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Monthly Archives: August 2009
August 31, 2009
DR. ZULKIFLI HASAN
Malaysia Independence Day
The struggle to search for independence began in 1511 and took more than 446 years. It ended with the declaration of national independence on 31st August 1957. On that day, YTM Tunku Abdul Rahman Putra Al-Haj poignantly read out the Proclamation of Independence of Malaya.
Transcript of YTM Tunku Abdul Rahman’s speech as follows:
Your Majesties, Your Royal Highnesses, Your Highnesses, Your Excellencies, People of Persekutuan Tanah Melayu.
I am indeed proud that on this, the greatest day in Malaya’s history it falls to my lot to proclaim the formal independence of this country. Today as new page is turned, and Malaya steps forward to take her rightful place as a free and independent partner in the great comity of nations – a new nation is born and though we fully realize that difficulties and problems lie ahead, we are confident that, with the blessing of God, these difficulties will be overcome and that today’s events, down the avenues of history, will be our inspiration and our guide. It is therefore with a feeling of particular solemnity that we have listened to the eloquent words of His Royal Highness and in particular to the moving message he has conveyed from Her Majesty the Queen. We are indeed honored that Her Majesty should have deputed her own uncle, His Royal Highness, to be with us on this occasion particularly when we remember that he is no stranger to this land: We recall too with pleasure his previous visit to Malaya and happy recollections of his stay have remained with us.
His Royal Highness has spoken in moving words of the past associations of our two countries. We in Malaya have a long history, but we do not lightly forget old relationships.
For many years past our fortunes have been linked with those of Great Britain and we recall in particular the comradeship of two world wars. We remember too the products of our association; justice before the law, the legacy of an efficient public service and the highest standard of living in Asia. We shall therefore always remember with gratitude the assistance which we have received from Great Britain down our long path to nationhood; an assistance which culminated today with the proclamation of Malaya’s independence.
But the long-standing friendship between our countries does not cease with independence: Rather it takes on a new form. As you have heard in the gracious message from Her Majesty the Queen, Malaya will henceforward take her place in the great Commonwealth of Independent Nations whose members are found in all parts of the world, and as an equal partner in that great association. We in this country will do all in our power to promote its well-being in the interests of mankind in general and in the particular service of world peace.
Thus today a new chapter opens in our relationship with Britain; our colonial status has given place to full equality but we are confident that, fortified by old associations, and linked by old memories, our ties with Britain will grow ever stronger and more durable.
British will ever find in us her best friend, and it is a source of much gratification to my government that British civil servants will continue to serve in this country to assist us in the solution of the many problems which independence will present.
But while we think of the past, we look forward in faith and hope to the future; from henceforth we are masters of our destiny, and the welfare of this beloved land is our own responsibility: Let no one think we have reached the end of the road: Independence is indeed a milestone, but it is only the threshold to high endeavor — the creation of a new and sovereign state. At this solemn moment therefore I call upon you all to dedicate yourselves to the service of the new Malaya: To work and strive with hand and brain to create a new nation, inspired by the ideals of justice and liberty — a beacon of light in a disturbed and distracted world.
High confidence has been reposed in us; let us unitedly face the challenge of the years.
And so with remembrance for the past, and with confidence in the future, under the providence of God, we shall succeed.
PROCLAMATION OF INDEPENDENCE: IN THE NAME OF GOD, THE COMPASSIONATE, THE MERCIFUL. PRAISE BE TO GOD, THE LORD OF THE UNIVERSE AND MAY THE BLESSINGS AND PEACE OF GOD UPON HIS messengers. Whereas the time has now arrived when the people of the Persekutuan Tanah Melayu will assume the status of a free independent and sovereign nation among the nations of the World.
AND WHEREAS by an agreement styled the Federation of Malaya Agreement, 1957, between Her Majesty the Queen and Their Highness the Rulers of the Malay states it was agreed that the Malay states of lohore, Pahang, Negeri Sembilan, Selangor, Kedah, Perlis, Kelantan, Trengganu and Perak and the former Settlements of Malacca and Penang should as from the 31st day of August, 1957, be formed into a new Federation of States by the name of Persekutuan Tanah Melayu.
AND WHEREAS it was further agreed between the parties to the said agreement that the Settlements of Malacca and Penang aforesaid should as from the said date cease to form part of Her Majesty’s dominions and that Her Majesty should cease to exercise any sovereignty over them.
AND WHEREAS it was further agreed by the parties aforesaid that the Federation of Malaya Agreement, 1948, and all other agreements subsisting between Her Majesty the Queen and Their Highness the Rulers or anyone of them immediately before the said date should be revoked as from that date and that all powers and jurisdiction of Her Majesty or of the Parliament of the United Kingdom in or in respects of the Settlements aforesaid or the Malay States or the Federation as a whole should come to an end.
AND WHEREAS effect has been given in the Federation of Malaya Agreement, 1957, by Her Majesty the Queen, Their Highnesses the Rulers, the Parliament of the United Kingdom and Legislatures of the Federation and of the Malay States.
AND WHEREAS a constitution for the government of the Persekutuan Tanah Melayu has been established as the supreme law thereof.
AND WHEREAS by the federal constitution aforesaid provision is made to safeguard the rights and prerogatives of Their Highness the Rulers and the fundamental rights and liberties of the people and to provide for the peaceful and orderly advancement of the Persekutuan Tanah Melayu as a constitutional monarchy based on parliamentary democracy.
And whereas the federal constitution aforesaid having been approved by an Ordinance of the Federal Legislatures, by the Enactments of the Malay states and by resolutions of the legislatures of Malacca and Penang has come into force on the 31st day of August, 1957, aforesaid.
Now in the name of God the Compassionate, the Merciful, I, Tunku Abdul Rahman Putra Ibni Al-Marhum Sultan Abdul Hamid Halimshah, prime minister of the Persekutuan Tanah Melayu, with the concurrence and approval of Their Highnesses the Rulers of the Malay States do hereby proclaim and declare on behalf of the people of the Persekutuan Tanah Melayu that as from the 31st day of August, 1957 the Persekutuan Tanah Melayu comprising the states of Lohore, Pahang, Negri Sembilan, Selangor, Kedah, Perlis, Kelantan, Trengganu, Perak, Malacca and Penang is and with God’s blessing shall be forever a sovereign democratic and independent state founded upon the principles of liberty and justice and ever seeking the welfare and happiness of its people and the maintenance of a just peace among all nations.
To all fellow Malaysian, Merdeka, merdeka, merdeka.
Best Regards

