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Vol. 5, Issue 27 11th July 2008 The World’s Global Islamic Finance News Provider

In this issue MALAYSIA Islamic Finance Briefs ...... 1 MIF 2008 Update Takaful News ...... 12 Only FOUR weeks left to be a part of the experts, high level executives from leading world’s biggest Islamic fi nancial event and global Islamic banks, Shariah scholars Islamic Ratings Briefs ...... 13 most infl uential gathering, MIF 2008–Issuers and key regulators, have registered for this & Investors Forum. extended three-day event spanning the IFN Reports ...... 15 Issuers, Investors and Equity markets. MIF 2008 continues to receive excellent Islamic Finance for Thailand: response from the global Islamic fi nance To participate in this FREE event, register Opportunities and Challenges ...... 17 industry. To date, over 1,000 delegates online NOW at www.MIFforum.com to attend Shariah Compliant Financial Industry comprising world renowned Islamic fi nance the day relevant to you! makes Headway in Thailand ...... 19

German Infrastructure Projects Offer UK Huge Investment Potential ...... 21 UK backs SII/IFC move Sukuk Market at a Crossroad ...... 23

The UK has welcomed the educational world by enabling them to learn more about DFSA Takes a Common Sense initiative between the Islamic Finance Council conventional fi nance,” she added. Approach ...... 24 and the Securities & Investment Institute, describing it as an excellent example of what Ruth Martin, managing director of SII, said: Forum ...... 26 the UK has to offer in terms of skills and “We are delighted that the IFC is united with Meet the Head ...... 28 professionalism. SII to support this initiative, further enhancing Qudeer Latif, Partner (Head of Islamic Finance), the skills of those working in Islamic Clifford Chance Kitty Ussher, Economic Secretary to the fi nance.” Treasury, explained how London has become Termsheet ...... 29 a global gateway for Islamic fi nance and how The SII has become the leading fi nancial Jordinvest Shariah Compliant MENA Fund it could maintain its position. “The scholar services educational body in the area of professional development program is a Islamic fi nance. It fi rst announced the Moves ...... 30 ground-breaking move to develop the fi nancial development of its benchmark Islamic Deal Tracker ...... 31 skills of Shariah scholars from around the Finance Qualifi cation (IFQ) in 2005. Islamic Funds Tables ...... 32

SOUTHEAST ASIA S&P Shariah Indexes ...... 33 Aqeelah plans Islamic bank Dow Jones Islamic Indexes ...... 34ـAl

Kuwait’s Al-Aqeelah Leasing, Finance and “Our approach is international. We are not Malaysian Sukuk Update ...... 35 Investment Company will set up an Islamic here to take markets from Malaysian banks bank in Malaysia next year to tap the growing but attract the others into this market, from Islamic League Tables ...... 36 demand for Shariah compliant products in the Middle East.” the region. Events Diary...... 39 Vice-president for consumer fi nance Yaqoub Subscriptions Form ...... 40 Managing director Hamed Khajah said of Al-Ebrahim said the bank will focus on the bank, with a paid-up capital of US$100 private equity and direct investment, cor- Country Index ...... 40 million and due to start business by January porate and structured fi nance and wealth next year: management. Company Index ...... 40 NEWS BRIEFS www.islamicfi nancenews.com

MALDIVES UAE Islamic banking to debut soon EIB introduces MENA CPPI Note The Sunni Muslim island nation of Maldives will likely get its ﬁ rst taste Emirates Islamic Bank (EIB) has launched the Emirates MENA CPPI of Islamic banking in the next four months, following the signing of Note, a three-year Shariah compliant structured note linked to the an agreement by the ﬁ nance ministry with Dubai’s Noor Islamic Bank performance of the Emirates MENA Opportunities Fund, one of the and the Islamic Development Bank (IDB) on Tuesday. various in-house managed funds launched by EIB two years ago.

According to a report, the service will be introduced through an en- The MENA CPPI Note was developed in conjunction with Deutsche tity operating as Noor Islamic Maldives Bank, which will be 34%- Bank with the twofold aim of meeting the increasing demand for owned by the Maldivian government. Noor Islamic and IDB affi liate Shariah compliant structured products and providing a high degree of Islamic Corporation for the Development of the Private Sector will capital protection over the Emirates suite of funds. EIB said it offers have 33% each. potential investors an opportunity to invest in the Middle East and North Africa (MENA) region. 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 “The MENA CPPI Note has been designed in line with the current development. market scenario across the MENA region,” said Faisal Aqil, general manager of retail banking for EIB. UAE Like the other products unveiled by the bank, the MENA CPPI Note will Kaizen offers global fi nancing also follow a Shariah compliant structure and will be professionally Strategic urban developer Kaizen Developments is offering managed by a team of fund managers. The note aims to achieve long- international Islamic fi nancing for its projects in both the UAE and term capital growth from a diversifi ed portfolio of Shariah compliant Turkey. equity securities and other assets primarily in the Gulf Cooperation Council and the MENA region. 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 UK and creative properties and investments while servicing the needs of Islamic assets worth US$1 trillion by 2010 the customers.” The Islamic fi nance industry will be worth US$1 trillion by 2010, with Headquartered in the UAE, Kaizen Developments currently maintains continuous expansion driven by increased global demand for Shariah a diverse portfolio of mixed-use, commercial and residential compliant fi nancial products and services, said Kuwait Finance House- developments. 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. Requires UAE FREELANCE FINANCIAL Another record quarter for FGB First Gulf Bank (FGB), one of the leading fi nancial institutions in the TRAINERS 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 To conduct public training courses in Malaysia and this year. GCC countries. Practical experience of working within the Islamic fi nancial services is required, as Net interest and Islamic fi nancing for the second quarter was is some experience of delivering training to the AED622 million (US$169 million), a surge of 112% from the previous corresponding period and 47% higher than the previous quarter. Non- banking sector. 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 If you would like to know more about this (US$330 million), of which the contribution of the core banking opportunity, please contact Andrew Tebbutt at operations represented 91%. [email protected] FGB’s CEO André Sayegh said: “In line with our strategy, we have been or by telephone on: +603 2162 7802 consistently outperforming quarter over quarter, and have witnessed strong growth in our core banking operations and in our subsidiaries and associate companies.”

HONG KONG SAUDI ARABIA Prudent and steady progression Al Rajhi records profi t growth Hong Kong Monetary Authority (HKMA) executive director Edmond Al Rajhi Bank, the largest Gulf Arab bank by market value, turned in Lau said the Special Administrative Region will be prudent in its drive a net profi t of SAR1.74 billion (US$465 million) in the three months to become a platform for Islamic fi nance products, and does not ended the 30th June 2007, an increase of 8.2% from the SAR1.61 see itself competing with existing centers. Lau, who is responsible billion (US$430 million) in the year-earlier period. The bank’s second- for monetary management, said it is diffi cult to predict when Hong quarter profi t is near the top end of analysts’ forecasts. 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. MALAYSIA/UAE/VIETNAM

“We don’t believe this is going to be a Big Bang event; it’s going to be Zico establishes presence a long drawn out process which takes years for an Islamic fi nance hub Shortly after the launch of its affi liate ZI Shariah Advisory in June, law to form,” Lau said. “Even before we introduce any changes to the tax fi rm Zaid Ibrahim & Co (Zico) has established its presence in Vietnam laws, it is possible under the taxation framework to grant exemptions and Dubai. Zico’s Vietnamese foray is in conjunction with Allen & in relation to certain types of taxes.” 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 In terms of attracting investments, Lau is confi dent: “We do not see, Ho Chi Minh City and Hanoi. at least at this stage, the need to provide incentives. We believe the Hong Kong platform is attractive already.” The main practice areas of AGZI LCT are banking and fi nance, corporate and commercial law, competition, construction and infrastructure, UAE foreign investment, employment, intellectual property, mergers and acquisitions, real estate and tax. ADIH fund beats target Zico is also the fi rst Asian law fi rm to have the approval of the Dubai Abu Dhabi Investment House (ADIH) has announced the fi nal exit of Financial Services Authority to provide services to local, regional and Al Arabi Investment Fund, generating an annual internal rate of return (IRR) of 20.2%. The fund’s subscribers were promised 20% annual international clients in and from the Dubai International Financial st return when it was launched in 2005. The announcement comes 30 Centre. The Dubai offi ce, due for launch on the 21 July, is said to be months earlier than the expected date of exit. a natural progression of the setting up of its Middle Eastern desk in Kuala Lumpur last September. 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. BAHRAIN Islamic fi nance needs new models The 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- Offshore expertise ous risk management and stress testing techniques. with a local presence.

He noted that newer entrants to the industry have tended to merely copy the strategies being successfully pursued by their more The world's leading offshore law firm and the first to establish an established rivals, hence there is a high degree of cloning of business office in the Middle East. Maples offers clients around the Middle models and this has resulted in a very high percentage of Islamic East an unparalleled range of Cayman Islands and British Virgin banks with strategies that are heavily weighted towards real estate Islands legal services, including advising on offshore Islamic and asset ﬁ nance. finance structures such as sukuk transactions, investment funds, trusts and securitisations.

The governor cautioned that the asset-based business models Contact Tahir Jawed at +971 4 360 4070 favored by many Islamic banks have not been tested in a downturn, or e-mail: [email protected] pointing out that a business model which looks robust in conditions www.maplesandcalder.com of rising asset values and abundant liquidity may not be so when the economic environment changes.

BAHRAIN ABG in US$30 million deal Bahrain-based leading Islamic banking group Albaraka Banking Group (ABG) said subsidiary Al-Baraka Islamic Bank (ABIB) and the First Investment Bank have presents 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 CALENDAR 2008 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 Accounting & Financial Reporting for of ABG which is a Bahrain joint stock company listed on the Bahrain and Dubai stock Islamic Banking & Finance exchanges. 14 – 16 July, KUALA LUMPUR

KUWAIT Takaful: Islamic Insurance Banking profi ts up 6 – 8 August, KUALA LUMPUR Banks 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 Structured Islamic the central bank to fi ght record infl ation, registered at 10.14% in February. Shares Finance & Investment Products of National Bank of Kuwait (NBK), the country’s biggest bank which is expected to 14 – 15 August, KUALA LUMPUR 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, Islamic Financial Markets, Treasury & 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 Derivatives feast on. 6 – 8 October, KUALA LUMPUR

Al Joman Center for Economic Consultancy general manager Naser Al Nafi si said Key Legal, Documentary & Structuring Issues the rules will affect banks slightly as many have other growing operations, especially for Islamic Financial Products 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 6 – 8 October, DUBAI 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 Structuring Islamic Financial Products 34.4% in the second quarter, has moved into Malaysia and plans to expand in Turkey Workshop and the Gulf to tap a boom in Islamic fi nance. 13 – 15 October, MUMBAI

SAUDI ARABIA The Islamic Capital Markets & Investment Banking School Higher proﬁ t for Riyad Bank 13 – 16 October, HONG KONG Riyad 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. Islamic Investment Funds: Mutual Funds, Hedge Funds & REITs UAE 10 – 12 November, KUALA LUMPUR EIB unveils MENA notes Shariah Coordination for Financial Emirates Islamic Bank (EIB) has launched the Emirates MENA CPPI Note, a 3-year Institutions Shariah compliant structured note linked to the performance of the Emirates MENA 16 – 18 December, KUALA LUMPUR Opportunities Fund.

It was developed along with Deutsche Bank to meet the increasing demand Takaful Products, Markets & Operations for Shariah compliant structured products and provide a high degree of capital 21 – 23 December, MANAMA protection over the Emirates suite of funds.

It offers investors an opportunity to invest in the Middle East and North Africa www.IslamicFinanceTraining.com (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 FOR MORE INFORMATION, contact: Emirates MENA Opportunities Fund at inception will be about 60% and is expected Andrew Tebbutt Tel: 603 2162 7802; to increase to a maximum of 150% during periods of consistent out-performance, Email: [email protected] and is readily tradable in the secondary markets.

UAE Arcapita to invest US$2 billion Bahraini 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. MALAYSIA Scholarship in Shariah fi nance The 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.

KUWAIT Capital 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.

US Investors moving away from US dollar Investment 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.

BAHRAIN Arcapita to sell Irish unit Bahrain-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.

BAHRAIN BAHRAIN Bank gains US$40.6 million Japan taps Bahrain Bahrain-based Al Salam Bank, one of the rapidly growing Islamic banks Central Bank of Bahrain (CBB) Governor Rasheed Al Maraj met the Jap- in the region, announced a net profi t of BHD15.3 million (US$40.6 anese prime minister’s special adviser, Hiroshi Okuda, on the develop- million) for the half-year ended 30th June 2008. The total assets grew ment of the banking and fi nancial sectors in the two countries, with the by 63% from BHD647 million (US$1.7 billion) as of the 31st December focus on CBB’s experience and knowledge of Islamic fi nance. 2007. In a market marred by fi nancial crisis and tight liquidity, the bank increased its institutional and customer deposits and is working to Al Maraj outlined Bahrain’s pioneering role in Islamic fi nance and its enhance liability management. precedence in setting up the necessary foundation for its development, saying that the country, as a well-established fi nancial center, has played Its gross operating income for the period rose to BHD21.3 million a key role in making Islamic banking one of the fastest growing segments (US$56.6 million) from BHD19 million (US$50.4 million) in the of the fi nancial services industry. 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. UAE Amlak Finance ups profi t outlook JAPAN Dubai Islamic mortgage company Amlak Finance raised its profi t outlook for this year after posting a record profi t in the second quarter Japanese banks courted driven by its home loan business and property investments. It saw a Japanese banks are being wooed to collaborate with Malaysian banks in 74% jump in net income to AED142.3 million (US$38.7 million) in the Islamic fi nancial services, particularly to penetrate markets in Southeast three months ended on the 30th June. Revenues jumped 114% in the Asia and the Middle East to help meet growing demand. Malaysian six-month period to AED620 million (US$168.8 million), of which 52% International Trade and Industry Minister Muhyiddin Yassin described came from property fi nancing. his country as having among the best infrastructure for the sector and therefore being an ideal platform for Japanese fi nanciers to use. 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 They can tap into a growing trend — in two years Islamic fi nance will total portfolio of real estate investments worth AED6 billion (US$1.6 constitute more than 20% of the global banking industry — and help billion) at the end of June. Malaysia positioning itself as an international hub for Islamic banking.

UAE Emcredit restructured The 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. MALAYSIA KFH seals private placement Kuwait 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.

