Nakba, the Palestinian catastrophe (1948) - Islamic Finance

Credit crunch may spur Islamic financial system

nospam@example.com (Waheed) — Wed, 05 Nov 2008 21:46:35 +0000

Doha (ANTARA News) - The fast growing Sharia financial system may receive a further boost as an alternative to capitalism amid the credit crunch and banking crisis, Islamic academics and clerics believe.

Already said to be worth 400 billion dollars and expanding at 15 percent a year, the Islamic system forbids the levying or payment of interest, preferring shared ownership and splitting of profits.

The global economic meltdown shows "the need for a radical and structural reform of the global financial system. The system based on the principles of Islam offers an alternative which could reduce risks," Hatem al-Naqrashawi, head of theological studies at Doha University, told AFP.

"Islamic banks don't buy credit but manage concrete assets... which shelters them from the difficulties that American and European banks are experiencing," explained Abdel Bassat al-Shibi, managing director of Qatar International Islamic Bank.

Islamic finance is different from capitalism in two main ways. It bans interest-bearing loans, seen as usury, a practice forbidden by Islam, and also forbids speculation. Instead, it favours sharing risks and profits between a bank and a client.

Sharia compliant products include Ijara, a way of buying a house through a lease and subsequent ownership, rather than through a mortgage. Others are Musharaka, the sharing of profits and losses, and Murabaha, under which the seller declares the profit margin being made on the sale of a commodity.

Murabaha is seen as a way of enabling a buyer to avoid taking an interest-bearing loan, though some Islamic scholars say it is too similar to the charging of 'riba', or interest.

In the past three decades, the number of Islamic financial institutions has risen above 300, spread among 75 countries. Their total assets are more than 300 billion dollars and are growing an at average rate of 15 percent a year, according to studies.

"The collapse of capitalism based on usury and paper and not on the trading of goods on the market is proof that it is in crisis and shows the Islamic economic philosophy is holding up," prominent Egyptian-born Qatar-based cleric Sheikh Yussef al-Qaradawi told a recent conference in Doha.

"We have all the wealth... the Islamic nation has all or nearly all the oil and we have an economic philosophy which no one else has," he said, referring to the fact that Islamic countries, headed by Saudi Arabia, hold a large part of the world's proven crude oil reserves.

Suleiman al-Audah, an influential Saudi cleric, called for an "international Islamic summit to define the framework and the stages of an Islamic economic alternative."

Some Islamists admit, however, that this alternative is not yet operational.

"Theoretically, the Islamic economic system offers a complete and solid mechanism... but in practice, the Islamic banking experience is not yet mature, because it offers limited products like 'Murabaha'," Audah, a moderate Islamist, told AFP.

His caution is shared by Egyptian Islamist intellectual Fahmi Howaidi, for whom the Islamic system "could bring solutions to certain banking problems but cannot be a magic wand" to end the financial unheaval which is shaking the world.

Islamic Finance Qualification launches in Singapore

nospam@example.com (Waheed) — Tue, 12 Aug 2008 19:37:23 +0000

On Wednesday, SII confirmed Singapore as its first choice for the regional launch of the IFQ. The Institute is also working with financial services regulators throughout the Middle East including all the Gulf Corporation Council countries (GCC).

Praesidium PTE, a subsidiary of Dubai based Praesidium LLP has been appointed as the first SII Accredited Training Provider offering the Islamic Finance Qualification (IFQ) in Singapore. "Singapore could become a very important player in Islamic Finance. The Government has put in place interesting initiatives to support the industry. Our decision to be in Singapore is to compliment those very initiatives and help in training and educating the market," said Mr. Sagheer Mohammed, Founding Partner of Praesidium.

"The launch of the SII Islamic Finance Qualification from Singapore provides the perfect tool for consumers in the region to gain the prerequisite background to assess wholesale instruments, such as Sukuk, Islamic Bonds or retail products such as Islamic mortgages," said Mona Poomy MSI, Executive Vice President, SII ASEAN.

Birmingham wants a piece of the market

nospam@example.com (Waheed) — Tue, 12 Aug 2008 19:36:44 +0000

Britain's second largest city Birmingham is eagerly rebranding itself as a key European centre for retail Islamic finance, according to Reuters.

Britain sees itself as the European leader in providing sharia-compliant financial services, aiming to serve both domestic Muslim markets as well as tapping into the vast wealth of Gulf investors keen to access Western assets.

London dominates Britain's financial sector but, with a growing Muslim population of about 250,000 and two flights a day to Dubai, Birmingham seems well-placed for the new sector.

"It's like in America's Silicon Valley -- you will get clusters of expertise in certain areas," said Stephen Amos, spokesman for the Islamic Bank of Britain (IBB).

"The two areas of expertise are always going to be London ... and hopefully Birmingham."

