Press Releases
The press releases.

Press Release 6
VBI strategies must come from the top, says experts
Press Release 5
Integrating sustainability into finance is good for business
Press Release 4
More than half of global asset firms uses AI to gauge sustainability
Press Release 3
GIFF2018: Malaysia’s Central Bank issues guidance on value-based banking
Press Release 2
GIFF2018: Propelling Islamic finance to the next level
Press Release 1
GIFF2018: Advancing VBI to strengthen Islamic finance
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VBI strategies must come from the top, says experts

OCTOBER 3, 2018, Kuala Lumpur: Top management of Islamic finance institutions should set the tone as a first step towards embarking on a value-based intermediation (VBI) approach.

Dato' Mohd Redza Shah Abd Wahid, CEO of Bank Muamalat Malaysia Berhad said if the Chief Executive Officer (CEO) or Board does not want to embrace VBI, it wouldn't happen.

"After you have set the tone, then you need to go on to the next step, how do you get this done.

"If you don't know, ask. Don't do it alone. This is a journey of Islamic finance, you need to change finance for finance to change,” he told participants at one of the panel sessions at the Global Islamic Finance Forum 2018 (GIFF2018).

Dr Adnan Chilwan, Group CEO of Dubai Islamic Bank said banks or financial institutions should also consider the customer's standpoint when implementing VBI strategies.

"The first step for customers is for them to think about the proposal and plan a business that is going to create value for society. It will fall under the bank's VBI scorecard," he said.

He also said that some jurisdictions would support VBI-based proposals, while others might need time to study it. But, he added most of the Islamic finance markets under the Gulf Cooperation Council (GCC) were embracing the VBI concept, which was also being accepted by conventional financial institutions.

Redza said executing VBI strategies was not a challenge, particularly if there was a regulator who was sponsoring the concept along with setting out the guidelines such as Bank Negara Malaysia (BNM).

"If you don't have that (support), you have to battle the board, stakeholders and the most important people - your staff," he pointed out.

To overcome that hurdle, Redza also said institutions should inculcate a culture of thinking of the community amongst bank employees.

He found that one way to engage employees was to communicate the methods of balancing a staff's key performance indicators (KPI) against the positive impact on society at large.

Chilwan also said VBI was a natural extension of what Islamic finance has been doing all this while. But the concept does extend beyond ethical financing.

“VBI is also about how you can merge it with pure commercial indicators, how you can create value for society and in the process, make profit,” he added.

He said VBI approaches must consider how Islamic finance institutions could create an environment that could support entrepreneurs, small and medium businesses through various initiatives and ensuring financial inclusion.

"Why you need VBI, you need to do it because we want to create a population that is financially independent. And that independence does not come from financing alone, but through training and empowerment," he said.

Chilwan added that VBI was essentially a "marriage" of environmental and social governance (ESG), corporate social responsibility (CSR) and socially responsible investments (SRI).

Sheikh Nizam Yaquby, a member of the ISRA Council of Scholars (COS) said the VBI concept was not new as Islamic finance was built on Syariah concepts that emphasises ethical practices and environmental awareness.

But, practical implementation could be difficult. He said, "When you put virtues and values to numbers, amounts and contracts, you will have a great deal of issues to tackle."

Redza also said Islamic banks who were new to VBI should be aware that VBI was not limited to scorecards or credit processes.

This was because there are existing instruments that can be used to meet VBI goals. He said banks could incorporate zakat and wakaf approaches into the VBI practice.

All three were panellists on the "Value-Based Intermediation: The Islamic Perspective" session which was moderated by Dr Imran Lum, Director, Islamic Finance, National Australia Bank Limited.

The two-day forum GIFF2018 was organised by the Association of Islamic Banking and Financial Institutions Malaysia.

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Integrating sustainability into finance is good for business

OCTOBER 3, 2018, Kuala Lumpur: The sustainability agenda needs to be incorporated into the Shariah governance framework of Islamic financial institutions to encourage them to adopt value-based financing that will result in a more positive social impact, said a panellist at the Global Islamic Finance Forum 2018 (GIFF2018).

Professor Datuk Dr Azmi Omar, President and Chief Executive Officer of INCEIF, said this will push the sustainability agenda up to the Board level of these institutions, and compel them to adopt an agenda that goes beyond profit.

