OnIslam

By Dandy Koswaraputra

Many Indonesians see dinars and dirhams as the best way of protection against economic fluctuations.

Seeing it as a source of security amid global economic instability, Indonesians are returning back to traditional Islamic currently in their daily transactions.

“I’ve chosen dinar because of it is safe and stable,” Hardjito Warno explained on Saturday, February 26.

The Indonesian man has been collecting gold dinars as a long-term investment since 2006.

He is now the holder of more than 50 coins in his deposit box, which he sometimes uses for certain purposes, such as paying education fees.

“[The] dinar is very liquid so I can use it for multiple purposes,” Warno said.

Dinar and silver dirham are available in shops in the world’s most populous Muslim country.

For collecting the Islamic coins, Warnoh regularly buys dinars from an agent in Jakarta.

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By ThomsonReuters' Global Head of Islamic Finance based in New York

Open letter to Former Malaysian Prime Minister Tun Dr Mahathir

DEAR Dr Mahathir,

Asalaam Alaikum

As a visionary former prime minister, in forcefully addressing the currency crisis and now as a `global ambassador' of Islamic finance, your words carry much weight across the Muslim world. A "keynote-cum-pep rally presentation," as only you can deliver, is needed for Islamic finance to go from cheerleading to leading cheers in the Muslim countries and beyond.

Dr. Mahathir, some of your recent comments about Islamic finance are ahead of our time. Yes, Islamic finance may be seen as superior model to conventional finance and after a few more decades of operation, say, by 2030, will prove that you are right.

And it may also provide an opportunity for Muslim countries, all of them either frontiers or emerging markets, to become developed nations by financing real underlying assets contributing to gross domestidc product (GDP), from agriculture to industrial to service sector.

But, today's Islamic finance is risk averse (Murabaha accounting for up to 85 per cent) and about bankable Muslims with nominal exposure to micro-finance, small and medium enterprise (SME) financing or venture capital, areas that contribute to financing/building knowledge base economies. The size of many Islamic banks is a rounding error or size of a transaction in the conventional space.

There is saying, a chain is only as strong as its weakest link, for Islamic banks, subset of Islamic financing, it is their lack of size. Many Islamic banks are privately held, have small free float and their paid up capital is under US$500 million (RM1.53 billion). Yes, an Islamic mega bank, allowing for important functions like market making of Islamic instruments, will be a reality in Malaysia in 2011.

However, a newly licensed Malaysian Islamic mega bank is not the only route to 'size matters' banking environment. Today, the small Islamic banks are fragmented in overbanked markets, like the United Arab Emirates and Malaysia, and comments on consolidation will resonate when the source, like yourself, Dr Mahathir, having a proven track record, respect, and recognition as former leader of a country that is a leader in Islamic finance.

Consolidation

Dr Mahathir, Malaysia, as a table setter for Islamic finance, initially needs to look inward towards its overbanked Islamic banks and seriously think about "consolidation-cum-megabank." The Malaysian Islamic banking subsidiaries, having spent enough time to grow and develop under their parent banking holding company, should be encouraged to merge, as part of the Economic Transformation Plan (ETP).

From the Pemandu website, on where we are today, "? the [financial] sector faces critical challenges, including lack of scale, lack of liquidity and diversity in the capital markets, low levels of financial literacy and competition from regional financial centres such as Singapore, Hong Kong and increasingly Indonesia".

Additionally, Malaysian bank holding companies should be encouraged to spin off their Islamic subs and list on Bursa Malaysia, hence, adding additional depth with syariah-based companies. As public listed, it opens up opportunities for (1) syariah-based indices, (2) stock options as part of compensation for attracting and retaining, (3) start process of Islamic shareholder activism, (4) acquisition currency, and so on.

Yes, there will be challenges, from desire to stay independent, especially for market share leaders, to political sensitivities to citing studies that mergers in the financial sector do not obtain the projected strategic efficiencies and so on. But, we have an example in Pakistan of two Islamic banks merging, Al Baraka Islamic Bank and Emirates Global Islamic Bank, to obtain strategic and financial efficiencies.

Size, especially horizontal mergers of commercial banks, allows for greater economies of scale, efficient use of distribution channels, better cost management, and ability to offer those products that are a function of size: project finance, debt underwriting, market making (all of which require a balance sheet).

