KFH Research Ltd. A Vision Beyond. Islamic Finance Regulatory Developments and Updates. KFH Research Ltd KDNPP15024/03/2013(029560)

KFH Research Ltd A Vision Beyond Islamic Finance Regulatory Developments and Updates KFH Research Ltd KDNPP1524/3/213(2956) 2 May 213

1. Introduction Islamic finance has been developing rapidly worldwide, particularly in the large Muslim-dominated countries. From banking and non-financial services to takaful and capital markets, the development of Islamic finance has surged forward in the last three decades. The development of Islamic finance has accelerated in the past few years, with the industry diversifying out of traditional territories into countries with significant and fast increasing Islamic populations, including countries in Europe and Africa. Suffice to say that the unprecedented growth that the industry has witnessed in recent years has shifted Islamic finance from being an alternative niche to a mainstream contender. It is estimated that the size of global Islamic financial assets reached USD1.6trln in 212, a growth of 2.4% y-o-y. If this growth rate continues, the total Islamic financial assets are expected to touch USD1.9bln in 213. A growing number of countries are implementing legislative and legal reforms to support the development of the industry. There have been many new year-to-date regulatory developments in Islamic finance, which have only served to cement the increasing popularity of this new assets class. With rapid developments being made across the world, it can be inferred that the growth in Islamic finance has been universal and it has been gaining ground at national, regional and international levels. Egypt has just approved its new sukuk law while Dubai is currently drafting a centralised legal framework to oversee Shariah-compliant products and transactions within the region. Elsewhere, there have been many Islamic banking new developments from Turkey to Qatar. The hive of regulatory developments so far has only cemented the expectation that Islamic finance will continue with its impressive growth trajectory and is set to reach USD6.5tln in total assets by 22. USD billion 2, 1,8 1,6 1,4 1,2 1, 8 6 4 2 Global Islamic Finance Assets 199s (199s-213F) 28 29 21 Source: Bloomberg, IFIS, KFHR 211 212E 213F Sukuk 14.5% Global Islamic Finance Share (212) Islamic Funds 4.1% Takaful 1.1% Islamic Banking 8.4% Composition of Global Islamic Finance Assets in 212 Assets By Region Banking Assets Sukuk Islamic Funds Takaful Outstanding Assets Contributions Asia 171.8 16.3 22.6 2.7 GCC 434.5 66.3 28.9 7.2 MENA (excl. GCC) 59.6 1.7.2 6.9 Sub-Saharan Africa 16.9.1 1.6.4 Others 59.8 1 1.8 Total USDmln 1,273.6 229.4 64.2 17.2 Source: Bloomberg, IFIS, KFH Copyright KFH Research Ltd. 213. All rights reserved 1

2. Islamic Finance Regulatory Developments and Updates 2.1 Islamic finance general overview: Qatar Qatar has long been an advocate of Islamic finance, and today this special assets class has proliferated and is well embedded in the nation. It has one of the fastest growing Islamic banking sectors in the world and its sukuk issuance has been very encouraging, with Qatar becoming one of the top 5 largest sukuk issuance nations in the world in 212. At present there are four full-fledged Islamic banks in Qatar, namely the Qatar Islamic Bank (QIB), Masraf Al Rayan, Qatar International Islamic Bank (QIIB), and Barwa Bank. The financial performance of the Islamic banks in Qatar continues to show positive results and Islamic banks are expected to benefit from the directive of the central bank to disallow conventional banks from offering Islamic banking products and services via window operations. According to data, the expansion of Islamic banks in the GCC continues to outstrip the growth of conventional banks, with the strongest performance being witnessed in Qatar in particular. As a testament to the rising popularity of Shariah-compliant products and services in the country, the market share of the Islamic banking industry in Qatar jumped to 23.8% in 212 from 23.1% in 211. As at end-212, the total assets of Islamic banks in Qatar stood at USD53.6bln, witnessing a growth rate of 21.