"The key thing is that you need the support of the Board. In some banks, the Board may not fully embrace it. They are looking at the dollar and sense. So you need to get the Board support, and you also need the nudge from the regulators," he said.

He was speaking after addressing a panel on 'Roadmap to Sustainability' at GIFF2018 that carried the theme 'Beyond Profits' as it sets out to discuss the adoption of Value-Based Intermediation (VBI) by Islamic banks.

VBI aims to reorient Islamic finance to focus on channeling financing to sectors that have a positive impact on the economy, community and environment.

According to Bank Negara Malaysia Governor, Datuk Nor Shamsiah Mohd Yunus, who delivered the keynote address, research shows that there are material benefits when banks manage non-traditional risks proactively. Managing non-traditional risks such as social, political and environmental factors are a key feature of VBI financing, along with broadening the concept of value.

In her speech, she said an International Finance Corporation survey of global banks showed that around 86 per cent of respondents which integrated social and environmental risks in their business have yielded positive business results.

The VBI system is also aimed at helping the Islamic banks to explore new opportunities for sustained growth as its rapid growth rate in Malaysia has declined from a double digit in 2011 to eight per cent in 2016.

Azmi said Islamic financial institutions are encouraged to regard a sustainability agenda as an opportunity for innovation, rather than an initiative that will affect their bottom-line.

For instance, he said they are encouraged to work with companies that do not fully meet the sustainable criteria by assisting them in their progress, rather than automatically rejecting their financing requests.

He said as there was generally a lack of skills and knowledge on implementing this system, INCEIF had worked with Bank Negara to come up with guidance documents to guide the banks to get on board. Implementation is on a voluntary basis.

Nine of the 27 Malaysian Islamic financial institutions have pledged to adopt VBI. Two innovative products – rent-to-own housing loans and cheaper financing for green hybrid vehicles – have already been introduced.

Another panellist Dr Ioannis Ioannou, Associate Professor of Strategy and Entrepreneurship in the London Business School, said regulation of this sector can bring about the creation of common best practices.

"As a society, we want to bring all of them to at least the best minimum standards, and then, give the space to the best ones to innovate," he said.

Anna Batenkova, Sustainable Finance Engagement Manager of WWF Singapore, spoke about banks needing to build good relationships with their clients to understand the issues, and to develop the tools to help the clients address those issues after the financing is disbursed.

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More than half of global asset firms uses AI to gauge sustainability

OCTOBER 3, 2018, Kuala Lumpur, Malaysia: Over 50% of the world's asset management companies are adopting artificial intelligence (AI) to measure a stock's performance and company's sustainability.

Omar Selim, CEO Arabesque Asset Management Ltd UK said the trend was likely to grow, as the latest AI adoption by the Swedish National Pension Fund, Första AP- fonden (AP1), marked a significant achievement.

He was talking about Arabesque's diagnostic tool, S-Ray, which uses AI to score companies. Selim was speaking on the topic, "Technological Disruption Impacting Sustainable Finance” at the Global Islamic Finance Forum 2018 in Kuala Lumpur.

"S-Ray is a new standard to sustainability and our mission is to make is as accessible as possible," he told some 1,000 delegates.

In early October, the Swedish pension fund announced its integration of AI in its assessment frameworks. The fund is the latest amongst other international players such as UBS who are turning to technology as a way to study the profitability of socially responsible investments.

Arabesque Asset Management developed S-Ray as an integrated sustainability scoring system, which analyses the sustainability performance of some 7,000 of the world’s largest listed firms using self-learning quantitative models and data scores.

Omar said big data was the future as information becomes more complex with an increasing number of companies looking for data to support religious, ethical and social value-based investments. He added that the S-Ray was suitable for players in the Islamic finance sector.

As an example, he said BIMB Investment Management Bhd has been working with Arabesque in the last few years to analyse data for better understanding of companies and their performances.

Last year, the Malaysian bank and Arabesque launched two funds using S-Ray, namely the BIMB-Arabesque i Global Dividend Fund 1 and the BIMB Arabesque Malaysia Shariah-ESG Equity Fund.

