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NEWHORIZON Rajab–Ramadan 1429

NEWS

Islamic

Development

Bank eases

food crisis

Sumatra, Indonesia

New takaful

venture

announced

for Egypt

The Islamic Development Bank

(IDB) has responded to the

global food crisis by earmarking

$1.5 billion in low cost loans to

those Muslim countries worst

affected. The IDB already

provided around $50 billion to

finance development projects in

the Islamic world. The bank’s

mission statement is to foster the

economic development and

social progress of member

countries, and the money is

intended to boost food security

and increase agricultural

production over the next five

years. It will reportedly be in the

form of a soft loan, i.e. cheaper

than the market rate.

Food riots have occurred in

numerous places recently,

including in Egypt, Pakistan,

Somalia and Yemen. Many

countries in the Middle East are

affected, and it is the poor who

suffer the brunt of the riots. The

rise in food prices has been

caused by increased global

demand, bolstered by countries

such as China and India, and

market distortions.

The money will therefore come

at an opportune time for those

affected. Saudi finance minister

and chair of the IDB’s governing

committee, Shaikh Ahmed Bin

Mohammad Al Khalifa, stated

that the five year programme

was intended to ‘help the least

developed member states reach

food security’.

© Elena Pokrovskaya | Dreamstime.com

Most populous Muslim

country set for

lift-off in Islamic finance

Indonesia, the country with

the world’s largest Muslims

population (over 200 million

people), plans to issue new

Islamic finance laws which

are designed to encourage

foreign investment in the

burgeoning industry. Despite

being inhabited by ten per cent

of the world’s Muslim

community, Indonesia has so

far lagged behind countries

such as Hong Kong, Malaysia

and Singapore.

However, Dr Muhammad

Syafii Antonio of Indonesia’s

Central Bank and regulator,

Bank Indonesia, has publicly

stated that the country is

trying hard to transform its

image and grab a slice of the

$700 billion Islamic finance

market. ‘The issue of Islamic

bonds is a strategic instrument

for the national economy’, he

says. Dr Antonio indicates his

hope that the new legislation

will increase Islamic

investment in the national

bond market from 2.3 per cent

now to five per cent in the

next two years.

Domestic Islamic insurance

(takaful) operators are also

hoping for a favourable

framework to be introduced

by the authorities. There are

currently over 40 providers of

takaful in the country,

although the sector anticipates

large-scale growth if Bank

Indonesia introduces

regulatory changes

accommodating this type of

insurance. (More information

on takaful in Indonesia can be

found in the ‘Takaful focus’

section of this issue, p14).

Plans are afoot for a new joint

venture insurance firm in Egypt.

To be named Arab Orient

Takaful Insurance Company, the

initiative follows a similar

successful venture in Syria.

The new company will be the

product of an agreement

between Amlak Finance, the

largest real estate financier in

the Middle East, Arab Orient

Insurance Company PSC, a

member of Al Futtaim Group of

companies, and Abu Dhabi

Islamic Bank (Egypt).

A Memorandum of

Understanding has been in place

between the three outfits since

Amlak Finance’s successful

launch in Egypt in October last

year. ‘The Egyptian market has

always been a key attraction to

UAE investments, and with this

new partnership I am confident

of the future success of this

entity,’ said Arif Alharmi, CEO

of Amlak Finance.

Abu Dhabi Islamic Bank is

well placed to grow in the

Egyptian market since its

acquisition of National Bank for

Development in Egypt in 2007.

According to Khamis Buharoon,

chairman of the Abu Dhabi

Islamic Bank in Egypt, ‘this

partnership is reflective of our

strong commitment to the

Egyptian market, which

represents a key growth market

for the Abu Dhabi Islamic

Bank internationally’.

www.newhorizon-islamicbanking.com IIBI 5

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