CORPORATE GOVERNANCE: "Building Blocks of IF - Regulation & Shariah in Perspective", Public Lecture Attended!

On 25th January 2011, Amirul HM attended a Public Lecture held at the Securities Commission(SC) of Malaysia under the SC-UM Visiting Scholar Programme. The Lecture titled " Building Blocks of Islamic Finance: Regulation and Shariah in Perspective " was given by Dr. Volker Nienhaus from Germany.

Points raised were good eye-openers for attending participants. Amongst them:-
1) Are the so-called "Building Blocks" for Islamic Finance - actually "BUILDING" or, "STUMBLING" Blocks?
2) CITIGROUP & AIG - Debate in the USA as to whether they(the US Government) should have supported "Islamists" movement when bailing out Citigroup and AIG as it contained the Islamic Finance operations as well.

3)LOW Retail Penetration. Examples:-
A. UK - After 5years of operations, the Islamic Bank of Britain (bailed out by Qatar), only had 50,000 out of a potential 2.5million customers in UK. Hence, a penetration rate of ONLY 2%.
B. Malaysia - 20% of deposits in the banking system is in Islamic deposits. However, ONLY 20% of the 20% are from private individuals.

4)Disturbing trend of using TRADE contracts (e.g. Commodity Murabaha, Tawarruq are a combination of trade/leasing contracts. Also sukuk) for FINANCING purposes.
5)Growth of IF is driven by NON-Islamic banks offering IF products.
6)Fatwa's change of opinion is NOT documented or, Updated. Thus, edicts are not accessible in this age of Transparency & Corporate Governance.

7)Conflicts of Interest in certain Financial Institution's Syariah Council.Examples:-
A. Brothers or members of the same clan sit in the Council.
B. Syariah Advisors sits on the Syariah Council of banks who are competing in the same market segment and/or competing to launch the same product first.
C. "Closed Door" Club.
Example:- A Syariah Advisor from Bank B2 will sit on the Syariah Council of Bank A1 in exchange for introducing one of Bank A1 Advisor to sit in Bank B2 Syariah Council.
D. Syariah Advisors sits on too many Syariah Council. Realistically, how much time can they spent for a particular institution.

At the end of the session, SC's Managing Director Dato Dr. Nik highlighted the difficulties the SC have been facing in collecting and collating the deliberations of the Syariah Council of the respective financial institution in endorsing or rejecting IF products.

"HALAL FINANCING/ISLAMIC FINANCE by AHM" BLOG APPRECIATION:
I would like to put on record my appreciation to the Securities Commission-Islamic Capital Market(SC-ICM) and Mr. Wan Rahim for the kind invitation. It is my fervent wish that SC-ICM's invites me to future events and access to all the other Conferences and Forums as well.

Attended at TTDI, talk by Sheikh M.Nuruddin Marbu Al-Banjari Al-Makki on "RIBA dan Kesannya Terhadap Masyarakat".

Attended a talk by Sheikh Muhammad Nuruddin Marbu Al-Banjari Al-Makki on "RIBA & Kesannya Terhadap Masyarakat"(Riba and its Impact on Society) at Taman Tun Dr.Ismail-K.Lumpur on Sunday, 16 January 2011.



Sheikh M.Nuruddin's talk was a Good recap of the various riba i'd learnt many years ago in IIUM-PJ i.e. Riba Jahiliyyah,Fadl,Nasiah etc.

Also learnt interesting stories of Imam Ahmad and the stolen lamb and what happened subsequently for the next 7 years. Sheikh also pointed out the various categories/levels of riba prohibition in the Al_Quran from zero tolerance to multiple folds.



During Q&A Session, when asked as to whether Paper/Fiat Money is "halal" - Most currencies are "halal" as they are backed by a Guarantee and/or by Gold, Commodities & Other Currencies....with the EXCEPTION of the USD! GO Figure!

Attending Public Lecture on "ISLAMIC GOLD DINAR: MYTHS & REALITY" on 17 JAN. at BNM

UPDATE: 17 Jan. 2011. Please refer to DinarDirham Trade blog for Lecture Report.