At a conference on Islamic banking this week in London -- where the British government again repeated its intention to issue its own sukuk Islamic sovereign debt in future -- promoters from the region were pushing the city's case. "Birmingham is generally acknowledged to have developed expertise in this emerging market, and we have a very well-rooted, successful Muslim community in the city," said Mike Loftus, from Locate in Birmingham, a government body promoting investment in the city.

Islamic finance industry to hit $1 trillion by 2010

nospam@example.com (Waheed) — Tue, 12 Aug 2008 19:35:11 +0000

The Islamic finance industry will be worth $1 trillion by 2010, delegates to a top Islamic finance conference were told. The prediction was made by Kuwait Finance House-Bahrain managing director, Abdulhakeem Alkhayyat, whose bank was the Platinum Strategic Partner of the first Annual World Islamic Banking Conference: European Summit (Euro WIBC 2008) in London.

"KFH-Bahrain is strategically positioned and adopts a pivotal role in the growth of Islamic banking," he said.

"Islamic banking assets are currently estimated at $750 billion in value and will top the $1trn mark by 2010. This continuous expansion is being driven by an increased global demand for Sharia-compliant financial products and services.

"The conference provided a unique and high profile platform for the advancement of the global Islamic banking industry in general," Mr Alkhayyat said.

"The exchange of ideas at the conference contributes to the growth of our knowledge, and inspires excellence throughout our work. The Euro WIBC was an excellent forum for discussion and the setting of standards for the conduct of the Islamic financial business.

"The occasion also provided the opportunity for direct interaction with key scholars and experts from the Islamic financial industry, which will contribute highly towards establishing professional relationships and laying foundations for future collaboration.

"With indications of an exciting growth potential for Islamic finance in Europe, Euro WIBC could not have come at a more opportune time as the industry stands on the threshold of significant expansion," he added.

Forex Currency Trading

nospam@example.com (Waheed) — Thu, 06 Dec 2007 13:58:58 +0000

Q.) Is Forex Currency Trading halal? I have attached a document detailing the aspects of the business.

A.) I went throught the papers sent by you. I am of the opinion that these transactions are not compliant with Shariah. The very condition that you cannot take delivery of the purchased currency makes it impermissible. Morever, there are other elements according to my knowledge that makes this trade unlawful in Shariah, such as, forward sales, short sales etc. This is in addition to the fact that the currencies are originally a medium of exchange and should only be exchanged for personal use in different countries. To make them a tradable commodity only for earning a profit is also against the basic philosophy of Islamic economics. I would therefore not advise you to indulge in this trade.

Islamic Bank of Britain celebrates 3 years

nospam@example.com (Waheed) — Mon, 01 Oct 2007 16:13:48 +0000

Islamic Bank of Britain is now celebrating its third year of success. The Bank has grown to eight branches across the UK and is offering comprehensive telephone and online banking services around the clock.

IBB has met the public expectations and established a reputation for pioneering achievements in the UK banking industry. It was the first bank to offer Halal Current and Savings accounts, Halal Personal financing and Business banking, bank accounts specifically designed for Masjids (Mosques) and Halal Commercial Property Finance using shared-ownership principles.

The Bank has also sponsored the "Muslim Power 100" initiative, which recognises the contribution Muslims have made to the social, economic and cultural well-being of modern Britain.

Sultan Choudhury, Commercial Director at IBB, commented: "The Muslim community in Britain contributes over £31 billion pounds to the British economy each year. This illustrates that Muslims are enjoying the opportunities for success available in modern Britain. IBB is here to help the community continue to achieve in the world of business in harmony with the ethical principles of Islamic Finance".

Today, Islamic Bank of Britain is a well-established brand in the UK and is seen as a model for those wishing to establish Islamic banks in other Western countries. A new milestone – 40,000 customers – was reached. The bank is still unrivalled as the only Islamic Bank on the UK’s high streets.

The success of IBB is equally shared by the customers who have grown with the Bank. Birmingham-based Shabir Nawab an accountant by profession, has been a customer of IBB since the inception of the Bank. He says: "IBB has taken care of my banking requirements in the last three years. With Islamic Bank of Britain I have the peace of mind that my money is invested ethically in line with my religious beliefs. IBB has always provided me with personalised services and is always there for me."

Verification of Endorsement

nospam@example.com (Waheed) — Tue, 15 May 2007 10:36:47 +0000

By Mufti Taqi Usmani
Posted: 4 Rabi ul-THANI 1427, 22 April 2007

Q.)A lot of banks offering halal option mortgages have Mufti Taqi Saheb's name to endorse their products. However a few 'ulema from England (where I live) advised that some products were endorsed, with his name on the product, however he has decided to remove his name. Some state that he still agrees with the product but has taken his name down for other reasons. In short, which products from Al-Buraq, Islamic Bank of Britain, and Ahle United are still endorsed/approved by Mufti Taqi Uthmani? Look forward to your reply, as many in the UK are unsure.

