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SECTOR REPORT
Islamic finance regulatory
developments point to positive
growth
This includes a number of European and other countries which
until recently have actively began to reform their tax, legal, and
regulatory frameworks in order to attract Islamic investments.
To date, there have been many new regulatory developments
international levels, and which only contribute to the strength
point the positive growth of the industry and that it will continue
on this impressive growth trajectory and is set to reach Us$6.5
trillion in total assets by 2020.
Egypt
and developments of 2013 takes us to Egypt which approved
February 2014
a new Sukuk law that will allow the country to tap a new source
Bank, Industrial Development and Workers Bank of Egypt, Export
Development Bank of Egypt and Barclays Bank Egypt, submitted
applications to the Central Bank of Egypt seeking Islamic banking
licenses.
Libya
to enact a new Islamic banking law by the end of 2012. The new
law was passed in May 2012 and further work has been carried
on to amend legislations in order to attract foreign investments
and stimulate the private sector following the civil war. On this
front, the Libyan authorities have been looking at several options
for Islamic banking services within the country; these include
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SECTOR REPORT
allowing conventional banks to operate branches or Islamic
banking windows and also permitting conventional banks to
resources still needs to be mobilized in Libya in order to activate
various institutions, such as insurance companies, Islamic funds
and investment instruments by the end of 2014 or the beginning
of 2015.
In January 2013, the Libyan government approved a law that
would ban all interest payments in Libya, in efforts to accelerate
the move toward an Islamic banking system in the country. This
law is expected to come into force in early 2015.
th
June 2013 the Islamic Financial Services
Malaysia
Act 2013 (IFSA) came into force, ushering in a new regulatory
and supervisory framework for Malaysia. The IFSA consolidates
the provisions of the Islamic Banking Act 1983 and Takaful Act
1984 which were also repealed, into a single piece of legislation.
and aims to provide the regulator with greater powers to counter
services sector.
As the Malaysian regulatory and supervisory framework enters
a new stage of its development, the IFSA will ensure the laws
Bahrain
institutions in Malaysia continue to be relevant and effective to
Master Investment Wakalah Agreement and related guidance
memorandum in June 2013. The Wakalah Agreement is a legal
their liquidity requirements through the Wakalah principal as
an alternative to the standard Murabahah currently used in the
market. The launch of the standard form Wakalah is the latest
standard form document published by the Bahrain-based IIFM,
pursuant to the launch of the ISDA/IIFM Tahawwut (Hedging)
in March 2010.
Oman
initiated the process by developing the required legislation and
The Bank of Muscat, Oman’s biggest bank by assets, received
a license to offer Shariah compliant services in early 2013. The
worth of conventional bonds and Sukuk in line with its budget
Sukuk issuance. Oman’s Capital Market Authority completed the
drafting of bylaw that regularizes the issuance of Sukuk and the
this development, the sultanate celebrated the issuance of the
Investment acted as the principal advisor, joint lead arranger and
joint lead manager for the Sukuk Ijarah on behalf of TDC.
institutions for the next ten to twenty years.
In Malaysia, the domestic bond market is the largest in
clear regulatory framework is required. In this regard, Malaysia
is expected to make amendments to existing laws and enact a
Netting Act to protect enforcement rights of “close-out netting”
contribute to a more robust derivatives market, thereby reducing
doing business in Malaysia.
Malaysia is expected to
make amendments to
existing laws and enact a Netting
Act to protect enforcement rights
of “close-out netting” under
the financial contract
Qatar
sectors in the world and its Sukuk issuance has been very
Sukuk issuance nations in the world in 2012. Islamic banks in
Qatar have continued to post positive results owing partly to the
directive issued by the central bank to disallow conventional
banks from offering Islamic banking products and services via
window operations earlier this year.
Index. The index is based on QE listed stocks of minimum free
was launched with the view to support the creation of a Shariah
industry with new developments taking place all the time. The
continue on a positive growth and will change to incorporate
more productive structure that are more innovation-driven and
knowledge intensive. The role of the regulator therefore will also
evolve in order to remain current with these changes. The regulator
will need to become an enabler of growth and development in
this very young industry. This will lead to increased predictability
consulting
and sound robust legal and regulatory framework.
www.IslamicFinanceConsulting.com
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singapore
businesses at the standard 12% rate, instead of the 5%
concessionary rate, from the 1st April 2013.
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can be contacted at [email protected] and whalan@azmilaw.
com respectively.
February 2014