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the 74th edition of the Global Islamic Economics Magazine (GIEM)

Abdelilah BELATIK

Secretary General of CIBAFI

Welcome to the 74th edition of the Global Islamic Economics Magazine (GIEM). As always, it is our pleasure to keep you updated with the current updates and prospects of the global Islamic financial services industry (IFSI). The GIEM also serves as a platform for CIBAFI to keep its stakeholders informed about its activities and key initiatives.

As part of its first Strategic Objective of Policy, Regulatory Advocacy, CIBAFI submitted its comments to the Accounting & Auditing Organization for Islamic Financial Institutions (AAOIFI) on the Revised Financial Accounting Standard No. 25: “Investments in Sukuk, shares and similar instruments” on 28th June 2018. CIBAFI indicated that the investment categories that are mentioned in the Exposure Draft (ED) are divided into: equity-type instruments; monetary debt-type instruments; non-monetary debt-type instruments; and other investment instruments. CIBAFI noted that it might be difficult to apply these categories to Sukuk in general, especially to hybrid or mixed Sukuk which include equity and debt contracts. In addition, CIBAFI noted that, although non-transferable Sukuk fall outside the scope of the ED, there may be some Sukuk which are in principle tradable but which in practice represent syndicated financing  and might be better classified as ‘loans or receivables’ than investment instruments, even ones which will be held-to- maturity investments. CIBAFI also noted that the definition of “participatory structure” in the ED refers among others to sharing losses. This could be taken to exclude Mudarabah structures, where the losses fall exclusively on the Rabb ul Mal, although in other respects it would be right to treat these as participatory. Detailed comments submitted to the AAOIFI are available on CIBAFI’s website: http://www.cibafi.org.

Aligned with its second Strategic Objective of Research and Publications, CIBAFI presented its eighth briefing “Islamic Trade Finance: Back to the Roots”, prepared in collaboration with the International Islamic Trade Finance Corporation (ITFC). The briefing aims to inform CIBAFI’s members and other stakeholders on recent trends in Islamic Trade Finance, as well as to increase the awareness among the stakeholders of the Islamic finance industry. The eighth briefing dives deeply into the role of international trade finance organizations and multilateral development banks (MDBs) in establishing an appropriate trade finance environment and their main advantages for different stakeholders. Moreover, it explores challenges, opportunities, and ongoing structural changes in the Islamic trade finance market as well as it highlights the digital development in trade finance and the effect of new technologies, such as blockchain, in the development of trade finance activities. The briefing also touches up on some Shariah issues and challenges, de-risking risk and the role of Islamic trade finance in promoting SMEs among others. The full briefing in both languages, Arabic and English, is available on CIBAFI’s website: http://www.cibafi.org.

As part of its third Strategic Objective of Awareness and Information Sharing, CIBAFI and the World Bank are pleased to announce their second joint international conference on “Corporate Governance of Islamic Financial Institutions: Overcoming Challenges and Implementing Best Practices”, organized on the sidelines of the Global Islamic Finance Forum 2018 (GIFF) in Kuala Lumpur, Malaysia on 2nd October, 2018. The 2nd edition of the International Conference on Corporate Governance in Islamic financial institutions is in succession to a highly successful first joint conference organised by CIBAFI and the World Bank in 2015 in Amman, Jordan. The objective of the conference is to reinforce both, CIBAFI and the World Bank’s commitment, to help foster the development of Islamic finance globally including in the developing markets in the area of Corporate Governance. The conference brings together various Corporate Governance stakeholders from the Islamic finance industry, multilateral institutions, international and national regulatory bodies, policy-makers, and academia to discuss emerging issues and discuss best practices to ensure the industry’s continued success. Be sure to save the date.

Towards more harmonisation of the Islamic financial industry’s practices across the globe, the Central Bank of the UAE (CBUAE) has adopted recently the standards of the Accounting & Auditing Organization for Islamic Financial Institutions (AAOIFI). This adoption comes as a result of a recommendation from the Higher Sharia Authority of the Central Bank. According to the CBUAE, all full-fledged Islamic banks, Islamic windows of conventional banks, and finance companies offering Sharia-compliant products and services in the UAE will be required to comply with the AAOIFI standards starting from 1st September 2018; this will require banks to revise their existing products and services to be in compliance with the AAOIFI standards. This initiative represents a huge encouragement to other regulators to do the same and adopt Islamic finance regulatory bodies’ standards, counting to more harmonisation and standardisation across the Islamic finance industry globally.

CIBAFI will continue to focus on important industry issues and help address them as part of its mandate as well as to support the Islamic finance industry, ensuring its continuous success. Stay tuned!

جميع الحقوق محفوظة لمجلة الاقتصاد الاسلامي العالمية 2018