% y-o-y (211: 35.1%). On the sukuk side, the rapid spending on infrastructure development and the improving sentiment apart from better credit terms saw robust sukuk issuances from the country in the last 2 years. Its sukuk issuance touched a peak of USD9.2bln in 211 before easing to USD5.4bln in 212. Its sukuk outstanding ended 212 with a jump of 41.9% y-o-y to USD17.4bln. Latest developments on Islamic finance in Qatar In January 213, the Qatar Exchange (QE) launched the Al Rayan Islamic Index. The index is based on Shariah-compliant stocks of a specified free-float size and liquidity listed on the QE. The index will support the creation of a Shariah-compliant exchange traded fund (ETF) by Al Rayan Investment which has been issued with a fatwa by its Shariah Board. In addition to that, the Finance Minister of Qatar announced the government s intention to proceed with the establishment of an international Islamic bank. Last April the Qatari government signed a memorandum of understanding with the Jeddahbased Islamic Development Bank and Saudi Arabia's Dallah Albaraka Group to establish a bank with an initial capital of USD1bln. The establishment of an international Islamic bank in Qatar comes at a time when the Qatar Islamic banking sector needs to tap into a new geographical area to sustain growth and this can only be done via the establishment of a very large and cross-border international Islamic bank in the country. The scarcity of very large, cross-border Islamic banks has been holding back the full maximum potential of Islamic banking sector in the country. It is opined that the setting up of an international Islamic bank coupled with the low penetration rate of Islamic banking in the country will witness the Islamic banking sector in Qatar continuing to experience double-digit growth rates. It is opine that the economy of Qatar and its Islamic banking system will be bolstered by the government s huge infrastructure project pipelines, and this together with the government s strong support of the domestic banking industry, will provide ample opportunities for Islamic banks to continue expanding their balance sheets. An increased momentum is expected in the government s realisation of its National Development Strategy 211-216 with major infrastructure projects in the pipeline, including the USD45bln Lusail development, USD17.5bln New Doha International Airport as well as a host of road, railway and construction projects associated with the World Cup 222. All in, the outlook for Islamic finance in the country will continue to be bright, particularly for Islamic banking and sukuk, thanks to the significant amount of infrastructure spending leading to the Qatar 222 World Cup. Suffice to say that the government's extensive infrastructure investment programme will boost the business opportunities of banks over the 12 to 18-month outlook period. Copyright KFH Research Ltd. 213. All rights reserved 2

Qatar Islamic Banking Assets Value and Share (26-212) USD bln 6 5 4 3 2 1 25 2 15 1 5 26 27 28 29 21 211 212 Total Assets Market share (RHS) % USD mln 1, 9, 8, 7, 6, 5, 4, 3, 2, 1, Qatar Sukuk Issuance (26-212) 26 27 28 29 21 211 212 Source: central bank, Bloomberg, KFHR 2.2 Islamic finance general overview: Turkey One of the significant developments in Turkey s Islamic finance journey is the evolution of the participation banking sector, which took root in 198 with the setting up of participation banks offering Shariah-compliant banking services in the country. The first Turkish financial institution operating on an interest-free basis was established in 1985 known as the AlBaraka Turkish Finance House, the institution was formed with capital contributions from Saudi Arabia. The Partnership Banks Law No. 5411, approved in November 25, paved the way for the development of the country s participation banking industry. The law which complemented the principles of Shariah governing this industry stipulated the opening of interest-free current accounts, namely Special Current Accounts, and allowed participation banks to receive deposits in accordance with speculation contracts, known as profit-and-loss participation accounts. As at December 212, the total assets of Turkey s participation banks stood at TRY7bln, a growth rate of 24.9% y-o-y from 211. Participation banking assets accounted for 5.5% of total banking assets in Turkey as at December 212, up from 4.6% as at end-211, while participation banking assets are expected to reach 1.