azerbaijan: emerging market islamic banking and finance

NEWS
NEWHORIZON October–December 2008
Pakistan encourages Islamic agriculture financing
The State Bank of Pakistan,
Pakistan’s central bank and
regulator, has drawn up and
issued new draft guidelines
which are intended to
facilitate Islamic (and
conventional) banks in
agricultural financing. The
guidelines cover most modes
of Islamic finance that can
be used to support farm and
non-farm sector activities, such
as agricultural implements,
farm mechanisation and
development, and transport.
The guidelines were prepared by
a taskforce which included
senior officials from the bank,
Shari’ah compliance advisers
and heads of agriculture from
private banks. They are
designed to help particularly
Islamic banks which are
extending their branch networks
into rural areas. Officials believe
that there has long been a
demand in agriculture for
Islamic finance. Dr Shamshad
Akhtar, governor of the State
Bank of Pakistan, also said
that Pakistan intends to launch
the country’s first ijara sukuk,
to increase liquidity in the
market, and to help the
government diversify its debts.
Indonesia issues first sukuk
Indonesia raised Rp4699 billion
($500 million) from its first
rupiah-denominated Islamic
bond issue. The figure was
just short of the target of
Rp5000 billion. The sukuk was
issued with seven and ten year
maturities, and it is thought that
it will pave the way for the issue
of foreign currency sukuk soon.
Total demand, according to
Rahmat Waluyanto from
Indonesia’s finance ministry, was
worth almost twice the figure
raised, but many applicants
wanted higher yields than those
on offer. Indonesia’s high
Qatari First Investment Bank
(QFIB), a new Islamic
investment bank, has been
awarded a license by Qatar
Financial Centre Regulation
Authority (QFCRA).
QFIB plans to become a
significant player in Qatar,
and harbours regional
inflation, at eleven per cent,
may have been a deterrent to
investors.
Islamic finance in Indonesia lags
behind that of its neighbour,
Malaysia, and Indonesia’s
finance minister, Sir Mulyani
Indrawati, indicated that the
sukuk issue was part of the
government’s efforts to help
the development of Islamic
finance in the country, as well
as diversify its fundraising
sources. The seven year bonds
were priced at a yield of 11.8
per cent, and the ten year bonds
at 11.95 per cent.
New Shari’ah-compliant
bank in Qatar
DIC already has interests in
Jordan through a $500 million
investment fund, and declared
earlier this year that it intended
to partner with DIB to set up an
Islamic lender in the country. It
has also partnered with Amlak
Finance to start a Shari’ahambitions
also. Phillip
Thorpe, chairman and CEO
of QFCRA welcomed the
establishment of QFIB stating,
‘we recognise the importance
of attracting major Islamic
financial institutions as part
of our aim of broadening
Qatar’s financial services
base’.
DIB to ‘convert’
Jordanian bank
Dubai Islamic Bank (DIB), the
world’s first fully-fledged
Islamic bank, has announced
plans to buy a majority stake
in Industrial Development Bank
of Jordan, with the intention of
turning the Jordanian institution
into a Shari’ah-compliant
business. The acquisition is
planned to be a joint venture
between DIB, Dubai
International Capital (DIC),
and Jordan Dubai Capital, and
will lead to an entity under the
name of Jordan Dubai Islamic
Bank, if all goes to plan.
compliant lending firm. Meanwhile,
DIB has already created
Shari’ah-compliant subsidiaries
in other countries, including
Sudan and Pakistan. Khaled
al-Kamda, group managing
director and CEO of DIB,
stated that the bank is ‘very
keen to expand its business
methods to countries throughout
the Arab and Muslim
world’.
In the meantime, another
Dubai-based Islamic bank,
Dubai Bank (which became a
Shari’ah-compliant financial
institution last year), is also
considering acquisitions worth
$5 billion in Africa and Asia.
Ahmed Elshall, Dubai Bank’s
chief financial officer, told
Reuters that the bank plans to
become a major Islamic lender
over the next five years.
To stay up to date with all the news in the Islamic financial
sector, visit the ‘Breaking News’ section of the NewHorizon
website at www.newhorizon-islamicbanking.com
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