Tuesday, May 29, 2007

Results of a Survey on the Public Opinion about Telecoms Liberalization in the BVI

JML Communications Ltd. commissioned a survey to get people's individual opinion about the process of telecommunications liberalization taking place in the British Virgin Islands. The survey was conducted by Research and Planning - a reputable research firm based in El Salvador. From May 2-10, 2007 they have interviewed a total of 350 persons, using the BVI Telephone Directory.

As a result of the survey, an estimated 77% of BVI residents surveyed think that the government should provide licenses to more than three companies currently having them, to operate in the new liberalized telecommunications market. 76.8% of customers interviewed by Research and Planning said they would prefer that government allows more than the three existing companies to receive a license,while 12.9% said they would prefer government allows only the three existing companies to receive a license; 10.3% didn’t know or had no opinion. Certain number of people also responded that they want to see the companies working with telecommunications to be local, because the money generated this way would stay in the islands.
Respondents also want the following mobile telecoms operators to enter the BVI market - Cingular (4.23), Digicel Group (4.14); bMobile (3.64); Cable & Wireless (2.86); and CCT Global Communications – (2.42).

Other things indicated by the survey are that:
  • Telecommunication liberalization is estimated positively by most respondents;
  • Liberalization should bring better rates, reliable services and technical support, bigger diversity of services and reliable companies;
  • By the opinion of many respondents, the government has delayed resolving of the matter because they are protecting the existing companies from other competitors;
  • A large amount of people did not have any knowledge of any company applying for a license, but most of them mentioned Digicel, which had been refused a license by government. Most respondents also mentioned that they would like to see Digicel in the BVI market, because it provides good and reliable services and would lower prices;
  • The government should not grant more licenses than the market can handle, but also should not restrict the number of companies applying for a license.

Article any source

Sunday, May 27, 2007

The BVI Ministry of Finance Establishes Website

At the beginning of this month the Ministry of Finance of the British Virgin Islands has announced its website, www.finance.gov.vg, having the aim to inform public servants and the general public about the services provided by the Ministry. Minister of Finance Honourable Ronnie W.Skelton told the Department of Information and Public Relations that the website will provide valuable information on the work of the Ministry.

According to BVI Financial Secretary Mr. Neil Smith, the website is aimed at 'informing the public and the civil service of the Virgin Islands on the activities and expectations of the Ministry of Finance'. The site provides information on financial legislation and regulations, budget estimates, and global fiscal and economic issues. It also gives access to general public and Government employees to various forms. FAQ section of the site provides information on various processes including the tendering and contracts process.

As some criticism I should note that as of today some chapters (for example the chapter 'Current Initiatives') of the new website still do not include any information, however the website provides many useful information that will be completed at the course of site's development.

Actually, the main duty of the Ministry of Finance is leadership and policy direction relating to fiscal, economic growth and development of the territory. One of the Ministry's duties is supervising the Financial Services Commission and the Development Bank of the British Virgin Islands. Strategic objectives of the Ministry of Finance are implemented through its five departments that carry out the operational functions of the Ministry - Her Majesty’s Customs, BVI Post Office, Department of Information Technology, Inland Revenue Department and the Treasury Department.

The Ministry joined some other BVI Government departments that have recently introduced their websites - the Immigration Department, Social Development Department, Deputy Governor’s Office and Human Resources Department.

Currently the BVI Financial Services Comission website is considered to be the best BVI government’s website. It is online for several years, it provides up-to date information and it was even redesigned some months ago. It is expected that more and more BVI government’s structures will go online. I hope that BVI International Finance Centre will be one of them very soon.
Article any source

Wine reform will lead to job losses


The competition: a vineyard in Chile

An impact assessment of the European Commission's proposed reforms to the CAP wine regime warns that job losses are inevitable in parts of Europe most responsible for the distillation of wine. The report quotes Italian organisations, not an entirely disinterested source, that the sector could lose 75 per centr of its jobs in Italy.

Reform is also expected to bring down the price of cheaper table wines as wine that would, under the old regime, have been distilled is instead bottled for sale (with binge drinkers in Britain being one possible market). However, specialised table wine producers in Sicily and Languedoc-Roussillion in France could see their income fall by up to a third. Enraged wine makers in Languedoc-Roussillion started fires in several French supermarkets to protest against the reform.

However, CEEV, the European wine producers' federation said that changes in the industry were inevitable in the face of growing globalisation. 'This may be the last chance we have to update the sector', warned José-Ramón Fernandez. 'We welcome the Commission's efforts as long as they are accompanied by measures to move into alternative agricultural sectors that are socially acceptable to producers.'

A Commission spokesman said that the changes were likely to mean less but better wine on the market in the short term, but in the long-term a more competitive market, together with simplified labelling and classification rules, could see production soar. 'In the long-term people around the world could be drinking French and Spanish and Italian wine, instead of New World varieties.'

Perhaps. But New World producers know that the market has changed, with a mass market less interested in provenance and more in having drinkable wines available at an affordable price. In the short run, Australian production could be hit by the country's chronic drought, a topic we hope to cover soonAny source

Thursday, May 24, 2007

Statistics of Chinese Government: Growth of Investments from BVI

On May 11, 2007 the State Administration of Industry and Commerce of China named the sources of foreign investment in country's economy. British Virgin Islands leads the 4 major offshore finance centers investing in China. Other 3 are Cayman Islands, Samoa and Mauritius. About 13,000 investors from BVI have invested in China, that is 31.9% more than last year and a faster growth than in US, Japan and Taiwan.

According to the information regularly provided by the government of China, BVI usually takes the second place in the Chinese FDI Sources list, the first one being Hong Kong. The last statement confirming traditional ratings of the British Virgin Islands was released by the Ministry of Commerce a month ago. Just in January 2007, BVI companies invested more than 1 billion USD in the Chinese economy.

Japan is the third traditional investor in China. According to the new statistics, currently there are about 199,000 other Asian countries' enterprises registered in China, a 4.5% growth compared with last year; these investors take up 72.5% of all the foreign enterprises registered in China.

In the first months of 2007, the main sources of foreign investment in China have been extended to Africa and Latin America.
Article any source

Plus ça change, plus c'est la même chose

France's new president Nicolas Sarkozy has aligned himself firmly with traditional French thinking on the CAP. He warned that he expected the EU to take a much tougher stance in global trade talks and said that he would not allow his country's farmers to be sold 'at the lowest possible price.'