% of the Turkish banking system s total assets by 218. There are currently four participation banks operating in Turkey, namely Albaraka Turk, Bank Asya, Kuveyt Turk and Turkiye Finans. Turkey s sukuk debut started in 21 when Kuveyt Turk issued USD1mln sukuk in 21, followed by a second issuance a USD35mln sukuk in 211. This was followed by the debut USD1.5bln sovereign international sukuk Al-Ijarah of Turkey in September 212, and two sovereign Turkish lira domestic sukuk Al Ijarah totalling TRY1.6bln in October 212 and a TRY1.515bln sukuk Al-Ijarah in February 213 respectively by the Turkish Under Secretariat of the Treasury. Turkey s sukuk outstanding ended 212 at USD1.3bln, a more than two-fold jump against 211. Latest developments on Islamic finance in Turkey Turkey will witness the establishment of three new Islamic banks, namely the Ziraat Bankasi, Turkiye Halk Bankasi and Garanti Bankasi, and hence join the burgeoning terrain of its Islamic banking sector. Turkey is also working on new regulations to allow wider use of Islamic bonds, a closely watched move which could see sukuk issues employed by the government and corporations to finance projects and infrastructure development. Turkish institutions and the Treasury currently only issue the ijara type of sukuk and the new regulations would approve the use of the istisna, murabaha, mudaraba, musharaka and wakala sukuk. Banking sources said the Capital Markets Board would complete its work on the regulations within a couple of months, and is seeking to ensure that the new types of sukuk are in line with internationally accepted standards for Islamic finance. The objectives of expanding the sukuk instruments include serving Copyright KFH Research Ltd. 213. All rights reserved 3

new, non-interest financial instruments to foreign investors from the Asian and Gulf countries, and to use sukuk to finance Turkey s planned domestic infrastructure investments, projected to reach USD6bln by the end of 213. With a penetration rate of only 5.5% in 212 by the participation banks, Islamic banking prospects in Turkey are definitely bright especially if one takes the cue from the industry leader, Qatar, which has an Islamic banking sector penetration rate of 23.8%. Hence, the award of licenses to new players will bode well with the government s aim to increase the market share of participation banks to 1.% by 218. It is opined that the low penetration rate of the Islamic banking industry will result in a resilient double digit growth rate by Turkey s participation banks in line with the expanding market reach and increasing number of players in the country. As for the expansion of sukuk instruments, the timing is opportune particularly when Turkey is poised to spend a sizeable amount on infrastructure development. According to official sources, Turkey plans to spend USD6bln on infrastructure development in 213 alone. This includes the completion of the Marmaray Tunnel under the Bosphorus waterway and the construction of Istanbul s third airport, which will start this year. It is opined that the expansion of sukuk instruments will allow issuers to tap a new source of financing (i.e. a broader product of sukuk) which will be the catalyst for Turkey s sukuk issuance to surpass the 212 figure of USD2.4bln. USD mln Turkey Sukuk Issuance (21-212) 3, 2,5 2, 1,5 1, 5 21 211 212 Source: Bloomberg, KFHR 2.3 Islamic finance general overview: Singapore Singapore started its Islamic finance journey at the start of the millennium with its watershed decision to give preferential tax treatment for Islamic finance. Realising the great potential of Islamic finance, especially as a reliable alternative assets class, the Singapore government, in tabling its 22 budget, announced fiscal incentives under the Financial Sector Incentive (FSI) scheme. The FSI scheme then offered a 5-year concessionary tax rate of 5% for qualifying high growth and high value-added activities (so-called enhanced tier or ET) including for bonds, derivatives and equity markets, projects and Islamic finance, and credit facilities syndication. In the 28 budget, the FSI scheme was extended for a period of five years from January 1, 29 to December 31, 213. The Singapore government s objective in this is clear, and it includes the development of a new industry by giving preferential tax treatment so that the industry can progress and compete with the much established conventional financing. Thanks to fiscal incentives, several Islamic window operations have been established in the republic, including Standard Chartered Bank, HSBC, OCBC, CIMB and Maybank. There has yet to be a full-fledged Islamic bank in the country as the Singapore government has taken the approach of many other developed nations to accommodate Islamic finance through the fine-tuning of existing regulations rather than creating a separate regulatory framework, resulting in a number of regulatory hurdles that have to be overcome. Latest development on Islamic finance in Singapore At the recent tabling of the Singapore government s 213 budget, the government said that it will tax Islamic finance businesses at the standard 12% rate, instead of 5% previously under the concessionary rate, when the incentive expires on 31 March. Tax incentives for other financial services, which carry concessionary tax rates of 5%, 1% and 12%, will Copyright KFH Research Ltd. 213. All rights reserved 4