A.) I have approved the products of Ahli United and HSBC Amana, but no other house financing product. I have left Islamic Bank of Britain before it came into operation.

Arab world focus on growth in the region

nospam@example.com (Waheed) — Sat, 14 Apr 2007 07:21:59 +0000

Over 150 top policy-makers, business leaders and public figures from the Arab world gathered in Doha, Qatar on 9-10 April for the Arab World Competitiveness Roundtable.

The participants at this exclusive regional meeting of the World Economic Forum discussed how to sustain the momentum of growth in the Arab world.

The programme of the two-day meeting focused on three sectors of Arab economies – travel and tourism, healthcare and insurance services – and discussions on the wider regional environment, including the growing role of Iran, future evolution scenarios for the Gulf Cooperation Council (GCC) region and the challenges ahead for the new generation of Arab companies that are growing globally.

"As Arab countries continue to make significant progress in getting the market fundamentals right, liberalising trade and encouraging private investment, a new generation of Arab companies is emerging as global players. The next challenge for Arab corporations will be to develop their own risk management know-how in order to sustain their capacity to compete. The Roundtable will dedicate a session where CEOs and experts will take stock of the types of risks Arab corporations are, or will be, facing and explore the alternative risk mitigation techniques that would be suitable for them," said Sherif El Diwany, Director, Head of Middle East, World Economic Forum.

On this occasion, the World Economic Forum will launch its third Arab World Competitiveness Report, which is intended to support policy-makers and business leaders alike in their endeavour to enhance competitiveness in the region.

This year’s report has expanded coverage to 13 Arab economies – Algeria, Bahrain, Egypt, Jordan, Kuwait, Libya, Mauritania, Morocco, Oman, Qatar, Syria, Tunisia and United Arab Emirates.

"The report contains a number of policy recommendations that governments can take up directly. They can use the rankings to get an overview of competitiveness in specific Arab countries as well as what the business sector thinks about the competitive environment," said Margareta Drzeniek Hanouz, Senior Economist at the World Economic Forum and co-author of the Arab World Competitiveness Report 2007.

Another highlight of the meeting is a televised debate on Tuesday on Al Jazeera television, the official host broadcaster of the meeting.

The debate, part of the official programme, will analyse whether Iran’s economic and political relations with the Gulf Cooperation Council (GCC) have a positive impact on the business environment in the region.

Muslim world's top businesses continue growth

nospam@example.com (Waheed) — Tue, 06 Feb 2007 11:08:13 +0000

An annual ranking of the top 100 businesses in the Muslim world showed a healthy aggregate revenue growth of 37% over the previous year revealing a healthy growth for Muslim economies.

Dinar Standard, a business strategy e-magazine, released the findings. According to the press release, Integrated Oil & Gas companies led the growth in revenues at 42% over the year before, but were closely supported in strong performances by the construction (+36%), food processing (+30%), transportation (+23%), and telecom (+20%) sectors.

The Turkey based food processing global brand, Ulker showed the highest revenue growth at 83% compared to the year before, however the Malaysian auto manufacturer Proton, marred by local competitive woes, recorded the biggest drop at -8% in revenues.

The purpose of the DS100™ is to present as close a picture as possible of the corporate environment in OIC (Organisation of Islamic conference) member countries. It continues to include Government and Private enterprises, for whom data was verified through public sources, to reflect their disproportionately significant role in the economies of the Muslim world.

At the same time, more than half of the list is comprised of publicly listed companies (55 of the 100) representing the growing public markets of the Muslim world.

The editor of Dinar Standard, Rafi-uddin Shikoh said, "This year's ranking shows a continued strengthening of OIC member states' economies.

"There is visible growth in professional business and competitiveness related events and benchmarking tools in the major economies of OIC member states,’’ he added.

Saudi Aramco, the world's top oil producer, continues to lead the DS100™ as the largest business enterprise of the Muslim world with an estimated 49% rise in its revenues from the previous year showing the continuing dominance of the Energy sector on the ranking.

Turkish companies continue to lead the list with 26 represented enterprises, followed by 17 from Malaysia, 15 from Saudi Arabia, and 10 from Indonesia.

The complete DS100™ list can be viewed at www.dinarstandard.com

Malaysia unveils second city project

nospam@example.com (Waheed) — Wed, 08 Nov 2006 11:43:42 +0000

Malaysia has unveiled a $105 billion blueprint to turn the area around its second-largest city into a prosperous Asian metropolis.

The government is to pump the money into a 2,200sq km development area of Johor Baru which will contain a hi-tech park, logistics and industrial precincts, an educational park, regional hospitals, a marina, waterside villas, theme parks and gated residential communities.