He said that he would not allow cuts in support for European farmers while their US counterparts benefited from the same policies. Trade offs did not interest him: 'I'm not going to sell agriculture to get a better opening for services.' Mr Sarkozy said he as not going to be 'boxed in' if others failed to make reciprocal offers.

With the Doha Round talks seemingly making little real progress, Mr Sarkozy has dashed hopes that he might to talk a more flexible approach to cutting EU farm tariffs than his predecessor.Any source

Scrap CAP says Commons committee

The Common Agricultural Policy should be scrapped and replaced with a new rural policy for the European Union says the House of Commons Select Committee on Environment, Food and Rural Affairs. The report is a response to the Government's 'Vision for the Common Agricultural Policy' published in December 2005. I appeared before the committee: further details of the report can be found at: CAP

The report states, 'The objectives of the CAP have remained unchanged for the last 50 years and now an anachronism. For all its revolutionary rhetoric, the UK Government's "Vision for the Common Agricultural Policy" was ultimately a disappointing lost opportunity as it merely described an evolution of the existing policy, primarily motivated by budget savings, rather than presenting a truly revolutionary vision.'

I was critical of the Government's strategy and tactics in launching the Vision document. The report comments, 'The Government showed a naivety in believing that its Vision document could be its catalyst to a reform agenda when it was introduced so near to the end of its Presidency and without any programme in place to gain support for the British position. For British ideas to succeed, it is important that the UK adopts a more sophisticated approach to its agenda than when it launched its Vision document on an unsuspecting audience and without prior effort to prepare other farm ministers for its arrival.'

It further notes, 'Not only did this approach subsequently damage its prospects for Pillar 2 development, it may well have undermined the UK Government's ability to infuence the reform agenda in the future by antagonising the European Commission and the other EU member states.'

The report talks favourably of the idea of a bond scheme, but notes Commissioner Fischer Boel's argument that it would lead to the demise of cross-compliance. However, the bond is intended to replace and phase out SFP payments. Separate payments could still be made for public good provision by farmers linked to cross compliance.

The report is perhaps too optimistic about the forthcoming CAP 'health check' offering a means of moving the debate forward given the narrow way in which its purpose has been defined by Commissioner Fischer Boel.Any source

Wednesday, May 23, 2007

Wine lake threatens to overflow



Chilean 'reserve' wine in oak barrels - see story below

A tabloid newspaper once asked me if I could help them with a stunt whereby a journalist in a boat would row on the wine lake. Needless to say, the wine lake does not exist in a form that lends itself to such an enterprise. Nevertheless, the crisis of surplus wine stocks in Europe is such that the lake metaphorically threatens to overflow.

The Commission's proposed reform measures would not have eliminated the problem, but now their effectiveness is going to be further diminished by dilution at the insistence of wine producing states like France, Italy and Spain, aided and abetted by wine producers among accession states such as Bulgaria and Romania.

The fundamental facts are these: Europeans are drinking less wine (consumption is declining by 0.65 per cent a year) and they are drinking more 'New World' wines from Australia, California, Chile etc. Exports are also declining, so that ten years ago the EU held mpre than 80 per cent of the world wine market and its current share is 65 per cent. Moreover, the accession of Bulgaria and Romania has pushed up production by some 7 million hectolitres.

The structural surplus in the wine market in a 'normal' year is around 12.8 million hectolitres and this does not include the amount distilled for industrial use. The EU is currently spending €1.269m a year on the wine regime, about forty per cent of that being spent on distillation.

Policy instruments have not worked well. The ban on new plantings has not controlled production because yields have increased in some member states and there have also been illegal plantings. The grubbing up scheme has virtually ceased to operate.

Wine is a very conservative industry in Europe and the rigid rules on labelling and wine-making practices hinder innovation. When I visited a Chilean winery last year, they told me that they had two types of wine, standard and reserve, the latter being matured in oak barrels.

Attempts to promote the idea of Geograohic Indications are making little headway anyway, but are not helped in the case if wine by the dichotomy between table wines and 'quality' wines produced in specified regions.

The Commission's original proposal envisgaed getting rid of about 12 per cent of the current area of vineyards. This would not have eliminated the surplus in a declining market, but it now looks likely that the grubbing up programme will be halved.

It is disappointing that the European Parliament has taken a hostile approach to the Commission's proposals. Particular interests have prevailed over more general ones. However, the wine sector itself needs to become more competitive otherwise it will suffer more in the long run.Any source

Monday, May 21, 2007

BVI FSC Establishes New Penalty Regime for Licensees

After the recent approvement of Telecommunications Liberalisation Policy, the British Virgin Islands Financial Services Commission has implemented a new penalty regime, with the purpose to promote higher standards among licensees. The Commission has commented that penalties are intended to stop those licensees who breached regulatory laws from committing further contravention, and to show the benefits of regulatory compliance.

The Regulations (Administrative Penalties), approved by Executive Council under the Financial Services Commission Act, 2001, came into effect on 15 January 2007. The penalties vary depending on the severity of the contravention, the lowest one being $100 and the highest $20,000.

Before imposing a penalty, the Commission must first give writing notice to a licensee, which should include the contravention on which the Commission proposes to impose the penalty, the amount of the proposed penalty, and the entitlement of the licensee to make representations to the Commission. Then the licensee has 21 days to make factual representations to the Commission, and these are taken into consideration before a penalty is imposed. After the Commission issues a final decision to impose a penalty, the licensee receives a penalty notice setting its amount.

In determining the amount of a penalty, BVI FSC has elaborated the following guidelines: the nature and seriousness of the contravention; whether the licensee has previously contravened the Act or any regulatory legislation; whether the contravention was deliberate, or caused by the negligrence of the licensee; whether any third parties got any loss or damage as a result of this contravention; at last, the ability of the licensee to pay the penalty.

Penalties may be appealed to the Financial Services Appeal Board.
Article any source

Saturday, May 19, 2007

Shariah compliant currency trading

Online currency trading can be shariah compliant, according to ACM director Iskandar Al Hajjar. But how much money can you make and what happens if the internet crashes? Al Hajjar has the answers.
Any source

Friday, May 18, 2007

BVI Governor Establishes the Commission to Probe Stamp Duty Evasion

On May 16, 2007, the institution of a commission of inquiry was announced by BVI Governor David Pearey. The commission is to be established after the election, and will investigate the cases the apparent undervaluing of property for the purpose of avoiding stamp duty.

