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Shariah Finance

Opposition Runs Riot on Zakat Minister

The government of Pakistan is under fire for allowing corrupt Zakat distribution and for failing to take action against Zakat committee chairmen... “despite the government admitting for two years that the chairman of its Zakat committees were corrupt...it had failed to name the chairmen or take any action against them.”



Daily Times
February 11, 2010
Islamabad, Pakistan

Despite efforts by senior minister’s to come to the aid of the minister for Zakat and Ushr after he was criticised by the opposition, the minister on Wednesday failed to provide satisfactory replies to questions relating to his department put before him on the floor of the House.

Pakistan People’s Party (PPP) leader Raja Riaz Ahmed’s efforts to help out Minister for Zakat and Ushr Ehsanuddin Qureshi backfired, as the opposition used the opportunity to question the credibility of the federal government.

Ehsan failed to adequately answer the majority of questions put before him by opposition and treasury members. Even Punjab Assembly Speaker Rana Muhammad Iqbal Khan asked the minister to carefully listen to the questions and properly answer them.

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Focus on the Little Guy Could Boost Islamic Banking in Indonesia

Indonesia, historically a moderate Islamic country, has been under siege from Shariah extremists for the past few years. Indonesia's embrace of Shariah finance is a symptom of this. Islamic mortgages and bonds are being sold as less risky than western versions because they ban interest. In order to "ban" interest, Islamic investments are engineered as highly risky derivatives. Professor of Islamic Economics at Rice University calls Islamic bonds and mortgages, "Islamic Credit Default Swaps." http://www.stopshariahnow.org/index.php?option=com_content&view=article&id=881:have-we-learned-nothing-here-come-the-qislamic-credit-default-swapsq&catid=69:shariah-finance-op-eds&Itemid=91



VOANews
January 31, 2010
Jakarta, Indonesia

Indonesia's central bank has recently embraced new regulations for Islamic banking, which it sees as key to building on last year's strong economic growth. In a country that is home to more than 200 million Muslims, the potential for expansion is enormous, although Islamic finance still accounts for a small part of the country's financial market.

Over the past six years Islamic banking has averaged 36 percent annual growth in Indonesia. But its $7 billion in assets makes up only 2.5 percent of the country's total banking sector.

Banking analysts say unclear regulations on banking that conforms to Islamic law and pervasive corruption have kept investors away from Indonesia.

The central bank, Bank Indonesia, wants that to change. It has drafted a blueprint that includes expanding Islamic lending to small and medium-sized enterprises, scrapping a tax law that imposes extra costs on Islamic banking transactions and improving risk management.

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Thailand Plans Sukuk Debut

Thailand is the next country to create an Islamic Finance market. Who is leading the charge? Western banks, experts in the lack of separation between mosque and state. Says Dheerasak Suwannayos, president of the Islamic Bank of Thailand, "No one knows really how big the petrodollar market really is. We think it may be larger than the US dollar market… We have a number of top international banks, banks with experience in Islamic finance such as Citibank, HSBC and Standard Chartered with offices in Thailand. I believe that we have strong potential to become an Islamic financing hub as well.”



Zawya
January 6, 2010
Bangkok, Thailand

Thailand's Securities and Exchange Commission expects to finalize rules for Sukuk instruments some time over the next several months, the local English daily Bangkok post reported on Tuesday.

Authorities hope that Islamic bonds will help draw capital from the cash-rich Middle East and other markets.

Dheerasak Suwannayos, president of the Islamic Bank of Thailand, said that Islamic finance has posted massive growth in recent years, and now plays a key role within the global financial system, the daily said.

Growth in the market has averaged around 80 percent per year over the past several years, with more than $80 billion in sukuk instruments outstanding.

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P&O in UK Return as Dubai Plans London Float

More confirmation that Shariah bonds lack disclosure, transparency and any distinct financial advantages. Dubai ’s DP World, the fourth largest port group, may now be listed in the London Stock Exchange. “A London-listing would also be a return of sorts for P&O, the UK ports group that was once revered as a symbol of the British Empire . DP World bought the business for £3.92bn in 2006 using a $3.5bn convertible sukuk – or sharia compliant bond…Insiders have blamed the sukuk for the lacklustre performance of the shares. DP World had to list to convert the bond into equity. Sources said investors, as reluctant holders, have been keen to sell, putting pressure on the shares.”



The Daily Telegraph
January 6, 2010
Dubai, United Arab Emirates

Delivering a much-needed vote of confidence in UK markets, DP World said it would seek a second primary listing on the London Stock Exchange "to address its continued disappointment with the [Dubai] market's valuation of the company".

DP World, the world's fourth-largest port group, floated on the Nasdaq Dubai in November 2007 but, after a brief rally, the shares dropped beneath their $1.30 list price. The stock rose 4pc to 44 cents on news of the dual-listing plans, valuing the business at $7.34bn (£4.5bn).

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Court Stays Kerala’s Islamic Banking Plans

Former Central Minister Dr. Subramanian Swamy’s petition delays the creation of an Islamic bank in India. “The government’s participation is clear instance of state favouring a particular religion. This is violative of Article 14 and 25 of the Constitution which promises equality before law and right to freedom of religion. Besides, Islamic Bank is violative of Banking Regulation Act of 1949. A 7-judge bench of the SC had ordered that no public money should be used for promoting institutions of a particular religion,” stated Swamy’s petition.



The Economic Times
January 6, 2010
Kochi, India

A division bench of the Kerala High Court on Tuesday stayed all further move by the state-owned Kerala State Industrial Development Corporation (KSIDC) to set up an Islamic bank in the state.

The division bench gave its orders on a petition filed by former central minister Subramanian Swamy, who maintained that the proposed bank was against India’s secular credentials and its banking norms. The court accepted the petition and issued notices to the Union government and KSIDC.

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