76.34 12.57 9.84 1.62

Mean, median, largest, smallest and component weights are based on fl oat adjusted market capitalization, not full market capitalization.

Anthony YeungRegional Director

[email protected]: +852 2831 2580

Learn more about the Dow Jones Islamic Market Indexes

Data as of the 9th July 2008

INDEX PRICE RETURN (%)

1 Week 2 Week 3 Week 1 Month 3 Month 6 Month 1 Year YTD

DJIM World -1.76 -4.82 -6.29 -5.7 -5.57 3.78 -8.12 -9.2

DJIM Asia/Pacifi c -3.64 -6.46 -9.53 -9.53 -8.67 -0.48 -14.65 -13.72

DJIM Europe -0.17 -1.72 -2.77 -2.25 -4.01 9.66 -7.35 -8.39

DJIM US -1.51 -5.47 -6.45 -5.8 -5.11 0.87 -8.38 -9.47

PERFORMANCE OF DJ INDEXES

INDEX PRICE RETURN (%)


DJIM Titans 100 -0.9 -3.18 -4.23 -3.99 -4.85 0.9 -8.85 -11.24

DJIM Asia/Pacifi c Titans 25 -3.56 -5.87 -8.85 -8.03 -4.09 5.01 -7.9 -7.04

PERFORMANCE OF DJ TITANS INDEXES

PRIC

E R

ETU

RN

(%)

1 Week 2 Week 3 Week 1 Month 3 Month 6 Month YTD 1 Year

DJIM World DJIM Asia/Pacif ic DJIM Europe DJIM US

PRIC

E R

ETU

RN

(%)

1 Week 2 Week 3 Week 1 Month 3 Month 6 Month YTD 1 Year

DJIM Titans 100 DJIM Asia/Pacif ic Titans 25

-20

-15

-10

-5

0

5

10

15

-14

-12

-10

-8

-6

-4

-2

0

2

4

6


www.islamicfi nancenews.comMALAYSIAN SUKUK UPDATE

© 11th July 2008

RINGGIT ISLAMIC DEBT MARKET: WEEKLY SNAPSHOT AS AT 9th JULY 2008MOST ACTIVE BONDS TRADED BETWEEN 3rd JUNE and 9th JULY 2008

Stock Name Last Traded Price Last Traded YieldTotal Volume Traded

Last 7% w-o-w Price

ChangeLast Week Closing

Price

BNMN-IDB 55/2008 21D 29.07.2008 99.84 3.3 300

BNMN-IDB 18/2008 182D 11.09.2008 99.38 3.44 150

BNMN-IDB 29/2008 182D 23.10.2008 99.01 3.35 100

BNMN-IDB 51/2008 21D 22.07.2008 99.87 3.35 60

BNMN-IDB 53/2008 33D 05.08.2008 99.77 3.3 60

BNMN-IDB 54/2008 61D 02.09.2008 99.47 3.38 60

BNMN-IDB 38/2008 182D 27.11.2008 98.74 3.3 55

BNMN-IDB 56/2008 42D 19.08.2008 99.64 3.31 53.33

MISC IMTN 0% 17.12.2009 - MTN 0002 99.87 4.15 40 0.1 99.77

RANTAU IMTN 0% 15.03.2012 - MTN 3 96.83 5.05 30 -0.6 97.41

BNMN-IDB 34/2008 182D 13.11.2008 98.82 3.35 25

OPT CHEMIC 5.80000% 27.09.2013 103.17 5.11 20 0.14 103.03

PLUS SPV IMTN 2% 27.06.2013 - Tranche No. 1 83.36 5.9 20 0.54 82.91

RANTAU IMTN 15.03.2011-MTN 1 98.72 4.9 17 -0.35 99.07

PUTRAJAYA RM80.0 MIL 7.000% 15.03.2013 108.07 5.05 15 0.21 107.84

Outstanding Bond by Issuer Class as at 9th July 2008 (RM’000) Bond Traded Amount by Issuer Class as at 9th July 2008 (RM’000)

Corporate115,372 (54%)