The government will also create free access zones in certain areas in Johor where visitors from Singapore can live and work.

There will be no immigration and customs check for entry into these zones which will be guarded by surveillance systems and barriers.

Abdullah Ahmad Badawi, the prime minister, keen to boost a slowing economy and his own political support, said on Saturday that the government would set up a central planning body to oversee 20 years worth of projects to transform Johor Baru and its surrounds.

"We mean business," he told a crowd on city's foreshore, overlooking the island state of Singapore, whose rapid economic success over 30 years has mocked Johor Baru's failed ambitions.

"Our vision is to make south Johor the new international address for business, investment, leisure and culture."

Abdullah said investment of $13 billion would be needed in the first five years from 2006-2010 to build roads and other infrastructure required to set the stage for an influx of private investment, which is expected to come largely from Singapore.

The government estimates $105 billion of investment will be required over 20 years to meet the projected growth target of eight per cent per annum for the region.

The Economic Challenge for the Ummah

nospam@example.com (Waheed) — Mon, 12 Jun 2006 18:09:16 +0000

[Condensed from a talk by Justice Mufti Taqi Usmani, delivered at the International Conference of the World Muslim Congress.]

The nineteenth century was a century of political oppression whereby the powerful Western nations enslaved most of the Asian and African nations including a large number of Muslim countries. The present century, which is nearing its end, has witnessed the gradual independence of these countries from Western imperialism. However, despite our apparent success in achieving the goal of political liberty, we could not succeed in acquiring independence on intellectual, economic and strategic levels. That is why Muslim Ummah could not yet reap the fruits of its political freedom.

Now the Muslim world is looking toward the coming century with hope that it will bring for it total independence in the real sense so the Muslims may find their due place among the nations of the world and may be free to live according to the Quran and the Sunnah of the Prophet, Sall-Allahu alayhi wa sallam.

However, this hope cannot be realized through wishful dreams. We will have to work hard for our total freedom even more than we did for our political freedom. We need a total revision of our strategy, a well-considered plan, a collective resolution, and a revolutionary approach.In this paper, I would like to confine myself to two major issues.

Self-Imposed Dependence

It is common knowledge that Ummah's basic economic problem is the dependence of the Muslim countries on others. Most of the them are borrowing huge amounts from the rich Western countries. Some countries are incurring these heavy interest-bearing loans not only for the development projects, but also for their day-to-day expenses, and what is more serious, for the payment of interest accrued on their previous loans which keeps the size of their indebtedness ever-increasing through a vicious circle.

Dependency on foreign loans is the basic disease of our economy that has not only shattered our economic life, but has also devastated our self-determination and has forced us to submit to the demands of our creditors, sometimes, at the price of our collective interests. It is no secret that the creditors impose their own conditions before they advance a loan. These conditions keep us under a constant foreign pressure, often stop us from pursuing our own objectives and force us to follow the policies dictated by others. The evil consequences of dependence on foreign loans are too obvious to need any further elaboration.

Islamic teachings consider "Indebtedness" as a detestable phenomenon, which should not be resorted to except in cases of extreme necessity. The Prophet, Salla-Allahu alayhi wa sallam, even refused to offer the funeral prayer for a person who died before paying back his loan.

Moreover, the Muslim jurists have discussed whether it is lawful for the ruler of a Muslim State to accept the gifts offered by a non-Muslim. The answer: It is lawful only where the acceptance of gifts does not result in any kind of pressure against the interest of the Ummah.

Islamic principles require that the Muslims should avoid incurring foreign debts, even if they face some hardships. But our present indebtedness was not created by lack of resources. In fact, the Muslims have never been so resource-rich. They own enormous natural resources. They occupy important strategic positions on the globe. They are joined together by a geographical chain from Morocco to Indonesia, broken only by India and Israel. They produce nearly 50% of the oil of the world. They are said to account for more than one third of the world's export of raw material. What is more, the cash they have invested in the western countries alone may be more than sufficient to set off their total liabilities.

According to a recent report of Islamic Development Bank, the total external debt of the IDB member countries in 1996 amounted to 618.8 billion dollars. The deposits and assets kept by the Muslims in the Western countries are said to be much more than this amount. Obviously, there is no authentic record of such deposits, because their owners do not disclose them. However, the economic experts have estimated them to be between 800 and 1000 billion dollars, out of which 250 billions are said to be taken back by the Arabs to their own countries after the Gulf War. Practically it means that we are borrowing a part of our own money at a high rate of interest.

Even if these estimated figures are taken to be exaggerated, one can hardly deny the fact that had these huge amounts been kept and properly used within the Muslim world, the Ummah would have never resorted to incur the debt of more than six hundred billion dollars.

