Archives: February 2013

Islamic finance boom after the global financial crisis

Said Head of finance at Syracuse University U.S., Dr. Yildirim chances booming Islamic finance large after the global financial crisis, it has become the Islamic banking alternative for banking services traditional after the recent crisis, where the conventional finance lenders to excessive loans, which led to the financial crisis , came during a seminar held yesterday in Economic Society titled economic crisis and Islamic financing opportunities.
He noted that the Islamic finance industry is facing liquidity requirements instruments compliant with Islamic law, as Islamic banking, which shall be strong assets owned and operated a successful take less dangerous fiscal policies.

He added that after the onset of the financial crisis, the current time is the best time for the growth of the Islamic finance market, especially since the development of Islamic banks already good and is compatible with the requirement (Basel 3) with respect to capital adequacy requirements.
He explained that the Islamic finance industry is facing liquidity requirements instruments compliant with Islamic law.
basel 3

He Dr. Yildirim durability Islamic banks due to its reservation to go into high risk investments when funding for traditional banks that characterized its activities with excessive lending and borrowing, without much consideration to risk management.

He pointed out that Islamic banking instruments issued about $ 700 billion, while still focusing on the financing of the real estate sector in the developing countries and the Gulf and which achieves very good returns for these banks due to the recovery of this sector continuously.

And between Yildirim of the most important challenges faced by Islamic banks apply Sharia in the securitization process and the renewal of funding despite its success in attracting new investors, pointing out that most of these banks retail banks offer their services to clients legal «There are no Islamic banks investment could face investment banks traditional.

He explained that Islamic banks are still suffering from a lack of financial experts to develop risk management for new products, most Islamic banks operate within the retail banks as well as the shortage suffered by the hand Sharia scholars who specialize economy and finance, and thus become difficult to verify the match some financial products provided those banks with Islamic law, limits the expansion of the work of these banks, as well as its lack of a regulatory framework unified globally between countries that produce these Islamic financial instruments, as some products that are illegal in Islamic bank may be illegal in another bank as a result to deepen the first bank in the development of its products and find legitimate exits, while not available to the other this factor.

Yildirim stressed the need to re-establish securitization applications for Islamic banks in the event of those banks wanted to work in a healthy economic environment, stressing the lack of a major development in this regard by most banks.

He pointed out that there is a need to establish indicators private real estate Islamic banks with exposure to the real estate market to see trends of this sector in the future and avoid any financial disaster for those banks as a result of lack of understanding of market conditions, and refer the main cause of crises in failure to market securitization bad design, especially if no uncertainty regarding the 'real value' of the securitized assets that exacerbated the impact of asymmetric information, what caused the collapse of the market.

He called Yildirim to re-establish the securitization market to reach a healthy economy, with the credit crisis rendered market confidence, however, considered that there is an opportunity to increase the new versions of the asset-backed securities Islamic for all investors all over the world seeking to invest Islamic means of economic diversification.

And opportunities in Islamic finance, Yildirim said that the property is one of the basic needs associated with a lot of sectors of the economy, and strengthen this sector, thereby enhancing employment, consumption and investment in the economy.

And demand in the market for real estate, said Yildirim that member countries of the Islamic Development Bank need about 8.2 million homes annually to accommodate low-income urban and poor, noting that the world's population will grow by 2 billion people by 2030, which means nearly 40 A home in time, in the areas of seismic activity, such as Turkey, for example, you need to finance the huge housing projects, nearly a trillion dollars.

He said that expanding housing benefit requires an appropriate means to deliver new funds from alternative sources of capital, this capital is likely to come from programs securitization or instruments, pointing out that in order to provide additional funding, you need rules of capital markets, as well as entities key investment to be placed in the right places.

Qatar and Turkey closer regional models of Islamic finance systems

Turkey has the QFC more tax systems in line with the financial systems of Islamic finance among the eight countries in the Middle East and North Africa.

Those results came in the wake of a study by three economists pioneers are Messrs: Mohammed Amin, and Salah Kaidi, Hafiz Chowdhury, under the auspices of the Qatar Financial Centre and the participation of the International Center for taxes and investment firm with headquarters in Washington, DC.

And under the name of preparing tax system agreed with systems of Islamic finance among countries of the Middle East and North Africa - the first phase, the study shows that during a financial transfers easy system of Islamic finance among States, Turkey and the QFC two bodies only two possess tax system can be public conduct dealings instruments without high tax costs.
islamic finance

Courses will be offered in the search command, and considering how any state modernize its tax to become consistent with Islamic financing, where test study two ways alternatives, (in reference to the typical United Kingdom and Malaysia), and conclude researched recommendation to adopt the system Malaysian fastest and easier systems that can be applied to Muslim-majority countries.