Government33,400 (16%)

Financial4,043 (2%)

BNM24,600 (12%)

Corporate Guaranteed2, 934 (1%)

ABS6,760 (3%)

Quasi-Govt26,455 (12%)

Corporate291 (25%)

Disclaimer: Information on this page is intended solely for the purpose of providing general information on the Ringgit Bond market and is not intended for trading purposes. None of the information constitutes a solicitation, offer, opinion, or recommendation by Bondweb Malaysia Sdn Bhd (“Bondweb”) to buy or sell any security, or to provide legal, tax, accounting, or investment advice or services regarding the profi tability or suitability of any security or investment. Investors are advised to consult their professional investment advisors before making any investment decision. Materials provided on this page are provided on an “as is” basis, and while care has been taken to ensure the accuracy and reliability of the information provided in this page, Bondweb provides no warranties or representations of any kind, either express or implied, including, but not limited to, warranties of title or implied warranties of fi tness for a particular purpose, accuracy, correctness, non-infringement, timeliness, completeness, or that the information is always up-to-date.

5 YR YTM Historical Chart (week closing, last 3 months)YTM Curves as at 9th July 2008

BNM863 (74%)

Quasi-Govt2 (0%)

Government5 (0%)

Corporate Guaranteed4 (0%)

www.islamicfi nancenews.comLEAGUE TABLES

© 11th July 2008

For all enquires regarding the above information, please contact: Catherine Chu Email: [email protected] Phone: +852 2804 1223; Fax: +852 2529 4377

TOP ISSUERS OF ISLAMIC BONDS JULY 2007 – JULY 2008

Issuer or Group Nationality Instrument Amt US$ m Iss. % Manager

1 Binariang GSM Malaysia Sukuk Musharakah 4,509 9 14.7 CIMB, RHB, Aseambankers, ABN AMRO Bank, AmInvestment, OCBC Bank (Malaysia)

2 Saudi Basic Industries Saudi Arabia Sukuk Istithmar 3,466 2 11.3 Calyon, HSBC Saudi Arabia

3 Jafz Sukuk UAE Sukuk Musharakah 2,043 1 6.7 Barclays Capital, Deutsche Bank (London), Dubai Islamic Bank, Lehman Brothers International (Europe)

4 Malaysia Malaysia Islamic Sukuk 1,628 2 5.3 Malaysia Government bond

5 Saudi Electricity UAE Islamic Sukuk 1,333 1 4.4 HSBC Saudi Arabia

6 Projek Lebuhraya Utara Selatan

Malaysia Sukuk Musharakah 1,162 11 3.8 CIMB

7 Sukuk Funding (No.2) UAE Sukuk Ijarah 1,021 1 3.3 Abu Dhabi Commercial Bank, Barclays Capital, Credit Suisse Securities (Europe), Dubai Islamic Bank, First Gulf Bank, Lehman Brothers International (Europe), National Bank of Abu Dhabi, Noor Islamic Bank

8 Dana Gas Sukuk Ltd UAE Sukuk Mudarabah 1,000 1 3.3 JPMorgan

9 Dar Al-Arkan International Sukuk

Saudi Arabia Sukuk Ijarah 1,000 1 3.3 ABS Islamic Bond, Arab National Bank, Deutsche Bank, Dubai Islamic Bank, Gulf International Bank (UK), Kuwait Finance House, Unicorn Investment Bank

10 Nakheel Development 3 UAE Sukuk Ijarah 980 1 3.2 Dubai Islamic Bank, NBD Investment Bank, JPMorgan

11 Nakheel Development 2 UAE Sukuk Ijarah 750 2 2.5 JPMorgan

12 DEWA Funding UAE Sukuk Ijarah 749 1 2.4 Barclays Capital, Citigroup Global Markets, Dubai Islamic Bank, Emirates Bank International