David Pearey commented that the decision on the establishment of the Commission has arisen out of the recommendation in favour of an inquiry in March 2006 Public Accounts Committee report. He said: “In the intervening 14 months there has been a full investigation by the Attorney General and the Director of Public of Public Prosecution into the transactions highlighted in the report ...These transactions were found to have given rise to an underpayment of stamp duty in excess of $500,000. Full payment of these sums is being secured, but evidence points to the likelihood that this practice has been continuing over many years.”

After the elections, the commission will examine the evidence of underpayment over a period starting from the year 2000, and other related matters. According to the BVI Constitution, the elections are due in June 2007, but must be held before October 10. The Governor said that the post-election timing for the inquiry is to ensure that it can make judgements away from the political limelight.

Chief Minister Dr. D. Orlando Smith and the Leader of the Opposition Ralph T. O'Neal have also been informed of the decision to issue an inquiry into the matter.
Article any source

Wednesday, May 16, 2007

1st Advisory Warning of 2007 Issued by the BVI FSC

On May 7, the British Virgin Islands Financial Services Commission has issued Advisory Warning No. 1 of 2007, signed by Robert Mathavious. The first Advisory Warning of this year concerns Dexter Insurance Company, Ltd., stating that the company is no longer licensed by the BVI FSC to conduct insurance business.

The reason is that Dexter's licence to carry on insurance business from within the BVI has not been renewed since December 31, 2006. The Financial Services Commission advised public not to conduct insurance business with Dexter, based on the fact that it is licensed to carry on business from within the BVI.

The issues coming under the power of the BVI FSC are licensing and following supervision of regulated activities such as insurance, mutual funds, banking and trust business, carried on in or from the BVI territory. Advisory Warnings are published by the Commission on its site for the general publics, to protect them from scams, misunderstandings or offences.
Article any source

Monday, May 14, 2007

Digicel Files Legal Action against BVI Telecommunications Regulatory Commission

On April 23, BVI Government released a new telecommunications policy outlining that only three current telecom operators in the BVI, namely CCT Global Communications, Cable & Wireless, and BVI Cable TV, will be granted licences to operate in the territory, with a possibility of a fourth considered at a later stage.

After the CCT Global Telecommunications filed for compensation under the Telecommunications Act, 2006, another licence holder Digicel has taken legal action against BVI telecoms regulators.

The telecommunications company whose licence had also been extended to March 31, 2007, made a statement, where again expressed its interest in entering the BVI market, just some days after the application by the company was filed in the High Court against the BVI Telecommunications Regulatory Commission (TRC).

In February, the TRC had rejected Digicel's application for a mobile telecommunications licence, under the reason that it did not meet the provisions set out under the Telecommunications Act. Now the Regulatory Commission, under the decision of the Court, has to consider the same application.

Digicel Group Regulatory & Legal Director, Jan Tjernell, stated that Digicel has been a driving force of mobile liberalisation across the entire Caribbean region; he also said that the company has always been interested and still remains interested in entering the BVI mobile market.

The company's application was filed on April 30, and granted by the court on May 4. It was ruled by the Court that the hearing will continue on May 18; the full judicial review application is also expected to be heard on this date.
Article any source

Abolish VAT?

The Times (14 May) says that the business leaders in the UK are pressing for a tax overhaul, involving simplification and lower rates (see also: Blog - 8 April). The Free Lunch – Fairness with Freedom argues for quite a different tax reform for individuals which would help business too. Governments raise tax mainly by taking away some of the effort of workers and producers of products or services, thus VAT is a tax on every slice of value added to a product or service, and income tax takes some of the effort of every individual’s hard work. These taxes directly penalize creativity and can sometimes be a disincentive to work, especially for those on welfare benefits.

A far better tax is to take a slice of the value gained by land. Land values rise when a community is considered to be a good place to live in or invest in and this happens because virtually everyone in that society is contributing to its success and it is considered to have a settled future. A large percentage of the spending needs of Governments could be met by an annual levy on the underlying value of all land. Income tax, VAT and other taxes would be cut and eventually abolished.

The Free Lunch suggests that part of the money raised would be recycled back as a Citizen’s Royalty - an annual payment to everyone - so that everyone would be rewarded for their contribution to the economic success of the whole. This would also help poor homeowners to pay their land tax. An added advantage of a Citizen's Royalty (also known as Basic Income or Citizen’s Income) is that welfare payments would be hugely simplified. For more on these radical yet simple ideas buy the book.

Link: www.the-free-lunch.com

Any source

Sunday, May 13, 2007

Sugar reform hits trouble

Last year's sugar reform has hit trouble and it's a familiar story: too much sugar is still being produced in the EU. 2007 production plans show that quotas have only fallen by 2.2 million tonnes over the first two years, well below the 5-6 million tonne target.

Moreover, the new rules also allow most sugar producers to purchase limited quantities of extra quota at €730 per tonne, and many companies who believe that their long-term future is promising have taken up this option, with nearly 900,000 tonnes of extra quota having been bought. In all, therefore quotas have only fallen by a net total of just over 1 million tonnes. Only three countries have ceased production altogether: Ireland, Latvia and Slovenia.

The quota system, together with high support prices, has not only built in large surplus production, but has left no room for imports. The commitment to import sugar from the ACP countries is being replaced over a transition period by quota free imports from the least developed countries and eventually from the ACP countries. The prices set in the EU will still be well above current world market levels even at the end of the reform process and the EU market is likely to be attractive to many producers in the developing world where the option for growing alternative crops is limited.

The reform cut sugar sale prices by 36 per cent over four years and set up a restructuring fund to pay uncompetitive processors and farmers to close down. Factories could choose between competing for sales at the new price, or being paid to cut their production quotas. According to the Commission, sugar facories were reluctant to reduce quotas because it was unclear how much of the restructuring aid they would have to pass on to sugar farmers. The reform gave farmers the right to at least ten per cent of the aid but member states could decide to hand out more.

The Commission is concerned that processors have been discouraged from taking up restructruring as they have been offered too small a proportion of the payment, particularly in the new member states where take up of restructuring money has been much lower than expected. The Commission plans to allow producers to keep 90 per cent of the restructuring money, with the remainder passed on to farmers. In any event, the world sugar market is very volatile and likely to become more so now that the EU has virtually disappeared from world trade.Any source

Thursday, May 10, 2007

CCT to Ask Compensation from the BVI Government

In the end of April BVI government has approved the telecommunications liberalisation policy that ended CCT's long-held monopoly, by allowing all the three currently licensed public suppliers to submit applications for licensing.