He added that Malaysia was one of five countries in the Southeast Asia region, who took the lead in adopting the AI tool for the market.

"Most of the data out there could be manipulated or is human biased," he said.

Omar said the S-Ray was a diagnostic tool that offered an alternative solution and was developed out of meticulous algorithms. It studies data points and subjects them to plausibility tests and fact checks.

His team checks the data point for reliability and credibility, and is inclined to analyse negative news as it believed positive news could be manipulated.

Omar acknowledged that governance may be questioned, but the algorithms and S- Ray's AI architecture were audited by external auditors and governed by a board backed by the UN Global Compact.

He said AI was still new in many markets and the company was open to discussions on how to improve it.

"The stronger AI becomes, the stronger you have to be in governance and cautious systems."

Omar said AI used in the finance sector was exposed to external and internal shocks compared to AI used in other fields such as gaming.

But, within the financial sector, AI offered practical and accurate analysis for investors compared to existing annual or quarterly tools available in the market, he added.

Arabesque's S-Ray tool analyses over 50,000 data sources in 15 languages, looking for data points based on the core principles of the United Nations Global Compact (UNGC) and the Environmental, Social and Governance (ESG) score on financial materials of listed companies.

S-Ray also allows a search function for investors keen to find out the types of products of companies before building their portfolios. The tool allows searches in the alcohol, tobacco and even stem cell sector.

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GIFF2018: Malaysia’s Central Bank issues guidance on value-based banking

OCTOBER 3, 2018, Kuala Lumpur, Malaysia: The Central Bank of Malaysia today issued guidance documents to encourage the nation’s Islamic financial institutions to adopt a value-based system to generate positive social impact, while helping to propel the industry into a new growth pathway.

The documents issued by the Central Bank or Bank Negara Malaysia (BNM) provided guidance to banks on implementing the value-based intermediation (VBI) system, creating a financing and investment framework, and a VBI scorecard. These documents build on the Strategy Paper on VBI which it released in July 2017.

Bank Negara Governor, Datuk Nor Shamsiah Mohd Yunus said with the support of the Central Bank, the industry in Malaysia has been taking concrete steps to drive strategies to increase the positive impact of finance on society.

"The commitment to adopt VBI is a significant step by the industry to clearly identify Islamic finance with sustainable practices, as it should," she said in a keynote address at the Global Islamic Finance Forum 2018 (GIFF2018) attended by over 1,000 delegates in Kuala Lumpur.

With the theme ‘Beyond Profit’, GIFF2018 brings together a panel of experts in Islamic finance and sustainability to lead the conversation in encouraging the banking industry to progress from Shariah-compliant banking towards a more holistic practice of Shariah-based financing that generates a positive impact on the economy, community and environment.

The growth of Islamic finance in Malaysia has been a remarkable success story, with the market share of Islamic banking assets in Malaysia having reached the 30 per cent mark. This has, however, since slowed, signalling the need for a fresh direction.

"The Islamic finance industry today faces a strategic choice - to either continue on a path that largely ignores the stark social and environmental realities that confront humanity, or to thoughtfully chart a new path that fully embraces the idea and philosophy of finance beyond profits.

"The latter will be an unfamiliar path in many respects, but one that is far closer to the fundamental premise of Shariah on which Islamic finance is based upon,” Nor Shamsiah said.

Towards this end, she said it will require a rethinking of the concepts of value and risk, and human capital needs.

On value, she said a rethinking of the concept of value will have a significant impact on how Islamic banks make decisions, and to the banking portfolios. For example, expert advisory services to help borrowers mitigate the environmental impact of projects will be a bigger part of the offerings of a bank.

On the rethinking of risk, Nor Shamsiah said non-traditional forms of risks such as social, political and environmental risks are business threats, and there are material benefits to managing these risks.

"As natural stewards of sustainable finance models, Islamic financial institutions are well placed to develop richer perspectives of social and environmental risks," she said.

On human capital, she said there has to be concerted focus to build the skillsets to implement sustainable financing including at the management levels. This includes engineering and technical skills in the design, construction and assessment of technology; science skills; and monitoring skills.