UAE MALAYSIA Hospitality fund draws investors DutaLand secures Islamic fi nancing Shuaa Partners, the private equity arm of Shuaa Capital, said it has DutaLand’s 100%-owned KH Land has secured from the Asian Fi- attracted US$165 million for its US$200 million hospitality fund. nance Bank Islamic fi nancing of RM85 million (US$26. million) to The fund, upon its fi rst closing on the 30th June, received interest in build 49 units of four-storey villas in a gated housing development in excess of US$240 million and over US$165 million in aggregate cap- Kuala Lumpur. ital commitments, and therefore anticipates the remaining US$35 million to be fully subscribed before the second and fi nal closing. UAE The Shuaa Hospitality Fund I is the third private equity fund spon- ‘De-peg from dollar’ sored by Shuaa Capital. Shuaa Partners manages the US$200 million Shuaa Partners Fund I which has made fi ve investments within Gulf oil producers preparing for monetary union should reconsider the Gulf Cooperation Council and exited two. It also manages the keeping their currencies pegged to the weak dollar and look instead US$100 million Frontier Opportunities Fund I, which has completed at a basket of currencies, an Abu Dhabi government body said. its fi rst investment and hopes to make investments in Lebanon, Saudi Arabia, the UAE and three other states in the world’s biggest Syria and Jordan. oil exporting region have agreed to keep their dollar pegs intact until they achieve a single currency by the 2010 deadline. The hospitality fund focuses on the MENA region, particularly Gulf countries, the Levant and Egypt. Shuaa said it will invest into the The Abu Dhabi Department of Planning and Economy said that as oil development of a diversifi ed portfolio of fi ve- and four-star hotels, prices soar, the dollar is tumbling to record lows against the euro and a resorts, serviced apartments and budget business hotel properties basket of major currencies as infl ation spirals and hence, maintaining which will be managed by Rotana Hotel Management Corporation. the policy has become problematic. It urged nations within the GCC to An amount of US$53 million will be allocated to the Shariah compli- peg to a basket of currencies instead, taking into account the region’s ant Shuaa Saudi Hospitality Fund I to develop 17 hotels with 5,000 big trade exposures to the euro. rooms in Saudi Arabia ranging from fi ve stars to budget hotels. UK MIDDLE EAST Shariah law to take root GCC records US$800 billion growth The Lord Chief Justice of England and Wales, Lord Phillips, has said the UK may introduce the principles of Shariah law into some aspects Gross domestic product (GDP) in the Gulf Cooperation Countries of its legal system. He said there is no reason Shariah law principles (GCC) grew by about 5.5% to US$800 billion at the end of 2007. cannot be used in mediation. However, this will still be subject to the For Saudi Arabia, the numbers are about US$375 billion and about jurisdiction of the English and Welsh courts, he added. 4%. Currently, Saudi Arabia is probably bringing in about US$1 billion 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, Advising on the laws of said Issam Zaid Al-Tawari, vice chairman and CEO of Rasameel Structured Finance Company. Another consequence is the growth BERMUDA CAYMAN BVI of the sovereign wealth funds which he estimated at over US$2 Since 1928, Conyers Dill & Pearman has consistently provided responsive, timely and thorough offshore law trillion. advice. The Dubai office provides advice on corporate and commercial law, with particular emphasis on private equity funds, mutual funds, capital markets, project financing, He felt some of the funds should be invested in infrastructure and securitisations and commercial and private aircraft financing non-petroleum sectors of the GCC economies but conceded it will and registration. be diffi cult to do this in a way that does not increase liquidity and the growth of credit. Conyers Dill & Pearman The Offshore Law Firm SAUDI ARABIA Level 2, Gate Village 4 Dubai International Financial Centre Jadwa gets Mecca contract PO Box 506528 Dubai, U.A.E. Jabal Omar Development has signed an agreement for Shariah Tel: +9714 428 2900 compliant Jadwa Investment to provide consultancy for the SAR12.4 Fax: +9714 428 2999 billion (US$3.3 billion) fi nance for the Jabal Omar mega real estate Email: [email protected] scheme in front of the Holy Haram in Mecca.

Jadwa chairman Prince Faisal Salman said his company’s efforts to www.conyersdillandpearman.com win the contract reﬂ ects the importance of the project, the ﬁ rst of its kind in Mecca. Jabal Omar Development chairman Abdul Rahman Anguilla & Bermuda & British Virgin Islands & Cayman Islands & Dubai & Hong Kong & London & Moscow & Singapore Faqeeh said the project will be in two phases. Advising on the laws of Bermuda, British Virgin Islands and Cayman Islands.

US INDIA Shariah fund goes Latin Bearys seeks partner US-based asset management fi rm Crescent Partners plans to launch Bangalore-based Bearys Group is scouting for a partner to raise some a US$500 million Shariah compliant private equity fund aimed at US$350 million to fi nance its two special economic zones (SEZ) in Ban- placing Middle East liquidity into the Latin American region by the end galore and Mangalore as well as a few other projects. of the year. The fund will be invested in a variety of sectors including agriculture, infrastructure and alternative energy. Bearys Amanah Investment CEO Shariq Nisar said the company is holding talks with several Shariah compliant private equity players in the over- Chief executive Paul Homsy said he sees a lot of potential for Middle seas market and hopes to fi nalize one partner in the next three to four East investors in the Latin American region and that the fi rm has months. already received a great deal of interest from Middle East investors. “One of the challenges of doing Shariah compliant private equity is that He said the UBS Group of Switzerland, Dubai Islamic Bank and Gulf In- most deals are highly leveraged but, to fi t within Shariah guidelines, vestment House are among the entities the Bearys group is negotiating can have no more than 30% debt to equity ratio. But in Latin America with. Bearys Amanah Investment is the real estate investment arm of the most deals are done entirely with equity, which makes structuring INR20 million (US$461,000) Bearys group. them in a Shariah compliant way easier,” he added. MIDDLE EAST UAE Shariah mode fi ve-star hotel New fi nance fi rm The Al Awadhi Investment group plans to build a 300-room Shariah Mubadala Development Company, Waha Capital, A A Al Moosa compliant fi ve-star hotel in Fujairah early next year with a total Enterprises and Fullerton Financial Holdings have signed an investment of AED350 million (US$95.3 million). Chief Executive agreement to incorporate a new fi nance company headquartered in Sharif Al Awadhi said the two-year-old company wants to tap the Abu Dhabi, to be called Dunia Finance. opportunities offered by Fujairah as a destination that attracts both foreign and domestic tourists. It will have a nationwide presence and focus on the retail and small business segments, providing a range of loans, credit cards and The company, which is mainly involved in the real estate and fi nancial planning services as well as deposits for non-individual industrial sectors in Fujairah and Dubai, is in talks with a European customers. 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 KUWAIT sector in Fujairah, Dubai and Ajman. Islamic fund launched Tharwa Investment Company, a closed Kuwaiti shareholding company SAUDI ARABIA established in 2006, has launched a new Shariah compliant fund. Private real estate ownership The Tharwa Islamic Money Market Fund provides liquidity and current Saudi Arabia’s consultative Shura council has passed a full-fl edged income to investors to meet short term and medium term cash fl ow mortgage law which is expected to boost Shariah compliant home needs while aiming to maintain capital stability by investing in Shariah fi nancing. The law, still to be approved by the Council of Ministers, is compliant instruments in Kuwait. aimed at encouraging private real estate ownership. Only one in fi ve Saudis owns a home. The Fund is also allowed to invest in other investment funds which invest in low risk products such as Murabahah. The minimum initial In Saudi Arabia, Islamic fi nance is the mainstream, with its biggest subscription is KWD50,000 (US$188,587) per investor without any fi nancial institution, the National Commercial Bank, having passed subscription or exit fees and offers bi-weekly exit. almost completely into Shariah compliant banking two years ago. Islamic home fi nance is one of the fastest growing segments in the QATAR industry. First retail bank for Qatar MALAYSIA Al 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 New Islamic fi nancial products six branches, two service centers and 10 offsite ATMs throughout Export- Import Bank of Malaysia (EXIM Bank) is expected to roll out its Qatar. Islamic fi nancial services products early next year. Targeting specifi c sectors and customers, they will include Takaful services. The bank was formed in Doha in January 2007 and completed its initial public offering and listing on the Doha Securities Market in The move is part of the bank’s strategy to add depth and breadth August. The bank, which aims to become a major corporate and to its activities. Other measures include upgrading its information retail commercial bank across the Gulf; has recruited an international technology infrastructure to increase effi ciency and a corporate management team and nearly 240 employees. improvement program for a better overall delivery system.

UK BAHRAIN Cahn affi rms Shariah commitment CrediMax to launch Shariah cards UK Trade & Investment CEO Andrew Cahn has spoken of the UK’s Bahrain’s leading credit card issuer and acquirer CrediMax expects strengthened commitment to Islamic banking, highlighting the its Shariah compliant credit and debit cards, to be launched in the growing importance of Islamic fi nance around the globe and the need next three months, to add 10% to 15% to its business. It also hopes for the UK’s fi nancial industry to provide an open door to the thriving 20% to 30% of existing customers will convert to the Shariah cards market. “The growth of Islamic fi nance in the past few years has been within a year. remarkable, and it has proven itself resilient to some of the recent shocks to the fi nancial markets,” he noted. It has signed an agreement with Bahrain-based Shariah Review Bureau (SRB) to ensure that the design and launch of new products Richard Thomas, a member of the UK Trade & Investment Financial are in compliance with the Shariah. CrediMax is also fi nalizing a line Services Sector Advisory Board and chairman of the sub-committee of Islamic products and will release them after SRB’s endorsement of on Islamic fi nance, expounded on the need for an increase in Islamic Shariah compliance. 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 UAE I am confi dent that more will follow. Investors want and expect their Dubai International Capital eyes Asia investments to be Shariah compliant and this demand is only going to become more prevalent in the near future.” Dubai 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 SRI LANKA 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 Shariah compliant Visa card expanding faster than the global average this year. Ceylinco Profi t Sharing Investment Corporation, one of Sri Lanka’s leading Islamic fi nancial institutions, has launched the region’s fi rst SWITZERLAND stand-alone Shariah compliant Visa credit card to meet customer demand to conduct banking and fi nancial transactions in accordance UBS moves into Saudi Arabia with the Shariah. Swiss banking group UBS’s Saudi Arabian unit is to begin operations by year end, focusing on the group’s global core securities businesses The Ceylinco Profi t Sharing Visa card features include interest-free offering international and domestic clients comprehensive wealth credit up to 51 days, supplementary cards, Takaful income plan at management, asset management and investment banking services. nominal fee, global acceptance and cash advances at over 800,000 automated teller machines around the world. John Fraser, chairman and CEO of UBS Global Asset Management and group executive board member, will also become chairman of UBS MALAYSIA Saudi Arabia while Mohammed Al Dhoheyan, currently CEO of the Development and Management House for Investments, will be vice Malaysian Sukuk on global pricing index chairman. UBS plans to have Mohamed Sammakia as CEO. Islamic fi xed income content will be at the core of the evaluated prices for Malaysia’s Islamic and conventional bonds to be provided UBS has also sought approval to open a branch in the Qatar Financial to investors in a tie-up between international news agency Thomson Centre and also intends to expand its regional investment banking Reuters and local bond pricing agency Bondweb Malaysia. Although division and equity research coverage across the region. 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 SINGAPORE offi cer, Meor Amri Meor Ayob. IBA’s fi rst innovative product He felt the arrangement will enable market players to have the pricing The Islamic Bank of Asia (IBA) has launched two Shariah compliant benchmark to rely on to further stimulate trading. Bondweb Malaysia products, an innovative profi t rate swap structure and a foreign will provide evaluated prices — calculated price based on certain exchange (FX) forward purchase contract, respectively designed to criteria — for the bonds. “We do not set prices but give the best prices help customers manage liability risks and maximize opportunities that they can look at. We can kick start the price discovery exercise for from currency market movements. Available in the G7 currencies, players,” he told reporters the signing the agreement on the strategic they help companies limit their exposure to fl uctuating funding costs partnership. and currency prices.

Thomson Reuters managing director Simon Soo Hu said although its IBA vice president of product development Kareem Hussaini said service provides conventional bond data, the agreement also tries users can do this with less time, less costs and less documentation. to harmonize the different Islamic bond sectors across the globe. “These new structures can cut traditional transaction costs by as He noted that Islamic fi nance is set to grow because more fi nancial much as half,” he contended. IBA CEO Vince Cook said the bank is institutions are offering Islamic fi nance services while the number working towards launching its fi rst Shariah compliant Asian equities of funds available to the investors is also on the rise and Islamic fund and real estate fund targeting special opportunities in the region countries are showing phenomenal fi nancial growth opportunities later this year.

KUWAIT UAE GHC sees 59% rise in profi t Al Hamad Group gets Islamic fi nancing Kuwait-based Gulf Holding Company (GHC) turned in a net profi t of Dubai Islamic Bank (DIB) has arranged Islamic fi nancing worth AED KWD18.72 million (US$71 million) for the fi nancial year 2006-2007, 824 million (US$224.34 million) for Al Hamad Group to fi nance a up 59% over the previous year. It plans a fi rst dividend of 20%, portion of the Remraam project coming up in Dubailand. The AED payable as 10% cash and 10% bonus shares. Vice chairman and CEO 3.37 billion (US$0.917 billion) project consists of 108 residential Ahmed Al Ameer said it was achieved against the backdrop of the buildings, including facilities such as shopping malls, health clubs global mayhem from the sub-prime crisis, rapidly rising global prices and mosques. for raw materials and a near slowdown in some of the most advanced markets. 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 GHC chairman Abdul Rahman Al Jasmi said the group’s steady growth and local contractors. Al Hamad Group Chairman Nashaat Sahawneh since its inception two years back and its rational approach, coupled said DIB has supported the group in different projects worth over AED 9 with exclusivity, have ensured that retail and residential units in both billion (US$2.45 billion), most of which have been completed. its fl agship projects were sold in record time, with the substantial revenue to be refl ected in this year’s fi nancial result. GHC listed subsidiary Villamar Sukuk’s US$190 million Sukuk bond issue on the Dubai KENYA International Financial Exchange (DIFX) and trade in has begun. New branches Gulf African Bank of Kenya plans to open 25 branches throughout the MIDDLE EAST country due to overwhelming response for its Shariah-oriented services. Its offi cials said that within three months of its operation, it had BIB inks partnership with Yemeni bank accumulated deposits amounting to KES1.1 billion (US$16.6 million). Bahrain Islamic Bank (BIB) and Islamic Bank of Yemen have entered into a strategic partnership under which BIB has a 43% stake in the Chief executive Najmul Hassan said the bank’s expansion program will oldest Yemeni Islamic bank. The deal enables the Yemeni unit to regain reach every corner of the country. “We came from Pakistan with this its stature and start competing with other Islamic and commercial Shariah compliant banking system and we have been overwhelmed banks operating in the country. by the response from both Muslims and Christians,” he added.