13 Syarikat Prasarana Negara Malaysia Sukuk Ijarah 616 3 2.0 CIMB, AmInvestment

14 Khazanah Nasional Malaysia Exchangeable Sukuk 550 1 1.8 CIMB, Deutsche Bank, UBS

15 Cagamas Malaysia Sukuk Murabahah 547 5 1.8 HSBC, CIMB, Aseambankers

16 National Bank of Abu Dhabi UAE Exchangeable Sukuk 545 1 1.8 Morgan Stanley, Credit Suisse

17 NIG Sukuk Kuwait Sukuk Mudarabah 475 1 1.6 BNP Paribas, Citigroup Global Markets, National Bank of Kuwait, Standard Chartered, WestLB

18 Tabreed 08 Financing UAE Convertible Sukuk Istisnah & Ijarah

463 1 1.5 Morgan Stanley

19 National Central Cooling (Tabreed)

UAE Exchangeable Sukuk 463 1 1.5 Morgan Stanley

20 Lingkaran Trans Kota Malaysia Sukuk Mudarabah 457 13 1.5 Aseambankers

Total 30,586 285 100.0


© 11th July 2008

ARE YOUR DEALS LISTED HERE?

Catherine ChuEmail: [email protected]

Telephone: +852 2804 1223

If you feel that the information within these tables is inaccurate, youmay contact the following directly:

TOP ISSUERS OF ISLAMIC BONDS APRIL 2008 – JULY 2008

Issuer or Group Nationality Instrument Amt US$ m Iss. % Manager

1 Saudi Basic Industries Saudi Arabia Sukuk Istithmar 1,333 1 16.1 Calyon, HSBC Saudi Arabia

2 Sukuk Funding (No 2) UAE Sukuk Ijarah 1,021 1 12.4 Abu Dhabi Commercial Bank, Barclays Capital, Credit Suisse Securities (Europe) , Dubai Islamic Bank, First Gulf Bank, Lehman Brothers International (Europe), National Bank of Abu Dhabi, Noor Islamic Bank

3 Nakheel Development 3 UAE Sukuk Ijarah 980 1 11.9 Dubai Islamic Bank, NBD Investment Bank, JPMorgan

4 DEWA Funding Ltd UAE Sukuk Ijarah 749 1 9.1 Barclays Capital, Citigroup Global Markets, Dubai Islamic Bank, Emirates Bank International

5 Syarikat Prasarana Negara Malaysia Sukuk Ijarah 616 3 7.5 CIMB, AmInvestment

6 Tabreed 08 Financing UAE Istisnah & Ijarah Exchangeable Sukuk

463 1 5.6 Morgan Stanley

7 National Central Cooling (Tabreed)

UAE Convertible Sukuk 463 1 5.6 Morgan Stanley

8 Lingkaran Trans Kota Malaysia Musharakah MTN 457 13 5.5 Aseambankers

9 MRCB Southern Link Malaysia Sukuk Istisnah 321 20 3.9 HSBC, CIMB

10 RAK Capital UAE Sukuk Ijarah 272 1 3.3 Standard Chartered

11 PLUS SPV Malaysia Musharakah MTN 234 7 2.8 CIMB

12 Villamar Sukuk Bahrain Sukuk Musharakah 190 1 2.3 Al-Rajhi Banking & Investment, Merrill Lynch International

13 Almana Sukuk Qatar Mudarabah Sukuk 163 1 2.0 Gulf International Bank

14 Aras Sejagat Malaysia Ijarah Islamic Bond 133 1 1.6 Bank Islam, Kuwait Finance House (Malaysia)

15 Bumiputra-Commerce Malaysia Sukuk Murabahah 110 1 1.3 CIMB

16 Cagamas Malaysia Sukuk Murabahah 96 2 1.2 HSBC, CIMB, Aseambankers

17 Projek Lebuhraya Utara Selatan Malaysia Musharakah MTN 95 1 1.2 CIMB

18 Gamuda Malaysia Sukuk Musharakah/Murabahah Notes

92 1 1.1 CIMB

19 Tanjung Langsat Port Malaysia Sukuk Musharakah 78 6 0.9 MIDF Amanah Investment

20 Jimah Energy Ventures Malaysia Sukuk Istisnah 76 10 0.9 AmInvestment, RHB Investment, MIMB Investment, Bank Muamalat

Total 8,264 105 100.0


© 11th July 2008

For all enquires regarding the above information, please contact:

Catherine Chu

Email: [email protected]: +852 2804 1223; Fax: +852 2529 4377

ISLAMIC BONDS BY CURRENCY APRIL 2008 – JULY 2008

Amt US$ m Iss. %

Emirati Dirham 4,111 7 49.7

Malaysian ringgit 2,458 88 29.7

Saudi Arabian Riyal 1,333 1 16.1

Total 8,264 105 100.0

ISLAMIC BONDS BY CURRENCY JULY 2007 – JULY 2008

Amt US$ m Iss. %

Malaysian ringgit 12,449 233 40.7

Emirati Dirham 6,698 9 21.9

US dollar 5,798 17 19.0

Saudi Arabian Riyal 4,799 3 15.7

Total 30,856 285 100.0

ISLAMIC BONDS JULY 2007 – JULY 2008

Manager or Group Amt US$ m Iss. %

1 CIMB 4,244 79 13.9

2 HSBC 3,987 39 13.0

3 JPMorgan 2,077 4 6.8

4 Malaysia Government bond 1,628 2 5.3

5 Aseambankers 1,496 39 4.9

6 Dubai Islamic Bank 1,356 7 4.4

7 Morgan Stanley 1,308 7 4.3

8 AmInvestment 1,242 43 4.1

9 Barclays Capital 1,126 4 3.7

10 Riyad Bank 1,066 1 3.5

11 Calyon 1,016 2 3.3

12 RHB Capital 848 63 2.8

13 Deutsche Bank 837 3 2.7

14 Oversea-Chinese Banking Corp 683 16 2.2

15 Emirates NBD 677 4 2.2

16 Lehman Brothers 638 2 2.1

17 ABN Amro 620 8 2.0

18 Citi 590 10 1.9

19 Standard Chartered 545 20 1.8

20 Credit Suisse 508 3 1.7

Total 30,586 285 100.0

ISLAMIC BONDS BY COUNTRY JULY 2007 – JULY 2008

Amt US$ m Iss. %

Malaysia 12,999 234 42.5

UAE 8,858 16 29.0

Saudi Arabia 5,799 4 19.0

Pakistan 660 17 2.2

Bahrain 550 2 1.8

Kuwait 475 1 1.6

Total 30,586 285 100.0

ISLAMIC BONDS APRIL 2008 – JULY 2008

Manager or Group Amt US$ m Iss. %

1 CIMB 942 35 11.4

2 Morgan Stanley 926 2 11.2

3 HSBC 773 21 9.4

4 Calyon 666 1 8.1

5 Dubai Islamic Bank 642 3 7.8

6 Emirates NBD 568 3 6.9

7 Aseambankers 554 16 6.7

8 AmInvestment 389 16 4.7

9 JPMorgan 327 1 4.0

10 Barclays Capital 315 2 3.8

11 Citi 187 1 2.3

12 Gulf International Bank 163 1 2.0

13 RHB Capital 140 33 1.7

14 Abu Dhabi Commercial Bank 128 1 1.5

15 Credit Suisse 128 1 1.5

16 First Gulf Bank 128 1 1.5

17 Lehman Brothers 128 1 1.5

18 National Bank of Abu Dhabi 128 1 1.5

19 Noor Islamic Bank 128 1 1.5

20 Malaysian Industrial Development Finance

108 15 1.3

Total 8,264 105 100.0

ISLAMIC BONDS BY COUNTRY APRIL 2008 – JULY 2008

Amt US$ m Iss. %

UAE 3,676 5 44.5

Malaysia 2,458 88 29.7

Saudi Arabia 1,333 1 16.1

Total 8,264 105 100.0

www.islamicfi nancenews.comEVENTS DIARY

© 11th July 2008

EDITORIAL TEAMManaging Editor S.Sivaselvam [email protected]

Deputy Editor Raphael Wong [email protected]