Our dependence on foreign loans is self-imposed for which we cannot blame anyone but ourselves. We did never probe in to the factors underlying the flight of our capital. We did never try to remove those factors and instill confidence in our own people. We could not deliver ourselves from the corrupt and oppressive system of taxation. We were not able to create a peaceful atmosphere for investment. We could not provide our countries with stable political system. We did not bother to create opportunities for the sound utilization of capital and, above all, we failed to mobilize the spirit of Islamic unity and to activate the strength of the Muslim Ummah as a whole.

The tragic situation cannot be corrected by expensive celebrations at the advent of the new century. We will have to take the challenge of time seriously. Our economic and political leadership will have to find ways and means to free ourselves from dependence on foreign countries. We already have the basic resources for that. All we need is to design new policies to utilize the wealth of the Ummah within the Muslim world, and to develop the concept of Islamic brotherhood and mutual understanding and cooperation.

The Quran says: "All the Muslims are brothers." Quranic injunctions and the Prophetic teachings require that the Muslim Ummah should act as a single body. The geographical barriers should not divide them into different nations with conflicting objectives. The political boundaries may only be tolerated for the internal administrative affairs of each country, but all the Muslim countries must have a united face at least with reference to the common objectives of the Muslim Ummah vis-à-vis the rest of the world.

Gone are the days when technical know-how was the monopoly of a few Western countries. Now, the Muslim talent is capable of at least handling the immediate requirements of the Ummah. What we need is to seek this talent, and to put it to the service of this Ummah with a missionary zeal.

But all this requires the unified efforts from the leadership of our countries. This is the biggest challenge faced by them. They must meet it, not only for the betterment of the Ummah, but for their own survival. A great responsibility, in this respect, lies on the shoulders of OIC, which should take the initiative and create a Muslim talent pool to design new policies for the Ummah as a joint body.

Restructing our Economic Systems

The twentieth century has witnessed the rise of communism, the conflict between capitalist and communist countries and lastly the fall of communism. The capitalist Western countries are celebrating the fall of communism as if it was an empirical evidence of their own victory, not only on a political front but also on ideological plane. The fact is, however, that communism was based on an emotional reaction against some evil consequences of the capitalist economy, specially, against the element of inequitable distribution of wealth, which has been experienced in the capitalist countries throughout the centuries. The failure of communism was not due to its justified criticism of the evils of capitalism. Rather it was caused by the inherent defects of the alternative system suggested by it. The capitalist economies still suffer from inequities in the distribution of wealth. There is still a large gap between the haves and the have-nots and 'poverty in the midst of plenty' is still the major problem of their economy. These are the real problems created by capitalism and unless they are satisfactorily solved, it may give birth to another reaction that may be more aggressive than communism.

The world, therefore, is badly in need of a Third Economic System. The Muslim Ummah can work out this system based on the Islamic norms. The economic principles taught by the Quran and Sunnah of the Prophet (Sall-Allahu alayhi wa sallam) are quite capable of solving the major economic problems faced by the world today. While they allow private ownership and market economy, they also provide a well considered system of distributive justice, which may eliminate the inequities and bring about a system in which profit motive works with the collective interest of the society. The basic fault of communism was that, frustrated with the inequity of capitalism, it assailed the very institutions of private ownership and market forces and developed a utopian idea of planned economy which was unnatural, artificial and oppressive. The denial of individual liberty curtailed the zeal for production and the wide powers of the state left the destiny of the people in the hands of the ruling class.

It was neither private ownership nor the institution of market forces that was the basic cause of injustice in the capitalist system. The basic factor for creating inequities in the capitalist countries was the absence of a criterion to differentiate between just and unjust earnings. The instruments of interest, gambling, speculative transactions and the tools of exploiting immoral desires of the consumers to secure huge profits were allowed, which tend to create monopolies and in turn paralyze the forces of demand and supply or at least obstruct their operation. It is thus ironical that the capitalist theory on the one hand asserts the principles of lassiez-faire but, on the other, by allowing the aforesaid instruments, interferes with their natural function and stops the market forces from playing their due role by creating monopolies that impose their arbitrary decisions on the bulk of the common people.

The system of interest favors the rich industrialists who benefit from the wealth of the common people who deposit their savings in the bank, and after making huge profits do not allow the common people to share these profits except to the extent of a fixed rate of interest that is again taken back by them as it is charged to the cost of production. At macro level, it means that these rich people always use the money of depositors for their own benefit and in reality pay nothing to them because the interest payments are always added to the cost of production. Similarly, gambling is a major instrument for concentrating the wealth of thousands of men in a few hands and for promoting the disastrous motive of greed for the unearned income. The speculative transactions are also a major source of disturbing the natural market operations and contribute to the inequities in the distribution of wealth.

Islam not only allows the market forces but also provides mechanism to keep them operative with their natural force without their being hindered by monopolies. It applies two types of controls on the economic activities.