BIB chairman Khalid Abdullah Al-Bassam said his ﬁ rm, having no branches outside its country, seeks to use its investment in Yemen UAE to expand and meet the increasing demand for Islamic ﬁ nancial and ‘Enough banking licenses’ banking services in the Arab and Islamic worlds. Emirates NBD Chairman Ahmed Humaid Al Tayer hopes the UAE Central Bank will stop issuing new banking licenses until there is a UK real need in the market.

IBB pushes home plan Expressing concern over the granting of three licenses for Islamic Islamic Bank of Britain (IBB) has launched its Home Purchase Plan banks in one year, Al Tayer said the current developments in the (HPP) as a Shariah compliant mortgage alternative based on Ijarah banking sector require more mergers and acquisitions to create and diminishing Musharakah. Under this arrangement, the customer giant ﬁ nancial institutions rather than licenses for small banks. The and the bank jointly buy the home and over a set term, the customer increasing number of small banks will not support high economic makes monthly payments to buy the bank’s share. growth, he contended.

IBB commercial director Sultan Choudhury said HPP is the only such product in the UK whose source of funds is 100% Shariah compliant. BAHRAIN “It gives UK consumers a real alternative to conventional interest- GBCORP’s HQ relocates based mortgages, which have suffered in the current ﬁ nancial Bahrain-based investment bank GBCORP has relocated its climate,” he added. 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 UAE award winning, fast growing Shariah compliant investment bank and the beginning of its vision of ushering in a new era of global Islamic Tamweel’s US$300 million Sukuk investment banking. Dubai’s Tamweel plans to issue a new dirham-denominated Sukuk by the end of this month. Although Tamweel and its advisers have not Chief executive Mark Hanson said: “Our new headquarters will enable disclosed the target size, it is expected to be about US$300 million the bank to effectively service the expanding needs of our investors and is being arranged by Standard Chartered, Dubai Islamic Bank and and the continued growth of all of our functional units including Badr al-Islami, the Islamic banking arm of Mashreqbank. wealth management, investment placement, investment banking and related operations. We continue to see extraordinary demand Tamweel has been assigned an ‘A’ rating by Fitch Ratings and an ‘A3’ for our Shariah compliant investment products driven by our global rating by Moody’s Investors Service. expansion strategy.”

INDONESIA SOUTH AFRICA Shariah banking to grow 52% by 2010 JSE in partnership with FTSE Shariah banking in the republic looks set to grow at a compounded The JSE Securities Exchange, in partnership with global index provider annual growth rate of 52% from 2008 to 2010, said market research FTSE Group, recently launched the JSE Shariah all share index and fi rm RNCOS in its analysis. The report said a large Muslim population, will launch the JSE Shariah top 40 index on the 21st July. An exchange- low penetration of Shariah banking and improvement in regulatory traded fund off the index is due by the end of September. framework will drive the Islamic banking industry to cross IDR119 trillion (US$13 billion) by 2010. The central bank of Indonesia is The Shariah top 40 index, unlike the Shariah all share which is a following a blueprint aimed at strengthening the Islamic banking benchmark index, will be tradable. Ana Forssman, a senior general industry by 2015, focused on increasing the effi ciency of Islamic manager at the JSE said the move was to meet demand for Shariah banking, integrating it into the Islamic fi nancial industry, and ensuring compliant investment products. it conforms to global Islamic banking standards. 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 BAHRAIN 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 Unicorn disposes shares in Orimix billion to US$53.8 billion internationally by 2010. Islamic 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% KUWAIT 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 Profi t growth for biggest lender fund, the Unicorn Global Private Equity Fund I. National Bank of Kuwait posted a 16% increase in net profi t for the second quarter. Kuwait’s biggest lender by assets boosted quarterly Unicorn managing director of Global Private Equity Aamir Khan said: profi t to 93 million dinars (US$350.4 million) compared with 80.30 “The increase in value demonstrates the success of Unicorn’s private million dinars (US$302.79 million) in the same period a year ago. equity business model. Our team worked closely with the management Return on assets was 3.1% in the fi rst six months while return on of Orimix to almost double it in size by expanding capacity and equity reached 23.5%. 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.” UAE Aldar, Sorouh sign deal with Noor SINGAPORE Dubai-based Noor Islamic Bank (NIB) has entered into a fi nancing Shariah compliant REIT? agreement with Aldar Properties and Sorouh Real Estate, two of Abu Dhabi’s largest developers, to provide up to 90% fi nancing for their A Singapore property trust is seeking to be Shariah compliant to residential developments. NIB said it will provide home fi nancing draw investment from the Middle East. Real estate investment for completed properties as well as for those which are under trusts (REITs) pay most of their rent as dividends, and these steady construction. yields are permissible under Islam so long as their buildings do not house businesses involved in alcohol, gambling and other immoral activities. QATAR Singapore-based Islamic Bank of Asia has been asked to conduct Qatari banks “strong performers” due diligence on Cambridge Industrial Trust (CMIT.SI) and an announcement that it is Shariah compliant is expected by next week. Qatari banks and industries are expected to deliver strong results for An initial report is said to have showed that few of the trust’s 43 the second quarter of this year, said investment bank EFG-Hermes. assets broke Shariah principles. 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. ARE YOU ON A CORPORATE On the industry front, Industries Qatar is expected to deliver strong results for its second quarter with EFG-Hermes forecasting 57% y-o-y SUBSCRIPTION? earnings growth, while Qatar National Bank’s second quarter results would have strong growth as the underlining theme.

60% cost savings to your company “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 Make Islamic Finance news available group dividend receipts and high trading income is going to make quarter- wide through your intranet on-quarter growth results difﬁ cult to beat. Spread recovery will likely continue as the credit crisis continues to restrain international competition.”

UAE QATAR Insure Direct’s big car scheme Qatari, Bahraini ﬁ rms form JV Insure Direct, the insurance and reinsurance broking company Qatari and Bahraini insurance companies have teamed up to form under Dubai World, has developed a “niche-speciﬁ c” product for Qatar-Bahrain Takaful Insurance Company, a 50: 50 joint venture high-performance/high-value motor vehicles valued at AED200,000 with a paid-up capital of QAR250 million (US$68.7 million). The (US$54,000) and more. The high-yielding HPV Scheme is said to company’s founders from both countries will hold a combined 40% provide an easy and effortless insurance option for an exclusive stake, with the remaining 60% to be offered for public subscription category of clients. to Qatari and Bahraini citizens.

Through this scheme, launched in compliance with the mandatory Deputy chairman Sameer Ibrahim Al Wazzan said the Takaful motor vehicle insurance requirements of the UAE, Insure Direct insurer will be registered in Qatar and listed initially on the Doha aims to provide insurance cover to a highly productive customer Securities Market after the initial public offering, and later, on the base in the country. Manama stock exchange. The insurer will start operations early next year and initially focus on the real estate, motor, energy and The HPV Scheme provides coverage in the UAE and is automatically marine segments. extended to Oman. It will support three years’ agency repairs from the date of the ﬁ rst registration of the vehicle, as against the As for plans to open an ofﬁ ce in Bahrain, Sameer said this would be industry standard of two years’. in Doha and later on, possibly in Manama.

QATAR UAE QIC’s profi ts leap by 66% Methaq nets US$408 million Qatar Insurance Company (QIC) reported a 66% hike in net profi ts Methaq Takaful Insurance has gained US$408 million in net profi ts for its fi rst half to QAR408.32 million (US$112.14 million), based since its incorporation on the 11th March this year. The fi rm is set to on faster growth in investment income. release a detailed income statement on Thursday (17th July).

Net premium income grew by 39% to QAR543.77 million (US$150 MALAYSIA million), while its net earned premium was up 42% to QAR450 million (US$124 million) between January and June 2008. Manulife keen to set up Takaful unit Manulife Insurance is keen to venture into the Takaful sector. Total assets were valued at QAR6.58 billion (US$1.8 billion), President/CEO Peter D Robertson said: “Our board of directors comprising investments worth QAR3.5 billion (US$961.27 million) in is interested in a Takaful subsidiary, maybe a few years down the cash and cash equivalents of QAR1.43 billion (US$392.74 million), road, although at the moment Bank Negara Malaysia is not issuing reinsurance contracts of QAR780 million (US$214.22 million) and any new licenses.” insurance and other receivables of QAR550 million (US$151.03 million). As at June, the central bank of Malaysia had issued only eight Takaful licenses, including four to local-foreign groups to establish MALAYSIA Islamic insurance services in the country. Etiqa to educate in cyberspace QATAR Etiqa Takaful is focusing on cyber communities to grow its local QIIB posts 67% jump in net profi t Takaful penetration, be it consumers or agents. Vice-president Qatar International Islamic Bank (QIIB), which plans to open two Izzudin Shah Othman said Etiqa is working with the energy, water Takaful companies in Pakistan and Mauritania, posted a 67% and communications ministry to establish a community center in increase in its net profi t to QAR350.8 million (US$96.43 million) in cyberspace to educate the public on Takaful products. the fi rst six months of this year.

Etiqa currently offers general insurance products online such as Chairman Sheikh Khalid bin Thani al-Thani said net ﬁ nancing income personal accident, motor and travel, but will offer a wider range rose 11% to QAR225 million (US$61.85 million) while assets grew once the cyber community is in place. by 37% to QAR12.6 billion (US$3.46 billion) for the same period.

“We will try to move to life products eventually, but they are more He said the results refl ect the bank’s right direction in meeting complicated and we need to emphasize on educating the cyber customer demands and achieving growth. QIIB is also contemplating community fi rst,” he said. a branch in Kuwait and a fi nancing fi rm in Morocco.

UAE MALAYSIA Tamweel gets an ‘A’ IPPs’ bonds face downgrade Fitch Ratings has assigned long-term senior debt ratings of ‘A’ to The independent power producers (IPPs) face a possible downgrade Tamweel Sukuk (TSL)’s trust certifi cates due June 2013 and Tamweel of their bonds after a windfall profi t levy was imposed on them from Funding (TFL)’s US$300 million exchangeable trust certifi cates due the 1st July. Their association’s president, Philip Tan, said the value January 2013. The fi nal rating for TSL trust certifi cates is contingent of their ringgit bonds and notes was estimated at about RM20 billion on the receipt of fi nal documentation. (US$6.13 billion) in 2006, making them the largest Sukuk issuers in the country. The transactions involve the sale of Shariah compliant assets by Tamweel to TSL and TFL, which will then issue the certifi cates and The 30% levy is part of government measures to reduce fuel subsidies make periodic distributions to certifi cate holders from income due to high oil prices. It kicks in when the return on assets exceeds generated by the assets. 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 For both transactions, Tamweel is required to provide suffi cient funds overall economy and investor confi dence in the country. 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 UAE holders have no right to sell or dispose of the trust assets and related rights. Fitch rates ‘AA-’ for Dubai Holding’s MTN Fitch Ratings has assigned Dubai Holding Commercial Operations MTN’s CHF250 million 5.25% notes due 14th July 2011 and JPY10 MALAYSIA billion fl oating-rate notes due 3rd July 2013 ‘AA-’ ratings. KFHM is stable These notes are issued under Dubai Holding Commercial Operations MARC has assigned long-term and short-term fi nancial institution MTN’s US$8 billion debt issuance program that is unconditionally ratings of ‘AA-’ and ‘MARC-1’ respectively to Kuwait Finance House and irrevocably guaranteed by Dubai Holding Commercial Operations Malaysia (KFHM). The outlook is stable. 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 The ratings are refl ective of KFHM’s banking franchise, healthy growth, US$5 billion. strong profi tability, sound capitalization, robust fi nancial profi le as well as the support by its major shareholder, Kuwait Finance House, DHCOG is effectively 100%-owned by Dubai Holding, which in turn should it need any. Formed in 2005, KFHM is the fi rst foreign Islamic is 97.4%-owned by Sheikh Mohammed Bin Rashid Al Maktoum, vice bank to be licensed in Malaysia. 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 At the same time, Standard & Poor’s also placed on CreditWatch with who is also a UAE cabinet minister, and 0.1% by Sheikh Rashid Bin negative implications its “BBB-” debt rating on the senior secured Mohammed Al Maktoum. 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. MALAYSIA ‘A-’ for HSBCAT from Fitch UAE Fitch Ratings has assigned an Insurer Financial Strength (IFS) Rating Tabreed on CreditWatch of ‘A-’ to HSBC Amanah Takaful (Malaysia) (HSBCAT) with a stable outlook which refl ects Fitch’s expectation that HSBCAT will show National Central Cooling’s (Tabreed) long-term corporate credit rating steady improvement in fi nancial results between 2008-2010 and has been assigned ‘BB-’ on CreditWatch by Standard & Poor’s Rating break even for the shareholders’ account in this period. Services with a negative outlook. The company’s senior secured Sukuk certifi cates were also rated at ‘BBB-’ debt rating, while its Fitch regards HSBCAT as an important member of HSBC Holdings subordinated convertible Sukuk certifi cates’ debt rating is at ‘BB’. (Long-Term IDR ‘AA’). The HSBC group’s franchise value, distribution Both are placed with negative implications and are on CreditWatch channel and management support were key factors in consideration as well. 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 The ratings are placed on CreditWatch due to Tabreed’s announcement statements, refl ecting the HSBC group’s effective control over the of a new business model that may create a new asset holding entity’s management and board of directors. company and divest existing and future assets into joint ventures. The company also revealed its revised fi nancial forecasts that may include The rating also refl ects HSBCAT’s low-risk product profi le and adequate an increase in its future capital expenditure program, another factor capitalization. The company reported a net loss of MYR19.7 million for the CreditWatch. (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 S&P is to meet with the Tabreed management to discuss the performance will gradually improve in 2008-2010 as it achieves development of the new business model and get a clearer picture of greater economies of scale. In consequence, Fitch believes that the the revised forecasts so as to resolve the CreditWatch status. company will remain securely capitalized over this period.