Size also opens up many macro objectives of Islamic finance, like financially empowering Muslims, Organisation of Islamic Conference (OIC) countries and cross sell of Islamic finance, and sets an example for the fragmented Gulf Cooperation Council (GCC) market.

A mega Islamic bank needs to compete with the likes of CitiBank, HSBC, Standard Chartered, JP Morgan Chase, etc, and not their windows and subsidiaries for mega projects, advisory, underwriting, etc, in OIC and G20 countries. It is here and at this stage, where your comments about Islamic finance being a superior model and contributing to development of Muslim countries, etc, will be confirmed.

Existing situation

Dr Mahathir, today, Islamic finance is starting from a low base, 25 out the 57 OIC countries have some sort exposure, from nominal to established. Beyond the smaller reach, Islamic bank penetration, as a per centage of overall banking assets, is also at a low base, averaging 12 per cent. Chart 1 shows a sample of OIC countries and market penetration.

At best, Islamic finance has reached 2 per cent to 3 per cent of the 1.6 billion Muslims, and, yet, the often ignored US$640 billion (RM1.96 trillion) Halal industry has not only better awareness and acceptance, but much greater market penetration.

Today, Muslim countries' GDP, except Turkey's and Indonesia's, are smaller than large capitalised listed companies in the West. For example, Malaysia's GDP for 2009, was about US$193 billion (RM591 billion), equal to the market capitalisation of Google. Table 1 shows Top 10 OIC countries GDP (World Bank) to the market capitalisation of the 10 largest companies in the S&P BMI Global index.

Thus, the litmus test is twofold: First, If I'm an emerging market (Islamic) asset manager in the Gulf or EU/US and I want to invest in publicly listed (market share leaders) in Islamic banks (and not in their funds) where do I go? Is Bank Islam my preferred option over Dubai Islamic Bank, Kuwait Finance House or Al Rajhi?

Second, if I'm a Fortune 50 company and I want to retain a large balance sheet Islamic bank to expand my sources for efficiently raising capital, advisory, and distribution for US$1 billion to US$5 billion (RM3.07 billion to RM15.3 billion) sukuk or syndicated loans, where do I go?

Does Malaysia have the will and vision to be that one-stop destination answer today?

Thank you, Wasalaam and kind personal regards.

* The writer is ThomsonReuters' Global Head of Islamic Finance based in New York

U.S. That Matters

"Socialism only works in two places:

Heaven where they don't need it and hell where they already have it."

'Here's my strategy on the Cold War:

We win, they lose.'

'The most terrifying words in the English language are:

I'm from the government and I'm here to help.'

'The trouble with our liberal friends is not that they're ignorant;

it's just that they know so much that isn't so.'

'Of the four wars in my lifetime, none came about because the U.S. was too strong.'

'I have wondered at times about what the Ten Commandments would have looked like if Moses had run them through the U.S. Congress.'

'The taxpayer: That's someone who works for

the federal government but doesn't have to take the civil service examination.'

'Government is like a baby:

An alimentary canal with a big appetite at one end and no sense of responsibility at the other.'

'The nearest thing to eternal life we will ever see on this earth is a government program.'

'It has been said that politics is the second oldest profession.

I have learned that it bears a striking resemblance to the first.'

'Government's view of the economy could be summed up in a few short phrases:

If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it'

'Politics is not a bad profession.

If you succeed, there are many rewards;

if you disgrace yourself, you can always write a book.'

'No arsenal, or no weapon in the arsenals of the world, is as formidable as the will and moral courage of free men and women.'

'If we ever forget that we're one nation under GOD, then we will be a nation gone under.'

Let's this article remind us on our Spiritual

Near the coast of Japan there has been an earthquake as we all know! Experts say that this will lead to a formation of new island. If u remember that Prophet Muhammad (SAW) had once quoted that DAJJAL is imprisoned on an island towards the west.