Senior Copy Koay Sook KuanEditor [email protected]

Copy Editor Sasikala Thiagaraja [email protected]

Editorial Elmira AzlanExecutive [email protected]

Features Editor Shabnam Mokhtar [email protected]

Staff Writers Dalila Abu Bakar [email protected]

Nazneen Abdul Halim [email protected]

Correspondents Kamal Bairamov, Seelan Sakran Shirene Shan

Forum Manager Christina Morgan [email protected]

Production Hasnani Aspari Manager [email protected]

Production Muhammad Najib Abdul Rahim Executives [email protected]

Nor Hidayah Mohamed [email protected]

SALES TEAMNew Business Charles PhilipManager [email protected] Tel: +603 2162 7800 x 13

Subscriptions Musfaizal Mustafa Manager [email protected] Tel: +603 2162 7800 x 24

Subscriptions Nadjmuddean Mohd Ris Sales Executives [email protected] Tel: +603 2162 7800 x 38

MARKETING TEAM

Marketing Deepa KaliperumalManager [email protected]

Administration & Dhana DorasamyMarketing Assistant [email protected]

Financial Faizah Hassan Controller [email protected]

Deputy Publisher Geraldine Chan & Director [email protected]

Managing Director Andrew Tebbutt [email protected]

Managing Director Andrew Morgan & Publisher [email protected]

Individual Annual Subscription Rate: US$575Company-Wide Subscription Rate: US$2,500

DISCLAIMERAll rights reserved. No part of this publication may be reproduced, duplicated or copied by any means without the prior consent of the holder of the copyright, requests for which should be addressed to the publisher. While every care is taken in the preparation of this publication, no responsibility can be accepted for any errors, however caused.

Islamic Finance news team

Published By: 21/F, Menara KUB, 12, Jalan Yap Kwan Seng 50450 Kuala Lumpur, Malaysia Tel: +603 2162 7800 Fax: +603 2162 7810

DATE EVENT VENUE ORGANIZER

July

14th - 16th 2nd International Takaful Summit London IBFIM

22nd Innovative Product Development UK IGG Events

23rd - 24th Islamic Real Estate Asia 2008 Kuala Lumpur IQPC

August

11th - 13th MIF 2008 Issuers & Investors Forum Kuala Lumpur Islamic Finance Events

12th - 14th Islamic Finance Summit (IFS) Mauritius 2007 Balaclava IBFIM

25th 2nd International Conference & Exhibition on Islamic Banking & Finance

Pakistan Al Huda Center of Islamic Banking & Economics

25th - 26th Islamic Financial Markets Indonesia Marcus Evans

25th - 28th Islamic Finance & Investment World 2008 South Africa Terrapinn

October

7th - 8th Islamic Finance Congress London IIR Conference

12th - 16th Middle East Retail Banking Forum Dubai IIR Middle East

14th Middle East Hedge Funds 2008 Switzerland Jetfi n Events

15th New York IFN Forum New York Islamic Finance Events

15th - 16th Middle East Investors Summit 2008 Dubai Worldwide Business Research

17th London IFN Forum UK Islamic Finance Events

20th - 21st Islamic Real Estate Investment TBA Naseba

21st Islamic Private Equity UK IGG Events

26th - 30th Saudi Insurance Summit Saudi Arabia IIR Middle East

28th Istanbul IFN Forum Turkey Islamic Finance Events

30th - 31st Middle East Money Summit Dubai Arabcom Group

November

2nd - 4th Islamic Funds World 2008 Dubai Terrapinn

3rd The World Islamic Infrastructure Finance Conference

Qatar MEGA

4th - 5th 2nd Annual Islamic Capital Markets London IFR Conferences

12th Karachi IFN Forum Karachi Islamic Finance Events

Yes! I would like to subscribe to Islamic Finance News

*Exclusive Corporate Subscription packages are available. Contact us today!

YOUR DETAILS

Full Name

(First Name) (Surname)

Company Name Designation

Address

...................................................................................................................................

...................................................................Postal/Zip...............................................