SAUDI ARABIA UAE SEC rides on sovereign upgrade Fajer ReTakaful gets an ‘A-’ Fitch Ratings has upgraded Saudi Electricity Company’s (SEC) long- Al Fajer ReTakaful Insurance Company KSCC (Al Fajer Re), a subsidiary term issuer default (IDR) and senior unsecured ratings to ‘AA-’ from of Dubai Banking Group, has been assigned a ﬁ nancial strength rating ‘A’, with a stable outlook. The upgrade is in line with Saudi Arabia’s (FSR) of ‘A-’ and an issuer credit rating (ICR) of ‘A-’ by US-based rating rating boost from ‘AA-’ to ‘A+’. agency A M Best. The outlook on both ratings is stable.

SEC’s ratings are aligned with the sovereign’s to refl ect the This refl ects the company’s excellent risk adjusted capitalization, well government’s strong tangible and intangible support for SEC. capitalized reTakaful fund, the capability of its regionally experienced management team and the strength of its principal shareholders, Dubai Group and Global Investment House. MALAYSIA Al Fajer Re is the fi rst independent reinsurance company to obtain an MARC revises rating on Tenaga’s notes ‘A-’rating by a globally recognized rating agency and the fi rst reTakaful Malaysian Rating Corp (MARC) has revised its rating outlook to stable company to be granted an ‘A-’ as a start-up. The company provides from developing on Tenaga Nasional Berhad’s (TNB) AA+ long-term Shariah compliant reinsurance protection, predominantly on a treaty issuer rating and MARC-1ID/AA+ID Islamic debt issue ratings to refl ect basis, to non-life risks. the utility’s recent success in securing offsetting tariff increases effective 1st July 2008 to counter increases in fuel and purchased SAUDI ARABIA power expenses. Positive outlook on kingdom Concurrently, MARC has reaffi rmed the ratings for the following issues: Saudi Arabia’s long-term local and foreign currency issuer default MYR2.0 billion (US$616 million) Al-Bai’ Bithaman Ajil Bonds rated ratings (IDRs) has received an upgrade from Fitch Ratings to ‘AA-’ AA+ID; MYR1.5 billion (US$462 million) Murabahah Commercial from ‘A+’, with a positive outlook. The Country Ceiling has also been Papers and Murabahah Medium Term Notes rated MARC-1ID/AA+ID; upgraded to ‘AA’ from ‘AA-’ and its short-term IDR upgraded to ‘F1+’ and MYR1.0 billion (US$308 million) Al-Bai Bithaman Ajil Notes from ‘F1’. Issuance Facility rated AA+ID. Saudi Arabia’s main credit strengths are its very low indebtedness The approved tariff hike dispels earlier uncertainties surrounding the and large domestic and external assets. General government debt, all impending gas price revision, particularly its implications on earnings of it domestic, fell to 7.2% of GDP at end-2007 while the wider public and cash fl ow generation. The revised tariffs will provide TNB with sector, represented mainly by profi table state-owned fi rms, has little improved certainty pertaining to generation cost recovery, as well as external debt. A strong banking system also makes for low contingent earnings and cash fl ow generation. liabilities from that source, notwithstanding some acceleration in credit growth this year. They refl ect TNB’s favorable demand characteristics, moderate gearing levels, solid operational record and considerable regulatory However, the ratings are moderated by volatile oil prices which protection. The ratings also incorporate the utility’s dominant position constitute 90% of Saudi Arabia’s revenue, and a sharp drop in oil in the domestic electricity generation and distribution industry. prices will threaten sovereign creditworthiness. THIS TIME LAST YEAR

• The value of traded shares in Saudi Arabia dropped • Amlak Finance’s profi ts for the 1st half of 2007 surged by by 43.49% at SAR1.11 trillion (US$295.94 billion), AED25 million (US$6.8 million), at 31% reaching AED106 compared to 52.58% in 2006. million (US$28.85 million), while its revenue saw a 54% hike. • Investment Dar and affi liated fi rms raised their stake in Boubyan Bank to 11.3% from an initial 10.2% for a 20% • Al Rajhi Bank opened its 14th branch in Malacca, bringing acquisition of the bank. the bank closer to hitting its target of 50 branches in Malaysia. • Al Haramain Islamic began offering New Zealand’s fi rst Shariah compliant mortgage product to the country’s • Abu Dhabi Commercial Bank revealed no near term 36,000–odd Muslim population. plans to merge with any UAE banks.

• Bear Stearns signed a letter of intent with a consortium • The Labuan International Financial Exchange listed of Saudi business leaders to form Bear Stearns Arabia its second Exchangeable Sukuk, with the induction of Asset Management. Khazanah Nasional’s US$850 million Sukuk.

MALAYSIA PAKISTAN World’s fi rst Islamic mortgage guarantee Good returns for Islamic funds Cagamas HKMC, which launched the world’s fi rst Islamic mortgage Al Meezan Investments’ dividends distribution for its various open guarantee program (MGP) last week, will explore all Islamic countries end funds for the year ended the 30th June 2008 demonstrates the if market conditions are feasible, said executive director Steven Choy. remarkable success of Shariah compliant funds. The distribution of Cagamas HKMC is a joint venture between Cagamas Holdings and PKR10 per unit for Meezan Islamic Fund (MIF) means 16.7% return on Hong Kong Mortgage Corporation. 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. 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 Ariful Islam, Chairman of Al Meezan Investments (middle) and COO of Meezan st Bank and CEO of Al Meezan Investments Mohammad Shoaib (left) at the outstanding in the banking industry as at the 31 December 2007, launching of a fund during a press conference in 2005. RM18 billion (US$5.5 billion), or 10.3%, was in respect of Islamic house fi nancing. 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 Cagamas’ outstanding housing loans (including Islamic house total payout of PKR4.60 per unit. This translates into a return of 9.19% fi nancing debts) purchased with recourse amounted to RM12.6 billion on the opening ex-div NAV of PKR50.03 and 9.2% on the face value of (US$3.88 billion), or 7.2%, of the total housing loans outstanding in PKR50 per unit for the year ended the 30th June 2008. the banking system. Al Meezan Investments, rated AM2 by JCR-VIS, currently has PKR17.4 Cagamas’ outstanding Islamic fi nancing debts constituted about 15% billion net assets under management as compared to PKR12.2 billion of the banking industry’s Islamic house fi nancing. 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 Choy added that a total of RM48.1 billion (US$14.8 billion) of new individual and institutional investors. housing loans (inclusive of Islamic house fi nancing) was approved in 2007. He said Cagamas will continue to issue debt securities as MIF is Pakistan’s largest open end equity fund in the private sector long as there is a need for Islamic banking institutions to raise funds and has been rated 5-Star by both PACRA and JCR-VIS for its superior through Cagamas. performance relative to its peers. At the close of the fi nancial year ended the 30th June 2008, MIF, despite recent downturn of stock “We are positive that this will happen but not certain of the quantum market, has been able to outperform the Karachi Stock Exchange’s and timing of the transaction,” he said. Cagamas had issued RM200 KSE-100 Index by 11.04%. million (US$62 million) of Islamic commercial papers in May. MIIF is the fi rst Shariah compliant open end income fund in Pakistan. However, according to Choy, demand for debt securities is expected It has been assigned fund stability rating of A(f) by JCR-VIS. The Fund to dampen as investors will likely demand higher yields amid rising has earned a total net income of PKR558 million. At the close of the infl ation globally. fi nancial year net assets of the Fund increased 81.44% to PKR5.74 billion from PKR3.16 billion last year. However, investors are seeking quality papers and this augurs well for Cagamas debt securities, which constituted about 23.5% of the AAA Meezan Capital Protected Fund-I, Pakistan’s fi rst Shariah compliant private debt securities market. capital protected fund, was jointly launched with Meezan Bank in May 2008 to provide a long-term investment avenue to investors seeking “Our experience shows that Cagamas debt securities are sought- protection of their capital along with potentially good returns of the after, even during the Asian fi nancial crisis in 1997-99. We managed stock market. Upon maturity on the 29th June 2011, investors will get to attain our ‘AAA-’ rating during that challenging period, unlike the their principal amount along with the profi t earned. The subscription other ‘AAA-’ institutions,” Choy added. of this fund remains open till the 31st July, 2008.

By Dalila Abu Bakar By Shabbir Kazmi

ISLAMIC WORLD Opportunities galore for Islamic fi nance players When the Group of Eight Islamic Developing Countries (D-8) met in “We acknowledge the efforts of the private sector to strengthen Malaysia this week, Islamic fi nance per se merited only a couple of collaboration in the global halal industry, biotechnology and renewable sentences in the joint statement. Yet, it was obvious that the initiatives energy as well as the potentials of Islamic banking and fi nance. These and measures Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria, sectors can further contribute to our future collaboration in trade and Pakistan and Turkey agreed upon will spawn a host of opportunities for investment.” players in the Islamic fi nance sector. Intra D-8 trade expanded by over 200% in eight years, from US$14.5 Preferential tariff arrangements, enhanced trade, greater private billion in 1999 to US$60.5 billion in 2007. This is expected further sector involvement in the development process, energy and alternative increase with the coming into force of the D-8 Preferential Trade energy development, expanded food production — these are some of Agreement. The Summit said Islamic fi nance has an important role to the areas where funding will be a major factor. And with the D-8 being play in trade and investment in D-8 countries, and in acknowledging an offshoot of the Organization of Islamic Conference, Islamic fi nance Malaysia’s initiatives as well as those of others in developing Islamic will be the funding channel of choice. fi nance, it called on member countries to foster greater understanding and cooperation in this fi eld. 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 surging oil prices spurred the globe which have a real potency to derail national economies. the D-8 into making a fi rm Besides the spiraling oil prices which have risen by 40% in this half-year alone, others include sharply higher food prices, shortage commitment in the energy of food supplies, and continuously increasing consumer prices sparking stagfl ation — infl ation amidst an economic slowdown or even sector, to enhance capacity, reversal. These issues have the potential to bring down leaders and transfer technology, explore new governments, hence the seriousness at the D-8 meeting in making sure that words do indeed translate into action. sources of supply and develop “Taking into account the adverse effects of the current global economic alternative fuels including crisis, we agree to ensure the continued relevance of the D-8, promote the interests of developing countries and redouble our efforts to meet renewable sources and even global challenges through innovative cooperation,” is how the leaders put it. nuclear energy”

“We note with great concern the urgent need to address the current In endorsing the D-8 Roadmap for Economic Cooperation for the next global shortage and skyrocketing prices of food items which pose a 10 years, the Group directed its secretariat to translate it into action serious threat to socio economic stability and agree to deepen our plans in the various sectors as well as study the viability of a joint cooperation, including joint ventures and private sector involvement, investment fund for D-8 projects. But work has been ongoing — for to produce fertilizer, animal feed and the creation of a seed bank to instance, the D8 Working Groups on Energy and Civil Aviation are ease the supply side constraints in agricultural inputs to boost food already studying the use of biofuels for civil aviation as a direct result production in short, medium and long term.” of soaring oil prices.

A proposal to create a D-8 Food Fund is also to be examined. Malaysian The D-8 has pledged to explore and develop various fi nancing Prime Minister Abdullah Ahmad Badawi said the group will promote mechanisms, including sourcing funds from outside the grouping, to joint ventures among their companies on projects to ease supply implement development programs under the 2008-2018 Roadmap. constraints in agricultural output. “We want to co-operate in food production. We want to increase food supply as we have land, plenty It will consider, in particular, the fi nancial products being offered by of good and fertile land,” he stressed. a number of development institutions such as Islamic Development Bank, Asian Development Bank, World Bank and its affi liate, the The surging oil prices spurred the D-8 into making a fi rm commitment International Finance Corporation, as well as bilateral development in the energy sector, to enhance capacity, transfer technology, agencies. The D-8 countries said such efforts are needed as the explore new sources of supply and develop alternative fuels including fi nancing requirements for the development of D-8 far exceed the renewable sources and even nuclear energy. It also recognized resources available to the governments of the eight countries. the intra-regional mobility of labor as an effective tool in poverty eradication and development. Promotion of the halal industry through For the private sector, this means funding will be made available, so joint ventures was also mentioned in the statement. 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 All these are in fact a call to the private sector to seek out investment golden eggs. and project opportunities in all these economic activities and thus help realize these aspirations. As the meeting statement noted, By S. Sivaselvam

Islamic Finance for Thailand: Opportunities and Challenges By Sathit Limpongpan

Thailand has every intention to develop an Islamic banking and fi nance For this upgrading process, Thailand welcomes support from its friends system. This may include both a retail banking sector, designed to around the world. They could include experts from the London market, assist small, medium and also large business enterprises, and also one of the most sophisticated in the world. They also include those an investment banking capability to institute, develop and market from Malaysia, which has achieved so much to create, in a relatively project fi nance instruments. These are notably the well-known Sukuk short time, one of the leading systems of Islamic banking and fi nance issues that have gained such broad acceptance around the world. 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. In the case of retail banking, the Islamic Bank of Thailand already has a nationwide branch network providing retail banking products and Malaysia has already gone far, setting up specialized Islamic banking services. These include savings accounts as well as personal, trade, and other fi nancial institutions. It has developed a fully operational real estate and housing loans. All these services are based on, and are capital market, making extensive use of Sukuk issues for the fi nancing compliant with, the Shariah. of transport, energy and other infrastructure projects. With Thailand also implementing extensive infrastructure development projects, it “Hence, it is not a question of could certainly benefi t from similar initiatives. The scope and scale of Islamic fi nance in the world today is truly launching Islamic fi nance in enormous and rapidly expanding. At the present rate of growth, the global market for Islamic fi nance services could soon reach US$1 Thailand but rather development trillion. But even that may be nowhere near full potential as Standard of greater sophistication. and Poors has estimated that the potential supply and demand for Islamic fi nance could readily reach US$4 trillion. It needs to train bankers, However, this estimate was made before the massive oil price escalation regulatory supervisors and, in in recent times. This has hugely expanded the resource base of oil producing countries, many of which are in the Middle East. Although particular, compliance and audit development is proceeding rapidly in those countries, their relatively small populations and territory size mean enormous fund surpluses offi cials in these new skills.” are seeking solid and secure outlets with good returns. Increasingly these funds require a Shariah compliant basis for lending. In the second case of larger scale project fi nancing and capital market Nevertheless, there are many challenges facing Thailand, and indeed operations, Thailand still has some way to go. The organization of any country, in gaining access to this massive funding base. Five are Sukuk issues, whether in the form of a national-level sovereign Sukuk particularly important: or specifi c Sukuk issues for transport, energy or other infrastructure projects, requires international banking capability. This is required both • The legal and regulatory framework. for the design of the funding structure, and also for the mobilization of • Financial reporting and accounting systems. major international fund providers. • Shariah compliance. • Availability of education and skills. Thailand is fortunate to have good friends in the international banking • Development of secondary markets. community with the capability and interest in cooperating with it. But Thailand also has its own knowledge of Islamic fi nance. The Ministry On the legal and regulatory framework, Thailand recognizes that it is of Finance has teams working on issues of Islamic fi nance in the Fiscal necessary to adapt tax, mortgage and fi nancial institution regulations Policy Offi ce and the Public Debt Management Offi ce, as well as at to accommodate Islamic fi nance. Thanks to the initiatives of the then the Islamic Bank of Thailand. The Bank of Thailand is also actively Chancellor of the Exchequer Gordon Brown, Britain was able to resolve studying the regulatory aspects of Islamic fi nance. these issues. As a result, an active, even world leading, Islamic fi nance market was developed. Thailand’s Securities and Exchange Commission as well as the Stock Exchange of Thailand are working on the possibilities of creating Malaysia and now Indonesia have within ASEAN also achieved secondary markets, as well as the inauguration of a Shariah Index impressive results. Thailand has to study their experiences, both from specifying listed companies which are compliant with Islamic an institutional viewpoint as well as in terms of tax, mortgage and principles. other specifi c transaction issues. Hence, it is not a question of launching Islamic fi nance in Thailand In terms of fi nancial reporting and accounting, there is also a but rather development of greater sophistication. It needs to train need for international standardization similar to the International bankers, regulatory supervisors and, in particular, compliance and Financial Reporting Standards (IFRS) which also forms the basis for audit offi cials in these new skills. continued...