be extended for five years to end-218. It is opined that the decision will put the sector at a disadvantage, given that the sector is still in its growth stage. Singapore s Monetary Authority of Singapore (MAS) has said that the republic s proposition for Islamic finance must be broader than just tax advantage. In the meantime, Singapore is still looking to develop the city's Islamic finance capabilities by providing a level playing field with conventional financial products. MAS further stressed that Singapore s success as an international financial sector stems from its high standards of regulation; deep and liquid capital market; the presence of international buy side players, and a critical mass of financial intermediaries with expertise to address a wide range of financing needs. These are the strengths that will allow Singapore to support the growth of Islamic finance. The growth of Islamic finance in the republic has been slower than expected despite Singapore s early venture into this field. The normalisation of the tax treatment for Islamic finance will only slow down the progress of Islamic banking industry especially with the lack of fiscal incentives. Indeed the support of the government plays a huge role in assisting the development of Islamic finance, particularly when the industry is still young. Despite the tax disadvantage facing Islamic finance in Singapore, the country s potential in this field can never be taken lightly, particularly when it has a huge and very liquid capital market, which means the adoption of Islamic finance can be very swift thanks to its decades of experience in venturing into capital market products and services. Singapore: Financial Services Growth Trend vs. GDP (1Q8-3Q12) Singapore Services Sector: Share of Financial Services SGD mln 9, 8, 7, 6, 5, 4, 3, 2, 1, 8:Q1 8:Q3 9:Q1 Real GDP 9:Q3 1:Q1 1:Q3 11:Q1 11:Q3 12:Q1 12:Q3 Financial Services (RHS) 2 15 1 5 % y-o-y -5-1 Business Services 17.8% Other service activities 15.4% Financial Services 19.7% Information and Communicat ion 5.5% Wholesale & Retail Trade 24.5% Transport and Storage 14.1% Restaurants & Hotels 3.% Source: Bloomberg, KFHR 2.4 Islamic finance general overview: Egypt The Central Bank of Egypt (CBE) has been exploring Islamic finance in recent years but so far no new regulations have been issued. There are approximately three banks in Egypt which operate on Islamic principles currently namely Al-Baraka Bank Egypt, Faisal Islamic Bank of Egypt, and National Bank for Development. In addition that, Egypt has 11 Islamic banking windows in the country. Despite being one of the most important economies among the Arab states, as Egypt s economy accounts for roughly 9% of the Arab world s GDP and its banking system is one of the largest in the region, Egypt has hardly been involved in the recent expansion of Islamic finance. Recent estimates suggest that Islamic banking accounts for no more than 4% of all banking activities in Egypt. With the low penetration rate of the Islamic banking industry in the country, Egypt s growth in Islamic banking remains exciting especially when one takes the cue from Qatar s Copyright KFH Research Ltd. 213. All rights reserved 5

Islamic banking penetration rate of 23.8% in 212. Egypt is also in the final lap of approving a new sukuk law and this may materialise very soon. Latest developments on Islamic finance in Egypt Egypt has approved a new sukuk law that will allow the country to tap a new source of financing at the back of a soaring budget deficit. Egypt's budget deficit for the coming 213/14 fiscal year (beginning 1 July 213) is forecast to reach EGP197.5bln according to a draft budget referred to by Egypt's Shura Council. The 213/14 budget deficit is around 7% higher than the revised figure for the current 212/13 fiscal year, which is forecast to reach EGP185bln by 3 June. The 213/14 budget deficit is expected to amount to 9.5% of Egypt's GDP, down from 1.7% in the current fiscal year. In