Last week CCT Global Communications filed for compensation from the government
in connection with this decision, under the Telecommunications Act, 2006, which includes the following clause: “Where prior to the coming into force of this Act, a person who was licensed under the Telecommunications Act to provide a public telecommunications network or public telecommunications service loses any existing right pursuant to such licence and such loss results in any pecuniary or other quantifiable disadvantage, the person shall be entitled to seek compensation for such loss."

Government's decision taken in the terms of policy of liberalisation and restructuring of the telecommunications industry in the BVI territory, allowed Cable & Wireless and BVI Cable TV to compete in the wireless telephone services sector, along with CCT Global Communications.

According to the statement, BVI Minister of Communications and Works Elmore Stoutt is now in consultation over the issue with the Telecommunications Regulatory Commission.
Article any source

Commission waters down wine reform

The Commission has backed away from radical plans to reform Europe's perenially troubled wine sector in the face of opposition from member states. The proposals put forward last June offered EU winemakers €2.4 billion over five years as an incentive to dig up their vines and concentrate on producing quality wines.

In particular the vineyard removal scheme will be much less extensive than originally proposed. The target for grubbing up vines, originally set at 400,000 of the current 3.4 million hectares, looks set to be cut in half. In any case, the scheme would continue to be voluntary for producers with no one forced to tear up vines.

All vine-covered land is planned to become eligible for Single Farm Payment to secure the 'Green Box' status of these aids in any future WTO dispue.

The Commission's plans have encountered opposition from some member states, not least Germany who are upset by a plan to ban the use of sugar. German farm minister Horst Seehofer claimed that Germany would lose part of its competitiveness 'if we did without sugar unnecessarily.' A ban on adding sugar would increase the cost of producing wine in Germany by up to 25 per cent. However, Commission officials argue that half of quality German wines are already produced without using sugar.Any source

Monday, May 7, 2007

Final Constitution Draft Received by the BVI Government

Last week it was announced by BVI Chief Minister Honourable Dr Orlando Smith that after long period of Constitutional talks and negotiations with the British Government, the final draft of a new Constitution is ready.

The new provisions included in the final draft of the Constitution are: a new cabinet form of government instead of Executive Council; appointment of Premier Minister instead of the Chief Minister; establishing of a House of Assembly instead of the Legislative Council; the separated duties of the Attorney General and the Director of Public Prosecutions. Other chapters of the Constitution provide for the legislature to remain in the governance of citizens of the BVI.

The modernized Constitution will be implemented following the next dissolution of the Legislative Council, - except for some provisions concerning the change from Executive Council to a Cabinet system of Government, change of Chief Minister's title, and the appointment of a Cabinet Secretary. They will come into effect after the general elections.

The BVI government currently undertakes the public education programme aimed at informing the public on the new Constitution. After these public meetings the people's constitution will be debated in the Legislative Council, and then sent to the Privy Council for final approval.

Dr. Orlando Smith has been the head of the BVI Constitutional Negotiating Team during all the period of negotiations which were successfully concluded in March. The BVI team that participated in the negotiations was formed of members of the Legislative Council and representatives of the Constitutional Review Commission. Also, the Commission published a Report after extensive discussions with the people of the BVI, which formed the basis upon which the Constitutional talks were conducted together with the UK team.

"This new constitution is a symbol of empowerment since for the first time in our history we now have a human rights or fundamental rights chapter," the Chief Minister said, "While I urge that every citizen should make themselves familiar with the full Constitution, now in circulation, I hope that you will get a feel for what has been achieved and is expected to govern the affairs of the British Virgin Islands in the foreseeable future."

By words of Dr. Orlando Smith, the new Constitution will finally provide a sustainable framework in which the basic rights of the people of the BVI shall be protected and preserved.
Article any source

Tuesday, May 1, 2007

BVI in the Malaysian list of top 10 FDI source countries

According to the information provided by the Malaysian state-run news agency, last year Malaysia attracted very high level of investments. The agency quoted International Trade and Industry Parliamentary Secretary Tan Yee Kew who said that Malaysia was the second in the Asian FDI top ranking, whith the amount of 20.2 billion ringgit (approximately US$5.9 billion; 1MYR ≈ 0.29US$). The first one is Singapore, which recorded last year 30.7 billion ringgit of foreign direct investments.

Tan Yee Kew also named the top 10 FDI source countries and their investment amounts in Malaysia in 2005 and 2006. The British Virgin Islands, with 700 million, is among these FDI leaders. The first one is Japan, with 8.1 billion ringgit; other countries in the list are the United States (7.6 billion), the Netherlands (5 billion), Singapore (4.9 billion), Australia, South Korea, the Cayman Islands, Taiwan and the United Kingdom.

Tan stated the amount of investments in Malaysia in 2006 - 46 billion ringgit for 1,077 manufacturing projects, compared to 31 billion ringgit in 2005.

The main sectors for foreign direct investments in Malaysian economy were electric and electronic products, chemicals and chemical products, metallic products, non-metallic mineral products, plastic, food, measuring and scientific instruments, machinery and equipment.
Article any source

Accession states face surplus stocks fines

The Commission has announced that all of the 2004 accession states except Hungary will have to pay for failing to stop speculators building up stocks and benefitting from selling them at EU prices. The issue has caused alarm in the new member states who claim that in many cases the build up of stocks was due to hoarding by citizens rather than any profiteering by commercial traders. This was the excuse used by Estonia to explain what would have been huge sugar stocks per household, the argument being that Estonians were preparing for an orgy of jam making which was claimed to be an historic national pasttime.

