Moving forward cross cultural branding of Islamic finance Paul WOUTERS

1. Venue: Ronald Reagan Trade Center – 1200 Pennsylvania Avenue - Washington D.C., USA Moving forward cross cultural branding of Islamic finance Paul WOUTERS CEO PT SENTURiYON GLOBAL

2. Malaysia U.S. Chamber of CommerceIslamic Finance – An Undiscovered Market in the United States Venue: Ronald Reagan Trade CenterWashington D.C., USA – Date: Nov 4, 2013 “Moving Forward: cross cultural branding of Islamic Finance” – Paul Wouters • Islam forbids the lending / borrowing of money against interest (‘Riba”) • Islam forbids however not profits made from legitimate trade • These profits can be generated amongst others through: • Business contracts : such as sale with deferred payment (Murabaha), [financial] leasing (Ijara [wa-Iqtina]) … • Partnerships: managing and silent partners (Mudaraba), managing partners (Musharaka) …

3. Malaysia U.S. Chamber of CommerceIslamic Finance – An Undiscovered Market in the United States Venue: Ronald Reagan Trade CenterWashington D.C., USA – Date: Nov 4, 2013 “Moving Forward: cross cultural branding of Islamic Finance” – Paul Wouters In conventional finance, the Bank ‘feeds’ the client with money against interest, so the latter can be active in the ‘real economy’ – but the Bank is itself not a direct player in the real economy. Islamic standards prohibit the lending of money against interest, so the Bank no longer can ‘feed’ the client. The Bank can only solve that by becoming a player in the real economy and participating in the transaction.

4. Malaysia U.S. Chamber of CommerceIslamic Finance – An Undiscovered Market in the United States Venue: Ronald Reagan Trade CenterWashington D.C., USA – Date: Nov 4, 2013 “Moving Forward: cross cultural branding of Islamic Finance” – Paul Wouters Either by intermission using business contracts : acquire the asset from the seller and sell down / lease down … to the client for a profit / mark up (Murabaha, Ijara, Salam, Istisna’ …)

5. Malaysia U.S. Chamber of CommerceIslamic Finance – An Undiscovered Market in the United States Venue: Ronald Reagan Trade CenterWashington D.C., USA – Date: Nov 4, 2013 “Moving Forward: cross cultural branding of Islamic Finance” – Paul Wouters (2) Or by partnering with the client (by bringing in the needed finance) and sharing the profit / loss of the partnership (Musharaka or general partnership and Mudaraba or limited partnership), what may be followed by a gradual buy out by the client (Diminishing Musharaka …)

6. Malaysia U.S. Chamber of CommerceIslamic Finance – An Undiscovered Market in the United States Venue: Ronald Reagan Trade CenterWashington D.C., USA – Date: Nov 4, 2013 “Moving Forward: cross cultural branding of Islamic Finance” – Paul Wouters • For a Sukuk this will typically be the acquisition of title in an underlying project and its revenue stream (securitization) with structured exit (recuperation invested capital). • For home financing this will typically be: • Acquisition of the home by the financier followed by a sale down to the client with a deferred payment and mark up • Acquisition of the home by the financier and the client in a partnership / LLC / trust with a lease down to the client and gradual transfer of full ownership rights to the client and exit of the financier

7. Malaysia U.S. Chamber of CommerceIslamic Finance – An Undiscovered Market in the United States Venue: Ronald Reagan Trade CenterWashington D.C., USA – Date: Nov 4, 2013 “Moving Forward: cross cultural branding of Islamic Finance” – Paul Wouters Observations: Financial Standards (debt management and leverage) and Industry Standards (halal) Avoidance: interest (Riba), uncertainty (Gharar) or gambling (Maysir) and Transactions in what already exists and what is in your possession (general rule) Result: “back-to-basics” channelling of financial assets to deserving industries in real economy – direct feedback to the community / society what comes from there Specifics: (1) Respect Private Property Rights – (2) Respect Free Market Principles – (3) Minimal Government Interference – (4) cross cultural / religious available without pressure to religious adherence – (5) Accountability

8. Malaysia U.S. Chamber of CommerceIslamic Finance – An Undiscovered Market in the United States Venue: Ronald Reagan Trade CenterWashington D.C., USA – Date: Nov 4, 2013 “Moving Forward: cross cultural branding of Islamic Finance” – Paul Wouters • Branding 1 • The distinguishing feature ‘suitable for Muslim users’- Jewish toothpaste, Hindu shoes and Christian computer software – in the long run contra-productive ? • Advantages (easy differentiator – easy sale for insiders / it describes what it is about and what standards are set) and disadvantages (alienation of insiders and outsiders) of ”Islamic” banking • Profiling as ’outsider’ however also has the disadvantage of not being ‘first choice’ and lots of people want to stay ‘main stream’ (herding effect) – so it might be more profitable to be ‘main stream with an edge’ • Participation Banking (Turkey) – potential window for somewhat different • structured competing offerings (secular or religious inspired – probably with • less ethical constraints – gambling … - and less legal restrictions – gharar …)

9. Malaysia U.S. Chamber of CommerceIslamic Finance – An Undiscovered Market in the United States Venue: Ronald Reagan Trade CenterWashington D.C., USA – Date: Nov 4, 2013 “Moving Forward: cross cultural branding of Islamic Finance” – Paul Wouters • Branding 2 • Alternative banking (UK) – association with minority / soft / green / • appearance none mainstream competitive • Ethical banking suggests other side is not ethical (potential insult and alienation) and again minority, not mainstream – and our goal is not to sell ethics but to provide for suitable financial solutions • Multicultural banking (Canada) – acceptance Islamic principles was easy, with add-ons of the other mainstream religious groups (Christian and Jewish) and again minority / not mainstream • - Use Halal sub-label – presentation as mainstream with an edge

10. Malaysia U.S. Chamber of CommerceIslamic Finance – An Undiscovered Market in the United States Venue: Ronald Reagan Trade CenterWashington D.C., USA – Date: Nov 4, 2013 “Moving Forward: cross cultural branding of Islamic Finance” – Paul Wouters

11. Malaysia U.S. Chamber of CommerceIslamic Finance – An Undiscovered Market in the United States Venue: Ronald Reagan Trade Center Washington D.C., USA – Date: Nov 4, 2013 “Moving Forward: cross cultural branding of Islamic Finance” – Paul Wouters Paul WOUTERS CEO PT SENTURiYON GLOBAL Islamic finance lawyer / consultant Contact: pwo@senturiyon.com IjaraUSA.com 2531 Jackson Ave, Ste 331 Ann Arbor, MI 48103 www.ijaraUSA.com Contact: paul@ijarausa.com / shoeb@ijarausa.com (ShoebSharieff - President) Toll Free: 87-786-IJARA