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State Bank of Pakistan (SBP) Governor Jameel Ahmad on Monday emphasised that Pakistan needed coordinated and sustained efforts on multiple fronts for building a robust Islamic corporate debt market.

Speaking at the inaugural International Conference on Islamic Capital Markets (ICM) jointly organised by Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and the Securities and Exchange Commission of Pakistan (SECP), he was of the view that these steps would provide an enabling tax, regulatory and policy environment.

Noting the importance of retail investors, he stressed the need for education programmes aimed at complementing the efforts for strengthening the market infrastructure.

According to a statement issued by the central bank, Ahmad also emphasised the need to embrace Islamic fintech, digital finance, climate finance, and innovation with a futuristic view to achieving holistic and sustainable development of an inclusive Islamic capital market.

He was of the view that collaboration among regulators, financial institutions, industry players and Shariah scholars was essential for bringing standardisation of Islamic financial contracts and simplifying the processes.

During the event, Ahmad spoke at length on key issues and challenges in the development of the Islamic capital market. He was convinced that the solutions are well within reach and hoped that the insights and knowledge exchanges during this conference will help in developing a roadmap for a sustainable, diversified, and inclusive Islamic capital market in Pakistan.

The governor noted that Islamic finance as a global industry had crossed the $3 trillion mark and the Islamic capital markets account for around 31% share of this growing pie.

He, however, noted that Islamic capital markets are in the nascent stages of development in most jurisdictions. He attributed this to gaps in institutional, legal and regulatory frameworks, inefficient price discovery, and lack of diversity in instruments and investors.

“Islamic banking has grown into a systemically important sector in the country both in terms of assets base and current market share,” he said.

Highlighting the challenges pertaining to the development of Islamic capital markets, particularly of the Islamic debt market, the governor stated that the conversion of public debt into Shariah-compliant instruments remains the biggest challenge.

“The lack of adequate sovereign assets has remained a major impediment to regular issuance of asset-based Sukuk until recently,” he said. “SBP has constituted a high-level working group to develop practical solutions on alternate Shariah compliant structures, especially Asset Light Sukuk Structures.”

He envisioned that Pakistan’s Islamic Capital market will be fair, modern, efficient, globally competitive, responsive to the needs of its stakeholders, and driven by sound regulatory principles, which should provide the impetus for sustainable economic growth.


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Rebirth May 30, 2023 01:26am
Lease government buildings such as all legislative assemblies, the lodges and colonial-era official residences. Buy high end properties in Pakistan’s most expensive areas such as Karachi and Islamabad. Nationalize Bani Gala, Raiwind and Bilawal House, all 1 worth billion dollars, since they’re built with public money, either through charity, embezzlement or conflict of interest. Then link REITs to all of them and invest in that too. The Sindh assembly and secretariat is illegally built on a drain. Shift them to Karachi’s town hall since Sindh’s assembly is the only one that will stay. Digital ad revenue models used in Apps and websites like YouTube rely on profit-sharing. Use this model in government-owned public transport and LED signs on street lights. These signs are used in Lahore, and must be replicated in Karachi. Rickshaws are banned so we can’t use them for anything, leave alone marketing. Many assets can be used to earn revenue and then, used for profit-sharing sukuk bonds.
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Rebirth May 30, 2023 01:45am
Other assets owned by the government relate to the Railways. The Railways was registered as a corporate entity, separate from the government, to restructure it’s debts and that’s what made the Railways profitable after 50 years. Using the railways for advertisement by painting the train compartments, playing announcements and running ads on the TV screens is how profit can be earned. The land owned by the Railways isn’t used to earn profit but is rather wasted on railways’ employees, who don’t earn any profit and neither is the land used effectively. All of these decisions regarding leasing Railways’ land, had already been made but haven’t yet materialized. Railway stations and the associated land was also to have been commercialized and linked to the hospitality industry. Why wouldn’t malls and hotels be built in such locations with as much consumer traffic as railway stations? The profit earned from these projects must be directly linked to Sukuk bonds.
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Rebirth May 30, 2023 01:58am
The railways minister at the time, Shri Ranjeet’s criminal negligence and his other corrupt practices too resulted in his downfall. While he’s illiterate and a curse on our nation, if not for all of mankind, the finance minister, Asad Umar, coming from a corporate background with an MBA, should’ve understood the Pareto Principle for employees in our state-owned enterprises. The 80-20 rule for employees may seem harsh but whenever there are reported layoffs by any company, usually its understood that they got rid of people from the 80%. Those who are unproductive or rather, a burden on the company were let go. The highest expense for any entity are the employees and with layoffs, expenses go down too. The investors view these layoffs as a positive and the stock value goes up immediately. 50% of Sindh’s funds go to employees and their pensions. Most are corrupt, ghost employees or never worked to get their pension. Its not just the expenses but also, corruption and lack of productivity.
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Rebirth May 30, 2023 02:06am
Asad Umar lost his job because he didn’t want thousands of corrupt, unproductive and ghost employees in our state-owned enterprises to lose theirs. He did not use the 80-20 rule that he would’ve known from his own academic and professional experience. He preferred to give these loss-making entities bailouts, driving our economy further into debt. These bailouts didn’t make those enterprises profitable and while he thought he was saving jobs, his policies would’ve burdened our economy even more and brought our entire government down, causing even more unemployment than he thought he was trying to stop. Ghulam Sarwar may have seemed harsh but PIA is not the same airline that helped create Emirates anymore. And it hasn’t been centuries, just a few decades. We must be doing something wrong and they must be doing everything right, even when they learned from us. Corporate bonds helped the PIA and its property is not being used to earn profit, but the main problem was and still is employees.
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Rebirth May 30, 2023 02:18am
Using the same model described for the Railways, for our Airports and Airlines, will also help with the profit-earning Sukuk bonds. Build executive business lounges full of our high-end fashion brands and restaurants, sponsored by our airlines, including the PIA. This’ll also help the airlines with their bonds because the PIA corporate bond isn’t linked to the foreign properties it owns and now earns from. They’re general corporate bonds that are basically loans used to pay off employees, who weren’t really of much use to begin with and the worst part is that they’re given perks and privileges for nothing. If you think rewarding corrupt and unproductive people with salaries was bad, they’re given perks and privileges too. Also, lease adjacent lands for high-end hotels. These assets will hugely benefit any Sukuk-type financial securities. Shuttle services can be separate and involve Pakistan-built cars. Tours can also be arranged. Just our local market is sufficient to help our economy.
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