Poland will have to pay €12.5m for surplus meat stocks, the Czech Republic €12.3m for excess meat and fruit stocks and Estonia €7.6m for milk. However, the relatively poor accession states will be given time to pay with instalments spread out over four years.Any source

ACCOUNTING REGULATORY ISSUES ON INVESTMENTS IN ISLAMIC BONDS

Abdul Rahim Abdul Rahman


The main objective of this paper is to examine contemporary accounting regulatory issues oninvestments in Islamic bonds or sukuk. Investments on Islamic bonds (sukuk) give rise to anumber of accounting and reporting issues related to recognition, measurement anddisclosure. The underlying rationale of this paper is that proper development of Islamicfinancial market requires a well regulated Islamic financial instruments and one of the keyelements of regulation is accounting regulation. Therefore, a well regulated Islamic financialmarket requires a sound accounting and reporting standard of Islamic financial instrumentsthat, first, meet the requirements of syari’ah, and, second, relevant to be practiced in our time.The need for Islamic accounting that deals with Islamic financial instruments has promptedAAOIFI recently to introduce Financial Accounting Standard No.17 on investments insecurities (AAOIFI FAS 17, 2003). The need for a codified Islamic accounting standard areprimarily stemmed from the need that Islamic accounting objectives, concepts and principlesto be developed based on syari’ah requirements. However, the Islamic accounting regulationalso needs to adapt to the modern accounting regulatory environment to make it relevant to bepracticed in our time. The examination of AAOIFI FAS 17 shows that AAOIFI has beenpragmatic in its approach by considering both requirements when developing its standard.This is a pro-active step to provide a sound accounting regulation as part of a comprehensiveregulation of Islamic financial institutions.

1. Introduction

The growth of Islamic financial market and institutions, culminating in the growing interest in Islamicbanking, finance and insurance reiterates the need for different accounting requirements. Islamic accountingis needed to serve different principles of financial instruments that are founded on the Islamic worldviewand syari’ah requirements. The efforts of Accounting and Auditing Organizations of Islamic FinancialInstitutions (AAOIFI) in the 1990s to develop accounting standards for Islamic financial institutions arecommendable as a positive contribution towards harmonizing accounting practices of Islamic financialinstitutions. The standards developed by AAOIFI are also expected to facilitate the needs of the users ofaccounting information of Islamic financial institutions who, in theory, demand different sets of information.The main objective of this paper is to examine contemporary accounting regulatory issues on Islamicbonds or Islamic Private Debt Securities (IPDS) or sukuk. Investments on Islamic bonds (sukuk) give riseto a number of accounting and reporting issues. These issues relate to recognition, measurement anddisclosure. This study also highlights and discusses the requirements made by AAOIFI’s FinancialAccounting Standard No.17 (FAS 17) on accounting for investments in Islamic bonds or sukuk. The underlying rationale of this paper is that proper development of Islamic financial market requires awell regulated Islamic financial instruments and one of the key elements of regulation is accountingregulation.Therefore, a well regulated Islamic financial market requires a sound accounting and reportingstandard of Islamic capital market instruments that, first, meet the requirements of syari’ah, and, second,relevant to be practiced in our time.The paper will be structured accordingly to address the above objectives, by first, introducing how theIslamic worldview influences the objectives and concepts of modern accounting and reporting. Secondly,the paper examines accounting objectives and concepts from an Islamic perspective. Thirdly, accountingissues on investments in Islamic securities particularly Islamic bonds or sukuk are discussed to highlightcontemporary accounting issues on providing a sound accounting regulation for Islamic financial marketinstruments.

2. Islam and Accounting

Islam literally means ‘peace’ and ‘obedience’, and adherence to Islam have to be ‘obedient’ to God and toappreciate the purpose of their existence in this world (Al-Faruqi, 1982). God is said to have proclaimedthat, “I have only created… men that they may serve me” (al-Qur’an, 51:56). The nature of this serviceis taken to have been spelled out clearly when God, upon creating men, declared,“I will create a vicegerenton earth”(al-Qur’an, 2:30). Muslims consider humans to be vicegerents of God. Thus, whatever worldlypossession a Muslim has is to be held in a stewardship capacity – that is simply in trust from God (Abu-Sulayman, 1994). According to Islam, Muslims are trustees (or stewards) for God: Man therefore agreesto assume this great responsibility in a covenant with God.In a Muslim society, accounting is expected to be influenced by the way the economic system is organizedand the philosophy underpinning its system. If we examine the role of economic activities in Islam we willfind that the philosophy of human activity should be directed towards the achievement of Falah acomprehensive humanwelfare in this life and also in the hereafter. According to Siddiqi (1972) Falahisa tangible quality towards the achievement of God’s pleasure. Human welfare as believed by Muslims canbe achieved without any conflict in the genuine interest of this worldly life and the Hereafter.Toachieve this Falah, economic activities must be morally directed. In any economic decisions, includingfinancial reporting upon economic activities, the ethical values should act as a norm and economicrelationship must be regarded as moral relationship. The achievement of Falah is neither dependent onnor related to maximization of wealth or profit nor to the size of the individual business enterprise andquantity of output. Therefore, to a profit making organization their activities should serve as a means forthem to function in the economy. The worldview should be that they provide service to the public bymanufacturing and/or trading goods or providing services and in return profit is only aim to ensure theycan operate and grow.Accounting functions to discharge the accountability of enterprise as a result of separation of ownershipand the management. The users might be shareholders, creditors, potential investors and the public. In theMuslim society, the concept of accountability is ingrained in the basic creation of Man as a vicegerent ofGod on the earth. Man mission on earth is to fulfill the purpose of its existence in the universe. Man is thuscreated as trustees and accountable for all their actions (Abu-Sulayman, 1994). In Islam, accounting sould function not only as a service activity providing financial information to the users and to the publicat large but more important accountants should discharge their accountability by providing information toenable society to follow God’s commandments.The Muslims also believed that Men are vicegerents on earth and directly accountable for all their actionsas they are only trustees of God. Therefore, in this sense, accountants should lay formal claim to the statusof moral arbiters to ensure the responsibility and transparency of an organization’s internal procedures, sothat issues of policy and governance are properly debated and recorded, at the point where the moralproblems arise in the first place (Gambling and Karim, 1991).In the light of the above worldview of Islam, some ethical notions assume a broader and more holisticsignificance to the accountant. In terms of responsibility, the accountant in Islam is not merely responsibleto human superiors, the management/client or shareholders. He/She is a servant and trustee of God in allsituations, is simultaneously responsible to God the Owner of his very self and the resources he is utilizingand managing. To forget or to neglect this fundamental aspect of this responsibility is tantamount to abetrayal of divine trust with all the attending consequences in this world and in the next (Hassan, 1995).The accountant in Islam is not only required to maintain good relationship with superiors, client or themanagement but also maintain, improve and strengthen his relationship with his Master by fulfilling thereligious obligations. In fact the relationship with the Master (Hablun Min’Allah) will determine themode of relationship with fellow servants (Hablun Min’An-Nas) (Hassan, 1995). Guided by the properrelationship with God, the human Accountant and public relations would then be inspired by value oftruthfulness, fairness, tolerance and uprightness etc.The accountant in Islam is motivated to provide work and excellent service because as a holder of Amanah(Trustee of God) on earth he must search for the bounties of God. His/Her work is a form of Amal Salih(virtuous deed) which is then the key for the attainment of Falah (true success in this world and in thehereafter). His/Her work is also a form of Ibadah(servitude to God) in so far as it is in conformity with thedivine norms and values. The Accountant who is imbued with the world-view of Tawhid(oneness of God)is not anti profit or anti-worldly gain within the limits provided by religion. His vision of success andfailure however extends beyond worldly existence to the life in the hereafter.