another development, the CBE has suspended the issuance of Islamic banking licenses until possibly the end of 213 due to market recession and low growth rates, according to the sub-governor of the CBE. A number of Egyptian banks, such as Alex Bank Intesa Sanpaolo, Ahli United Bank, Industrial Development and Workers Bank of Egypt, Export Development Bank of Egypt and Barclays Bank Egypt, have submitted offers to the CBE asking for Islamic banking licenses. The temporary halt of Islamic banking license issuance in Egypt is not an issue at the moment given the country s slow economic momentum and it is believed that the CBE will resume awarding the licenses once the country s economy is on a solid growth trajectory. Egypt s real GDP is forecast to grow at 2.7% this year, below its last 7-year average of 4.9%. Notwithstanding that, Egypt s real GDP is expected to accelerate to 3.7% in 213 as the country is expected to get its house in order and resume strong growth trajectory. As for the inaugural sukuk issuance by the country, its budget deficit to the tune of 9.5% of GDP in 213 will pave the way for the country to source a new option for financing. In permitting the issuance of sukuk, Egypt is also opening the way for companies and institutional investors to use one of the tools of Shariah-compliant finance. It is opined that the Egyptian corporate sector can gain access to a new pool of investors while the Egyptian financial institutions can capture some market share in the Shariah-compliant industry. It is believed that the government will issue short-term sukuk as part of its routine debt management programme and this will materialize as soon as the country overcomes the regulatory hurdles in allowing the issuance of sukuk. GDP Growth (%) Egypt s Real GDP Growth (21-214F) 6 5 4 3 2 1 21 211 212 213F 214F Source: Bloomberg, KFHR 2.5 Islamic finance general overview: Libya Libya s involvement in Islamic finance came about last year when the government announced its plan to implement a new Islamic banking law by the end of 212. The country approved an Islamic banking law in May 212 and has been working to amend its legislation to attract foreign investments and stimulate its private sector following last year's war that ousted Muammar Gaddafi. The authorities are looking at several options for Islamic banking services, which include allowing conventional banks to open branches or windows for Islamic finance and permitting conventional banks to become Islamic. Libya is also looking at introducing a special licence for Islamic banking, according to the central bank. Nevertheless, the Copyright KFH Research Ltd. 213. All rights reserved 6

licensing option is still under discussion because the authorities have yet to agree on the capital requirements. In this regard, market watchers predict that licenses will be granted in 213 to launch Libya s first full Islamic bank, which is within the strategic vision of Libya to turn the country into an Islamic Financial Centre. Substantial resources are expected to be mobilised in Libya in order to activate institutions and new Islamic financial resources, in addition to the establishment of insurance companies, Islamic funds and investment instruments by the end of 214 or the beginning of 215. Latest development on Islamic finance in Libya Libya may not enforce a recently adopted Shariah-compliant regulation banning traditional banks from accepting interest, and there is a possibility that the implementation of the law could be postponed. In January 213, the government approved a law that would ban all interest payments in Libya, accelerating the move toward an Islamic banking system in the country. The law is expected to come into force in early 215. Given that the move towards the full implementation of Islamic banking will come into force only in 215, the plan to not enforce a complete ban on the acceptance of interest by traditional banks is not surprising as this can disrupt the existing system which has long been an advocate of conventional banking system practices. Nevertheless, it is opined that the long period leading towards 215 will give existing banks a period of adjustment to migrate and adopt the full Islamic banking practice. Note that Libya currently has approximately 16 banks, all of which have shariah-compliant windows. Joining the fray of the burgeoning potential of Islamic banking in Libya is the Bahrain-based Al Baraka Banking Group, which plans to assist in the implementation of Islamic banking regulations by investing at least USD1mln in a local Libyan bank. Al Baraka Bank is hoping to acquire a majority stake in a small Libyan bank and turn it into an institution that is run along the Islamic principles. Al Baraka Bank, which has a long and chequered history in Islamic banking practices, can surely help to set up a full Islamic banking practice in Libya. Al Baraka Islamic Bank was incorporated in Bahrain in February 1984 and operates as a retail and investment Islamic bank. It obtained a commercial banking license in Pakistan in 1991. The bank operates 6 branches in Bahrain and 89 branches in Pakistan. 