ZULKIFLI HASAN

DURHAM
Texas, United States of America
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August 28, 2009
DR. ZULKIFLI HASAN
Korea to exempt Islamic bonds from distributions tax
Available at:
http://www.bloomberg.com/apps/news?pid=20601080&sid=axmMs9VeBfQE
By Jungmin Hong: South Korea plans to exempt Islamic bonds from tax on distributions as it seeks to expand its capital markets and attract Muslim wealth from overseas. The rules would affect Ijarah and Murabahah securities, the most common forms of Islamic bonds, which are also known as sukuk, the Ministry of Strategy and Finance said in an e-mailed statement yesterday. The ministry will submit its proposals to the National Assembly by the end of September, it said.
Special treatment for sukuk “will draw large-scale capital from countries in the Middle East, which are likely to benefit from rising oil prices, while helping the nation diversify funding,” according to the statement. Global sukuk sales jumped to a record $31 billion in 2007 from $2.2 billion in 2000 as surging crude prices spurred economies in the oil-rich Persian Gulf, according to data compiled by Bloomberg. They then plunged to $13.9 billion last year as energy demand slumped amid the global credit crunch, the data show. Oil closed at $72.04 a barrel yesterday from an intra-day low of $32.4 on Dec. 19.
Muslim Shariah law forbids interest payments and speculation, so sukuk are asset-based securities paying a profit distribution to investors rather than interest. GS Caltex Corp., South Korea’s second-largest oil refiner, hired Merrill Lynch & Co. and Malaysia-based RHB Investment Bank Bhd. to help it sell what may be the country’s first sukuk, Chay Wai Leong, RHB Investment’s chief executive officer, said in April. Seoul-based Daewoo Securities Co. will “actively seek” opportunities to sell sukuk, it said last year. Indonesia’s government drew $4.7 billion of orders for its first sale of dollar sukuk, seven times the $650 million of securities on offer, debt management office Director General Rahmat Waluyanto said in April.
Best Regards

ZULKIFLI HASAN

DURHAM
Estadio Santiago Barnebeu, Madrid, Spain
Islamic finance news
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August 24, 2009
DR. ZULKIFLI HASAN
Central Bank of Malaysia Bill 2009
Assalamualaikum and Happy Ramadhan al-Mubarak,
Dear Readers,
Please find enclosed the Central Bank of Malaysia Bill 2009 for your reference. This Bill is really significant to Islamic finance industry in Malaysia as it involves some major amendment to the existing legal frameworks particularly Part VII section 51-60. I highlight several essential provisions pertaining to the Shari’ah Advisory Council.
Section 53. Appointment of members to Shariah Advisory Council

53. (1) The Yang di-Pertuan Agong may, on the advice of the Minister after consultation with the Bank, appoint from amongst persons who are qualified in the Shariah or who have knowledge or experience in the Shariah and in banking, finance, law or such other related disciplines as members of the Shariah Advisory

Council.

(2) If a judge of the High Court, the Court of Appeal or the Federal Court, or a judge of the Shariah Appeal Court of any State or Federal Territory, is to be appointed under subsection (1), such appointment shall not be made except— (a) in the case of a judge of the High Court, the Court of Appeal or the Federal Court, after consultation by the Bank with the Chief Justice; and (b) in the case of a judge of the Shariah Appeal Court of any State or Federal Territory, after consultation by the Bank with the Chief Shariah Judge of the respective State or Federal Territory, as the case may be.

(3) A member of the Shariah Advisory Council appointed under subsection (1) shall hold office on such terms and conditions as may be provided in their respective letters of appointment, and shall be eligible for reappointment.

(4) The members of the Shariah Advisory Council shall be paid such remuneration and allowances as may be determined by the Board from the funds of the Bank.
Section 56. Reference to Shariah Advisory Council for ruling from court or arbitrator

56. (1) Where in any proceedings relating to Islamic financial business before any court or arbitrator any question arises concerning a Shariah matter, the court or the arbitrator, as the case may be, shall—

(a) take into consideration any published rulings of the Shariah Advisory Council; or

(b) refer such question to the Shariah Advisory Council for its ruling.

(2) Any request for advice or a ruling of the Shariah Advisory Council under this Act or any other law shall be submitted to the secretariat.
Section 57. Effect of Shariah rulings

57. Any ruling made by the Shariah Advisory Council pursuant to a reference made under this Part shall be binding on the Islamic financial institutions under section 55 and the court or arbitrator making a reference under section 56.
Section 58. Shariah Advisory Council ruling prevails

58. Where the ruling given by a Shariah body or committee constituted in Malaysia by an Islamic financial institution is different from the ruling given by the Shariah Advisory Council, the ruling of the Shariah Advisory Council shall prevail.
For full text, click here
The Central Bank of Malaysia Bill 2009
Enjoy reading!

Best Regards

ZULKIFLI HASAN

DURHAM
Fujairah, United Arab Emirates.
Islamic finance news
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August 22, 2009
DR. ZULKIFLI HASAN
E-Lecture on Uqud in Islamic Financial Services
Assalamualaikum and Happy Ramadhan al-Mubarak,
As an additional effort to disseminate knowledge on Islamic finance as part of my intellectual journey and contribution, I am very pleased to share my series of lecture on Islamic finance related issues. The series of lecture are available on USTREAM TV. You may watch the first lecture series on the following address.
http://www.ustream.tv/recorded/2026400
.
Please apologize for the defects and shortcomings. This is only my small effort of knowledge-sharing for the sake of Allah the Almighty.
Best Regards

ZULKIFLI HASAN

DURHAM UNIVERSITY
Liverpool, United Kingdom
My Thought
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August 20, 2009
DR. ZULKIFLI HASAN
Luxembourg Stock Exchange becomes an important European centre for Sukuk
Source: Le Voix E paper, Originally taken from Salaheddine Ahmedi
The Luxembourg Stock Exchange is an important European centre for the quotation of sukuk issuances. The statement follows after the admission of a new issue of sukuk for a total value of USD 1.5 billion. The issuer is the oil company owned by the Malaysian government, Petroliam Nasional (Petronas), which simultaneously made a bond debt quotation for an amount of USD 3 billion. The Luxembourg Stock Exchange lists 16 sukuk for a total amount of USD 7.3 billion, further positioning itself among the major players for this niche product and enabling it to compete in terms of value with notably London.
In 2009, global sukuk issuances could amount to USD 27.5 billion, according to a report by global consultancy firm Ernst & Young (E&Y) on Islamic finance, of which sukuk represents only one part. The E&Y report also highlights that this market weakened a bit in 2008, with issues worth USD 15.5 billion compared to USD 47 billion in 2007. Proving the interests of the Grand-Duchy, the Luxembourg Stock Exchange advocates a practical approach in requesting documentation pertaining to the inherent transactions rather than that of an exhaustive description of the sukuk structure. In addition, Clearstream, which is the international central depositary of Luxembourg, has adapted its technical procedures to take into account the specific nature of these products.
Finally, according to representatives of HSBC Securities Services, specialists in Islamic Finance, the Luxembourg government is at the moment studying the possibility of financing various activities of state or public entities through sukuk. Equivalent to bonds in Islamic finance, the sukuk should conform to Sharia law. Among other rules, the Sharia prohibits loans with interest, on which lies the principle of the classic bond issue. In the case of sukuk, the issues should correspond to a specific investment project and the profits paid annually to owners corresponding to profits coming from the development or utilisation of the underlying project. Hence, if losses are incurred, the owners don’t receive anything; a risk notion is thus associated with the return on investment of a sukuk.
Best Regards