3. An Islamic Perspective of Accounting Objectives and Concepts

According to conventional accounting, accounting objectives and concepts are needed to guide existingaccounting practice; prescribe future accounting practice; and define key terms and fundamentalaccounting issues (Miller, 1985). According to AAOIFI’s Statement of Financial Accounting No.1 (AAOIFISFA 1), the need for accounting objectives for Islamic financial institutions stemmed from the role ofaccounting. Since the role of financial accounting is to provide the information which users of the financialstatements of Islamic banks depend on in assessing the bank’s compliance with the precepts of syari’ah,therefore, in order for the Islamic financial institutions to perform the role effectively, accounting standardsneed to be developed and complied with by Islamic banks. The development of such standards must bebased on clear objectives of financial accounting and agreed upon definitions of its concepts.Allah SWT said:“We shall set up justice scales for the day of judgement, not a soul will be dealt unjustly in the least. Andif there be (no more than) the weight of mustard seed, we will bring it (to account); And enough are Weto take account” (Al-Qur’an Chapter 21, verse 47).“O you who believe! When you deal with each other, in transactions involving future obligations in afixed period of time, reduce them to writing” and “Let a scribe write down faithfully as between theparties” (Al-Qur’an Chapter 2, verse 282)Based on the above verses we can deduce that the objectives of accounting should be to ensure fair and justfinancial transactions between human beings. Accounting information is expected to fulfill the needs ofthose who are in need or expected to require such information. However, the primary objective ofaccounting information must be to fulfill the ultimate accountability to Allah SWT.In addition to fulfilling the ultimate accountability to Allah SWT, the preparers of financial informationmust know the common information needs of users of financial reports. Common information needs of theusers are normally consist of the needs for information which can assist in evaluating the entity’s ability inusing its economic resources and fulfill its obligations. In this respect AAOIFI’s SFA 1 has broaden thescope beyond just economic responsibilities to encompass information that can assist in evaluating theentity’s compliance with the principles of syari’ah and its ability to carry out social responsibilitiesspecified by IslamSome scholars have also argued that accounting objectives can be derived from the way one account for hisor her zakat obligations (Adnan & Gaffikin, 1997). Adnan and Gaffikin (1997) argue that by makingzakat the primary objective, one tend to avoid the unwanted practices of cheating or ‘window dressing’because he or she believes that accountability to Allah SWT is of utmost important and Allah SWT alwayswatches him or her.On the other hand, accounting concepts are variously referred to as principles, axioms, postulates,assumptions and rules. One of the basic accounting principles is the use of historical cost for assetvaluation that basically derived from the concept of conservatism. Many Islamic accounting writers (e.g.Gambling and Karim, 1991; Adnan and Gaffikin, 1997) cast doubt on the relevance of the concept ofconservatism. Many refer to the principles of zakat where trade assets subjected to zakat must be based oncurrent market value (Qardawi, 1999) or cash equivalent value (AAOIFI FAS 9). Adherence to the costprinciples leads to the conventional accounting practice that is lower of cost or market value. This will leadto understatement of trade assets to be subjected for zakat. Thus, the cost concept cannot be acceptable inIslam.The preparation of financial information in Islam should be aimed among others for zakat purposes. Thus,the aim for zakat purposes may lead to the need of periodicity assumption as zakat is only paid once a year.The periodicity assumption has led to the development of accruals accounting, and the principles ofincome recognition and matching. Therefore, accounting statements would, therefore, be prepared for thatparticular period, showing the amount of which zakat would be levied (Gambling and Karim, 1991).

