"Dubai developer sells world's largest Islamic bond", Yahoo! News India, December 7, 2006
The company building the palm-frond shaped islands off of Dubai and had to increase the sukuk issue to meet demand. The sukuk issue ended up being US$3.52 billion.
"Commodity Murabahah set to draw more interest", Business Times (Malaysia), December 7, 2006
The use of commodity murabaha with the underlying transaction based around crude palm oil (CPO) will ease the problems banks have with the illiquidity and maturity mismatch problems associated with Islamic banking operations, but it appears that there has been a breakdown between the basic ideas on which Islamic banking is based. The description of Islamic banking (whether or not this is supported by everyone) is that it is free of interest. However, the commodity murabaha puts the interest-free nature of Islamic banking in doubt. The following is quoted directly from the Business Times article:
"'The main plus point of Commodity Murabahah is that it gives a pre-agreed net yield rate of return at the point of transaction and is Gulf Cooperation Council-compliant,' RHB Islamic Bank chief executive officer Khalid Bhaimia said." (italics added)
How is a 'pre-agreed net yield rate of return' different from interest? Is this distinction one that undermines the basis for Islamic banking or does it make it clearer that an incorporating an ethical edifice for Islamic banking would make it more widely accepted and used by both Muslims and non-Muslims? This is my view looking at Islamic banking through the eyes of a non-Muslim. (Note: as the disclaimer to the right says, this is my personal opinion and does not represent the opinion of the IHI).
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