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

Vol. 4, Issue 32 10th August 2007 cooperation with this and other institutions in order to achieve high The World’s Global Islamic Finance News Provider standards of operation. In this issue MALAYSIA News Briefs Cagamas hits big time Capital Markets ...... 1 Control infl ation, please All-round success for Cagamas MBS (CMBS) coming from government agencies (22.6%), more inside... yesterday as its residential mortgage-backed asset management companies (13.9%), Ratings ...... 8 securities of RM2.41 billion (US$694.72 insurance companies (11%) and corporates TAQA outperforms million) nominal value attracted a book size of (0.6%) (see Islamic Finance news, Vol. 4, issue more inside... RM9.10 billion (US$2.6 billion) from a diverse 31, page 1 for more details). Malaysia: Turning the Vision group of domestic and offshore investors, into Reality...... 9 Shariah compliance is a diffi cult and complicated issue. There needs giving an over-subscription rate of close to Despite market jitters in the US sub-prime Interview ...... 12 four times. debt market, investor confi dence in the John Doyle, UOB Asset Management domestic asset-backed securities market was Approximately 51.9% of the bids came from seen from both local and foreign fi xed income Ijarah Financing in Malaysia ...... 14 institutional investors, with the remaining investors. Case Study – Dar Al-Arkan to be harmonization of legal opinions regarding the validity of products, Sukuk Ijarah ...... 15 SINGAPORE Mudarabah as a Fuel to Growth ...... 17 Trust withdrawn Key Trends in Islamic Funds, Part 2 ...... 18 Arcapita Bank has withdrawn the proposed Arcapita thus believe that divesting assets via operations and systems. This will ensure that all Islamic fi nancing S$300 million (US$198.29 million) IPO of Ar- a listing would be sub-optimal at present. Meet the Head ...... 20 capita Unit Trust in Singapore. The strength- Michael J. Zamorski, DFSA ening of private markets for wind and water The IPO had already been registered with the Termsheet ...... 21 assets has caused a widening of the valua- Monetary Authority of Singapore, and was Alam Maritim Resources Sukuk Ijarah and tion gap between private and public markets, slated to be the fi rst Shariah compliant busi- Murabahah products, general and specifi c, will gain acceptance universally. thus disrupting public market expectations. ness to list in the country. Takaful News ...... 22 AXA for Qatar Petroleum MAURITIUS more inside... Takaful Interview ...... 23 Haji Syed Moheeb Syed Kamarulzaman, Getting down to business Takaful Ikhlas The Mauritian ministry of fi nance has passed in the fi elds of wealth management and the 2007/2008 bill on tax measures, which investment. Existing and new banks will be Takaful Report ...... 26 encompasses Islamic banking services. able to provide such services.” Takaful Rating Methodology and Review Summary, Part 2

Rama Sithanen, the country’s minister of Rama added that Shariah compliant Moves ...... 29 Otherwise, a product which is judged Shariah compliant in one fi nance, elucidated: “Mauritius has a great institutions are now able to carry out activities opportunity to diversify its fi nancial sectors under the existing regulations and legal Deal Tracker NEW ...... 30 and provide foreigners with new services framework for conventional banks. Eurekahedge ...... 31 GLOBAL Dowjones Islamic Indexes ...... 32 market will not gain acceptance in another market. As Islamic fi nance Bondweb ...... 33 All-time Sukuk high Dealogic – League Tables ...... 34 According to latest reports, the global Sukuk growth rate of 71.4%, while the international market is valued at US$24.5 billion as at the markets have expanded by 83.3% over the Events Diary...... 37 end of June 2007. This marks a 75% growth last year. Sovereign Sukuk issues also grew Subscriptions Form ...... 38 develops, no doubt experts in Islamic principles, laws and fi nance will over last year. by 521% to US$4.4 billion, with Malaysian ringgit-denominated Sukuk accounting for Country Index ...... 38 The Malaysian Sukuk market experienced a 70% of the market. reach consensus. But we have not arrived at that point yet. Company Index ...... 38

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 WHY SUBSCRIBE? of expertise. • To receive the latest developments on the Cooperation between Malaysia and Thailand has already commenced global Islamic capital markets and will undoubtedly expand in the future. Islamic fi nance also needs specialized accounting and information technology services. These • Read exclusive research reports from should not be neglected in the educational process. industry practitioners every week • Get to know the leaders in your industry Finally, the importance of the development of secondary markets for Islamic fi nance products must not be overlooked. This is where the • Keep abreast of latest deal fl ows and Securities and Exchange Commission and Stock Exchange of Thailand funds performances will need to develop expertise, including study of the experiences of • Exclusive online access to more developed markets. The main markets for Sukuk, which are usually denominated in US Dollar, are international. www.islamicfi nancenews.com • Read exclusive articles and case studies However, it will also be important for Thailand to develop Shariah in our annual guides and supplements indices comprising locally listed stocks and bonds. These may thereby attract equity capital from Middle East capital markets. sent to you in hard copy

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 BAHRAIN REPORT 2007 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 A Product 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.

Shariah Compliant Financial Industry makes Headway in Thailand By Raphael Wong

Thailand, with a population of over 62 million people, is one of the on technical aspects) to establish Shariah compliant banks most staunchly Buddhist countries, the religion being practiced by in Bangkok and southern Thailand. During the fi rst meeting more than 90 % of the Thais. Islam is the second largest religion with of the Thailand-Malaysia Committee on Joint Development over six million followers, most of them in the southern region mainly Strategy for border areas (JDS) on the 5th August 2004, both in the provinces of Yala, Pattani, Narathiwat, Satun and Songkla. The countries were keen to develop technical cooperation on the Islamic banking system in Thailand started when the Government Islamic Education System through study visits to Malaysia Savings Bank (GSB) introduced an Islamic window in 1998, followed as well as on the Islamic banking services, and had explored by the Bank for Agriculture and Agricultural Cooperatives (BAAC) in possible training cooperation between the Islamic Bank of 1999. In 2001, Krung Thai Bank introduced its Islamic branch. The Thailand and Malaysian Islamic fi nancial institutions. The Thai Islamic banking system expanded further when the Islamic Bank of government is also likely to mandate a Malaysian bank as a Thailand was established by the Thai government in 2003. fi nancial adviser to help structure the fi rst sovereign Sukuk in 2008 for an infrastructure project. Islamic Finance news spoke to Islamic Bank of Thailand’s Product Development Department Deputy Vice President, Tuansaleena 3. Neighboring countries such as Singapore and Hong Kong are Kubaha, on the challenges Thailand faces on the economic front, going all out to develop their Islamic fi nance sectors. Will public acceptance, existing rules and regulations and the future. Thailand follow suit?

1. Is Islamic fi nance a new phenomenon in Thailand? The opportunity is there. In its fi ve-year plan, the Thai government needs about THB1 trillion (US$29.7 billion) The Islamic fi nancial system is not new to the Muslim community for mega projects which include electricity, road and mass but may be so to Thailand. Thai Muslims in the southern region transportation projects. This may be the push factor for and whose way of life is according to the Islamic doctrine started Thailand in considering its fi rst sovereign Sukuk issuance to having Islamic fi nance activity in the form of Islamic savings tap the vast liquidity available from Middle East investors. cooperatives since 1987. The fi rst saving cooperative, which operated on the Shariah principle, was established in Pattani, However, according to Dr Chodechai, Director of Financial a southern province that has the most number of Muslims, Development and Strategy in the Fiscal Policy Offi ce, there are with its main objective being managing and mobilizing funds factors such as government policy and the Thai economy itself among the Muslim community. that will affect the driving of Islamic fi nance in Thailand.

Then in 1994, the idea to set up an Islamic bank emerged 4. There are only 6 million Muslim in a country that is when the government agreed to the Indonesia-Malaysia- predominantly Buddhist. Do you face a lot of obstacles from Thailand Growth Triangle (IMT-GT). Almost 10 years later, the the Thai people? What is their biggest apprehension? Islamic bank of Thailand was established under the Islamic Bank of Thailand Act 2002. Prior to that, the Thai government It is not a matter of numbers. London has only 1.5 million attempted to push the Islamic banking system by assigning Muslim population but it has become one of the leading Islamic state banks to have Islamic fi nancial services as a pilot fi nance centers in the world. It depends on the government’s scheme. sensitivity toward its own community as well as global surroundings. In fact, over 6 million people (some records In 1998, the Government Savings Bank, which serves a small say about 8 million) is not a small number when compared to savings clientele, introduced an Islamic banking window to our neighbor Malaysia which has about 14 million Muslims. provide Islamic banking products and services, with the Bank The idea of Islamic fi nance development is now beyond only for Agriculture and Agricultural Cooperatives following suit in Muslim interest and more on creating a regulated Islamic 1999. The Krung Thai Bank opened the fi rst Islamic Branch fi nancial framework which will draw Middle Eastern investors, in 2001, offering a full range of Shariah compliant banking who are already looking to diversify their portfolios by investing products and services. in Asia, to Thailand’s capital market, thus benefi ting the Thai economy as a whole. 2. How is Malaysia co-operating with Thailand in developing its Islamic fi nance industry? 5. What can be done to overcome these obstacles?

With plenty of experience to share, Malaysia gradually offered The government’s commitment is the key success factor to its assistance in developing Thailand’s Islamic fi nance industry. promote the Islamic fi nancial system in Thailand. The Ministry At last year’s meeting between the prime ministers of Malaysia of Finance, the Bank of Thailand and all parties involved must and Thailand, cooperation in Islamic banking was high on the be clear on their role in strengthening the Islamic fi nancial agenda. Prime Minister Abdullah Ahmad Badawi said Malaysia industry in the country. That would include seeking advice from was prepared to offer the necessary assistance (including continued...

Shariah Compliant Financial Industry makes Headway in Thailand (continued)

Malaysia, which has more than 25 years experience in how to open up their services in various aspects — fi nancial market, create a regulated Islamic fi nancial framework. money market as well as capital market — in order to create sophisticated instruments. 6. How far in the future do you forecast Islamic fi nance taking off in Thailand? What is holding it back at the moment? 7. How can the Islamic Bank of Thailand play its role in promoting Islamic fi nance in country? I wish to see a comprehensive Islamic fi nancial infrastructure in Thailand as it is in Malaysia. Now people are talking about Islamic Bank of Thailand has been playing its role in promoting Sukuk but it is just a slice of the pie. There is a lot more to do in Islamic fi nance to the corporate sector like insurance order to increase accessibility to the Islamic fi nance industry. 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 “Islamic fi nancial products collaboration with the Islamic Bank of Thailand in order to must not be a burden but be increase accessibility to Islamic fi nancial services. benefi cial to the players as well Several institutions currently provide Islamic fi nancial products, including: as the consumers, otherwise • Krung Thai Asset Management, offering Retirement Mutual this will become an obstacle in Fund and Long-Term Equity Fund. • MFC Asset Management, offering Islamic LTF and Islamic expanding the industry” Fund. • Finansa Life Assurance, offering family Takaful. Legislation and taxation are the very fi rst issues that require • Dhipaya Insurance, offering general Takaful. reform in order to patronize the Islamic fi nance products • Krung Thai Panitch Insurance, offering general Takaful. structure and make them more effi cient. Islamic fi nancial • Muang Thai Life Assurance, offering general Takaful. products must not be a burden but be benefi cial to the players • Kamol Insurance, offering general Takaful. as well as the consumers, otherwise this will become an obstacle in expanding the industry. Soon, the Stock Exchange of Thailand and the FTSE Group will launch an Islamic index. Secondary Mortgage Corporation is Moreover, strong support from the government is essential also cooperating with Islamic Bank of Thailand to design a new to encourage new Shariah compliant fi nancial entities to Islamic product. MIF2008 STRATEGIC PARTNER Issuers & Investors Forum 11 th – 13th August 2008 SPONSORS Mandarin 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. TAKAFUL

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

LEAD MEDIA PARTNERS MEDIA PARTNER We look forward to meeting you at MIF 2008! MIF 2008 registrations are now open. Online registration: www.MIFforum.com

German Infrastructure Projects Offer Huge Investment Potential By Dr Olaf Fasshauer

On the 26th June 2008, the German federal minister of transport, public partner and a private partner enter into a 30-year contractual Wolfgang Tiefensee, presented eight new highway expansion projects relationship. in Germany that are to be realized via public private partnerships (PPPs) over the coming years. The total volume of investment will be The private partner, being in most cases a consortium of construction approximately EUR1.5 billion (US$2.35 billion) and will affect 370km companies and capital providers, undertakes to renovate, expand and of the German highway (autobahn) network. maintain a certain part of the autobahn network (for instance, 50km) for the duration of the contract. Some parts of the German autobahn network are now up to 75 years old and need renovation as well as expansion, especially for freight As consideration, Germany (the federal state) grants the private partner movement. Heavy truck traffi c has increased fi vefold since 1970, the concession to levy user charges (street tolls) on that part of the when most of the present network was already in place. Due to autobahn. This generates a constant income stream for the private German reunifi cation and integration of eastern European countries partner for 30 years and will ideally not only refi nance the investment in the European Union (EU), truck traffi c has increased by about 135% and cover ongoing maintenance costs, but also generate a profi t for since 1990. 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 PPP The 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 Geographically located in the heart of Europe, Germany is a central (US$0.24), generating toll revenues of approximately EUR3 billion hub of international truck trafﬁ c. As more countries are expected to (US$4.71 billion) a year. An increase of the average toll per kilometer become members of the EU, a further considerable increase of 55% in to 16.2 Euro cents (US$0.25), effective January 2009, has just been truck trafﬁ c on the autobahn network is expected until 2025. determined.