ZULKIFLI HASAN

DURHAM
World Museum, Liverpool, United Kingdom
Islamic finance news
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BLOG OF KNOWLEDGE (Shari'ah, Law, Islamic Finance and Muslim News)
Shari'ah, Law, Islamic Finance and Muslim News
Monthly Archives: November 2009
November 25, 2009
DR. ZULKIFLI HASAN
My Thought: BBA Issue in Malaysia
INTERVIEW ON BBA ISSUE IN MALAYSIA
1. You mentioned that the main issue of the BBA facilities is not about the selling price or right for rebate but concerns the fundamental issue of fiqh muamalat which extremely discourages any act of legal trick or fiqh hiyal as can be clearly found in the BBA instruments. Can you please explain in lay men’s term what all these means and how BBA consist of legal trick?
To address this issue, it is essential to have better understanding on the conceptual framework of Bay Bithaman Ajil (BBA) facility. Having in mind that people are sometimes confused with BBA and bay’ al-Inah, it is worth mentioning the difference between the two. BBA is only a mode of payment and BBA facility is actually structured under bay al-Inah concept. Bay’ al-Inah refers to the concept of buying and selling between two parties where the bank sells an asset (be it real or fictitious) to the customer on a deferred payment and then the financier immediately repurchases the asset for cash at a discount or vice versa. As a simple illustration, we may refer to the mechanism used in personal financing. Customer X needs cash for his personal consumption and applies for personal financing based on concept of bay al-Inah. To facilitate the financing arrangement, Bank X will sell a computer or a small lot of its fixed asset to the customer on deferred payment at selling price of RM5000 and then immediately repurchases the computer for cash at a discount price of RM4000. This kind of practice is questionable since the real intention of the contract is not for actual sale transaction but to provide cash to the customer. In the absence of several elements of valid contract, I am of the view that this kind of practice may constitute legal device which is quite equivalent to interest-based financing.
Although contract of Inah is confirmed from Shafi’i point of view which is even hardly to prove with satisfactorily evidence that he has expressly declared its validity, it is nevertheless condemned by numerous fuqaha as it has been seen as something similar to riba-based financing. The Malikis, Hanbalis, Ibnu Taymiyah, Ibnu Qayyim and contemporary fuqaha such as Yusuf Al-Qaradawi, Wahbah Al-Zuhailiy and others vividly hold that contract of Inah is not valid. If this is not sufficient to convince the proponents of bay al-Inah, perhaps judgment of the High Court in the case of Arab Malaysian Finance Berhad vs Taman Ihsan Jaya and Ors provides a strong message about the status of bay al-Inah. Despite of the High Court judgment was overruled by the Court of Appeal, the decision made by the learned judge at least effectively highlighted several significance issues on the validity and actual implementation of BBA facility.
2. Since no one has appealed against the Court of Appeal’s decision that favoured the banks, what can consumers of BBA do in the event they default?
Besides going to the court of justice as a settlement of last resort, there are several avenues available for the consumers. They may consult the Bank Negara Malaysia Laman Informasi Nasihat dan Khidmat, the Association of Islamic Banking Institutions of Malaysia and any other consumer associations. These institutions may provide some assistance, guidance and information for any potential settlement or action that needs to be taken for the consumers.
In addition, as an ex-in-house legal counsel for one of Islamic banks in Malaysia, I personally view that the best approach for the consumers is to discuss and consult the extent of their indebtedness with the financial institutions. I believe that the financial institutions are surely willing to offer various financial arrangements to the consumers for possible settlements either via refinancing, rescheduling or any other available financial instruments. As far as I concern, the financial institutions mainly concern about debt recovery and the consumers on the other hand if possible try to avoid any legal action against them. At this point, mutual understanding and agreement based on mutual consideration on any settlement of debt by both the financial institutions and the consumers are much more preferable.
3. Do you think Bank Negara should intervene in some way? How and what should be done?
I agree that the Bank Negara Malaysia (BNM) may interfere to certain extent. But I would like to insist here that any intervention or roles play by the BNM will only provides solution from regulator’s perspective. For instance, the initiative taken by the BNM to introduce the Central Bank of Malaysia Act 2009  which affirms the authority of the National Shari’ah Advisory Council (SAC) as the sole authoritative body on Shari’ah matters pertaining to Islamic banking, takaful and Islamic finance is commendable. This recent amendment enhances the status of the SAC’s rulings to be binding upon the court as well as arbitration.
While affirming the essence of regulation to provide strong and robust framework for Islamic finance, I also have strong faith on the institutional and community approaches. The institutional approach requires the financial institutions to pro-actively consider the overall issue in Islamic finance which may affect the industry as a whole. In this regard, product innovation and financial engineering with maqasid Shari’ah as the paramount consideration for Islamic financial products are much needed. To complement this, community approach that nurtures the demand towards truly Islamic and Shari’ah-based financing products may create motivation to financial institutions to offer such kind of financing instruments.
4.         What is your advice to consumers who are planning to take up BBA?
In the context of Malaysian consumer perspective, they do not have much choice about the availability of financing facilities particularly retail products. Furthermore, the consumers are motivated with price and package of financing that suit their needs and financial capabilities. Hence there must be a paradigm shift on the consumer’s way of thinking and approach towards Islamic financial products including BBA. While believing that education and awareness about general understanding of Islamic financial products on the part of consumer are of the essence, I am of the view that the consumers must also be very diligent and concern about the mechanism of Islamic financial products that they plan to subscribe. With the basic knowledge of contemporary applied Islamic finance, then the consumer may be able to influence the market particularly financial institutions to satisfy their needs towards Shari’ah-based financing.
5. Can our banks sell things to customers? From what I understand, a bank is supposed to be a financial institution that gives out loans to clients, not sell goods. Is the role of the housing loan in BBA then contradicts the banking laws in any way? Must BBA housing loan adhere only to the Islamic Banking Act or must also adhere to BAFIA?
Let me first address the issue on the IBA and the BAFIA in order to clarify the framework of these both acts. The IBA is relevant to full fledged Islamic banks while the BAFIA particularly section 124 is concerned upon Islamic window i.e. conventional banks that offer Islamic financial services. In this regard, Section 124 (6) specifically exempts the application of the BAFIA to Islamic banks. In other words, Islamic banks shall adhere to the IBA and Islamic window to the BAFIA.
As regard to the second issue, section 33 and Section 66 of the BAFIA 1989 provides certain restriction on trading and investment in which the former require the banks to not to engage in any trading business other than its licensed business and the latter restricts the banks to have any shares in companies as well as immovable property. BNM nevertheless has the authority to give exemption on these restrictions. Furthermore, section 124 (1) allows Islamic window to carry on Islamic banking business or Islamic financial business in addition to its existing licensed business. At this point, Islamic banking business or Islamic financial business refers to any business that free from element which is not approved by religion of Islam and this includes sale or trading transaction such as in the case of BBA.
7.	Do you think the BBA contradicted both the laws as ruled by the High Court Judge (before the decision was overturned)?
As highlighted by the learned judge in this case, I personally view that it is a matter of interpretation. There is no single definition of BBA or other Islamic financial instruments either in the IBA or the BAFIA. Moreover, the absence of precise definition of Islamic banking business leads to uncertainty and vagueness. Both the IBA and BAFIA are general, non-exhaustive and non-comprehensive. If this issue has not been resolved, I will not be surprised that there will be another controversial court’s judgment which may give huge implications to Islamic finance industry in the future. Perhaps, the recent Central Bank of Malaysia Act 2009 (CBA) may resolve this issue where it is mandatory for the court or arbitrator to refer the National Shari’ah Advisory Council for deliberation on any Shari’ah issue. Despite of this recent legal development, it is worth noting that the CBA has jurisdiction to only in matters fall under the auspices of the BNM, so as to exclude the Shari’ah board in the Securities Commission. This is another grey area that needs to be resolved.
“Wisdom is knowing what to do next, skill is knowing how to do it, and virtue is doing it.” By David Starr Jordan
Best Regards

ZULKIFLI HASAN

DURHAM, UK
With Dr. Hussain Pirashteh and Dr. Abdul Rahman Haqi in Dubai, UAE
Islamic finance news
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November 24, 2009
DR. ZULKIFLI HASAN
Would Islamic Finance Prevent Another Financial Crisis?
Assalamualaikum,
Dear Readers,
Another brief article in “Utusan Malaysia”. Click here:
Would Islamic Finance Prevent Another Financial Crisis?
“What we know about the global financial crisis is that we don’t know very much.”