Amirul HM is attending a Public Lecture on "ISLAMIC GOLD DINAR: Myths & Reality " to be held on Monday, 17 January 2011 (1000-1100hours) at the Auditorium - Bank Negara Malaysia, K.Lumpur. Lecture will be given by Prof. Dr. Murat Cizakca, a Professor of Comparative Economic History at INCEIF. Dr. Murat will present a thorough analysis of gold /silver coinage systems in history



Brief Report will be published at the GOLD DINAR & SILVER DIRHAM blog after the event.

Islamic Finance by AHM blog would like to thank INCEIF, ACIFP and OP Razali Ahmed for the kind invitation and updates.

ISRA blooms, wither INCEIF???

The Central Bank of Malaysia i.e. Bank Negara Malaysia(BNM) announced their new Syariah Council line-up for 2010/2013.

Amirul HM is quite surprised that nobody from INCEIF's faculty was named...."is it a slap on the wrist to INCEIF???"

Despite there being 2 members from ISRA (which is part of INCEIF), the fact that non from INCEIF is named to the board is a shocking revelation especially in view of the push by the powers that be to elevate INCEIF to a whole new level i.e. the premier Islamic Finance university/institution in the world....read, "the Al-Azhar, Harvard, Oxford or Cambridge of ISLAMIC FINANCE"

Am hopeful that this omission is an oversight by BNM considering that they have "easy" access to INCEIF's faculty due to INCEIF being their subsidiary and the amount that BNM have and about to pour into INCEIF rather than the announcement being a slap on INCEIF's faculty wrist. Am sure that the likes of Syed Othman, Syed Hamid, Saiful Azhar or even Obiyathullah would be able to add to the discourse.


The new Syariah Council consists of:-
# Tun Abdul Hamid Mohamad
- Former Chief Justice of the Federal Court, Malaysia;
# Tan Sri Datuk Sheikh Ghazali Abdul Rahman
- Shariah Legal Advisor, Attorney General Chamber;
# Dato’ Haji Hassan Haji Ahmad - Mufti of Penang;
# Dato’ Dr. Abdul Halim Ismail
- Executive Director of BIMB Securities Sdn. Bhd.;
# Dr. Mohd Daud Bakar
- Chief Executive Officer of Amanie Business Solutions Sdn. Bhd.;
# Prof. Madya Dr. Engku Rabiah Adawiah Engku Ali
- Associate Professor, International Islamic University Malaysia;
# Prof. Madya Dr. Mohamad Akram Laldin
- Executive Director of International Shariah Research Academy for Islamic Finance;
# Prof. Madya Dr. Ashraf Hashim
- Senior Researcher, International Shariah Research Academy for Islamic Finance;
# Dr. M. Anwar Ibrahim
- Vice Chairman, National Shariah Board, Indonesia Ulama Council;
# Dr. Aznan Hassan
- Assistant Professor, International Islamic University of Malaysia; and
# Dr. Rusni Hassan
- Lecturer, International Islamic University of Malaysia

2nd Global Islamic Finance Forum(GIFF 2010), Attended!

Attended the 2nd GLOBAL ISLAMIC FINANCE FORUM 2010 (GIFF 2010) at the Mandarin Oriental Hotel, Kuala Lumpur - Malaysia for 2 days i.e. from 25-26 October 2010. The theme for this year is " Islamic Finance: OPPORTUNITIES for TOMORROW ".

It was refreshing for me that the organiser chose to highlight another verse from the Al-Quran rather than the Al-Baqarah verse commonly used/associated with Islamic Finance during the Al-Quran recitation prior to the start of the Opening Ceremony.



It is not often that 3 speakers ( Malaysian Prime Minister cum Finance Minister 1, Governor of the Malaysian Central Bank & HRH the MIFC Ambassador) speak when opening a forum, no matter how distinguished they are. Hence, I can't help but feel a sense of deja vu when HRH Raja Nazrin (MIFC Ambassador) spoke at length on the Hijrah especially when he had spoken about it on a similar vein in the Inaugural Securities Commission - Oxford Centre for Islamic Studies(SC-OCIS) Forum in March 2010. Read SC-OCIS Forum 2010



For me the highlight of GIFF 2010 must be the signing of the Articles of Agreement for the Establishment of the International Islamic Liquidity Management Corporation (IILM). The Articles were signed by Eleven(11) Central Banks and Two(2) Multilateral Organisations. Whilst the impact of IILM on IF would not be felt immediately by the IF industry, trust me when I say that its reverberation and "green foot mark" would come in the months if not years to come.