As of today, 20% of the 12,200km autobahn network is considered to As a general rule, the federal state retains the right to fi x the street be overloaded and chronically congested. In addition, one out of fi ve toll. However, the PPP agreement will contain clauses on a minimum kilometers of the network will need repair in the near future. 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 Combining resources, sharing risks return on investment and profi ts. As the costs for renovation and expansion of the autobahn network are expected to be considerably higher over the years than the budget Since 2000, political support for PPP projects has increased of the federal ministry of transport, the idea of PPPs becomes more considerably. The pilot PPP project for autobahn construction was and more attractive. awarded to a private consortium in May 2007.

By defi nition, a PPP means long-term, contractually regulated A second project followed in September 2007. It is expected that the cooperation between the public and private sectors for the effi cient constructed costs of these two projects will be refi nanced by the street fulfi llment of public tasks by combining resources (for example, capital, toll in less than 20 years. Thereafter, the private investor would only know-how and personnel) and sharing risks. have to pay for maintenance costs.

Translated into infrastructure projects like renovation and expansion Don’t forget that these calculations are based on today’s trafﬁ c and of roads, this means that the Federal Republic of Germany as the preclude a further increase in truck trafﬁ c. The two existing pilot continued...

German Infrastructure Projects Offer Huge Investment Potential (continued) projects as well as the eight future projects are therefore likely to of the federal state. In general, the concession will only be granted to become success stories. the private partner under the PPP agreement and such concession is not transferable. 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 “The new projects should 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 be interesting not only for interest (riba) will be charged. conventional investors, but also The street toll will be collected by Toll Collect and the pre-agreed share for investors seeking investment 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 opportunities that are in line involve any speculative element, they are therefore not gharar. The concession granted by the federal state will contain clear guidelines with the Shariah” for the investor and list the events when the concession will expire or can be revoked. However, the federal state may consent to a transfer of the concession to the issuer of Sukuk bonds, thereby making these bonds asset-based. Country open to Islamic needs Generally speaking, the Federal Republic of Germany and its 16 states The Islamic investor could enter into a Shariah compliant profi t and have proven to be open to new fi nancing structures, in particular to the risk-sharing joint venture with one or several construction companies needs and requirements of Islamic investors. when applying for the concession. In effect, it might be sensitive to bring in a local partner when dealing with the federal state. 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 When structuring the fi nancing of the investment, the Islamic investor (US$157 million). The intention was not only to make use of this might think of a diminishing Musharakah structure: As the investment structure for fi nancing purposes, but also to use it as a pilot project for generates a constant income stream over 30 years, the Islamic in- future investments and to send a clear signal that Shariah compliant vestor might bring in one or more Islamic banks into the Musharakah investments are welcome in Germany. partnership, agree with them on a proportionate profi t and loss sharing scale and buy out the bank’s share in the partnership over the The roads in Germany are not paved with gold, but with lots of pre-agreed period by making use of the cash generated through the opportunities for Islamic investors. toll payments. Dr Olaf Fasshauer is a partner at Dechert And last but not least, the Islamic investor might also think of a LLP in Munich, Germany. He can be securitization of the income stream through Sukuk. As Shariah law contacted at +49 89 2121 6328 or via requires that the asset involved (such as. the concession) is transferred email at [email protected] to the issuer of the Sukuk bonds, this would require also the consent Reprints Order your reprints today

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Sukuk Market at a Crossroad By Ali Ravalia

With global Sukuk issuance reaching US$100 billion in 2007 it was However, Geert Bossuyt, managing director and regional head of widely felt that the Sukuk market was coming of age. The volume Middle East structuring at Deutsche Bank, indicates that this shift will and variety of deals together with the growing appetite for GCC (Gulf probably not materialize for a number of reasons. Firstly there is a Cooperation Council) issuers to tap debt markets were all seen as dearth of suitable underlying assets for issuers to use in asset-backed factors underpinning the development of the Sukuk market. More transactions (although in a few instances third parties are leasing recently, the sub-prime crisis and the so called ‘Shariah challenge’ assets to issuers for this purpose). (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 Secondly, many markets especially those in the GCC do not currently fundamental occurring in this market? have a legal structure that can support the securitization market. Property rights; trust law; insolvency law etc. are often rudimentary or The second annual London Sukuk Summit, held on the 25th and 26th non-existent. Related to this, the enforceability of contracts in these June, attracted practitioners, issuers, regulators and others. Much and other emerging markets maybe uncertain and untested. of the discussions had focused on examining the implications of the credit crisis and the Shariah challenge. In November last year He also indicated that even if these issues are resolved there are a prominent religious scholar active in the Islamic fi nance market more fundamental issues to consider. Essentially, issuers demand issued a statement suggesting that two of the most common Sukuk products that mirror conventional debt in terms of risk and economic types — Mudarabah (a form of trust fi nancing) and Musharakah (joint substance. ABS Sukuk simply does not fulfi ll these requirements. partnership) — do not conform to the Shariah. Although Sukuk are Mutlaq Al-Morished, vice president of corporate fi nance at Saudi Basic widely seen as the Shariah compliant equivalent of conventional debt Industries Corporation, one of the largest Sukuk issuers in the world, securities, Sukuk comes in a number of different guises with an array echoed these sentiments, adding that issuers will use Sukuk only if it of different economic and risk characteristics. makes economic sense.

The underlying reason for the scholar’s concern was that while the The market is at an important juncture: it is clear that there is a desire Mudarabah and Musharakah Sukuk are essentially equity-type among scholars and certain practitioners to focus on more ‘authentic’ instruments, the market uses certain techniques such as repurchase asset-backed structures. Yet it was clear at the Summit that issuers are agreements (at maturity or specifi ed default events) to guarantee the fundamentally driven by cost and there is preference for instruments return of the Sukuk. This is at odds with the spirit of Islamic fi nance, which closely resemble conventional debt. At fi rst glance this may where profi ts should be shared and interest is prohibited. This seem an insurmountable gap. However, the market seems to have an controversy is referred to as the ‘Shariah challenge’. It is estimated infi nite capacity to innovate within the guidelines laid by the scholars. that over 80% of Sukuk are affected, but some Sukuk structures such Recent evidence suggests that a new round of innovation could yet as the Ijarah Sukuk (leasing) are not. In fact it is the Ijarah Sukuk which boost the fl edgling market. is the preferred structure for the UK government’s sterling sovereign Sukuk issuance. For example, Shaikha Al-Sudairy, manager at HSBC Amanah in Riyadh, talked about two recent deals pioneered by her bank — the SABIC-I The divergence in opinion between Islamic law scholars has caused and SABIC-II Sukuk and the Saudi Electricity Company (SEC) Sukuk — concern in the market. In general though, the market has reacted which use innovative new asset classes such as pools of petrochemical positively to the Shariah challenge, considering the clarifi cation marketing contracts and electricity meters and the tariffs due on them, as being helpful. Confusion, a lack of clearly defi ned parameters which were then securitized. and divergences of opinion between scholars may yet damage the credibility of the market. These examples demonstrate that there is a wider range of assets that are acceptable from the perspective of Islamic law. This will be An example is the move by the Japan Bank for International Co-opera- benefi cial to the market as previously only tangible fi xed assets such as tion (JBIC) to issue a Sukuk. JBIC was preparing to issue its fi rst Sukuk aircraft, shipping or real estate were considered as being acceptable. in May 2008 to fund its activities in promoting trade and international development projects. JBIC had selected Citibank of Dubai and CIMB of From November 2007 till February 2008 the Sukuk market suffered; Malaysia to arrange the deal but the Shariah boards of the two banks in this period no international, dollar-denominated, rated Sukuk came disagreed on the whether it was Shariah compliant. The transaction to the market. The impact of the recent credit crisis and the Shariah will need to be restructured — from the original Murabahah structure challenge infl icted a deep wound. Innovative deals like SABIC and SEC to the Musharakah version — adding to cost, time and frustration for Sukuk indicate that human ingenuity and imagination may yet help the issuer. Such an outcome cannot be benefi cial to the market. this market fl ourish.

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 Ali Ravalia has written extensively on Islamic capital markets and is linked to the issuer) or asset-backed (the credit risk is linked to the banking. He currently works for a prominent Western ﬁ nancial underlying asset). The latter is similar to conventional asset- backed regulatory agency. He has a Masters in Economic History from securities (ABS) which have risen in prominence in recent years. It was the London School of Economics. He can be contacted at envisaged that the Shariah challenge may lead to a shift away from [email protected]. asset-based to asset-backed structures.

DFSA Takes a Common Sense Approach By Shabnam Mokhtar

The Dubai Financial Services Authority (DFSA) is the integrated accountants), and 16 auditors — the DIFX and the Dubai Mercantile regulator of all fi nancial and ancillary services in or from the Dubai Exchange (DME). International Financial Center (DIFC). Its responsibility includes ensuring that the DIFC is one of the best regulated fi nancial centers Last year was a signifi cant year in its growth and recognition. The in the world. International Monetary Fund (IMF) and the World Bank conducted a fi nancial sector assessment program (FSAP) on the UAE, including a DFSA is unique in that it had been established as a world-class separate review of the quality of the DIFC jurisdiction and the quality regulator from the outset unlike many other regulatory bodies that of its regulator, the DFSA. arose from a country’s fi nancial crisis.

Using a risk-based framework, DFSA oversees the full range of fi nancial “The FSAP report concluded and ancillary services in the DIFC, including wholesale banking, asset management, reinsurance as well as securities, derivatives that we have established and commodities exchange activities undertaken by exchanges including the Dubai International Financial Exchange (DIFX). DFSA an impressive set of laws, also authorizes, licenses and registers institutions and individuals to operate within the DIFC upon fulfi lling stringent requirements and regulations and rules as well as even has the power to hold to account those who fail. policies and procedures for our regulatory regime. This was one of the highest assessments the IMF has accorded in the past fi ve years.”

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 Islamic Finance news secured an interview with DFSA’s managing of laws, regulations and rules as well as policies and procedures for director (supervision) Michael Zamorski (pic) on the regulator’s recent our regulatory regime. This was one of the highest assessments the activities. He had joined DFSA in April 2006 after a 29-year career IMF has accorded in the past ﬁ ve years. However, we want to avoid with the US Federal Deposit Insurance Corporation (FDIC). As FDIC’s complacency and continue to be vigilant in our regulatory approach. director of the division of supervision and consumer protection, he had been responsible for overseeing the FDIC’s bank supervisory ac- We have been fortunate to be able to design our regulatory system and tivities for safety and soundness as well as compliance and consumer build our corporate culture with a clean slate. protection for the 5,200 institutions under its jurisdiction. Our staff are experienced regulators from many well-regarded jurisdic- Zamorski was a member of the Basel Committee on Banking tions including Australia, the US, the UK, Germany and Canada. This Supervision, the prudential standard setter for large, internationally- obviously gives us a great diversity of regulatory opinions and an ability active banks, from 2000 to 2006. He has a degree in economics, to choose best practices. conferred cum laude, from Villanova University, Pennsylvania, and is a graduate of the American Bankers Association’s Stonier Graduate We also benchmark our standards againts other respected centers School of Banking. like Hong Kong, Singapore, London and New York.

Would you share with us the recent activities of the DFSA? Please explain how you implement risk-based supervision. The DFSA is in full operational mode, supervising 267 entities To me, risk-based supervision means imposing a level of regulation — 206 authorized ﬁ rms, 45 ancillary service providers (lawyers and appropriate to control and prevent excessive risk to achieve desired continued...

DFSA Takes a Common Sense Approach (continued) regulatory outcomes. It is important to remember that fi rms are in the law court system, which is unique to the Middle East and North Africa business of taking risk. (MENA) region. Additionally, a critical mass has developed with the number of high-quality fi rms coming into the DIFC. 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 With the explosion of the subprime crisis, there has been a call for identifi able, measurable and controllable. In this process, we make a greater regulation for investment banks due to their off-balance- conscious effort to avoid unduly prescriptive, detailed regulations and sheet activities. Do you agree with this approach? procedures in an attempt to minimize regulatory burdens. 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 Since we have invested in the quality of our staff and we have large in the fi nancial sector; however, we would offer words of caution in internationally active fi rms and high-quality regional fi rms with higher thinking that increased regulation is the ultimate solution to this degrees of competence in their risk management under our supervision, problem. 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 “Since we have invested in systemic risk? Supervision by risk means that we will allocate greater resources to the quality of our staff and areas of greatest risk. We are certainly concerned about systemic we have large internationally 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. active fi rms and high-quality For risk-based supervision to work in an effi cient manner, we need to regional fi rms with higher 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 degrees of competence in their and resources necessary to understand an 8,000-page regulatory rulebook. Open and unfettered communication between our team risk management under our of relationship managers and the authorized fi rms is critical to this process. supervision, we do not need to

What do you do in the outreach program? be as prescriptive as some other An outreach program is an integral part of the communication process jurisdictions” 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 Are fi rms at the DIFC bound by Basel II? to occur. 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 For example, we periodically meet with our compliance and money decision to focus our attention on Pillar II (supervisory review) and laundering reporting offi cers (MLRO) to discuss anti-money launder- Pillar III (market discipline) of Basel II for the time being. We have ing (AML) and counter terrorist fi nancing (CTF) issues as well as other not yet focused considerable attention on Pillar I because we have issues arising in the DIFC without disclosing confi dential information. adopted Basel I on a ‘super-equivalent’ basis. 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 We have a number of fi rms to which Basel II capital ratios do not di- their own operation so as to prevent the same problem. 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. Are fi rms in the DIFC exposed to the sub-prime crisis? The UK FSA would ultimately be in charge of Basel II implementation The subprime lending boom happened largely before most of our fi rms for a branch of one of their fi rms as our rulebook states that these were authorized. However, some of our fi rms were indirectly impacted fi rms are bound by home country capital requirements. because the subprime issue affected affi liates in other jurisdictions. Additionally, fi rms conducting banking business in the DIFC are all well One of the biggest challenges at the DIFC is keeping up with the capitalized and are not taking a signifi cant amount of on-balance sheet demand for space. When I arrived a little over two years ago, we had risk. The strategy of the DFSA is to evolve as the fi rms evolve. In short, 40 fi rms. Now, we have more than 260 supervised entities. Most of the I would say we are adopting Basel II appropriate and proportionate to top 70 largest global fi rms have offi ces in the DIFC and we continue to the nature and complexity of risks in the DIFC. receive strong interest. What would be your last note to our readers? I think the reason for this is the uniqueness of the DIFC. It is in the The DFSA and the DIFC have enjoyed signifi cant success and we will time zone between Asia and Europe. Importantly, fi rms operating in continue our efforts to support sound, sensible regulatory oversight the DIFC are offered enhanced legal certainty through the common that meets or exceeds international standards.