Dato’ Adissadikin Ali, President of the Association of Islamic Banking and Financial Institutions Malaysia (AIBIM), the organiser of GIFF2018, said nine of the 27 Islamic financial institutions in Malaysia have adopted the VBI system.

"It is on a voluntary basis, and the form and manner will differ between the institutions," he said.

The two-day conference features speakers on issues such as integrating sustainability into the financial sector, reporting on sustainability and technological disruption.

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GIFF2018: Propelling Islamic finance to the next level

Kuala Lumpur (25th September 2018): The Global Islamic Finance Forum 2018 (GIFF2018) will be held from 3rd to 4th October in Kuala Lumpur, bringing together Islamic finance leaders, policy decision makers and world renown sustainability experts across the globe to discuss latest developments, challenges and prospects of sustainable banking in the global Islamic finance industry.

With the theme, 'Beyond Profit', GIFF2018 aims to deepen the conversations and discussions on embedding sustainable policies in Islamic banking and finance. In Malaysia, the Islamic banking space has progressed beyond providing Shariah-compliant products and services towards a more holistic value proposition through the adoption of value-based intermediation (VBI), introduced by Bank Negara Malaysia (BNM) in 2017.

The principles of VBI are key to strengthen the roles of Islamic Banking Institutions and position Islamic finance as a prominent and leading agent of change by incorporating holistic business practices and offerings into the financial system to ensure a positive and sustainable impact on the economy, community and environment.

Dato' Adissadikin Ali, President of the Association of Islamic Banking and Financial Institutions Malaysia (AIBIM) and Chief Executive Officer of RHB Islamic Bank said, “The Islamic finance industry will reach a global asset volume of no less than $3.8tn by 2022, up from $2.2tn at the end of 2016, according to the ICD Thomson Reuters Islamic Finance Development Indicator (IFDI) 5th edition released in 2017.

"While the report is upbeat about the recovery in performance in all Islamic finance sectors as oil prices pick up, the report is clear that, "The Islamic finance industry is climbing to new heights on the back of strong global demand for sustainable and socially responsible investments."

"By introducing VBI, BNM extends its leadership in Islamic finance as VBI aims to position Islamic finance as a prominent and leading agent of change".

"The growth of Islamic finance in Malaysia has been a remarkable success story, with this sector having transformed from a niche product proposition to full-fledged Islamic banks within a few short decades.

"The market share of Islamic banking assets in Malaysia leapt to a high of 28% in 2016 from 7.1% in 2010 but this has since plateaued, signalling the need to explore opportunities to boost growth and reinvent its strategies to enhance our market share,” said Rafe Haneef, GIFF2018 Organising Chairman and CEO of Group Islamic Banking, CIMB Group.

GIFF's theme this year, 'Beyond Profit', underscores the importance of incorporating VBI principles into Islamic finance. This presents a unique opportunity to start embracing VBI principles, as well as to craft a fresh narrative on how Islamic products and services can offer value while also ensuring a positive impact on societies and the environment.

Governor of Bank Negara Malaysia, Datuk Nor Shamsiah Mohd Yunus will deliver the keynote address at GIFF2018.

Notable speakers include Dr Adnan Chilwan, Group Chief Executive Officer, Dubai Islamic Bank; Dr. Sheikh Nizam Yaquby, Member ISRA Council of Scholars; Chris Skinner, CEO, The Finanser Ltd; Omar Selim, Chief Executive Officer, Arabesque Asset Management Ltd; Dr Ioannis Ioannou, Associate Professor of Strategy and Entrepreneurship, London Business School; Dr Ashraf Iqbal, Board Member of HSBC Amanah; Professor Dato’ Dr Azmi Omar, President & CEO, INCEIF; Dr Simon Lord, Chief Sustainability Officer, Sime Darby Group; and Ryan Giannetta, Senior Facilitator, Disney Institute.

Various Islamic finance events will also be taking place in Kuala Lumpur during the week of GIFF. These include the 13th International Shariah Scholars Forum (ISSF2018), and the CIBAFI-World Bank Conference on Corporate Governance.

In addition, the Islamic Banking & Finance Institution Malaysia (IBFIM) will be holding its inaugural Future Talent Forum. With the theme of "Reskilling for the Future Economy", the forum will serve as a platform to discuss the required skills and strategies to tackle the disruptions in a digital economy.

