EiD Greetings from AlHuda Centre of Islamic Banking & Economics

'Nation Leads In Islamic Banking'

PIONEER: Syariah-compliant system serves as model for other countries, says Najib.

THE government has succeeded in developing the Islamic financial system,   as the country has become the   centre of reference for others around the world, said Prime Minister Datuk Seri Najib Razak.

He said Malaysia was not only known for pioneering the Islamic banking and financial system, but also as the only nation that had developed such a system through a holistic approach.

Najib said the nation's Islamic financial system offered syariah-compliant products and fulfilled the community's needs, as the nation had developed an infrastructure for the system to run well.

"Alhamdulillah (praise to God), the government's initiatives have been fruitful, as the country is now an international referral centre for a syariah-compliant Islamic financial system," he said at the launch of the week-long Malaysian Unit Trust Week 2014, themed "PNB 360 Investment", at the Rural Transformation Centre in Tunjong here yesterday. More than 5,000 people attended the event.

Najib said Malaysia continued to be a global leader in the international sukuk market, accounting for more than US$82.4 billion (RM266 billion), or 68.8 per cent, of the total international sukuk issuances last year.

"Islamic bank assets showed a growth of up to 16.5 per cent, with a market share of 25.7 per cent, of the total banking system assets last year," he said, adding that total transactions involving foreign exchanges managed by international Islamic banks had increased to RM18.1 billion last year, compared with RM14.6 billion in 2012.

He said the figures showed that syariah-compliant Islamic financial transactions had gained a foothold not only in Malaysia, but also at the international level.

Najib, who is also finance minister, said the government, through Bank Negara, had allocated RM500 million to establish a special university to nurture quality talent, with the aim of expanding the Islamic banking and financial industry.

He said another RM200 million had been channeled to set up an international-standard syariah research centre to ensure all components of Islamic finances strictly complied with syariah principles.

"The government's seriousness in empowering and raising the standards of the Islamic financial system can been seen from various governing and legal initiatives."

Under the legislation, he said, syariah was placed high up in the Islamic Financial Service Act 2013, whereby any financial institution found to have breached syariah principles in its business transactions faces a jail term of up to eight years, fine of up to RM25 million, or both, upon conviction.

Najib said the implementation of the initiatives to develop the system was among the key factors that caused the nation to receive the world's attention.

"What we envision is an Islamic financial system that is truly respectable, not only in its label and logo, but also for fulfilling the true essence of Islam."

He said in the latest development, the World Bank had indicated its interest to open a branch office in the country, with one of its main objectives being to gain experience and learn from Malaysia to develop the Islamic financial system.

"This is another endorsement for the country, which is a model, driver and pioneer in the agenda to raise the standards of the financial system, based on syariah, on the international stage."

Najib said Permodalan Nasional Bhd's (PNB) role in empowering the Bumiputera economy could not be denied, as it successfully managed investors' funds from the public, especially the lower-income group.

He said 75 per cent of Bumiputeras were living below the poverty line at the beginning of Malaysia's independence and held only two per cent in equity in the 1970s.

"The formation of PNB as an important New Economic Policy instrument has helped the national affirmative policy to restructure society through Bumiputera-share ownership in the corporate sector.

"This has provided an opportunity to Bumiputera professionals to contribute directly to the country's wealth creation and management.

"After 36 years, more than RM267 billion in the people's funds was managed excellently by PNB, through trust funds such as Amanah Saham Nasional, Amanah Saham Bumiputera, Amanah Saham Malaysia, AS1Malaysia and proprietary funds."

Najib said this had led the way for Bumiputeras to venture into strategic sectors, which they had never dreamed of doing.

"This innovation, allowing the rakyat to be shareholders with as low as RM10, has made PNB the most successful public institution, becoming a model to the world.

"This proves the government's commitment to realising the spirit of 'Maqasid al-Syariah' in the context of wealth management, fulfilling the principles underlined by Allah SWT."

He lauded PNB's initiative to expand the syariah-compliant portfolio.

He said one of PNB's most important portfolios, Maybank, had shown tremendous Islamic banking asset growth through Maybank Islamik, which expanded from RM3.6 billion to RM127 billion in assets.

"Maybank operates as the third-largest Islamic commercial bank in the world in terms of assets and is the largest in Southeast Asia."

Source: http://www.malaysiandigest.com/business/497908-nation-leads-in-islamic-banking.html

Islamic Microfinance Research Study initiated in Yemen: Zubair Mughal

AlHuda Center of Islamic banking and economics (CIBE) Initiated a Islamic Microfinance research study for Yemen Microfinance Network (YMN) in Yemen. This study will be conducted in the Yemen’s capital Sana’a including Taiz, Adan and Almoukla, so that the Islamic Microfinance products can be examined broadly and further Islamic Microfinance products can be developed for Yemen Microfinance sector with the compatibility of existing structure. Consequently, maximum people utilize the Microfinance facility and the alleviation of poverty would be assured.