[Paul A. Samuelson]
Enjoy reading!
Best Regards

ZULKIFLI HASAN

DURHAM, UK
MILAN, ITALI
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November 23, 2009
DR. ZULKIFLI HASAN
The Effect of the Central Bank of Malaysia Act 2009: Part VII, Section 51-58
Assalamualaikum,
Dear Readers,
Malaysian government took a further step in enhancing the framework of Shari’ah governance by passing the Central Bank of Malaysia Act 2009 (CBA). This new legislation was passed by the Parliament in July 2009 which received royal assent on 19 August and gazetted on 3rd September 2009. The CBA consists of 100 sections divided into 15 parts.  Unlike the Central Bank of Malaysia Act 1958, the CBA inserts new provision in Part VII which covers provision pertaining to Islamic financial business. I take this opportunity to elaborate the effect of section 51-58 of the CBA that enhances the framework of Shari’ah governance in Malaysia.
Section 51-58 of the CBA clarifies and enhances Shari’ah governance framework in Malaysia in the following aspects: –
(i)	It grants authority to the Central Bank of Malaysia (BNM) to establish the National Shari’ah Advisory Council (SAC) and to specify its distinctive functions as well as secretariat to assist the SAC in carrying out its definitive roles. This vividly clarifies the roles and responsibilities of the SAC as the highest and sole authority in Islamic financial matters.
(ii)	In parallel with the status of the SAC as the highest authority in matters pertaining to Islamic banking, finance and takaful, the appointment of the SAC members shall be made by the Yang di-Pertuan Agong. The SAC’s remuneration and the terms of reference then shall be determined by the BNM.
(iii)	It sets the minimum fit and proper criteria of the SAC members. The candidate must at least knowledgeable and qualified in Shari’ah or has appropriate knowledge and experience in banking, finance and law. Section 53 of the CBA also allows expert in other related disciplines as well as judges of the civil court and shari’ah court to be the SAC members. This provision is unique as combination of mixed expertise amongst the SAC members would potentially contribute towards more solid and sound Shari’ah rulings.
(iv)	The defunct of section 16B of the Central Bank of Malaysia (Amendment) Act 2003 merely provides that the Shari’ah rulings issued by the SAC are binding upon the arbitrator. Section 57 of the CBA then affirms the legal status of Shari’ah pronouncement issued by the SAC to be binding upon both the court as well as arbitration.
(v)	The court or arbitrator is not obligated to refer the SAC to resolve any Shari’ah issue in the previous regulation. Section 58 of the CBA on the other hand makes it mandatory for the court or arbitrator to refer the SAC for deliberation on any Shari’ah issue as well must take into account its existing Shari’ah rulings.
(vi)	It clarifies the status of Shari’ah ruling issued by the SAC in the event it contradicts with Shari’ah pronouncement of Shari’ah committee at individual Islamic financial institution (IFI). The Shari’ah rulings of the SAC shall prevail and have binding force over the Shari’ah resolutions of Shari’ah committee of IFI.
For full version of the CBA, click here:-
The Central Bank of Malaysia Act 2009
Law is order, and good law is good order. [Aristotle]
Best Regards

ZULKIFLI HASAN

DURHAM, UK
Sultan Qaboos Grand Mosque, Muscat, Oman
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November 21, 2009
DR. ZULKIFLI HASAN
The 500 Most Influential Muslims in the World
“The 500 Most Influential Muslims 2009,” edited by Professors John Esposito and İbrahim Kalın.
1. His Majesty King Abdullah bin Abdul Aziz Al Saud, King of Saudi Arabia,