Country......................................................................................................................

Work Email

Telephone Fax

The information you provide will be safeguarded by REDmoney, whose subsidiaries may use it to keep you informed of relevant products & services. Tick here if you do not wish to receive further Islamic Finance related information.

PAYMENT METHOD

□ By Credit Card: Please go to www.IslamicFinanceNews.com/subscribe.asp for online payment.

□ By Telegraphic Transfer (T/T):Benefi ciary Account Name: Red Money Sdn BhdAccount No: 10100-1061002685 (Malaysian Ringgit) Account No: 10100-5070505083 (US Dollars)Swift Code: RJHIMYKLBenefi ciary Bank Name & Address: Al Rajhi Banking & Invest-ment Corporation (Malaysia) Bhd, Ground Floor East Block, Wisma Selangor Dredging, 142B Jalan Ampang, 50450 Kuala Lumpur, Malaysia

□ By Check: Please make check payable to Red Money Sdn Bhd

21/F, Menara KUB, 12, Jalan Yap Kwan Seng50450 Kuala Lumpur,Malaysia

[email protected]

+603 2162 7800 +603 2162 7810

HOW TO ORDER

INDIVIDUAL SUBSCRIPTION

1 Year at US$575 nett*

2 Years at US$995 nett*

COMPANY WIDE SUBSCRIPTION

1 Year at US$2,500 nett*

2 Years at US$4,250 nett*

(Max: 10 Individual Subscriptions)

Each subscription will receive:

• 50 issues of Islamic Finance news available every Friday. • Exclusive login details for each subscriber.• Unlimited access to the archived library of all past issues• All additional supplements, guides and reports.

A A Al Moosa Enterprises 8A M Best 14ABG 4ABIB 4ADIH 3Al Awadhi Investment Group 8Al Fajer ReTakaful Insurance Company 14Al Hamad Group 10Al Joman Centre for Economic Consultancy 4AL Khaleej Development Company 4Al Khaliji 8Al Rajhi Bank 3Al Safat Investment 11Al Salam Bank 6Al-Aqeelah Leasing, Finance and Investment Company 1Aldar Properties 11Allen & Gledhill Singapore 3Amanahraya-JMF 30Amlak Finance 6Arcapita 5Bahrain Stock Exchange 6Bearys Amanah Investment 8Bearys Group 8BIB 10BIsB 30BNL 30Bondweb Malaysia 9Burgan Bank 5CambridgeIndustrial Trust 11CBB 3, 6Ceylinco Profi t Sharing Investment Coproration 9

Colossus Holdings 5CrediMax 9CreditWatch 13Crescent Partners 8Deutsche Bank 4Development and Management House for Investment 9DIB 10DIFX 10Dubai Banking Group 14Dubai Holding 13Dubai International Capital 9, 30Dubai World 12EFG-Hermes 11EIB 2, 4EIIB 30Emcredit 6Emirates NBD 10Energia 5Etiqa Takaful 12EXIM Bank 8FGB 2First Energy Bank 30First Investment Bank 4Fitch Ratings 13, 14FSA 9FTSE 11Fullerton Financial Holdings 8GBCORP 10GCC 3, 7GHC 10GIH 14Gulf African Bank of Kenya 10

HKMA 3Honiton Energy Holdings 5HSBC 30HSBCAT 13IBA 9IBB 10IDB 2IFC 1Insure Direct 12Islamic Bank of Asia 11Jabal Omar Development 7Jadwa Investment 7JIFB 30JSE Securities Exchange 11Kaizen Developments 2KFH 6KFH-Bahrain 2KFHM 30Kuwait Finance 4Linklaters 30Manulife Insurance 12MARC 13, 14Methaq Takaful Insurance 12Moody’s 10Morgan Stanley 30MRSA Investment 13Mubadala Development Company 8NBK 4, 11NCB 8NIB 2, 11Noor Islamic Maldives Bank 2Qatar-Bahrain Takaful Insurance Company 12QIB 11