First, it subjects the process of earning to certain divine injunctions, which clearly define the limits of halal and haram. These injunctions tend to prevent monopolies and curb the unjust and immoral earnings and commercial activities detrimental to the collective interest of the society. In the context of modern economic needs where the savings of the common people are activated to boost development, the use of the Islamic instruments like musharakah and mudarabah, instead of interest, may make the common people directly share the fruits of development which may bring prosperity in a balanced manner reducing the gap between the rich and the poor.

Second, the institution of zakat, sadaqat, and certain other financial obligations provide that even the halal income is again distributed to the persons who could not earn enough due to insufficient market opportunities. Through the twin controls, the wealth is kept under constant circulation and the chances of its concentration are almost eliminated.

But our main tragedy is that the principles of Islamic economy are still in theoretical form for which no living example is available. The Muslim countries have not tried to structure their economy on Islamic basis. Most of them are still following the capitalist system and that too in a half-baked manner, which has made the economic atmosphere much worse than that of the developed capitalist countries. Unfortunately, despite having the clear cut Islamic injunctions, the inequities existing in Muslim countries are far more severe than in the Western world.

This tragic situation cannot last forever. If we are not prepared to mend our ways, some natural process of revolution is bound to find its way. If we want to avoid disastrous consequences of such revolution, we'll have to restructure our economic system on the basis of clear guidance provided by the Qur'an and Sunnah. Our success in setting an example for implementing the Islamic principles will be our best gift to the human fraternity at the advent of the new century. I hope that if the principles of Islamic economy are implemented sincerely, we'll find the world more receptive to them today than we experienced it in the past.

Pakistan stock boom fuels fears

nospam@example.com (Waheed) — Sun, 07 May 2006 20:45:25 +0000

Three years ago it was the world's best performing index, and Pakistan's stock market has grown more than tenfold since the end of 2001.

But the astronomical increase has prompted stakeholders and analysts to wonder whether the Karachi Stock Exchange (KSE) can sustain that growth, while lax regulation has raised questions about money laundering.

"There is no difference between the stock market and a casino and the gain we see all seems fictitious and engineered," said Abid Sulheri, of Pakistan's Sustainable Development Policy Institute, an independent economic watchdog.

Shahid Javed Burki, a former World Bank vice-president, last month warned that Pakistan was facing symptoms that preceded the 1994 Mexican financial crisis.

These include a big current account deficit, weak banking system and what he called excessive speculative business activity.

Caution

Separately a Merrill Lynch report late last month advised investors to slash their holdings in Pakistan's stock market by two-thirds.

The words of caution come at a time when the KSE is worth a total of $56 billion - 25,000 times what it was when the market was founded in 1950.

In 2003, its growth of 110% made it the biggest gainer in the world. In the following year it increased by 65% and in 2005 it further rose by 55%.

Independent economists and observers attribute this rise to reckless speculation, coupled with allegations that some groups have been manipulating the market.

"The Pakistani market is a sheer speculative market and governed by some groups or influential individuals having inside information," said Qazi Masood, professor of public finance at Pakistan's Institute of Business Administration.

Market manipulation

The experts point to the fact that private sector companies raised a record 410 billion rupees of credit from banks last year, despite the state bank's efforts to curb borrowing by raising interest rates.

In contrast, the floating of bonds, which are more stable than stocks, remains almost non-existent.

Recent sell-offs of several state-run giants, mainly in the energy sector, have also "artificially jacked up" the market, Masood added. Such initial public offerings now account for more than $17 billion of the market's total.

The World Bank's Burki last month also cited what he called a "casino culture" fuelled by easy credit in Pakistan. He further disputed an assessment by Shamshad Akhtar, the first woman to lead Pakistan's central bank, that Pakistani banks were in reasonably good shape.

Pakistan's largely undocumented economy also provides opportunities for money laundering, analysts say.

"There is no documentation of losers and gainers and this has made the stock market and the real estate business the most attractive venues now for whitening black money," Sulheri said.

Unsuspecting victims

Small investors have often been the victims of this speculative trading.

In March 2004, hundreds of them rioted after the exchange stopped them from selling their loss-making holdings for a week in a crashing market.

Investigations showed the market was being manipulated by "someone big" so shares could be bought cheaply from desperate small holders.

Mutual funds, regarded as the safest investment mode for small investors, have not developed in Pakistan despite some being listed as far back as 1967, analysts say.

The funds account for a mere 2.5% of gross domestic product in Pakistan, compared with 28% in India.

Analysts said strong regulation was needed to steady the market. Reforms initiated in 1997 under the Asian Development Bank (ADB) assistance have not worked yet, they said.

"Despite the reforms and other measures the market has been not matured enough to lead investment - rather it is still led by speculators and collusion of the cartels making short-term profits," Masood said.

