The acceptability of financial derivative instruments like forwards, futures, options and swaps for Shariah-compliant businesses remains unresolved. As of now, there appears to be no consensus on whether Muslim businesses can use derivative instruments for their risk management needs. While the issue is still being debated and deliberated, risk management remains the soft underbelly of Islamic banking and finance. Still, there has been some progress. Shariah scholars have allowed the use of wa’ad (promise) based contracts in the case of managing exchange rate risk. Today, wa’ad bas...

As climate risk rises on the agenda, financial institutions have to manage their response to balance the physical and transition risks they facePhysical risks pose the greatest risk to humanity, but the necessary action to respond have consequences for society that also need to be addressed to create a Just TransitionIgnoring the risk doesn’t make it go away, so climate risks have to be considered in every economic decision “There is no question in my mind the frequency of events is giving us real evidence that climate change is investment risk. No company should be surpri...

Dialog Group Berhad’s (Dialog) Senior Islamic medium-term notes (MTN) (Senior Sukuk) of up to MYR 3 billion and Subordinated Perpetual Islamic Notes (Subordinated Sukuk) of up to MYR 3 billion have been assigned respective final ratings of AA2 and A1 by RAM Ratings (RAM), with both ratings carrying a Stable Outlook.  The Sukuk are combined under Dialog’s proposed Senior Sukuk and Subordinated Sukuk Programme, in which Dialog can issue both Sukuk under a combined MYR 3 billion limit. In addition, Dialog will also be able...

The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) has cut its key policy rates by 50 basis points (bps) on the 12th of November 2020, in a bid to support the Egyptian economy, which has slumped due to the COVID-19 pandemic.  According to local media reports, the MPC cut the overnight deposit, overnight lending and main operation rates by a further 50 bps each, to 8.25%, 9.25% and 8.75% respectively. In addition, the discount rate was also cut by 50 bps to 8.75%. The decision to cut interest rates came amid mut...

Indonesia has recorded a trade surplus of USD 3.6 billion in October 2020, compared to a surplus of USD 161.3 million in the same month a year earlier, and a surplus of around USD 2.4 billion in September 2020, according to data released by the Central Statistics Agency (BPS). Local media reported that Indonesia’s trade surplus in October 2020 was the largest recorded since December 2010.  According to Setianto, Deputy Head of BPS, the trade surplus in October 2020 was attributed to a decrease in imports, which declined by&nbs...

Indonesian Vice President Ma’ruf Amin is hopeful that more Indonesian Halal products and services will penetrate the global market, through cooperation with other countries as well as increased trade fields and investment opportunities, according to local media reports. Speaking at the virtual launch of the State of Global Islamic Economy (SGIE) Report 2020/2021 in Jakarta on the 17th of November 2020, Amin also welcomed Indonesia’s improvement in overall Global Islamic Economy Indicator Score Rank to fourth position in 2020 (scor...

Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai, United Arab Emirates (UAE) and General Supervisor of the ‘Dubai: Capital of Islamic Economy Initiative’ (DCIEI), attributed Dubai’s success in the global Islamic finance sector thus far to the progressive vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. Sheikh Hamdan stated that it was this vision that had laid down the foundation and structure for Dubai’s Islamic economy sector to become an important...

Fitch Ratings (Fitch) has stated that bankruptcy resolution systems in major Sukuk-issuing markets remain in general, at early stages of development, with the COVID-19 pandemic making the need for more effective resolution regimes more pressing.  Whilst many of these jurisdictions have updated their bankruptcy laws in recent times, the effects of these laws in practice are yet to be witnessed. According to Fitch, key areas that need to be developed include better protection of rights for bond and Sukuk-holders, as well as having recovery prospects made more predictable.  ...

In a bid to support Bank Negara Malaysia’s (BNM) Value Based Intermediation (VBI) initiative, which aligns sustainability with Islamic values, Public Islamic Bank Berhad (PIBB) has launched solar panel financing for residential houses, according to local media reports.  BNM’s VBI initiative is aimed at aligning Islamic finance business models towards realising the objectives of Shariah principles in order to create sustainable and positive impacts to the economy, environment as well as the community.  PIBB announced that the solar pa...

Saudi Electricity Company (SEC), Saudi Arabia’s main power generation and distribution company, has signed an agreement with the Saudi Government to convert state liabilities valued at SAR 167.92 billion (USD 44.77 billion) into a subordinated Shariah-compliant perpetual financial instrument, according to media reports. Based on a Tadawul statement issued by SEC, the conversion will be considered as the world’s largest Islamic transaction to be executed, and the Shariah-compliant instrument will carry a 4.5% profit rate and a redemption option. The conversion is considered a...