QIC 12QIIB 12QNB 11Rasameel Structured Finance Company 7REITs 11Riyad Bank 4RNCOS 11Rotana Hotel Management Corporation 7S&P 13Saudi Electricity Company 14Schroders 30Shariah Review Bureau 9Shuaa Capital 7Shuaa Partners 7SII 1Sorouh Real Estate 11Tabreed 13Tamweel 10, 13Tanti Group 5Tharwa Investment Company 8The Privatization Company 6Thomson Reuters 9TNB 14UAE Central Bank 10UBS 8, 9UK Trade & Investment 9Unicorn Investment Bank 11United Gulf Bank 5Waha Capital 8Zico 3

NE-IFN05/27

Company Index

Company Page Company Page Company Page Company Page

Country Index

Bahrain Islamic fi nance needs new models 3 ABG in US$30 million deal 4 Arcapita to sell Irish unit 5 Bank gains US$40.6 million 6 Japan taps Bahrain 6 CrediMax to launch Shariah cards 9 GBCORP’s HQ relocates 10 Unicorn disposes shares in Orimix 11Hong Kong Prudent and steady progression 3India Bearys seeks partner 8Indonesia Shariah banking to grow 52% by 2010 11Japan Japanese banks courted 6Jordan 30Kenya New branches 10Kuwait Banking profi ts up 4 Capital hike for Burgan Bank 5 Islamic fund launched 8 GHC sees 59% rise in profi t 10 Profi t growth for biggest lender 11Malaysia MIF 2008 Update 1 Zico establishes presence 3 Scholarship in Shariah fi nance 5 KFH seals private placement 6 New Islamic fi nancial products 8 Malaysian Sukuk on global pricing index 9 Etiqa to educate in cyberspace 12

Malaysia Manulife keen to set up Takaful unit 12 KFHM is stable 13 APP’s bonds face downgrade 13 ‘A-’ for HSBCAT from Fitch 13 MARC revises rating on Tenaga’s notes 14Maldives Islamic banking to debut soon 2Middle East GCC records US$800 billion growth 7 Shariah mode fi ve-star hotel 8 BIB inks partnership with Yemeni bank 10Qatar First retail bank for Qatar 8 Qatari banks ‘strong performers’ 11 QIC’s profi ts leap by 66% 12 Qatari, Bahraini fi rms form JV 12 QIIB posts 67% jump in net profi t 12Saudi Arabia Al Rajhi records profi t growth 3 Higher profi t for Riyad Bank 4Singapore IBA’s fi rst innovative product 9 Shariah compliant REIT? 11South Africa JSE in partnership with FTSE 11Southeast Asia Al-aqeelah plans Islamic bank 1Sri Lanka Shariah compliant Visa card 9Switzerland UBS moves into Saudi Arabia 9UAE Kaizen offers global fi nancing 2 EIB introduces MENA CPPI Note 2 Another record quarter for FGB 2 ADIH fund beats target 3

UAE Zico establishes presence 3 EIB unveils MENA notes 4 Arcapita to invest US$2 billion 5 Emcredit restructured 6 Amlak Finance ups profi t outlook 6 Hospitality fund draws investors 7 New fi nance fi rm 8 Dubai International Capital eyes Asia 9 Tamweel’s US$300 million Sukuk 10 Al Hamad Group gets Islamic fi nancing 10 ‘Enough banking licenses’ 10 Aldar, Sorouh sign deal with Noor 11 Insure Direct’s big car scheme 12 Methaq nets US$408 million 12 Tamweel gets an ‘A’ 13 Tabreed on CreditWatch 13 Fitch rates ‘AA-’ for Dubai Holding’s MTN 13 Fajer ReTakaful gets an’A-’ 14UK UK backs SII/IFC move 1 Islamic assets worth US$1 trillion by 2010 2 Cahn affi rms Shariah commitment 9 IBB pushes home plan 10US Investors moving away from US dollar 5 Shariah fund goes Latin 8Vietnam Zico establishes presence 3

Country Title Page Country Title Page Country Title Page

the world’s global islamic finance news...

Documents