Kingdom, Singapore to Expand Ties

nospam@example.com (Waheed) — Thu, 13 Apr 2006 20:42:50 +0000

Saudi Arabia and Singapore intend to establish a long-term economic partnership and expand their cooperation in the energy sector, according to a joint communiqué issued at the end of Crown Prince Sultan’s three-day visit to Singapore.

“Crown Prince Sultan and Prime Minister Lee Hsien Loong discussed ways of strengthening bilateral relations and achieving a long-term, comprehensive economic partnership,” said the communiqué.

Sultan, the first and highest-ranking Saudi official to visit Singapore, arrived here on Monday with a high level delegation and met top officials including President S.R. Nathan, Minister Mentor Lee Kuan Yew and Defense Minister Teo Chee Hean.

The visit saw the signing of four landmark agreements for promoting general cooperation; for enhancing political consultation between the two foreign ministries; for the promotion and protection of mutual investments; and for the setting up of a Saudi-Singapore Business Council and the opening of a Saudi Arabian General Investment Authority (SAGIA) office in the country.

The two countries emphasized the need for resolving international and regional disputes on the basis of UN resolutions as well as for promoting peace and dialogue between nations.

In this respect, Singapore supports the statement made by Custodian of the Two Holy Mosques King Abdullah condemning the idea of a clash of civilizations and calling for peaceful coexistence of all civilizations based on respect for one another.

“Sultan and Premier Lee supported the dialogue between Asian and Middle Eastern countries and expressed their satisfaction at the progress of relations between the two sides, boosting constructive cooperation and understanding,” the joint communiqué said.

Saudi Arabia and Singapore reviewed the benefits of free trade and regional trade agreements and agreed to enhance their cooperation and coordination within the framework of the World Trade Organization (WTO) and regional economic groups.

Referring to Middle East peace, the two countries called for a just and comprehensive solution to the Palestinian issue based on UN resolutions and the Arab peace plan, proposed by King Abdullah and approved by the Arab Summit held in Beirut in 2002.

The two sides vowed to continue their cooperation to combat terrorism, considering it an epidemic that threatens security and stability throughout the world. Singapore backed the resolutions passed by the international counterterrorism conference held in Riyadh last year along with King Abdullah’s proposal to establish an international counterterrorism center.

Sultan supported the plan to sign a free trade agreement between Singapore and the Gulf Cooperation Council which groups Saudi Arabia, Qatar, Bahrain, Oman, Kuwait and the United Arab Emirates.

Singapore underscored the leading role played by Saudi Arabia to stabilize the international oil market. Sultan said the Kingdom would continue to play a leading role in stabilizing the oil market, adding that it has launched a $50 billion program to increase output to 12.5 million barrels per day by 2009.

Sultan has welcomed Singaporean companies and businessmen to invest in the Kingdom’s key sectors such as desalination, power generation, gas exploration, minerals, air transport, airports, seaports, services and telecommunications.

Minister for Defense Hean called on Prince Sultan yesterday afternoon. Teo later hosted a lunch for Prince Sultan and his delegation.

Teo noted the growing relationship between Saudi Arabia and Singapore, and agreed that the bilateral relationship would grow stronger with the current visit of Prince Sultan. They also reaffirmed the need for closer engagement between Asia and the Middle East.

The meeting underscores the friendly defense ties between Saudi Arabia and Singapore. The Royal Saudi Armed Forces have attended the Command and Staff Course conducted by the Singapore Armed Forces. There is also a regular exchange of visits by both armed forces for defense exhibitions and professional events. Such interactions help to foster mutual understanding and enhance the relationship between the two armed forces.

Sultan arrived in Singapore on the second leg of an Asian tour that will also take him to Pakistan. Last week, he visited Japan, the Kingdom’s second largest trading partner after the United States, and met Emperor Akihito and Prime Minister Junichiro Koizumi. The crown prince’s foreign tour concludes with a state visit to Pakistan that begins on Saturday.

Also yesterday, Prince Sultan donated $1.5 million to three Islamic organizations in Singapore. He gave $500,000 to the Supreme Islamic Council, a government body that oversees the activities of all Islamic organizations in the country, to establish an Islamic school. The Association for Islamic Propagation and the Muhammadiya Association also received $500,000 each to carry out their Islamic, social and charitable activities.

Jeans tailor-made to fit Muslims hits European market

nospam@example.com (Waheed) — Sat, 01 Apr 2006 15:55:09 +0000

Forget about Levis, Benetton, Calvin Klein or Diesel- a new brand of jeans is set to become a hot trend among Muslims in Italy and beyond, who may have found it a stretch to wear denim pants before.

Muslims, who number some 1.3 billion worldwide and 21 million in Europe, pray up to five times a day in a ritual involving kneeling - an almost impossible exercise for people wearing traditional jeans.