2. His Eminence Grand Ayatollah Hajj Sayyid Ali Khamenei,Supreme Leader of the Islamic Republic of Iran

3. His Majesty King Mohammed VI, King of Morocco

4. His Majesty King Abdullah II bin Al Hussein, King of the Hashemite Kingdom of Jordan

5. His Excellency Recep Tayyip Erdogan, Prime Minister of the Republic of Turkey

6. His Majesty Sultan Qaboos bin Sa’id al Sa’id, Sultan of Oman

7. His Eminence Grand Ayatollah Sayyid Ali Hussein Sistani, Marja of the Hawza, Najaf

8. His Eminence Sheikh Al Azhar Dr Muhammad Sayyid Tantawi, Grand Sheikh of the Al Azhar University,

9. Sheikh Dr Yusuf Qaradawi, Head of the International Union of Muslim Scholars

10. His Eminence Sheikh Dr Ali Goma’a, Grand Mufti of the Arab, Republic of Egypt

11. His Eminence Sheikh Abdul Aziz Ibn Abdullah Aal al Sheikh, Grand Mufti of the Kingdom of Saudi Arabia

12. Mohammad Mahdi Akef, Supreme Guide of the Muslim Brotherhood

13. Hodjaefendi Fethullah Güllen, Turkish Muslim Preacher

14. Amr Khaled, Preacher and Social Activist

15. Hajji Mohammed Abd al Wahhab, Ameer of the Tablighi Jamaat, Pakistan

16. His Royal Eminence Amirul Mu’minin Sheikh as Sultan Muhammadu Sa’adu Abubakar III, Sultan of Sokoto

17. Seyyed Hasan Nasrallah, Secretary General of Hezbollah

18. Dr KH Achmad Hasyim Muzadi, Chairman of Nahdlatul Ulama, Indonesia

19. Sheikh Salman al Ouda, Saudi Scholar and Educator

20. His Highness Shah Karim al Hussayni, The Aga Khan IV, 49th Imam of the Ismaili Muslims

21. His Highness Emir Sheikh Mohammed bin Rashid al Maktoum, Ruler of Dubai, Prime Minister of the UAE

22. His Highness General Sheikh Mohammed bin Zayed al Nahyan, Crown Prince of Abu Dhabi

23. Sheikh Dr M Sa’id Ramadan al Bouti, Leading Islamic Scholar in Syria

24. His Majesty Sultan Haji Hassanal Bolkiah Mu’izzaddin Waddaulah, Yang Di-Pertuan of Brunei Darussalam

25. His Eminence Professor Dr Sheikh Ahmad Muhammad al Tayeb, President of Al Azhar University

26. His Eminence Mohammad bin Mohammad al Mansour, Imam of the Zaidi Sect of Shi‘a Muslims

27. His Eminence Justice Sheikh Muhammad Taqi Usmani, Leading Scholar of Islamic Jurisprudence, Pakistan

28. His Excellency President Abdullah Gül, President of the Republic of Turkey

29. Sheikh Mohammad Ali al Sabouni, Scholar of Tafsir

30. His Eminence Sheikh Abdullah Bin Bayyah, Deputy-Head of the International Union of Muslim Scholars

31. Her Eminence Sheikha Munira Qubeysi, Leader of the Qubeysi Movement

32. His Eminence Sheikh Ahmad Tijani Ali Cisse, Leader of Tijaniyya Sufi Order

33. Sheikh al Habib Umar bin Hafiz, Director of Dar al Mustafa, Tarim, Yemen

34. Khaled Mashaal, Leader of Hamas

35. Professor Dr M Din Syamsuddin, Chairman of Muhammadiyya, Indonesia

36. Maulana Mahmood Madani, Secretary General of Jamiat Ulemae-Hind, India

37. Sheikh Habib Ali Zain al Abideen al Jifri, Director General of the Tabah Foundation, UAE

38. Sheikh Hamza Yusuf Hanson, Founder of Zaytuna Institute, USA

39. His Eminence Sheikh Professor Dr Mustafa Ceric, Grand Mufti of Bosnia and Herzegovina

40. His Excellency Professor Dr Ekmelledin Ihsanoglu, Secretary General of the OIC

41. General Mohammad Ali Jafari, Commander of the Revolutionary Guard, Iran

42. Dato’ Haji Nik Abdul Aziz Nik Mat, Religious Guide of the Islamic Party of Malaysia

43. Motiur Rahman Nizami, Ameer of the Jamaat-e-Islami, Bangladesh

44. Professor Sayid Ameen Mian Qaudri, Barelwi Leader and Spiritual Guide

45. His Holiness Dr Syedna Mohammad Burhannuddin Saheb, 52nd Da‘i l-Mutlaq of the Dawoodi Bohras

46. Dr Abdul Qadeer Khan, Pakistani Nuclear Scientist

47. Professor Dr Seyyed Hossein Nasr, Islamic Philosopher

48. Abdullah ‘Aa Gym’ Gymnastiar, Indonesian Preacher

49. Sheikh Mehmet Nazim Adil al Qubrusi al Haqqani, Leader of Naqshbandi-Haqqani Sufi Order

50. Dr Abd al Aziz bin Uthman Altwaijiri, Secretary General of the Islamic Educational.

450. Dato’ Seri Anwar Ibrahim- The PKR De Facto Leader.
For full list of the 500 Most Influential Muslims in the World, click here:
The 500 most influential Muslims in the world
Best Regards

ZULKIFLI HASAN

DURHAM, UK
The leaders who work most effectively, it seems to me, never say “I.” And that’s not because they have trained themselves not to say “I.” They don’t think “I.” They think “we”; they think “team.” They understand their job to be to make the team function. They accept responsibility and don’t sidestep it, but “we” gets the credit. This is what creates trust, what enables you to get the task done. By Peter Drucker
Estadio Santiago Bernabeu, Madrid, Espania
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November 20, 2009
DR. ZULKIFLI HASAN
Islamic Finance in the World University
Assalamualaikum,
Dear Readers,
My brief article in “Utusan Malaysia”. Click here:
Islamic finance in the World University
Enjoy reading!
Best Regards

ZULKIFLI HASAN

MILAN, ITALY
Duomo, Milano, Italia
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BLOG OF KNOWLEDGE (Shari'ah, Law, Islamic Finance and Muslim News)
Shari'ah, Law, Islamic Finance and Muslim News
Daily Archives: March 30, 2010
March 30, 2010
DR. ZULKIFLI HASAN
The Current Economic Crisis – Is Islamic Finance a Solution?
The Current Economic Crisis – Is Islamic Finance a Solution?
By Parvez Ahmed Available at:
http://www.huffingtonpost.com/parvez-ahmed/the-current-economic-cris_b_516965.html
Throughout the current economic and financial crisis one contrarian statistic has stood out. Financial assets offered by the Islamic Financial Services Industry (IFSI) and generally classified as “Shariah-compliant,” were less affected by the crisis. Economist Loretta Napoleoni during a lecture at the University of New Mexico proclaimed, “Islamic finance … [a] system [that] could help us to get out of the current crisis.” Writing in the influential Turkish daily Today’s Zaman, columnist Ibrahim Ozturk declared, “Islamic finance has entered a bright new stage of development, emerging after the global financial crisis as a more equitable and efficient alternative to the Western approach.” The widely read Arabic daily Asharq Al Awsat opined, “Islamic banks are untouched by the current crisis due to the nature of Islamic banking especially that it does not deal in debt trading and distances itself from market speculation that takes place in European and American banks.” How do such claims stack up against reality? Is Islamic finance different enough from conventional finance to avoid its pitfalls?
The IFSI, which has marketed itself as being an alternative to the conventional financial system, has come a long way from its rather modest and relatively recent beginnings. The IFSI was recently estimated by Moody’s to be worth $700 billion and projected by the Islamic Development Bank to be $2.8 trillion by 2015. By 2015, majority of the IFSI will be geographically centered in the Gulf Cooperation Council (GCC) region while the South Asian region will provide about 15 to 25 percent of the total services. The IFSI encompasses almost all of the institutional and architectural features of the conventional finance industry. However, it should be noted that the size of IFSI relative to the Conventional Finance Industry (CFI) is very small (about 2 percent). In other words the IFSI has not been sufficiently stress tested to proclaim its efficacy when applied to a broader set of economic situations.
One distinguishing feature of IFSI has been its insistence that in complying with Shariah (the jurisprudence of Islam) it considers dealing with interest as totally unacceptable. The avoidance of interest reflects verses in the Holy Quran (3:130; 2:175; 4:161) which forbid riba, most often and commonly translated as interest rates. The IFSI contends that it has replaced interest rates with rate of profit on equity, profit sharing finance and markup transactions.
In practice, the contracts of the IFSI fall short of the “interest-free” claims it makes. IFSI contracts do allow for presence of interest rates, mostly indirectly but sometimes directly, albeit in small measures. Islamic mutual funds for example allow investment in stocks of companies that use interest based debt (current practices allow 33 percent debt-ratios). Sukuks, described as Islamic bonds, guarantee a fixed rate of return, which to most financial observers look like interest. In murabaha, Islamic jurists opine that home buyer (mortgagor) is involved in credit sales and not a loan contract (as in traditional mortgages). Yet murabaha loan documents use the conventional terms like “note,” “loan,” and “interest” to describe its features much like any home mortgage contract. Moreover, the mark-up used in murabaha is usually benchmarked to a conventional interest rate.
This has given rise to what Rice University’s Mahmoud El-Gamal pejoratively calls Shariah-arbitrage, defined as the practice of extracting premium rents from participants in a captive-market for products labeled and perceived to be Shariah compliant. The paradox is not merely of academic interest. Among the producers and users of Islamic financial products there is pervasive skepticism. A unique insight about this perception is gathered from a recent research on the attitude of customers and bankers using IFSI. A significant majority (6 in 10) believe that the development of Islamic banking has more to do with being faithful to Islam than any other criterion (although the proponents of Islamic finance often cite the superiority of IFSI is due to its purported commitment to social justice and welfare). Nearly 7 in 10 believe that the “rate of profit” or “markup profit” charged by Islamic banks do not differ much from interest based transactions offered by the CFI. Potential patrons (7 in 10) are unwilling to transact with the IFSI because they do not find much difference between the IFSI and the CFI.
In discussing how bankruptcy courts are likely to rule on foreclosures under IFSI contracts like ijarah (lease-based transactions), murabaha (cost plus markup sale) and musharaka (partnership contract), legal experts observe, “We would not anticipate that this type of foreclosure would differ materially from that of a conventional mortgage foreclosure. … The ‘borrower’ holds all the benefits and risks of ownership in a Musharaka transaction as well.” As such in bankruptcy and foreclosure proceedings, IFSI providers have the same legal protections as those afforded to CFI institutions in debt based transactions.
The current state of IFSI is prohibition driven primarily centered on taking existing CFI contracts and pronouncing the Islamicity or lack thereof for those contracts. The IFSI then proceeds to institute contractual changes that alter the structure of the contract to make them contractually Shariah-compliant without addressing any of their possibly inherent fault lines. This process is enabled by Shariah-boards, which pronounce the Islamicity of such contracts. The Shariah-boards are beset with agency problems (conflict of interest) as they are not subjected to disclosure rules equivalent in scale and scope to those for corporate boards, which many argue are in urgent need for more reform and transparency themselves! According to a recent study the top 5 Shariah-scholars makeup 15 percent of the entire universe of Shariah board positions. Only 180 scholars are involved in nearly 1000 Shariah board positions. This stifles innovations and fosters unhealthy imitations.
One thing is clear, if Islamic Finance is to remain restricted to Muslims then not only will Islamic Finance not save the day but it will also pervert the mission of Prophet Muhammad, described in the Quran (21:07) as a mercy to all humanity (creation, to be precise). The emphasis on the prohibition based aspects of Shariah have led to missed opportunities to promote the maqasid or objectives of Shariah whose aims are not prohibition-driven but rather, inclusive and egalitarian. The maqasid or objectives of Shariah, is to protect and preserve life, mind, faith, property and offspring, which according to the noted Andalusian Islamic scholar Abu Ishaq al-Shatibi is a set of objectives that are common to all religions and must be the transcendent framework to evaluate all Islamic law, social obligations and contracts (financial or otherwise). The attainment of these goals require the development of a positive and inclusive vision, which can truly address the many shortcomings that plagues the world of finance — from bad regulation, to un-transparent contracts, to plain old greed.
Islamic finance has a role to play in the world of finance. But to do so, the IFSI will have to de-emphasize its innovations based on Shariah-arbitrage and engage in developing a more holistic vision that will resonate with all people of conscience, not just Muslims. Islamic mutual funds, for instance, will have to beyond the negative screens it primarily imposes in selecting stocks to developing positive screens that steer investments towards those opportunities that can lead to sustainable development strategies. Islamic finance must also promote the highest ethical standards and the most transparent disclosure rules, enabling a healthy dose of sunshine into the complex world of financial engineering (responsible for the now infamous credit default swaps that produced the toxic home loans). Islamic banks must also provide a positive vision of efficient and effective distribution of zakat wealth. Islamic financial institutions must develop innovative programs to produce equity based partnerships with small and medium enterprises, which are often the forgotten sector in the world of high finance. The Islamic financial service industry can truly differentiate itself by adopting a more socially conscious role that will enable them to not only fulfill the objectives of Shariah but also inject an alternative vision into the world of global finance allowing a necessary paradigm shift if only to avoid another global economic crisis.
Prof. Parvez Ahmed is a Fulbright Scholar and Associate Professor of Finance at the University of North Florida. With Seth Anderson he co-authored, “Mutual Funds: Fifty Years of Research Findings.” He is also a frequent commentator on Islam and the American Muslim experience. His blog can be read at:
http://drparvezahmed.blogspot.com/
“The easiest period in a crisis situation is actually the battle itself. The most difficult is the period of indecision-whether to fight or run away. And the most dangerous period is the aftermath. It is then, with all his resources spent and his guard down, that an individual must watch out for dulled reactions and faulty judgment.” Richard M. Nixon
Regards