2.6 Islamic finance general overview: Oman Oman is the last of the six GCC states to embrace Islamic finance. The sultanate decided last year to introduce Islamic banking by developing the required legislation and issuing licences to full-fledged Islamic banks and windows. The Bank of Muscat, Oman s biggest bank by assets, received a license to offer Shariah-compliant services in early 213. The bank will open seven so-called Islamic windows operating under the brand Meethaq Islamic Banking. Prior to that, Oman s central bank awarded two Islamic bank licenses to Bank Al Izz International Bank and also Bank Nizwa to operate as fullfledge Islamic banks. Oman has also been focusing on establishing the sultanate s sukuk market in order to tap the regional liquidity and to support government finances. The Executive President of the Central Bank of Oman (CBO) announced in 1Q13 that the country is looking to issue OMR2mln (USD52.2mln) of conventional bonds and sukuk in line with its budget financing needs in what would be the country s first sovereign sukuk issuance. Latest development on Islamic finance in Oman Oman s Capital Market Authority (CMA) has received two requests for issuing sukuk. The CMA has given its initial approval for two of these companies to issue special sukuk for a start. The CMA has completed the draft bylaw that regularises the issuance of sukuk and the proposed amendments to the Capital Market Law related to this issue. The bylaw will be published soon. The issuances would be the first for Oman. Oman s sukuk debut will join the burgeoning sukuk issuances from the GCC. Sukuk issuances from the GCC amounting to USD23.6bln in 212 witnessed a strong 26.% y-o-y jump. With Oman joining the sukuk issuance terrain plus the Copyright KFH Research Ltd. 213. All rights reserved 7

region s huge infrastructure spending estimated at USD533.5bln until 215, the GCC will maintain its reputation as one of the most important destinations for sukuk issuance. In the meantime, Oman remains mum on the identity of the two companies that have been given the green light to issue sukuk. Notwithstanding that, to get the ball rolling, it is expected that Oman s central bank will issue its debut sukuk likely to the tune of USD5mln in line with the state s budget deficit. Oman s real GDP is forecast to grow at 4.4% and 4.15% in 213 and 214 respectively, slower than 5.% recorded in 212. 6 5 Oman s Real GDP Growth (21-214F) GDP Growth (%) 4 3 2 1 21 211 212 213F 214F Source: Bloomberg, KFHR Copyright KFH Research Ltd. 213. All rights reserved 8

Disclaimer & Disclosure By accepting this publication you agree to be bound by the foregoing terms and conditions. You acknowledge that KFH Research Limited ( KFHR )!"#$%&'#()#'*+#,(&-.,!.+#/,%!'#1!2%23+#4("+#5&($#()#"6"!.!%&!+"#%2.#%)7-!%'+"#8/14#5&($9:#+%3*#()#,*!3*#!"#%#"+$%&%'+#-+;%-#+2'!'<=#/14>#%-(2+# is responsible for this publication and for the performance of related services and/or other obligations. The recipient agrees not to make any claim or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regulations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conditions. J*+#!2)(&@%'!(2#3(2'%!2+.#*+&+!2#*%"#6++2#(6'%!2+.#)&(@#"(&3+"#6+-!+?+.#'(#6+#&+-!%6-+#6'#*%?+#2('#6++2#!2.+$+2.+2'-<#?+&!7+.=#/14>#@%D+"#2(# ;%&%2'++:#&+$&+"+2'%'!(2#(&#,%&&%2'<#%2.#%33+$'"#2(#&+"$(2"!6!-!'<#(&#-!%6!-!'<#%"#'(#!'"#%33&%3<#(&#3(@$-+'+2+""#%2.#!'#"*(-.#2('#6+#&+-!+.#$(2#%"# such. J*+#!2)(&@%'!(2#3(2'%!2+.#*+&+!2#!"#2('#!2'+2.+.#'(#$&(?!.+#$&()+""!(2%-#%.?!3+#6'#@+&+-<#%2#!2.+$+2.+2'#%""+""@+2'#()#'*+#&+-+?%2'#"+3'(&:#('-((D# %2.#@%&D+'#)+%"!6!-!'<#()#'*+#6"!2+""=#/14>#"*%--#2('#6+#.++@+.#'(#+2.(&"+:#&+3(@@+2.:#%$$&(?+:#;%&%2'++#(&#$&(@('+#2(&#'(#;!?+#%2<#,%&&%2'<# in respect of such information unless otherwise stated by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publication. 213 KFH Research Ltd. All rights reserved.