8 States

The revised study dealing tax practice in the Middle East and North Africa eight Egypt, Jordan, Kuwait, Libya, Oman, Qatar, Saudi Arabia and Turkey, and the QFC through four structures are common in Islamic finance a commodity at the head Murabaha and instruments.

He led the search process detailed adviser Mohammed Amin, an expert in Islamic finance and former president of the Department of Islamic finance branch company Price water house Coopers in the UK, in conjunction with Mr. Saleh Kaidi, tax consultant first at the Ministry of Economy and Finance of Qatar and Mr. Hafiz Chowdhury management consultant and policy tax International Center for taxes and investment.

The format branch Ernst & Young distribution of questionnaires on the offices of company branches in the Middle East and North Africa to be completed and reviewed by the tax authorities in the country, while completed Price water house Coopers Malaysia questionnaire special Malaysia to provide a comparison between systems area and another system outside.

The UK model is compared to a second study based on the experience of Mr. Mohammed Amin as a tax adviser in the United Kingdom.

The first version

The report is the first of a series planned for, where intends team continue to provide prospective studies covering the impact of taxes consumables such as value-added tax imposed on the Islamic financing, and financial systems Islamic within international treaties to agreements on preventing double taxation, which aims primarily to compatibility with traditional ways of financing, as well as to Zakat transactions in Islamic finance and framework followed by the Government of the Emirate of Sharjah in its financial transactions. The are other countries in the region to review their systems in subsequent reports.

Mr. Ian Anderson, Chief Financial Officer and tax Authority QFC, in his comment: «The body of the QFC welcomes the results of research and recommendations provided by us this pioneering study in the field of trade tax financial transactions among Muslim countries in the Middle East and North Africa, where Islamic finance has a growing importance in the region, but their tax systems to almost all countries in the region have been developed in the framework of traditional ways of funding. This means often that Islamic finance suffers from an additional tax burden and unfair by those traditional ways. Because this report refers to the best ways to help settle competition in the region, we are delighted sponsored research such as this study the first of its kind, and support the development of Islamic finance and development organized by the world.

Get rid of the barriers

In this regard, Mr. Daniel A.. Witt, President of the International Center for taxes and investment: «proud International Center for taxes and investment to participating in this study, where we consider countries' support and support within the framework of its efforts to get rid of barriers to trade and international investment an integral part of our mission. In a world of increasing globalization attributes, and grow the welfare and prosperity rates in many Muslim-majority countries, occupies Islamic finance institutions a very important place in the establishment of infrastructure for the world's financial international trade and finance. And to emphasize that this study is the first study of its kind delve into the analysis of tax issues between states. We place high hopes on what emerge from this study of the language of dialogue we hope to be involved when states to discuss their internal systems and systems dealing with markets Islamic finance active in efforts to reach a way of dealing best with the reality of the physical barriers that hinder the growth of those markets because of tax laws . We hope to continue this important work under the umbrella of the active support funding centers such as the Qatar Financial Centre and other parties have influence in the markets.


Following Mr. Mohammed Amin, head of the team preparing the report, on the matter, saying: «The study shows quite clearly the additional risk of financial transactions required to act in accordance with Islamic finance systems to achieve economic achievements are similar to those achieved by traditional financial systems. These risks are subject to tax transactions to move or taxes on income or profits, which could raise the cost of Islamic financing to high costs.

He adds: «Malaysian based approach, mentioned in the report's recommendations, the application of the legislatures of the process of determining prior to any financial transaction regarding its approval of Islamic finance or not. Can then modify the tax law with relative ease for this segment to give the same result tax governing traditional transactions. Since the intermediate transactions are an essential part in the structure of Islamic finance, can easily exempt such transactions from the tax argument. As for the approach of the United Kingdom, and requires a more complex formulation of tax law because it could not find a reference to external sources of Islamic finance as a result of approach based on the principle of separation of religious matters financial. And conclude in the end that the Malaysian approach is the fastest and simplest to implement in the Muslim-majority countries.
top 10 food to build muscle fast

The Rise of Islamic finance Assets

Islamic banking assets grow more quickly than traditional banking asset growth is expected to reach Islamic assets to U.S. $1.1 trillion in 2012, marking a growth rate estimated at 33% for 2010.

As well as the presence of huge liquidity in Islamic banks began attracting attention top players in the market of global finance, especially when there are conditions pricing and commercial terms similar to those used in the conventional finance, and as a result we have seen in the past a lot of traditional financial institutions, which began showing interest in knowledge.

islamic banking

And we can also ignore a deficit of liquidity in U.S. and European markets after the global financial crisis in 2008 and the crisis of the euro zone and that led naturally to the pursuit of major financial institutions in the United States and Europe to look for financing alternatives sources and other regions in the world were not in the circle of interests Previously such as the Middle East and Northeast Asia.