ZULKIFLI HASAN

DURHAM, UK
The Bowes Museum, Durham.
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AUTHOR
DR. ZULKIFLI HASAN
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Al-Baqarah, 2:275
Calendar
March 2010

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T

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« Feb
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Academic
Centre for Islamic Area Studies at Kyoto University

Durham Islamic Finance Programme

Harvard University Islamic Finance Project

IIUM Institute of Islamic Banking and Finance

INCEIF

International Institute of Islamic Economics

International Shari'ah Research Academy for Islamic Finance

MIHE
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Abdullah Saeed

Mahmud El-Gamal

Mohammad Obaidullah

Monzer Kahf

Muhammad Nejatullah Siddiqi

Muhammad Umer Chapra

Sheikh Ahmad Raysuni

Sheikh Imran Hossein

Sheikh Muhammad Afifi Al Akiti

Sheikh Muhammad Said Ramadhan al-Buthi

Sheikh Muqbil Haadee

Sheikh Salman Audah

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Liquidity Management Centre
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Law of Banking and Law of Banking and

SecuritySecurity

DR. ZULKIFLI HASANDR. ZULKIFLI HASAN

1515thth November 2011November 2011

Week IXWeek IX

Contents Contents

�� Securities?Securities?

�� Capital Market?Capital Market?

�� Regulatory StructureRegulatory Structure

�� Regulatory FrameworkRegulatory Framework

�� Governing LawsGoverning Laws

�� SCSC

�� Bursa MalaysiaBursa Malaysia

�� LabuanLabuan Financial Services AuthorityFinancial Services Authority

Securities?Securities?

�� Securities: The generic term for any instrument traded on a Securities: The generic term for any instrument traded on a
stock exchange. stock exchange.

�� Shares: a security representing a portion of the holder's Shares: a security representing a portion of the holder's
capital in that company. capital in that company.

�� S 2 of the CMSA 2007: Securities means:S 2 of the CMSA 2007: Securities means:--

�� (a) debentures, stocks or bonds issued or proposed to be (a) debentures, stocks or bonds issued or proposed to be
issued by any government;issued by any government;

�� (b) (b) shares in or debentures of, a body corporate or an shares in or debentures of, a body corporate or an
unincorporated body; orunincorporated body; or

�� (c) (c) unit trusts or prescribed investments,unit trusts or prescribed investments,

�� and includes any right, option or interest in respect thereof, and includes any right, option or interest in respect thereof,
but does not include futures contractsbut does not include futures contracts

Capital MarketCapital Market

�� AA capital marketcapital market is a market for securities, where is a market for securities, where
business enterprises (companies) and governments can business enterprises (companies) and governments can
raise longraise long--term funds.term funds.

�� Primary market: securities are purchased directly from Primary market: securities are purchased directly from
an issuing companyan issuing company

�� Underwriting: The process of selling new issues to Underwriting: The process of selling new issues to
investors.investors.

�� IPO: A new stock issuance IPO: A new stock issuance

�� Secondary market: theSecondary market: the financial marketfinancial market where where
previously issuedpreviously issued securities and financial instruments securities and financial instruments
such as stocks, bonds, options and futures are bought such as stocks, bonds, options and futures are bought
and sold. and sold.

�� Ministry of FinanceMinistry of Finance

�� Securities CommissionSecurities Commission

�� Bursa Malaysia       Bursa Malaysia

Regulatory StructureRegulatory Structure

�� Capital Markets and Services Act 2007Capital Markets and Services Act 2007

�� Securities Industry (Central Depositories Act) Securities Industry (Central Depositories Act)

19911991

�� Securities Commission Act 1993Securities Commission Act 1993

�� Companies Act 1965Companies Act 1965

�� Offshore Companies Act 1990Offshore Companies Act 1990

�� LabuanLabuan Financial Services and Securities Act Financial Services and Securities Act

20102010

Governing LawsGoverning Laws

Securities CommissionSecurities Commission

�� PrePre--1993: Capital market is under the auspices 1993: Capital market is under the auspices
of Capital Issues Committee (MOF), Panel on of Capital Issues Committee (MOF), Panel on
TOM and FIC (PMD), (MITI), CCM and BNM.TOM and FIC (PMD), (MITI), CCM and BNM.

�� Established in 1993. Established in 1993.