Also, of significance are Remarks by Tun Dr. Mahathir (Malaysia's 4th Premier) and Tan Sri Andrew (Economic Advisor) on GOLD and its linkages to the World economy should be noted with circumspect.

All in it was a good forum as I caught up with some old contacts from the IF industry, friends and I'd made new friends as well...prominent amongst them is Senator Reverien Ndikuriyo from Burundi as its not often you get to meet representatives from Burundi in IF forums or Conferences.


"HALAL FINANCING/ISLAMIC FINANCE by AHM" BLOG APPRECIATION:
I would like to put on record my appreciation to the GIFF 2010 Secretariat for the kind invitation. It is my fervent wish that the GIFF Secretariat invites me to future events and access to all the other sessions as well.

"HALAL" Certificate for IF Instrument Proposed at 7th KLIFF!

Attended the 7th Kuala Lumpur Islamic Finance Forum (KLIFF 2010). Theme for this year is " ISLAMIC FINANCE: Authenticity, Innovation & Reach ".



The last session i.e. Session 7 for KLIFF 2010 is "SHARIAH Session".
Panel members consists of Sheikh Essam Ishaq (Bahrain),Dr. Mohammed Abdul Rahim Sultan (UAE), Dr. Mohd Daud Bakar (IIIF-Malaysia)and Dr. Engku Rabiah Adawiah (IIUM-Malaysia) . Assoc. Prof. Akram Laldin (Executive Director, ISRA) was the Moderator.

During Q&A for the last session titled "SHARIAH DIALOGUE"....I was given the privilege of asking the first question to the panelists during the second round of questions.



I'd suggested that since there are Halal Certificates for the food industry, why can't a similarly modified "Halal" Certificate along the lines of the 4 mazhabs be introduced for IF instruments/issues.

Elated that my Suggestion for a "Halal" Certificate for Islamic financial instruments and/or issues along the lines of the 4 mazhabs(as opposed to a general Syariah Council ruling) were received favorably by the Shariah Panelists...even from Middle East scholar Sheikh Essam Ishaq from Bahrain. Dr. Engku Rabiah even said that this will make the IF instrument even more transparent.

Dr. Akram Laldin-ISRA's Executive Director/ Session Moderator even asked me to clarify further my proposal from the floor. I clarified further my earlier question/suggestion by saying - " IBF products/contracts popular in certain countries or regions like the Al-Bai' Bithaman Ajil (BBA) can still be marketed and securitised as they appeal to a niche set of Muslim investors. Hence, the differences in opinion can be used to grow the industry even further as certain individuals/funds will still invest as long as the instrument/contract complies to a just one sect or mazhab."

I'd earlier touched on this Halal Certificate matter in my earlier blog posting on 19th May after attending the 6th WIEF when suggesting the introduction of the " IBF Compliance Certification "

TQ Shariah Panelists for the positive responses and CERT for the kind invitation

4th International Islamic Capital Market Forum, Attended!

Attended the 4th International Islamic Capital Market Forum with the theme " Sukuk: Transferring the Best Practices " at the Securities Commission, KL.




It was good to receive updates on the sukuk. It can be said that negative conotations like "arbitrage" between Islamic and conventional finance and "helah fiqqiyah(legal devices)" is starting to creep-in or is rampant...depending on who you talk to!



Good to have met up with my former Islamic Jurisprudence lecturer whilst doing my PDIBF in IIUM i.e. Prof. Hashim Kamali (now the founding CEO of ISRA) and also my former Syariah Advisor whilst I was with EON Finance Berhad/EON Bank Group i.e. Dr. Mohammad Deen Mohd Napiah ( now Maybank Islamic Syariah Advisor). Also, IF practitioners like Wan Rahim (SC), Ust. Nurdin(SC), Afifudin (OSK), Wan Rizaidy (Bursa)and others.

Looking forward to the 5th International Islamic Capital Market Forum



BLOG APPRECIATION:
TQ to SC's Islamic Capital Market & SIDC for the kind invitation.