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?

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

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

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 BENER LAW OFFICE and meet ﬁ nancial market standards. The market will develop further and nuance and change will Istanbul – Turkey 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

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.

Islamic Finance news talks to leading players in the industry

Name: Qudeer Latif and documenting Shariah compliant transactions across any of the traditional asset classes. Position: Partner (Head of Islamic Finance) What are the strengths of your business? Company: Clifford Chance We have an excellent global Islamic fi nance group that includes people in a number of jurisdictions including Dubai, London, Singapore, Hong Based: Dubai 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 Age: 32 fi nance principles and structures in addition to having a thorough understanding of how the international banking and fi nance markets Nationality: British 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 Could you provide a brief journey of how you arrived best solutions to our clients. where you are today? As part of the Clifford Chance global network I’ve been fortunate What are the factors contributing to the success of enough to have lived and worked in many jurisdictions, including your company? London, Riyadh and Dubai. I have been actively involved in structuring and documenting Islamic fi nance products since 2001. Clifford Undoubtedly, the people who work for Clifford Chance are responsible Chance has been advising on Islamic fi nance transactions for more for our success. The quality and commitment of our people means than 20 years, however while in London in early 2003 I was tasked that we are able to deliver high quality and innovative products to our with coordinating the fi rm’s global efforts in building an Islamic fi nance clients. practice, a task that has led me to Dubai where I have been based since March 2006. What are the obstacles faced in running your business today? What does your role involve? Although a number of Islamic fi nance instruments are still bespoke Within the fi rm I work closely across a number of the traditional practice and therefore require unique documentation, there are now a number areas such as project fi nance, capital markets, asset fi nance, corporate of ‘commoditized’ products where standard form documentation fi nance, funds and derivatives to structure Islamic fi nance products. would be of invaluable benefi t as it would allow a quicker turnaround Given the increase in activity in this industry across the globe, I also time for transactions with a lower cost base. Standard documents for work closely with our other offi ces and associate offi ces in the global simple Islamic instruments such as the Murabahah are also likely to network to structure and deliver Shariah compliant instruments. As increase liquidity in the secondary market. It is therefore imperative information and know-how sharing is critical for the development of that all entities working in this industry support the initiatives of our fi rm and global practice, I also spend time educating other lawyers industry bodies such as the IIFM based in Bahrain. internally within the network. Where do you see the Islamic fi nance industry in, say, What is your greatest achievement to date? the next fi ve years? Over the next fi ve years I would envisage a wave of consolidation of It’s a great time to be working in Islamic fi nance at Clifford Chance. Islamic fi nance institutions across the Gulf and the Far East. I think We advised on more than US$25 billion worth of Islamic fi nance there will also be growth in certain asset classes such as Islamic transactions last calendar year (2007) and have reached US$20 securitizations and the Takaful industry and greater use of Islamic billion for the fi rst half of this calendar year (2008) and this does fi nance instruments by European and U.S. based entities as an not include any of the work we have done in relation to fi nancial alternative way of raising capital. 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 Name one thing you would like to see change in the of the leading Sukuk deals from the Gulf and Malaysia, most of the world of Islamic fi nance? groundbreaking project fi nancings in the Gulf region including Saudi A movement away from trying to replicate conventional products in a Kayan and Ma’aden as well as the largest Islamic fi nancing in the UK Shariah compliant manner and the development of Shariah compliant to date for the Chelsea Barracks acquisition. products that involve risk participation between all the parties. Which of your products/services deliver the best results? Clifford Chance is one of the world’s leading law fi rms that Our lawyers are well trained to look at all sides of a problem and provide has legal resources across the best solution considering the commercial and legal ramifi cations. the three key markets of the Americas, Asia as well as Europe By adding our ability to analyze and guide on Shariah issues we are and focuses on the core areas of commercial activity. able to offer clients additional value when it comes to structuring

Jordinvest Shariah Compliant MENA Fund

An open-ended “all-equity” collective investment scheme registered under the laws of Bahrain and created by STRUCTURE 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/ HSBC Bank Middle East Bahrain CUSTODIAN

REGISTRAR Keypoint Consulting Bahrain

PLACEMENT AGENT Jordinvest

VALUATION DATE/ Twice a month, on the business day which immediately follows the 14th day of each calendar month, and the last SUBSCRIPTION DATE/ business day of each calendar month. REDEMPTION DATE SUBSCRIPTION/ Multiples of 10 units. REDEMPTION AMOUNT

SHARE CLASSES (AMC) Retail and institutional.

BOARD OF DIRECTORS OF JORDINVEST Ahmad Hamza Ahmad Tantash, Hani Al Ali, Alaa Barakat and Ammar Jarrar. SHARIAH COMPLIANT MENA FUND COMPANY The fund is Jordinvest’s ﬁ rst Islamic fund. To ensure Shariah compliance, investment decisions will be based BACKGROUND 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. The primary objective is to seek medium- to long-term capital appreciation by investing in Shariah compliant PURPOSE OF THE securities including equities, and other investment products issued by Shariah compliant companies or entities FUND in the Middle East and North African (MENA) region. SUBSCRIPTION PRICE US$100 + 0.75% subscription fee/unit. PER UNIT MINIMUM Initial subscriptions must be for a minimum of 10 units, with additional subscriptions by an existing unit holder SUBSCRIPTION being in increments of 10 units. INITIAL INVESTMENT Started on the 9th March 2008. PERIOD The 8th June 2008. After the last day of the initial period, there will be a closing period of six months in which one ENDED 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.

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. RISK FACTORS 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 For more termsheets, visit www.islamicfinancenews.com

AMANAHRAYA-JMF — Malaysia FIRST ENERGY BANK – Bahrain Sharizad Jumaat is now managing director of AmanahRaya-JMF Asset First Energy Bank has named Esam Janahi, known worldwide for Management. She joined as CEO in 2004. Following the merger his contributions to the energy fi eld, as Chairman of its Board of between AmanahRaya and JMF Asset Management, Sharizad was Directors. appointed executive director and chief investment offi cer. She has over 18 years of experience in fund management, in particular fi xed MORGAN STANLEY — Middle East and Africa income and equities. Henry Stewart is now Morgan Stanley’s head of consumer investment Sharizad began her career at Permodalan Nasional as a research banking team for the Middle East and Africa. Stewart replaces Benoit analyst, later joining the Employees Provident Fund, where she served Renon, who is returning to the Paris offi ce. in various capacities. Stewart, a senior mergers and acquisitions banker, was with UK asset HSBC — UAE manager Schroders. He will work with Mark Warham, chairman of UK investment banking and his colleague at Schroders. Shaker Zainal has been appointed head of branch management while Samira Abdulrahman has been promoted to senior manager of BIsB — Bahrain HSBC’s Jebel Ali branch. Jaffer Saleem Badwan has become a member of Bahrain Islamic Shaker has been with the bank for over eight years and was senior Bank (BIsB)’s executive management team as general manager for manager of the Dubai branch. He also headed regional operations and investment and treasury. has held senior positions in the bank’s network services department and the regional call center in Dubai Internet City. In his new position, With over 27 years’ industry experience, Badwan held several man- Shaker will oversee management and smooth delivery of products agement and executive positions in various fi nancial institutions and and services across branches in the UAE. banks outside Bahrain, including Abu Dhabi National Bank, UAE Cen- tral Bank and Kuwait Investment Company. Meanwhile, Samira will oversee day-to-day operations as well as manage key client relationships. Prior to this, she was manager of the LINKLATERS — UAE Sharjah branch. Linklaters has appointed Sarosh Mewawalla as managing partner SCHRODERS — UAE and local head of fi nance at its Dubai offi ce, after being transferred from Milan where he was co-managing partner. Schroder Investment Management has recruited Maha Soueissy as a Middle East equity analyst, to be based in Dubai. The former associ- Ewan Cameron, who has been managing partner of the Dubai offi ce ate with Shuaa Capital will work with Rami Sidani, who was appointed since it opened in 2006, will become senior partner of the Middle head of MENA at Schroders last month. Soueissy has four years’ ex- East region. The reshuffl e follows the recent relocation of two partners perience in the funds industry, covering the MENA region. 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 KFHM — Malaysia strategy, dubbed emerging markets in Europe, the Middle East and North Africa. Raja Teh Maimunah, chief corporate offi cer and head of international business at Kuwait Finance House Malaysia (KFHM), sent shockwaves DUBAI INTERNATONAL CAPITAL — UAE through the industry with her departure from the bank this week. The investment arm of Dubai Holding has appointed David Smoot as The move comes barely two years after her exit from Unicorn the managing director of private equity. Investment Bank (Malaysia). Citing family obligations as the main reason, Raja Teh was instrumental in the setting up of KFH’s Singapore He has 14 years of experience in investment banking and private and Australia offi ces. She was vice president of investment banking at equity. Smoot spent three years at Salomon Brothers, specializing RHB Bank, and before that, was at CIMB. in energy and chemicals investment banking before moving on to Morgan Stanley. He stayed for 11 years before shifting to Dubai JIFB — Jordan International Capital. Jordan Investment & Finance Bank (JIFB)’s board of directors has BNL — Bahrain appointed Basheer Jardaneh as the company’s new chairman with immediate effect, to succeed Basel Jardaneh. Fathalla Ebrahim has been promoted as general manager of Bahrain National Life Insurance (BNL) effective from this month. He succeeded EIIB — UK Patrick Byrne. European Islamic Investment Bank (EIIB) has appointed 44-year-old Fathalla was previously the assistant general manager in the Keith George McLeod as executive director and fi nance director at the insurance company. Prior to joining BNL, he was attached to the Arab bank. McLeod has held senior positions at Schroders, Credit Suisse Insurance Group since 1993 in various technical and managerial First Boston, Morgan Stanley and HSBC. positions in insurance and reinsurance.

Deal tracker Islamic Finance news Advisory Board: Keeping you abreast of the world’s upcoming Shariah compliant deals Mr Daud Abdullah (David Vicary) Another Islamic Finance news exclusive Chief Operating Offi cer Asian Finance Bank ISSUER SIZE (million) INSTRUMENT Dr Mohd Daud Bakar Bumiputra-Commerce Islamic and conventional CP/MTN US$1.84 billion Chief Executive Offi cer Holdings program International Institute of Islamic Finance Islamic Bank of Thailand US$178.77 Ijarah Prof Dr Mohd Masum Billah ETA Star Property Group Executive Chairman Up to US$150 Sukuk Middle Eastern Business Developers World Group of Companies Abu Dhabi Commercial Bank US$1.07 billion Islamic MTN Dr Humayon Dar Chief Executive Offi cer Dewa Minimum US$500 Sukuk BMB Islamic Philippines Up to US$1 billion Sukuk Mr Badlisyah Abdul Ghani Chief Executive Offi cer BTA Bank Up to US$150 Sukuk CIMB Islamic

Bahrain Central Bank US$500 Sukuk Ms Baljeet Kaur Grewal Group Chief Economist Head, Global Research Qatar Islamic Bank US$300 Sukuk KFH Research Limited Barwa Real Estate US$800 Sukuk Mr Sohail Jaffer Partner Doha Bank US$1 billion Sukuk Ijarah International Business Development FWU International RAK Properties US$2 billion Sukuk Dr Monzer Kahf Consultant/Trainer/Lecturer Tabreed Up to US$500 Sukuk Private Practice Dubai International US$200 Sukuk Mr Mohamed Ridza Abdullah Financial Center Managing Partner Mohamed Ridza & Co Amlak Finance US$260 Sukuk Prof Bala Shanmugam Al-Rajhi Cement Investment US$595 Sukuk Director of Banking & Finance Monash University Malaysia Al-Zamin US$11.15 Mudarabah Mr Muhammad Nejatullah Siddiqi Muhibbah Engineering US$125.41 Mudarabah Author, Scholar, Speaker, Trainer Mr Rushdi Siddiqui Indonesia up to US$2 billion Ijarah Global Director Dow Jones Islamic Indexes Orient Technology Indonesia US$120 Islamic and conventional Mr Dawood Taylor Perisai up to US$47.03 2 tranches in 6 series Head of Takaful Taawuni Division Bank Aljazira Glomac US$18.83 Murabahah MTN Mr Abdulkader Thomas President & CEO First Fidelity US$2.9 Diminishing Musharakah SHAPE – Financial Corp Ijarah alongside US$8.5 million Aneka Gas US$26.5 Mr Paul Wouters worth of conventional bonds Partner US$93.5 million senior Bener Prolintas US$187 Ijarah, US$93.5 million junior Prof Rodney Wilson Musharakah Director of Postgraduate Studies Monetary Authority of Durham University TBA Sukuk Singapore Mr Sohail Zubairi Vice President & Head Shariah For more details and the full list of deals visit Coordination www.islamicﬁ nancenews.com Dubai Islamic Bank

Eurekahedge Global Islamic Fund Index

120

110

100

4 4 5 5 5 6 6 6 7 7 7 8 4 0 0 5 0 0 6 0 0 7 0 0 8 -0 l- -0 - -0 l- -0 - -0 l- -0 - -0 l- -0 - -0 r t n r u t n r u t n r u t n r p Ju c a p J c a p J c a p J c a p A O J A O J A O J A O J A

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 Banque Saudi Fransi 11.76 Saudi Arabia Trading Fund 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

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

Contact Eurekahedge To list your fund or update your fund information: [email protected] For further details on Eurekahedge: [email protected] Tel: +65 6212 0900

Disclaimer Copyright 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.