�� Statutory bodyStatutory body

�� Regulating and developing capital marketRegulating and developing capital market

�� Supervising and monitoring the activities of the Supervising and monitoring the activities of the
market institutionmarket institution

�� To promote and maintain fair, efficient, secure To promote and maintain fair, efficient, secure
and transparent securities market.and transparent securities market.

Roles of the SCRoles of the SC

�� 1. Registering authority for prospectus of 1. Registering authority for prospectus of

corporationcorporation

�� 2. approving corporate bonds2. approving corporate bonds

�� 3. regulating securities and futures contract3. regulating securities and futures contract

�� 4. regulating take4. regulating take--over and mergerover and merger

�� 5. regulating unit trust schemes5. regulating unit trust schemes

�� 6. licensing and supervising licensed institutions6. licensing and supervising licensed institutions

Stock Exchange???Stock Exchange???

�� AA stock exchangestock exchange is anis an entity that provides entity that provides

services forservices for stock brokers and traders to trade stock brokers and traders to trade

securities. securities.

�� Functions:  Functions:

�� Raising capitalRaising capital

�� MobilisingMobilising savings for businesssavings for business

�� Facilitating company growthFacilitating company growth

�� Profit sharingProfit sharing

�� Government capital raisingGovernment capital raising

Bursa MalaysiaBursa Malaysia

�� Bursa Malaysia is an exchange holding company Bursa Malaysia is an exchange holding company

approved under Section 15 of the Capital approved under Section 15 of the Capital

Markets and Services Act 2007. Markets and Services Act 2007.

�� Operates a fullyOperates a fully--integrated exchange, offering integrated exchange, offering

the complete range of exchangethe complete range of exchange--related services related services

including trading, clearing, settlement and including trading, clearing, settlement and

depository services depository services

Bursa Malaysia Bursa Malaysia

�� The The Bursa MalaysiaBursa Malaysia or or Malaysia ExchangeMalaysia Exchange, , MYXMYX

previously known as previously known as Kuala Lumpur Stock ExchangeKuala Lumpur Stock Exchange

((KLSEKLSE, , Bursa Bursa SahamSaham Kuala LumpurKuala Lumpur) )

�� Dates back to 1930 when the Singapore Stockbrokers' Dates back to 1930 when the Singapore Stockbrokers'

Association was set up as a formal organisation dealing in Association was set up as a formal organisation dealing in

securities in Malaya. securities in Malaya.

�� In 1937 it was reIn 1937 it was re--registered as the Malayan Stockbrokers' registered as the Malayan Stockbrokers'

Association, but it still did not trade public shares.Association, but it still did not trade public shares.

�� By 1960s, the Malayan Stock Exchange was formed and By 1960s, the Malayan Stock Exchange was formed and

public trading of shares began in Maypublic trading of shares began in May

�� Kuala Lumpur Stock Exchange was reKuala Lumpur Stock Exchange was re--named named

Bursa MalaysiaBursa Malaysia in 2004. in 2004.

�� The main index for The main index for Bursa MalaysiaBursa Malaysia is KLCI. is KLCI.

�� In June 2006, a new index series jointly In June 2006, a new index series jointly

developed by developed by Bursa MalaysiaBursa Malaysia and FTSE and FTSE

Group was introduced known as FTSE Bursa Group was introduced known as FTSE Bursa

Malaysia Index Malaysia Index

Bursa MalaysiaBursa Malaysia

Operate all Islamic Markets businesses and activities initiated under
Bursa Malaysia

Bursa Malaysia Islamic
Services Sdn Bhd

Provide and disseminate prices and other information relating to
securities quoted on exchanges within the group

Bursa Malaysia Information
Sdn Bhd

Act as a nominee for the central depository and receive securities on
deposit for safe-custody or management

Bursa Malaysia Depository
Nominees Sdn Bhd

Provide, operate and maintain a central depositoryBursa Malaysia Depository
Sdn Bhd

Provide, operate and maintain a clearing house for the futures and
options exchange

Bursa Malaysia Derivatives
Clearing Bhd

Provide, operate and maintain a clearing house for the securities
exchange

Bursa Malaysia Securities
Clearing Sdn Bhd

Provide, operate and maintain registered electronic facility for secondary
bond market

Bursa Malaysia Bonds Sdn
Bhd

Provide, operate and maintain offshore financial exchangeLabuan International
Financial Exchange Inc.

Provide, operate and maintain a futures and options exchangeBursa Malaysia Derivatives
Bhd

Provide, operate and maintain securities exchangeBursa Malaysia Securities
Bhd

Principal ActivitiesSubsidiaries

�� FrontFront--line regulatorline regulator-- rules and regulations to rules and regulations to

ensureensure

�� Orderly and fair marketOrderly and fair market

�� Secure, efficient and cost effectiveSecure, efficient and cost effective

�� Develop investor confidenceDevelop investor confidence

�� Price discoveryPrice discovery

�� InfrastructureInfrastructure

�� Avenue for capital raisingAvenue for capital raising

Roles Roles

�� Promote orderly conduct and expansion of Promote orderly conduct and expansion of

market for better investmentmarket for better investment

�� Protect overall integrity of marketProtect overall integrity of market--monitor monitor

financial standing of companiesfinancial standing of companies

�� Protect investor interestProtect investor interest

�� Provide conclusive investment environmentProvide conclusive investment environment

�� Develop the Malaysian capital marketDevelop the Malaysian capital market

Objectives Objectives

Islamic MarketIslamic Market

�� Islamic Market products Islamic Market products ieie equities, derivatives, equities, derivatives,
commodities, to debt securities, across all commodities, to debt securities, across all
sectors and industries sectors and industries

�� ShSh. Compliance Stock: 88% of the securities . Compliance Stock: 88% of the securities
currently listed on Bursa Malaysia currently listed on Bursa Malaysia

�� Equity Indices: The FTSE Equity Indices: The FTSE HijrahHijrah ShariahShariah index index
(FBM (FBM HijrahHijrah ShariahShariah) and the FTSE Bursa ) and the FTSE Bursa
Malaysia EMAS Malaysia EMAS ShariahShariah index (FBM EMAS index (FBM EMAS
ShariahShariah) )

Islamic MarketIslamic Market

�� Islamic Bond or Islamic Bond or sukuksukuk: two: two--thirds of the global thirds of the global

sukuksukuk outstanding.outstanding.

�� ShariahShariah ETF: ETF: ShariahShariah--compliant investment compliant investment

instruments instruments

�� Islamic Islamic reitsreits

�� ShariahShariah--based unit trust fundsbased unit trust funds

Bursa Bursa SuqSuq Al Al SilaSila

�� Subsidiary of the BM.Subsidiary of the BM.

�� a commodity trading platform specifically a commodity trading platform specifically

dedicated to facilitate Islamic liquidity dedicated to facilitate Islamic liquidity

management and financing by Islamic banks management and financing by Islamic banks

�� SC, BNM, BM and MPOB, MPOA and MPOC.SC, BNM, BM and MPOB, MPOA and MPOC.

�� The fully electronic web based platform The fully electronic web based platform

provides industry players with an avenue to provides industry players with an avenue to

undertake multi commodity and multi currency undertake multi commodity and multi currency

trades from all around the world.trades from all around the world.

Offshore Business???Offshore Business???

�� TaxationTaxation

�� Simplicity and reportingSimplicity and reporting

�� Fees for incorporationFees for incorporation

�� Cost of operationCost of operation

�� Thin Thin capitalisationcapitalisation

LFSALFSA

�� Established on 15 February 1996Established on 15 February 1996

�� International business and financial centre.International business and financial centre.