Najah Al-Mugahed Managing Director of Yemen Microfinance Network explained the association memorandum of research study that Microfinance market size in Yemen is more than one million but only 80,000 (eighty thousand) people are barely facilitating with the services and products of Microfinance which is approximately 8% of the total Microfinance market size.  Its major reasons are; Non-existence of complete Islamic Microfinance range of products, Domination of Murabaha in Islamic Microfinance sector, increasing rate of Murabaha and percentage of interest in Microfinance are the obstacles in the expansion of Microfinance industry. An appropriate implementation plan would be prepared through this research study to strengthen the Yemen’s Microfinance sector.

Zubair Mughal - Chief Executive Officer AlHuda Center of Islamic Banking and Economics with Mohammad Al-Lai CEO Al-Amal Microfinance Bank - Yemen

Muhammad Saleh Al-Lai Chairman of Yemen Microfinance Network and Executive Director of Alamal Microfinance Bank proclaimed that Yemen’s Islamic Microfinance market is very promising and we want to make it stronger through this study so that Yemen could get a distinguished level through Islamic Microfinance. He further mentioned that this is our privileged that Al-amal Microfinance Bank won the award of Islamic Microfinance Challenge 2010 which was organized by Islamic Development Bank and CGAP (World Bank) which shows a clear understanding of our strong structure of Islamic Microfinance.

Muhammad Zubair Mughal Chief Executive Officer of Alhuda Center Islamic Banking and Economics (CIBE) said that our selection for the research study is a great honor for AlHuda CIBE. He mentioned that they have developed a strong research methodology for this study and used different research instruments e.g surveys, focus group discussion (FGDs), stake holder’s interviews, desk review of MFI’s and meetings with prestigious professionals of Microfinance industry to get primary & secondary information etc which will help to design the ideal products for Yemen Islamic Microfinance sector.

He further mentioned that the share of Islamic Microfinance in Yemen’s Microfinance sector is approximately 90% and remaining 10% are also converting their portfolio into Islamic Microfinance, Yemen Microfinance Industry will be further strengthened with the development of new Islamic Microfinance products, It will increase the outreach of Microfinance sector and help out to eradicate poverty_#

Yemen will Host an International Workshop on Islamic Microfinance

Islamic Microfinance is getting appreciation by the whole world for alleviation of poverty and Muslim and non-Muslim Countries are utilizing it. Microfinance Institutions in Arab Countries are also providing Microfinance to Muslims which is in accordance with Islamic standards in order to get poor out of obscurity of poverty. Amongst these Arab Countries, Yemen is at the top of the list with other countries like Iraq, Syria, Jordan and Egypt.

Due to the escalating popularity of Islamic Microfinance in Arab countries with the intention to increase the reach of Microfinance Institutions, AlHuda Centre of Islamic Banking and Finance and Yemen Microfinance Network is going to arrange 2 days training workshop on Islamic Microfinance on 16^th & 17^th September, 2012 to be held in the Capital City of Yemen - Sana’a, in which different topics like the proper utilization of Islamic Microfinance for alleviation of poverty in poor countries, Islamic Microfinance Products and their structure, Shari’ah principles of Microfinance and MicroTakaful would be discussed.

The Chairman of Yemen Microfinance Network, Mr. Mohammed Al Lai has declared the arrangement of this two days international workshop on Islamic Microfinance, a good step for the Microfinance sector. He said that Islamic Microfinance is rapidly growing in Yemen and the workshop like this will provide more awareness about it.

Chief Executive Officer of AlHuda Centre of Islamic Banking and Economics, Mr. Muhammad Zubair Mughal has said that AlHuda has established a separate department for the promotion of Islamic Microfinance, named as “Centre of Excellence in Islamic Microfinance” so that awareness, consultancy and training could be provided to the Microfinance Institutions and in this regard, during this year, workshops will be arranged in Yemen, Azerbaijan, Nigeria, Kazakhstan, Indonesia and Niger. He further said that the purpose of this training in Yemen is to make Arab countries aware of the importance and benefits of Islamic Microfinance which is in accordance with the religious beliefs of Arab Countries because in Arab Countries, people avoid conventional microfinance due to the factor of interest and remain stuck in poverty. So, Islamic Microfinance is very much needed to alleviate poverty in Arab countries. It should be noted that in spite of abundant oil and natural resources in Arab regions, some Arab countries are having poverty in them like 23% people in Iraq, 18% in Iran, 34.8% in Yemen, 13.3% in Jordan, 12.5% in UAE, 28% in Lebanon and 11.9% in Syria are living under the poverty line.