S&P Shariah Indices Price Index Levels

2000 1900 S&P 500 Shariah S&P Europe 350 Shariah 1800 S&P Japan 500 Shariah 1700 1600 1500 1400 1300 1200 1100 1000 09/07/08Jun-08 May-08 Apr-08 Mar-08 Feb-08 Jan-08

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

2000 S&P Pan Asia Shariah 1900 S&P GCC Composite 1800 S&P Pan Arab Shariah S&P BRIC Shariah 1700 1600 1500 1400 1300 1200 1100 1000 08/07/08Jun-08 May-08 Apr-08 Mar-08 Feb-08 Jan-08

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

1200 S&P Global Property Shariah 1080 S&P Global Infrastructure Shariah 960 840 720 600 480 360 240 120 0 09/07/08Jun-08 May-08 Apr-08 Mar-08 Feb-08 Jan-08

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

Data as of the 9th July 2008

PERFORMANCE OF DJ INDEXES

DJIM World DJIM Asia/Pacific DJIM Europe DJIM US 15

-5

-10 PRICE RETURN (%)

-15

-20 1 Week 2 Week 3 Week 1 Month 3 Month 6 Month YTD 1 Year 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 TITANS INDEXES

DJIM Titans 100 DJIM Asia/Pacific Titans 25

-2

-4 1 Week 2 Week 3 Week 1 Month 3 Month 6 Month 1 Year YTD

-6

PRICE RETURN (%) -8

-10

-12

-14 1 Week 2 Week 3 Week 1 Month 3 Month 6 Month YTD 1 Year INDEX PRICE RETURN (%) 1 Week 2 Week 3 Week 1 Month 3 Month 6 Month 1 Year YTD 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

DESCRIPTIVE STATISTICS Market Capitalization (US$ billions) Component Weight (%) Component Float Index Full Mean Median Largest Smallest Largest Smallest number adjusted 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.

Learn more about the Dow Jones Islamic Market Indexes

Anthony Yeung [email protected] Regional Director Tel: +852 2831 2580

© Page 34 11th July 2008 MALAYSIAN SUKUK UPDATE www.islamicﬁ nancenews.com RINGGIT ISLAMIC DEBT MARKET: WEEKLY SNAPSHOT AS AT 9th JULY 2008 MOST ACTIVE BONDS TRADED BETWEEN 3rd JUNE and 9th JULY 2008 Total Volume Traded % w-o-w Price Last Week Closing Stock Name Last Traded Price Last Traded Yield Last 7 Change 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)

Government ABS Government Corporate Corporate Guaranteed BNM 33,400 (16%) 6,760 (3%) 5 (0%) 115,372 (54%) 4 (0%) 863 (74%)

Financial Quasi-Govt 4,043 (2%) 2 (0%)

BNM Corporate Guaranteed Corporate 24,600 (12%) Quasi-Govt 2, 934 (1%) 291 (25%) 26,455 (12%)

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

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.

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 Malaysia Sukuk Musharakah 1,162 11 3.8 CIMB Selatan 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 Saudi Arabia Sukuk Ijarah 1,000 1 3.3 ABS Islamic Bond, Arab National Bank, Sukuk 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 463 1 1.5 Morgan Stanley Istisnah & Ijarah 19 National Central Cooling UAE Exchangeable Sukuk 463 1 1.5 Morgan Stanley (Tabreed) 20 Lingkaran Trans Kota Malaysia Sukuk Mudarabah 457 13 1.5 Aseambankers

Total 30,586 285 100.0

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 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 463 1 5.6 Morgan Stanley Exchangeable Sukuk 7 National Central Cooling UAE Convertible Sukuk 463 1 5.6 Morgan Stanley (Tabreed) 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/ 92 1 1.1 CIMB Murabahah Notes 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 ARE YOUR DEALS LISTED HERE? If you feel that the information within these tables is inaccurate, you may contact the following directly:

Catherine Chu Email: [email protected] Telephone: +852 2804 1223

ISLAMIC BONDS JULY 2007 – JULY 2008 ISLAMIC BONDS APRIL 2008 – JULY 2008

Manager or Group Amt US$ m Iss. % Manager or Group Amt US$ m Iss. % 1 CIMB 4,244 79 13.9 1 CIMB 942 35 11.4

2 HSBC 3,987 39 13.0 2 Morgan Stanley 926 2 11.2

3 JPMorgan 2,077 4 6.8 3 HSBC 773 21 9.4

4 Malaysia Government bond 1,628 2 5.3 4 Calyon 666 1 8.1

5 Aseambankers 1,496 39 4.9 5 Dubai Islamic Bank 642 3 7.8

6 Dubai Islamic Bank 1,356 7 4.4 6 Emirates NBD 568 3 6.9

7 Morgan Stanley 1,308 7 4.3 7 Aseambankers 554 16 6.7

8 AmInvestment 1,242 43 4.1 8 AmInvestment 389 16 4.7

9 Barclays Capital 1,126 4 3.7 9 JPMorgan 327 1 4.0

10 Riyad Bank 1,066 1 3.5 10 Barclays Capital 315 2 3.8

11 Calyon 1,016 2 3.3 11 Citi 187 1 2.3

12 RHB Capital 848 63 2.8 12 Gulf International Bank 163 1 2.0

13 Deutsche Bank 837 3 2.7 13 RHB Capital 140 33 1.7

14 Oversea-Chinese Banking Corp 683 16 2.2 14 Abu Dhabi Commercial Bank 128 1 1.5

15 Emirates NBD 677 4 2.2 15 Credit Suisse 128 1 1.5

16 Lehman Brothers 638 2 2.1 16 First Gulf Bank 128 1 1.5 17 Lehman Brothers 128 1 1.5 17 ABN Amro 620 8 2.0

18 Citi 590 10 1.9 18 National Bank of Abu Dhabi 128 1 1.5 19 Noor Islamic Bank 128 1 1.5 19 Standard Chartered 545 20 1.8 20 Malaysian Industrial 108 15 1.3 20 Credit Suisse 508 3 1.7 Development Finance Total 30,586 285 100.0 Total 8,264 105 100.0

ISLAMIC BONDS BY COUNTRY JULY 2007 – JULY 2008 ISLAMIC BONDS BY COUNTRY APRIL 2008 – JULY 2008

Amt US$ m Iss. % Amt US$ m Iss. %

Malaysia 12,999 234 42.5 UAE 3,676 5 44.5

UAE 8,858 16 29.0 Malaysia 2,458 88 29.7

Saudi Arabia 5,799 4 19.0 Saudi Arabia 1,333 1 16.1

Pakistan 660 17 2.2 Total 8,264 105 100.0

Bahrain 550 2 1.8 ISLAMIC BONDS BY CURRENCY APRIL 2008 – JULY 2008 Kuwait 475 1 1.6 Amt US$ m Iss. % Total 30,586 285 100.0 Emirati Dirham 4,111 7 49.7 ISLAMIC BONDS BY CURRENCY JULY 2007 – JULY 2008 Malaysian ringgit 2,458 88 29.7

Amt US$ m Iss. % Saudi Arabian Riyal 1,333 1 16.1

Malaysian ringgit 12,449 233 40.7 Total 8,264 105 100.0 Emirati Dirham 6,698 9 21.9 For all enquires regarding the above information, please contact: US dollar 5,798 17 19.0 Catherine Chu Saudi Arabian Riyal 4,799 3 15.7 Email: [email protected] Total 30,856 285 100.0 Phone: +852 2804 1223; Fax: +852 2529 4377

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Company Page Company Page Company Page Company Page A A Al Moosa Enterprises 8 Colossus Holdings 5 HKMA 3 QIC 12 A M Best 14 CrediMax 9 Honiton Energy Holdings 5 QIIB 12 ABG 4 CreditWatch 13 HSBC 30 QNB 11 ABIB 4 Crescent Partners 8 HSBCAT 13 Rasameel Structured Finance Company 7 ADIH 3 Deutsche Bank 4 IBA 9 REITs 11 Al Awadhi Investment Group 8 Development and Management House for IBB 10 Riyad Bank 4 Al Fajer ReTakaful Insurance Company 14 Investment 9 IDB 2 RNCOS 11 Al Hamad Group 10 DIB 10 IFC 1 Rotana Hotel Management Corporation 7 Al Joman Centre for Economic Consultancy 4 DIFX 10 Insure Direct 12 S&P 13 AL Khaleej Development Company 4 Dubai Banking Group 14 Islamic Bank of Asia 11 Saudi Electricity Company 14 Al Khaliji 8 Dubai Holding 13 Jabal Omar Development 7 Schroders 30 Al Rajhi Bank 3 Dubai International Capital 9, 30 Jadwa Investment 7 Shariah Review Bureau 9 Al Safat Investment 11 Dubai World 12 JIFB 30 Shuaa Capital 7 Al Salam Bank 6 EFG-Hermes 11 JSE Securities Exchange 11 Shuaa Partners 7 Al-Aqeelah Leasing, Finance and Investment EIB 2, 4 Kaizen Developments 2 SII 1 Company 1 EIIB 30 KFH 6 Sorouh Real Estate 11 Aldar Properties 11 Emcredit 6 KFH-Bahrain 2 Tabreed 13 Allen & Gledhill Singapore 3 Emirates NBD 10 KFHM 30 Tamweel 10, 13 Amanahraya-JMF 30 Energia 5 Kuwait Finance 4 Tanti Group 5 Amlak Finance 6 Etiqa Takaful 12 Linklaters 30 Tharwa Investment Company 8 Arcapita 5 EXIM Bank 8 Manulife Insurance 12 The Privatization Company 6 Bahrain Stock Exchange 6 FGB 2 MARC 13, 14 Thomson Reuters 9 Bearys Amanah Investment 8 First Energy Bank 30 Methaq Takaful Insurance 12 TNB 14 Bearys Group 8 First Investment Bank 4 Moody’s 10 UAE Central Bank 10 BIB 10 Fitch Ratings 13, 14 Morgan Stanley 30 UBS 8, 9 BIsB 30 FSA 9 MRSA Investment 13 UK Trade & Investment 9 BNL 30 FTSE 11 Mubadala Development Company 8 Unicorn Investment Bank 11 Bondweb Malaysia 9 Fullerton Financial Holdings 8 NBK 4, 11 United Gulf Bank 5 Burgan Bank 5 GBCORP 10 NCB 8 Waha Capital 8 CambridgeIndustrial Trust 11 GCC 3, 7 NIB 2, 11 Zico 3 CBB 3, 6 GHC 10 Noor Islamic Maldives Bank 2 Ceylinco Proﬁ t Sharing Investment Coproration GIH 14 Qatar-Bahrain Takaful Insurance Company 12 9Gulf African Bank of Kenya 10 QIB 11

Country Index

Country Title Page Country Title Page Country Title Page Bahrain Islamic fi nance needs new models 3 Malaysia Manulife keen to set up Takaful unit 12 UAE Zico establishes presence 3 ABG in US$30 million deal 4 KFHM is stable 13 EIB unveils MENA notes 4 Arcapita to sell Irish unit 5 APP’s bonds face downgrade 13 Arcapita to invest US$2 billion 5 Bank gains US$40.6 million 6 ‘A-’ for HSBCAT from Fitch 13 Emcredit restructured 6 Japan taps Bahrain 6 MARC revises rating on Tenaga’s notes 14 Amlak Finance ups profi t outlook 6 CrediMax to launch Shariah cards 9 Maldives Islamic banking to debut soon 2 Hospitality fund draws investors 7 GBCORP’s HQ relocates 10 Middle East GCC records US$800 billion growth 7 New fi nance fi rm 8 Unicorn disposes shares in Orimix 11 Shariah mode fi ve-star hotel 8 Dubai International Capital eyes Asia 9 Hong Kong Prudent and steady progression 3 BIB inks partnership with Yemeni bank 10 Tamweel’s US$300 million Sukuk 10 India Bearys seeks partner 8 Qatar First retail bank for Qatar 8 Al Hamad Group gets Islamic fi nancing 10 Indonesia Shariah banking to grow 52% by 2010 11 Qatari banks ‘strong performers’ 11 ‘Enough banking licenses’ 10 Japan Japanese banks courted 6 QIC’s profi ts leap by 66% 12 Aldar, Sorouh sign deal with Noor 11 Jordan 30 Qatari, Bahraini fi rms form JV 12 Insure Direct’s big car scheme 12 Kenya New branches 10 QIIB posts 67% jump in net profi t 12 Methaq nets US$408 million 12 Kuwait Banking profi ts up 4 Saudi Arabia Al Rajhi records profi t growth 3 Tamweel gets an ‘A’ 13 Capital hike for Burgan Bank 5 Higher profi t for Riyad Bank 4 Tabreed on CreditWatch 13 Islamic fund launched 8 Singapore IBA’s fi rst innovative product 9 Fitch rates ‘AA-’ for Dubai Holding’s MTN 13 GHC sees 59% rise in profi t 10 Shariah compliant REIT? 11 Fajer ReTakaful gets an’A-’ 14 Profi t growth for biggest lender 11 South Africa JSE in partnership with FTSE 11 UK UK backs SII/IFC move 1 Malaysia MIF 2008 Update 1 Southeast Asia Al-aqeelah plans Islamic bank 1 Islamic assets worth US$1 trillion by 2010 2 Zico establishes presence 3 Sri Lanka Shariah compliant Visa card 9 Cahn affi rms Shariah commitment 9 Scholarship in Shariah fi nance 5 Switzerland UBS moves into Saudi Arabia 9 IBB pushes home plan 10 KFH seals private placement 6 UAE Kaizen offers global fi nancing 2 US Investors moving away from US dollar 5 New Islamic fi nancial products 8 EIB introduces MENA CPPI Note 2 Shariah fund goes Latin 8 Malaysian Sukuk on global pricing index 9 Another record quarter for FGB 2 Vietnam Zico establishes presence 3 Etiqa to educate in cyberspace 12 ADIH fund beats target 3

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