�� For capital market: For capital market:

�� The The LabuanLabuan Financial Services and Securities Financial Services and Securities

Act 2010 (LFSSA), Act 2010 (LFSSA),

�� The The LabuanLabuan Islamic Financial Services and Islamic Financial Services and

Securities Act 2010 (LIFSSA),Securities Act 2010 (LIFSSA),

LFSALFSA

�� The LFSSA, Part IV provides for the licensing of The LFSSA, Part IV provides for the licensing of

securities licensee with the following scope of business:securities licensee with the following scope of business:

�� Provide investment advice or administration services in Provide investment advice or administration services in

respect ofrespect of securities for purpose of investment; orsecurities for purpose of investment; or

�� Deal in securities; orDeal in securities; or

�� Provide other activity as may be specified by Provide other activity as may be specified by LabuanLabuan FSAFSA

�� The The LabuanLabuan Islamic Financial Services and Securities Islamic Financial Services and Securities

Act 2010 (LIFSA), Part V provides for the licensing of Act 2010 (LIFSA), Part V provides for the licensing of

Islamic securities licensee with the same scope of Islamic securities licensee with the same scope of

business as per the securities licensee above.business as per the securities licensee above.

LIFXLIFX

�� Launched 23 November 2000Launched 23 November 2000

�� LFX is limited by shares and is wholly owned by LFX is limited by shares and is wholly owned by
Bursa Malaysia Bursa Malaysia BerhadBerhad. .

�� a fulla full--fledge Exchange with listing and trading fledge Exchange with listing and trading
facilities facilities

�� the listing of conventional and Islamic the listing of conventional and Islamic
instruments. instruments.

�� an efficient, cost effective access to capital an efficient, cost effective access to capital
market and practical alternative to existing market and practical alternative to existing
domestic Exchanges domestic Exchanges


BLOG OF KNOWLEDGE (Shari'ah, Law, Islamic Finance and Muslim News)
Shari'ah, Law, Islamic Finance and Muslim News
Daily Archives: August 28, 2009
August 28, 2009
DR. ZULKIFLI HASAN
Korea to exempt Islamic bonds from distributions tax
Available at:
http://www.bloomberg.com/apps/news?pid=20601080&sid=axmMs9VeBfQE
By Jungmin Hong: South Korea plans to exempt Islamic bonds from tax on distributions as it seeks to expand its capital markets and attract Muslim wealth from overseas. The rules would affect Ijarah and Murabahah securities, the most common forms of Islamic bonds, which are also known as sukuk, the Ministry of Strategy and Finance said in an e-mailed statement yesterday. The ministry will submit its proposals to the National Assembly by the end of September, it said.
Special treatment for sukuk “will draw large-scale capital from countries in the Middle East, which are likely to benefit from rising oil prices, while helping the nation diversify funding,” according to the statement. Global sukuk sales jumped to a record $31 billion in 2007 from $2.2 billion in 2000 as surging crude prices spurred economies in the oil-rich Persian Gulf, according to data compiled by Bloomberg. They then plunged to $13.9 billion last year as energy demand slumped amid the global credit crunch, the data show. Oil closed at $72.04 a barrel yesterday from an intra-day low of $32.4 on Dec. 19.
Muslim Shariah law forbids interest payments and speculation, so sukuk are asset-based securities paying a profit distribution to investors rather than interest. GS Caltex Corp., South Korea’s second-largest oil refiner, hired Merrill Lynch & Co. and Malaysia-based RHB Investment Bank Bhd. to help it sell what may be the country’s first sukuk, Chay Wai Leong, RHB Investment’s chief executive officer, said in April. Seoul-based Daewoo Securities Co. will “actively seek” opportunities to sell sukuk, it said last year. Indonesia’s government drew $4.7 billion of orders for its first sale of dollar sukuk, seven times the $650 million of securities on offer, debt management office Director General Rahmat Waluyanto said in April.
Best Regards

ZULKIFLI HASAN

DURHAM
Estadio Santiago Barnebeu, Madrid, Spain
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BLOG OF KNOWLEDGE (Shari'ah, Law, Islamic Finance and Muslim News)
Shari'ah, Law, Islamic Finance and Muslim News
Daily Archives: August 24, 2009
August 24, 2009
DR. ZULKIFLI HASAN
Central Bank of Malaysia Bill 2009
Assalamualaikum and Happy Ramadhan al-Mubarak,
Dear Readers,
Please find enclosed the Central Bank of Malaysia Bill 2009 for your reference. This Bill is really significant to Islamic finance industry in Malaysia as it involves some major amendment to the existing legal frameworks particularly Part VII section 51-60. I highlight several essential provisions pertaining to the Shari’ah Advisory Council.
Section 53. Appointment of members to Shariah Advisory Council

53. (1) The Yang di-Pertuan Agong may, on the advice of the Minister after consultation with the Bank, appoint from amongst persons who are qualified in the Shariah or who have knowledge or experience in the Shariah and in banking, finance, law or such other related disciplines as members of the Shariah Advisory

Council.

(2) If a judge of the High Court, the Court of Appeal or the Federal Court, or a judge of the Shariah Appeal Court of any State or Federal Territory, is to be appointed under subsection (1), such appointment shall not be made except— (a) in the case of a judge of the High Court, the Court of Appeal or the Federal Court, after consultation by the Bank with the Chief Justice; and (b) in the case of a judge of the Shariah Appeal Court of any State or Federal Territory, after consultation by the Bank with the Chief Shariah Judge of the respective State or Federal Territory, as the case may be.

(3) A member of the Shariah Advisory Council appointed under subsection (1) shall hold office on such terms and conditions as may be provided in their respective letters of appointment, and shall be eligible for reappointment.

(4) The members of the Shariah Advisory Council shall be paid such remuneration and allowances as may be determined by the Board from the funds of the Bank.
Section 56. Reference to Shariah Advisory Council for ruling from court or arbitrator

56. (1) Where in any proceedings relating to Islamic financial business before any court or arbitrator any question arises concerning a Shariah matter, the court or the arbitrator, as the case may be, shall—

(a) take into consideration any published rulings of the Shariah Advisory Council; or

(b) refer such question to the Shariah Advisory Council for its ruling.

(2) Any request for advice or a ruling of the Shariah Advisory Council under this Act or any other law shall be submitted to the secretariat.
Section 57. Effect of Shariah rulings

57. Any ruling made by the Shariah Advisory Council pursuant to a reference made under this Part shall be binding on the Islamic financial institutions under section 55 and the court or arbitrator making a reference under section 56.
Section 58. Shariah Advisory Council ruling prevails

58. Where the ruling given by a Shariah body or committee constituted in Malaysia by an Islamic financial institution is different from the ruling given by the Shariah Advisory Council, the ruling of the Shariah Advisory Council shall prevail.
For full text, click here
The Central Bank of Malaysia Bill 2009
Enjoy reading!

Best Regards

ZULKIFLI HASAN

DURHAM
Fujairah, United Arab Emirates.
Islamic finance news
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Al-Baqarah, 2:275
Calendar
August 2009

M

T

W

T

F

S

S

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31
« Jul
Sep »
Academic
Centre for Islamic Area Studies at Kyoto University

Durham Islamic Finance Programme

Harvard University Islamic Finance Project

IIUM Institute of Islamic Banking and Finance

INCEIF

International Institute of Islamic Economics

International Shari'ah Research Academy for Islamic Finance

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