4. Islamic Accounting Concepts on Recognition, Measurement & Disclosure

Accounting recognition refers to recording the basic elements of the financial statements. The concepts ofaccounting recognition define the basic principles that determine the timing of revenue, expense, gain andloss recognition in the entity’s income statement and, in turn, the basic principles that determine the timingof assets and liabilities recognition. AAOIFI’s SFA 2 recommends that “revenues should be recognizedwhen realized”. Realization of revenue shall take place when one of the three conditions are met: (1) Theentity has the right to receive the revenue; (2) There is an obligation on the part of another party to remit;and (3) The amount of revenue should be known and collectible with reasonable degree of certainty.The above recommendation indicates the use of accrual basis accounting which has been claimed to bebetter than the alternative cash basis accounting. Accrual basis of income recognition does meet therequirement of Islamic objectives to determine the ‘real’ wealth of an entity. Contrary to cash accounting,it likely provides an underestimate value of wealth as the recognition is based on actual cash received andpaid.In addition, according to the matching principle, expense recognition is realized either because the expenserelates directly to the earning of revenues or because it relates to the period when the expense is incurred.From the Islamic perspective, the matching principle which allocates expenses to their related revenues,provides fairness and justice simultaneously to the shareholders and other stakeholders (El-Tegani,undated)The conventional accounting measurement is based on the cost principle that considers the acquisition costor historical cost as the appropriate measurement basis. However, this principle is questionable from theIslamic point of view due to it conflicts with the concept of fairness and justice. In the case of zakatdetermination, majority scholars recommended the use of current prices on the due date of zakat (Al-Qardawi, 1999). The argument for the use of current market value has been based on the needs for the mostaccurate valuation of wealth to be subjected for zakat in order to serve justice to both the zakat recipientsand zakat payers.AAOIFI, however, asserts that the measurement attributes should be guided by the relevance, reliability,understandability and comparability of the information to be provided to the users. AAOIFI hasrecommended the use of cash equivalent value that indicates the value that would be realized if an assetwas sold for cash in the normal course of business as at the date of the financial statement. In order toensure the reliability and comparability of the cash equivalent value, it must be supported with objectiveindicators; logical and relevant valuation methods; consistency of the use of valuation methods; expertvaluation; and conservatism in the valuation process (AAOIFI SFA 1). AAOIFI also recommends analternative method i.e. historical cost that refers to its fair value at the date of its acquisition includingamounts incurred to make it usable or ready for disposition.In terms of disclosure requirements, it is of interest to examine Baydoun and Willet’s (1997) proposedobjectives of accounting disclosure. They argued that there are at least four objectives of accountingdisclosure for an Islamic firm, whereby the first two are specific requirements laid down by syari’ah for thefirm to avoid riba’ and pay zakah. The second two objectives are based on inferred general requirementswhich can be referred to as ‘social accountability’ and full disclosure’.While the first two objectives i.e. prohibition of riba’ and payment of zakat have extensively been coveredby many past literature, the second two objectives require special attention. Baydoun and Willet (1997)viewed the Islamic concept of social accountability to encompass the accountability ultimately to God.The fundamental concept of Islamic accountability is where Muslims believed that all resources are madeavailable to individuals in a form of trust. The success of individuals in the life hereafter depends upontheir performance in this world.The implications of Islamic accountability on accounting is that the management and providers of capitalneed to be accountable for their actions (or in-action) both within and outside the firm by providing properaccounting and reporting. Thus, the Islamic concept of social accountability departs clearly from thewestern attitudes toward accountability which are most applicable to the concept of private accountability.The concept of social accountability in Islam is also related to the principle of full disclosure. According toBaydoun and Willett (1997) full disclosure does not mean to disclose everything down to every minutedetail of transactions. There is, however, the need for the preparer of account to disclose everything that isbelieved as importance to users for purposes of serving God. In a more precise word, AAOIFI’s Statementof Financial Accounting No. 2 on Concepts of Financial Accounting for Islamic Banks and FinancialInstitutions (SFA 2) made it very clear that the Islamic concept of disclosure revolved around the conceptof ‘adequate’ disclosure. Here, adequate disclosure means that the financial statements should contain allmaterial information necessary to make them useful to users.AAOIFI’s SFA 2 elaborated the concept of adequate disclosure into two aspects namely optimal aggregationand appropriate descriptions and clarifications. Optimal aggregation means the financial statements shouldprovide sufficient details to meet the users’ need for information. However, too much detail can contributeto confusion. Therefore, it needs appropriate descriptions and clarifications to make the informationprovidedtobeuseful to users and sufficient additional notes become necessary.

5. Aaoifi Fas 17 & Accounting Issues On Investments In Islamic Securities

Background of the Standard


The AAOIFI Financial Accounting Standard No. 17 (AAOIFI FAS 17) shall apply to the institution’sinvestments, whether in the form of direct investment funds or investment portfolios, in sukuk (Islamicbonds), shares, and real estate. The standard is relatively new that is it shall only be effective for financialperiods beginning 1 Muharram 1424H or 1 January 2003. Thus, it makes the discussion of this standardnecessary especially for institutions that have investments in Islamic capital market instruments. There islack of academic writings in this area that require special attention to ensure proper accounting for com-plex instruments such as Islamic bonds (sukuk).
AAOIFI FAS 17 classifies Islamic bonds (sukuk) into at least four types:

(a) Mudaraba (Muqaradah) sukuk

These are investments in sukuk that represent ownership of units of equal value in the Mudaraba equityand are registered in the names of holders on the basis of undivided ownership of shares in the mudarabaequity and its returns according to percentage of ownership of share. The owners of such sukuk are therabbul-mal (capital provider).

(b) Musharaka sukuk

These are investments in sukuk that represent ownership of Musharaka equity. It does not differ from theMudaraba sukuk except in the organization of the relationship between the party issuing sukuk forms acommittee from the holders of the sukuk who can be referred to in investment decisions.

(c) Ijarah sukuk

These are sukuk that represent ownership of equal shares in a rented real estate or the usufruct (benefit) ofthe real estate. These sukuk give their owners the right to own the real estate, receive the rent and disposeof their sukuk in a manner that does not affect the right of the lessee, i.e. they are tradable. The holders ofsuch sukuk bear all cost of maintenance of and damage of the real estate.

(d) Salam or Istisna’ sukuk

These are sukuk that represent a sale of a commodity on the basis of deferred delivery against immediatepayment. The deferred commodity is a debt in-kind against the supplier because it refers to a commoditywhich is accepted based on the description of the seller. The Istisna’ sukuk is similar to Salam sukuk,except it is permissible to defer payment in an Istisna’ transaction, but not in a Salam. In both Salam andIstisna’, the subject matter of the sale is an obligation on the manufacturer or builder in the case of Istisna’and the seller in the case of Salam. Hence both instruments can neither be sold nor traded before theirmaturity date if either the buyer or the seller of the commodity issues them. Accordingly, these sukuk aretreated as investments held to maturity.

Classification of Investment

One notable contribution of AAOIFI FAS 17 is the classification of investment in sukuk into three typesnamely: for trading purposes; available for sale; and held to maturity. The basis of AAOIFI classificationis based on the well-known syari’ah classification of trade commodities for the purpose of zakat. Forexample, the jurists of Maliki School have classified trading assets into the following: (a) assets that aremeant for buying and selling; (b) assets that are held for sale in the expectation of making profits throughprice appreciation in the future; and (c) assets acquired not for trade, but for personal use.However, if we examine the conventional classification of investment in securities, normally it is onlyclassified into 2 types i.e. either dealing (short-term); or investment (long-term). The use of AAOIFI’sclassification of investment into three types would be more desirable and useful to users of accountinginformation as it provides an additional classification that distinguishes the intention or purpose ofinvestment. However, the main problem of classifying the investments is to objectively determine theintention of the investors and intention may also subject to change overtime due to the changes in economicclimate.

Recognition

AAOIFI’s FAS 17 has recommended that recognition for investment in sukuk and shares shall berecognized on the acquisition date and shall be measured at cost. However, at the end of accountingperiod, investment in sukuk and shares held for trading purposes and available for sale shall be measuredat their fair value. The unrealized gains or losses as a result of re-measurement need to be recognized in theincome statement.The additional requirement is the share of portion of income related to owners’ equity and portion relatedto unrestricted equity investment account holders must be taken into consideration. This is consideredcrucial as no proper treatment and disclosure of this transaction of profit sharing and distribution may leadto confusion as to the method, ratio and process to disburse profit that have been taken place. This is toensure transparency in profit and loss sharing on re-measurement of investment at the end of the year to beproperly disclosed to the users. At the same time it fulfils the syari’ah requirement of ensuring fair and justprofit sharing and distribution between shareholders and depositors (investors).Any unrealized gain or loss resulting from re-measurement at fair value, according to AAOIFI FAS 17shall be recognized in the statement of financial position under the “investment fair value reserve”. Thisreserve account will reflect the net gain or loss at the end of the year. The standard also makes a provisionthat in case the institution has reserves created by appropriation of profits of previous financial periods tomeet future investment risks, it is recommended that unrealized loss resulted from re-measurement ofinvestment at fair value shall be deducted from this reserve.