On the other hand lies the importance of the initiative of Dubai in that it will help to stimulate this sector to meet the financing needs of the region due to the presence accelerated growth in the number of major projects in the field of services, industry and infrastructure in the Middle East due to the existence surpluses large oil or need some countries hit by unrest political rebuilding vital facilities that have been stalled as a result of the disturbances, so it is considered a historic opportunity for Islamic banks to provide innovative financing solutions and play a key role in the growth and development of the region.

Despite the region's need to finance major development projects, the challenge lies in the ability of Islamic banks to meet this need, in other words you have Islamic banks capital needed to finance the requirements of these major projects individually without you in financing arrangement "multi-source" involving conventional banks with Islamic finance?

This need and thirst by the global financial markets for liquidity and for Islamic finance in particular has made a lot of governments and central banks Bank, which was looking for Islamic finance glance of suspicion and doubt and inferiority to adopt amendments legal and regulatory to suit the Islamic finance and privacy.

It is noticeable legally that amendments regulators adopted by these central banks aims mainly to encourage the growth of this sector through the consolidation of the principle of equal opportunities and equal treatment for the legal and regulatory between conventional finance and Islamic, and the difficulties faced by these central banks is the absence of a uniform is developing rules The provisions relating to this sector.

But there are some scattered efforts of some institutions in the harmonization of standards and rules of Islamic finance to help to understand how to structure products Islamic financing and legitimate framework and Alhokma for these products, and the institutions that should be mentioned here the Accounting and Auditing Organisation for Financial Institutions and Islamic (AAOIFI) and Islamic Financial Services Board (IFSB ).

But still need a lot of effort. Despite we need to global liquidity, but more important is the ability of Islamic finance to play a role in the restructuring of global financial centers in the post-financial crisis.

As the regulatory and supervisory financial sector has become consider to Islamic finance and rules strict model can be emulated in financial sector regulation and, for example, can take these rules to modify some frames and banking standards for conventional banks to avoid risks that have an impact on the economy as a whole is not limited impact in a particular sector or cutting only or the so-called systemic risk.

In practical terms, application mandatory standards Basel (3) bank will contribute to give Islamic finance a boost and quality globally, as these standards will raise the minimum ratio of capital reserve, knowing that Basel (3) gave a deadline for a very 2019 to be able to banks in the world in straighten their positions.

It is likely to cause the application of Basel II standards (3), which specializes capital adequacy and liquidity at banks to make trade finance traditional heavy price because of the requirement to increase banks' capital reserve has but Islamic banks Unlike traditional they always adhere to the requirements more stringent than Basel (3) With regard to capital.

Therefore it is unlikely that the additional costs that will affect the ability of those banks to compete in global trade finance. The demand for trade finance products reflect the reality of the desire of the world to adopt a new approach to funding helps create business processes of economic value and commercial real community and be far away from speculation rabid or buying and selling debt and called Securitization which rejects Islamic banks.

This has led buying and selling mortgage debt in the United States and the world to the collapse of many international banks hear and be guided it has become the model in funding burden on these countries, by contrast, the Islamic banks are based on the principle of mutual profit and loss, which helps the growth of the economy and business processes real and the emergence of an economy based on a genuine partnership between the bank and the merchant.

The outlook for the growth of Islamic finance for optimism and star will continue to rise, and the continuing financial crisis, will help the growth of this sector more and will create a real opportunity for Islamic finance to play a role regionally and globally.
 souq uae

Egypt Islamic finance depends crane for its ailing economy

The Financial Times newspaper said that Egypt is heading to Islamic finance as a lever for its ailing economy, after it had been deliberately marginalized by the former regime, which rejected the application of development projects that carry an Islamic character.

islamic finance

The Gazette, in a report yesterday that the size of this sector in Egypt is estimated at about 100 billion Egyptian pounds, and is expected to grow by between 9% and 15% in the next three years. He said that he did not allow Islamic banks in the past only to provide personal finance products, mostly investment banks or traditional development offering Islamic services.

The bill allows for companies and banks to issue instruments after the approval of the Central Bank of Egypt, also allows the companies offering international and regional instruments to finance projects in Egypt.
The Financial Times explained that the party should source according to the draft law to opt for Islamic oversight committee has the right to determine the types of Shariah-compliant instruments, the Committee shall consist of three experts selected by the party's source of a roster of experts prepared by the Fatwa. The law recognizes nine types of instruments.
source: forex sniper pro