To register for GIFF2018, please visit https://www.giff2018.com.

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GIFF2018: Advancing VBI to strengthen Islamic finance

Kuala Lumpur (7th August 2018): The Global Islamic Finance Forum (GIFF) makes its return this year with the theme "Beyond Profit". GIFF is scheduled on 3rd to 4th October 2018 in Kuala Lumpur, and will bring together Islamic finance leaders and sustainability experts to advance value-based intermediation (VBI) with the aim of building a more sustainable and inclusive global financial ecosystem.

"The introduction of the VBI Strategic Paper by Bank Negara Malaysia in 2017 marked an important milestone in realising the full potential of Islamic finance and has placed Malaysia at the forefront of Islamic banking leadership globally, with the aim to strengthen the roles and impact of Islamic banking institutions (IBIs) towards a sustainable financial ecosystem.

"The adoption of VBI as this year's theme for GIFF is both apt and timely, given its key role in propelling the development of the Islamic finance industry. GIFF 2018 is a powerful platform for meaningful conversations and insights on how VBI will be a game changer to drive Islamic finance industry to its next level of growth, while giving equal importance to social, ethical and environmental considerations towards sustainable value creation.

"The application of VBI practices will result in a better facilitation of entrepreneurship, community well-being, sustainable environment and economic growth, which are very much aligned with shareholders' focus on sustainable, long term retuns," said Rafe Haneef, Organising Chairman, GIFF2018 and Deputy President of the Association of Islamic Banking and Financial Institutions Malaysia (AIBIM).

Rafe, who is also the Chief Executive Officer of CIMB Islamic Bank, CIMB Group added, "In addition to the launch of the VBI scorecard at GIFF, the presentations and discussions at the forum will culminate in a Statement of Commitment. This statement will be made available to the industry to demonstrate their recognition of and commitment to adopting the good practices".

The VBI Scorecard is a collaborative intiative by Bank Negara Malaysia, Global Alliance for Banking on Values (GABV) and members of the VBI Community of Practices (CoP) which consist of nine Islamic banks who have indicated their commitment to adopt VBI. It aims to measure the progression of the overall business activities and practices in delivering the intended outcomes of VBI.

GIFF2018 will feature industry leaders and experts who will share and discuss topics such as Integrating Sustainability and Responsible Financing into the Financial Sector; Roadmap Sustainability; and Technological Disruption Impacting Sustainable Finance.

Key speakers include Dr Adnan Chilwan, Group Chief Executive Officer, Dubai Islamic Bank; Ming Maa, President, Grabtaxi Holdings Pte Ltd; Dr. Sheikh Nizam Yaquby, Member ISRA Council of Scholars; Chris Skinner, CEO, The Finanser Ltd; Omar Selim, Chief Executive Officer, Arabesque Asset Management Ltd; Dr Ioannis Ioannou, Associate Professor of Strategy and Entrepreneurship, London Business School; and Dr Simon Lord; Chief Sustainability Officer, Sime Darby Group.

Various Islamic finance events will also be taking place in Kuala Lumpur during the week of GIFF. These include the 13th International Shariah Scholars Forum (ISSF2018), and the CIBAFI-World Bank Conference on Corporate Governance.

The Royal Award for Islamic Finance 2018 will also be conferred to a deserving individual on 3rd October 2018 in Kuala Lumpur by His Royal Highness, Sultan Nazrin Muizzuddin Shah, the Sultan of Perak and Royal Patron for Malaysia's Islamic Finance Initialive.

To register GIFF2018, please visit https://www.giff2018.com.

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About AIBIM

The Association of Islamic Banking and Financial Instititions Malaysia (AIBIM) was established in 1996 as the Association of Interest Free Banking Institutions Malaysia. Currently, AIBIM has 26 member banks. The organisation promotes sound Islamic banking system and practice in Malaysia; represents interest of members locally and abroad; provides advice and assistance to members partinent in the development on Islamic banking and finance at local, regional and global level; coordinates human capital development initiatives, and promotes public awareness.

Media enquiries, please contact:

Tan Wai Fong (Ms)
Media Officer
Email: waifong@twfcomms.com
Tel: +6017 3000 032