No longer. Italian company Al-Quds has started marketing jeans that facilitate kneeling and increase comfort during Muslim prayers.

Al-Quds, named after the Arabic name for Jerusalem and headquartered in Udine in the northern region of Friuli Venezia Giulia, has been the first to offer a solution to the problem.

The Al-Quds trousers are specifically designed with wide legs that facilitate movement and increase comfort during prayers. Producers have deliberately avoided low-rise or other fashionable styles that Muslims may consider offensive.

The bagginess is to ensure the wearer avoids stiffness while bending down repeatedly during prayers. The pockets are for holding all the accessories Muslims have to take off while they worship. And the jeans have green seams -- because green is the sacred colour of Islam.

"As far as we know we're the first, at least in Italy," said Luca Corradi, who designed Al Quds jeans.

Al Quds representatives said a year of research and testing went into the product, with models being asked to try different versions of the jeans while they prayed.

Abdel Hamid Shaari, president of the Islamic Cultural Institute in Milan, said low-priced jeans specifically designed to keep Muslims comfortable could open up a big market in Islamic countries and countries with large Muslim populations.

"This could be a good idea, thinking of the comfort," said Shaari, who used to be a production manager for Italy's Carrera jeans.

"About 90 percent of Muslims, aside from a niche that wants Armani and other top designer-jeans, generally seek jeans that are both resistant and comfortable and not expensive," he said.

Shaari, who is originally from Libya, said Muslims in Tunisia and other North African countries generally wear established brands of jeans or imitations. He said "normal jeans indeed can be slightly stiff to pray and kneel in."

Al Quds -- the Arabic name for Jerusalem -- has produced an initial 9,500 pairs that it sold to the French retailer Carrefour SA. The retailer has sold an initial batch of about 50 pairs of jeans at a low promotional price of €18.90 (£13.06) in its centers in Italy, company officials said. Corradi said the regular price would be €25 (£17.28).

Officials at Carrefour and Al Quds said there was no way to know whether Muslims had bought the jeans.

Al Quds, based in Udine, Italy hopes to make an impact first among Italy's 1.1 million Muslims. If successful, it will reach out to the estimated 18 million Muslims living in Europe.

The company's Web site advertises the jeans as "a new expression for an old tradition."

Corradi said officials from Carrefour had met with representatives from Al Quds and had "reacted with enthusiasm" to the new line. However, it was too soon to tell whether the French company would buy more.

"Let's say we're on the right path," Corradi said.

Carrefour said they did not intend to market the jeans exclusively to Muslims.

"We thought the (model) had an excellent quality-price ratio," said Sonia Augenti, a spokeswoman for Carrefour in Italy. "We target everyone. We do not have a political or religious connotation."

Corradi said the idea for the jeans first came to his friend Giorgio Lotta -- a businessman who had never worked in fashion -- about a year ago, when he spotted a picture in a newspaper of a sea of jeans-clad Muslims bent down in prayer.

Lotta, now president of Al-Quds, studied the market for about a month and concluded there were no jeans designed to keep Muslims comfortable while they pray.

"I couldn't help noticing that Muslims bend down to pray several times a day. This movement is not very common in our culture," Corradi told reporters last week.

Corradi realized that Muslims would find Western jeans uncomfortable. So he came up with trousers that are less tight and have a higher waist.

Because Muslims usually take off their watches, glasses and other personal objects during prayer, he also designed larger pockets.

Denim has not been stonewashed, shredded, crinkled or bleached like the one used for traditional jeans and stitches are green, the colour of Islam.

Corradi said the jeans are manufactured at a plant near Karachi, Pakistan that employs about 15,000 people.

"I wanted to respect (the fact) that if these are the first jeans for Islam, they should be built by Muslim hands," he said.

New centre to offer world’s first certified Islamic Finance professionals

nospam@example.com (Waheed) — Sat, 01 Apr 2006 15:53:50 +0000

The new International Centre for Education in Islamic Finance (INCEIF) will offer the world’s first certification on Islamic Finance, the Certified Islamic Finance Professional (CIFP) Programme, said Malaysian Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz.

She said CIFP modules were designed by renowned experts and developed in full consultation with local and international industry players to ensure the relevance to industry requirements.

"The objective of INCEIF is to produce high-calibre practitioners and professionals in Islamic finance as well as specialists and researchers," she said in her speech during the launch of INCEIF on 28 March.

Zeti also said the INCEIF would be governed by the Governing Council and the Professional Development Panel.

"This council will comprise local and international professors to set strategic direction and provide insights and learning needs of the Islamic financial services industry.

Later, she told reporters that INCEIF, which would hold classes in June, had already received some 500 queries, with about half of them from international students.

Last year, Bank Negara had set up an endowment fund of RM500mil to support the initiative.

INCEIF programmes will cover professional certification, postgraduate programmes, and a research and publication programme.