Measurement

In the case of sukuk held to maturity, it needs to be measured based on historical cost except that if there isimpairment in value it should be measured at fair value. The difference in value will then need to berecognized in the income statement and the information related to the fair value is then need to be disclosedin the notes to the financial statements. For securities held for trading and available for sale, AAOIFI FAS17 recommends the measurement to be based on fair value.Fair value is normally defined as the amount which the instrument could be exchanged or settled betweenknowledgeable and willing parties in an arm’s length transaction, other than forced or liquidation sale.Quoted market price, when available, normally are used as the measure of fair values. However, for manyfinancial instruments and it may include Islamic bonds (sukuk), quoted market prices may not available.In the case of unquoted securities, conventionally the estimate is based on the net present value or othervaluation techniques. However, these techniques involve uncertainties and are significantly affected by theassumptions used and judgments made regarding risk characteristics of various financial or capital marketinstruments. The uncertainties include the arbitrary used of discount rates, future cash flows, expected lossand other factors.The determination of fair value for unquoted securities requires the availability of objective indicator andexpertise, as well as conservatism in the valuation process. The objective of Islamic valuation should be toprovide both relevant and reliable value that can be relied on by the users of financial statements to makeuseful judgment and decision (El-Tegani, undated).In the case of securities held to maturity, the rationale of AAOIFI’s FAS 17 to recommend historical costrather than fair value could be because of the inherent uncertainties in relation to the use fair value forcapital market instruments. Another reason could be because there is no intention to trade in the securitiesbefore maturity, thus, there is no apparent need to measure the securities at the end of the year at fair value.The AAOIFI’s FAS 17 also prescribes that the realized profits or losses resulting from sale of anyinvestment shall be measured at the difference between the book value and the net cash proceeds from thesale of investment. The standard also makes recommendation that different types of investment must beshown separately according to the three classifications as defined earlier. This is important to give a betterpicture of profit resulted from different types of investment. This recommended treatment is also necessaryto assist users in determining and comparing profitability between different types of investment.In the case of dividends received from investment in shares and sukuk, the standard requires it to berecognized in the income statement at the declaration date rather than at the date when the cash proceed isreceived. This indicates the use of accrual basis of accounting to ensure that the institution recognizedincome when it is realized based on the contract or the right to receive that income. The use of accrual hereis required in order to reflect the actual or fair income at that point when it is realized.The additional requirement of realized profit from sale of investment and dividends received is the need todistinguish between the portion to be shared by owners’ equity and depositors (investors). The rationale issimilar to the case of treatment of profit on re-measurement of investment at fair value as discussed above,as it will ensure sufficient information to be provided to users of accounting information particularly on thedistribution of profit between equity holders and depositors.

Disclosure


AAOIFI’s FAS 17 has made special requirements of disclosure in the case of investments in sukuk. Amongthe requirements are that disclosure shall be made by the issuer of sukuk, if material, the face value ofsukuk, the percentage of sukuk acquired from each party issuing the sukuk and each type of sukuk. Thereis also a requirement to disclose the party guaranteeing the sukuk and the nature of the guarantee. Anotheruseful disclosure requirement is the need to disclose the contractual relationship between the issuer and/ormanager of sukuk and the holders of such sukuk. The additional disclosure with respect to investment insukuk is the requirement to disclose the classification of sukuk according to their maturities.All the above disclosure requirements indicates the need for the Islamic institutions to be more transparentin disclosing financial information pertaining investment in securities especially sukuk. The underlyingrationale is to provide useful information for users to make informed judgement especially about institution’sinvestment in securities. The users are expected to require all the above information and disclosure notonly with respect to the risks of investment undertaken and the potential return (full disclosure) but thecontractual relationships of the parties involved that is expected to fulfill the syari’ah requirements (socialaccountability).

6. Concluding Remarks

The need for Islamic accounting that deals with Islamic financial instruments has prompted AAOIFIrecently to introduce Financial Accounting Standard No.17 on investments in securities. The need for acodified Islamic accounting standard are primarily stemmed from the need that Islamic accountingobjectives,concepts and principles to be developed based on syari’ah requirements. However, the Islamicaccounting regulation also needs to adapt to the modern accounting regulatory environment to make itrelevant to be practiced in our time. The examination of AAOIFI FAS 17 shows that AAOIFI has beenpragmatic in its approach by considering both requirements when developing its standard. This is apro-active step to provide a sound accounting regulation as part of a comprehensive regulation of Islamicfinancial institutions.The development of modern accounting has shown that accounting itself is an emerging and pragmaticdiscipline. Another paramount challenge and conventional accounting is of no exception, is compliance ofthe standard. For the standard to be adopted by commercial participants, the regulatory agencies ofrespective Muslim states at least must be convinced not only for the need of such standard but the necessityto adopt it as a mandatory requirement.Another pre-requisite for a sound accounting regulation is the credibility of standard setter. In the case ofAAOIFI, the credibility of its standard will be subjected to ‘acid’ test of acceptance by commercialparticipants especially Islamic financial institutions. In addition, another challenging task would be theacceptance of juristic rules made by AAOIFI’s board of syari’ah scholars by Islamic financial institutionsworldwide. As syari’ah opinion can be subjected to vast differences among scholars, this leads to anotherneed that is a standard or a codified syari’ah rules based on consensus of credible Muslim scholars of ourtime that transcends beyond geographical boundaries of nation states.Finally, the development of a new discipline called Islamic accounting establishes an urgent need for theaccounting academics and practitioners to undertake studies that attempt to understand how accounting isinfluenced by and adapted to the way the economic system is organized and the philosophy underpinningits system. The interests on Islamic accounting has been growing for the past two decades, however, thedevelopment of Islamic accounting is still at the infancy stage. This paper is just a small contribution to theliterature on contemporary accounting regulatory issues on investments in Islamic bonds or sukuk

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