Japan is the first land to receive sunlight and to see the dawn in the world. Before the coming of Imam Mahdi (A.S) it was quoted that the year before his arrival will face solar n lunar eclipse which has already occurred twice this year! There are more signs which can be seen around! Is the Judgment Day closer?! Allah knows better! Offering Salaah is one of the most necessary work in all our lives while straining away from all the wrong path! This is a wake up call for all the Muslims! Let's unite and face the signs together and be happy to get rid of this slavery life of ours! Forward this message if u think this is relevant! The choice is yours!!

Our Prophet Muhammad

(SAW) told us that there would be 3 major earthquakes before the

Judgement Day. One in the east, one in the west and one in Arabia.There has already been one in Japan (East) and one in Haiti (West).It's so very scary! What have we done to deserve a place in Jannah? We watch TV, swear, talk back & give attitude to elders, we watch things that we are not supposed to watch, some don't even dress modestly. We listen to music & spend time learning the lyrics, but why not learn the Quraan? It's probably because we don't have enough Imaan (faith) in us. We need to get rid of the bad habits and get onto the good ones. Send this to as many Muslim brothers and sisters as possible. If people act upon this, then Insha Allah, you will get rewards. 93% will not pass this on, will you be one of them? Courtesy: fi se bi lillah. It's good to inform people hope you learn from it. (The fwd part is up to you, I just wanted to spread the info.). May Allah help us all! Ameen!

-----------------------------

(up to you all, spread, or share among you guys or anything)

ref:

http://news.nationalgeographic.com/news/2010/02/photogalleries/100210-undersea-volcano-island-japan-pictures/

Interesting figure on EPF members saving

Interesting figure on EPF members saving

Below is the table of the active Eemployee Provident Fund (EPF) members saving as of 31 December 2008,

Will be useful if you need this data for reference for research or financial planning purpose to see at which category are we at ??????

Saving Range (RM)	Total Members	Members Percentage (%)	Savings (RM)
0	23,914	0.42	0
<1-1,000	417,884	7.32	205,339,378.47
1,001-2,000	282,895	4.96	416,222,989.05
2,001-3,000	218,875	3.84	544,279,814.89
3,001-4,000	185,241	3.25	646,480,763.64
4,001-5,000	165,361	2.90	742,886,900.21
5,001-6,000	150,875	2.64	828,948,491.27
6,001-7,000	140,110	2.46	910,013,814.16
7,001-8,000	131,315	2.30	984,079,405.51
8,001-9,000	122,038	2.14	1,036,634,449.82
9,001-10,000	115,239	2.02	1,094,560,448.70
10,001-15,000	505,459	8.86	6,274,437,487.79
15,001-20,000	402,317	7.05	7,006,200,344.82
20,001-25,000	333,818	5.85	7,488,088,437.20
25,001-30,000	279,700	4.90	7,671,183,643.56
30,001-35,000	237,011	4.15	7,688,957,190.75
35,001-40,000	203,478	3.57	7,618,443,162.94
40,001-45,000	176,122	3.09	7,475,153,676.64
45,001-50,000	153,541	2.69	7,284,307,982.62
50,001-60,000	252,423	4.42	13,832,466,217.96
60,001-70,000	196,614	3.45	12,740,412,452.76
70,001-80,000	157,910	2.77	11,816,132,770.81
80,001-90,000	127,430	2.23	10,808,822,775.24
90,001-100,000	104,082	1.82	9,870,909,954.72
100,001-110,000	85,131	1.49	8,924,346,896.98
110,001-120,000	70,063	1.23	8,047,153,158.42
120,001-130,000	57,489	1.01	7,178,668,095.68
130,001-140,000	48,340	0.85	6,518,913,622.65
140,001-150,000	40,554	0.71	5,874,500,314.46
150,001-300,000	232,690	4.08	47,052,228,297.56
300,001-400,000	38,609	0.68	13,241,101,548.01
400,001-500,000	18,260	0.32	8,112,502,128.49
500,001-600,000	10,293	0.18	5,619,620,061.69
600,001-700,000	6,215	0.11	4,011,907,379.98
700,001-800,000	3,899	0.07	2,908,558,354.95
800,001-900,000	2,700	0.05	2,287,290,845.75
900,001-1,000,000	1,835	0.03	1,737,519,197.92
>1,000,000	6,462	0.11	10,023,567,600.41
	5,706,192	100.00	256,522,840,056.48