Sri Mulyani Indrawati, Finance Minister of Indonesia, has remarked that third-party funding (DPK) in Islamic banking grew 16.54% in the second quarter of 2021 (2Q 2021), higher than the DPK funding in conventional banking.  Why it Matters?  This shows that there are real developments and dynamics that have supported the survival and improvement of Islamic banking amid the COVID-19 pandemic. Further, the Islamic banking sector’s assets grew 15.8% year-on-year during 2Q 2021. However, the market share of the Islamic banki...

According to Yasir Al Rumayyan, Governor of Saudi Arabia’s Public Investment Fund (PIF), the Kingdom intends to deploy 50% of its investments in renewable and sustainable power sources and it is to issue a green Sukuk soon. The PIF would be the first sovereign wealth fund to issue green debt. Why it Matters? Despite being the world's largest oil exporter, Saudi Arabia fares better than other producers in terms of carbon dioxide emissions. It is considered as one of the most efficient countries with regard to sustainability a...

The performance of Indonesia’s Halal value chain (HVC) in agricultural and food sectors has surpassed that of national gross domestic product (GDP), according to Ma’ruf Amin, Vice President of the country, who was speaking at the opening of the Indonesia Shariah Summit 2021 on the 22nd of September 2021.  Why it Matters?  The performance of Indonesia’s HVC was strengthened by the increase in online spending and consumption amid the implementation of public activity restrictions to combat the C...

Erick Thohir, Indonesia’s State-Owned Enterprises Minister stated the hope that Bank Syariah Indonesia (BSI) would expand its operations in other countries, such as Saudi Arabia and the United Arab Emirates within the next five years. Why it Matters? Expansion of operations of BSI would enable Indonesia’s Islamic banks to have a global presence, Thohir said adding that BSI is among the top 10 banks in the country. He noted that as reported currently, the growth of Islamic funding is greater than conventional banks, which confirms that BSI could also function...

On the 30th of August 2021, Bank Negara Malaysia (BNM) released an exposure draft of the Policy Document on Bancassurance/ Bancatakaful (Policy Document).  Why it Matters?  BNM has set a deadline of the 30th of September 2021 for receiving feedback on the Policy Document. The Policy Document is applicable to licensed insurers, licensed banks and licensed investment banks under the Financial Services Act 2013, licensed Takaful operators and licensed Islamic banks under the Islamic Financial Services Act 2013, and to prescribed instituti...

According to Fitch Ratings (Fitch), the Indonesian Takaful industry would experience challenges in the short to medium term as a result of the requirement that Shariah business units (SBUs) of conventional insurers spin off into separate organisations. Why it Matters?  Even though the deadline for submitting amended spin-off plans to the regulator is approaching (17th of October 2021), only a few SBUs have separated as required. It is claimed that due to significant capital requirements and operating expenses, most insurance companies are moving slowly an...

Several promising developments in responsible finance are occurring across a range of Islamic marketsThe lead up to COP 26 has created momentum in the area of climate change, but Islamic markets are pursing action more broadly across ESGFinancial institutions, investors and regulators in Islamic markets should avoid taking merely a 'compliance' mindset to responsible finance As the world returns from summer – perhaps more virtually than anticipated given the continued challenges relating to Covid-19 – so do efforts to embed ESG into the financial sector in I...

One outcome of the recent Islamic Development Bank meetings was the announcement of the first of what could become a flood of ‘reprogramming’ requests by member countries in response to accelerating climate change impactsReprogramming funding towards resilience and mitigation will help make the Islamic Development Bank a more important green sukuk issuerIf the IsDB can accelerate green finance capabilities in member countries, it will help financial institutions & investors to more easily identify and act on responsible finance opportunities The growing incidence...

Pakistan proposes to issue up to USD 1.5 billion of international Sukuk in October 2021, to strengthen the finances of the country during the COVID-19 pandemic.Why it Matters? Pakistan government officials stated that the Sukuk worth between USD 1 billion to USD 1.5 billion are to be raised, pledging asset-backed guarantees of two international airports (Lahore and Islamabad) and certain parts of motorways in the country. The Ministry of Finance of Pakistan had budgeted the raising of a total of USD 3.5 billion through internatio...

In line with Indonesia’s economy that grew 7.07% year-on-year (YoY), the Islamic Insurance industry saw positive performance in the second quarter of 2021 (2Q 2021).  Why it Matters? Ronny Ahmad Iskandar, Head of Research and Innovation for Shariah Life Insurance at the Indonesian Shariah Insurance Association, noted that this positive performance was quite a significant rise compared to the second quarter in 2020 (2Q 2020), with growth in the gross contribution of the national Shariah insurance industry up 51.89% YoY i...