:AACE CERTIFICATION 2009-2010:

I am continuing to search and read several articles by goggling on the net, for what I wrote in Blog#5 and how to define framework of my 2,500 word paper “EVM observed from Syariah law”. I am tried to define:
“Why I write on this topic?”
“What issue becomes the starting point?”
“What other topics will correlate with the paper?” and wondering;
“What the final conclusion related to EVM?

I start my reading with interesting presentation” Introducing to Islamic finance, Security and Sukuk”, by Amer Khalil Ur Rehman, AIMS-Academic for International Modern Studies UK.
I found interesting cited from website of AIMS wrote as follow:
“...Global potential of the Islamic banking market is conservatively estimated at $4,000bn, according to Moody's Investor Service. Current market is estimated at only $700bn, most of it in the Gulf. With such potential it becomes clearer why governments, eager to please their Muslim populace, are encouraging more banks to start up and expand outside domestic markets...” (1)
I found also in the presentation slide, that ABN Amro, Citibank, Deutsche bank, Hongkong & Shanghai banking Corp, Union Bank of Switzerland doing Islamic Banking for profit and market size since potential, and not (necessarily) for religious reasons. Profit during 80’s average 15%-20% p.a. and in 90’s onwards averaged 10%-15% p.a. return (1).
Booth cited above; and what I ever wrote in my Blog#5 probably could be answering “Why write in this topics”.

Then I continue to “What is the starting”.
One of special characters of Islamic/Syariah finance is prohibiting usury, interest, or riba. (PS: I will not discuss further in this blog, but what I read in the presentation (1), cited some epistle from Judaist and Christian with the same aims). Syariah is part Islamic which teach us on practice and activity; including practice on banking and financial activity.
In this point I will explain on “Riba”. If we talk on Islamic banking/ Finance law, we usually find Riba/usury prohibition. The very basic question” Why Riba/Interest/usury is prohibit in Islamic Syariah perspective?
Riba (Interest) is any return/reward or compensation charged on a loan contract as well as charged in rescheduling debts. Riba is strongly prohibited in Islam. The economic implication is that money is considered as a medium of exchange effectively created to be sought not in itself but for other commodities. Thus, charging interest on loans is considered unjust since money is considered to be simply an intermediary between goods. Recently scholars have also placed increased scrutiny on not only the rationale for the prohibition of interest but also on the lack of theory in support of interest. Mirakhor (1995) provides an overview of recent discussions concerning this theme. He refutes numerous arguments that lend support for the existence of interest as a backbone for conventional financial markets. It is maintained that when money is loaned, the funds are used to create either a debt (in which case there is no warrantable rationale why the lender should accept a return) or an asset (in which case there is no justifiable reason why an unconditional assurance of interest should be imposed by the market) (2)

Picture: Cited from (4)

Anyway, I realize still far away from “What the final conclusion related to EVM".
Recall the pictures I ever shown in blog#5 (see attached), and read on below of “Sukuk Istisna” definition as a contract whereby a manufacturer (or contractor) agrees to produce (or construct) and deliver, at a given price on a given date in the future, a well-described good (or building) according to specifications. In istisna the price need not be paid in advance. It may be paid in installments, similar to progress payment as agreed by the parties, or partly up front, with the balance being paid later”(3).
I think running Project management EVM (probably) applicable to Syariah finance law environment. It because the strength of Project management EVM (compare to Ordinary PM) is the “real time” monitoring on any project indicator (such as progress etc) and plays in helping to know and understand how “healthy” our projects are (5).

Those capability will satisfy the Istisna requirement above that”... In istisna the price need not be paid in advance. It may be paid in installments, similar to progress payment as agreed by the parties, or partly up front, with the balance being paid later”.

And then, IMPO, a prompt payment issue is crucial to the health of contractor who applying project management EVM, regarding to the tight margin provision in the high market competitiveness.

Let me finish my reading, researching, and seeking of any correlate issue within it,in order to complete the body of my paper.

B/R, Farid Maloni
PS: Pak Paul (as mentor), I will potentially cannot reach any net access within nextweek, 'cause I am on the way to relocate my family from mining site to Jakarta and set the new place, so, I almost sure cannot post any blogs nextweek. I hope you could understand the condition.Thanks

(1) http://www.learnislamicfinance.com/ ; Financial Times UK 'Jul 2008
(2) Managing Financial Risks of Sukuk Structure,- A dissertation, MSc, International Banking, Ali Arsalan Tariq,Loughborough University UK, 2004.
(3) “Islamic Financial Services Industry Development-Ten year framework and Strategy”,policy dialog paper no#1 ,IFSB -Islamic Financial Service Board, may 2007.
(4) Sukuk Al Istisna’a Scheme for Balongan Project- Case Study,Pertamina, September, 2006. www.alhudacibe.com/.../Sukuk/Sukuk%20al%20Istisna%20Case%20Study.pdf
(5) Paul D Giamalvo, email to aace-2009@googlegroups.com ,title: RE: [AACE-2009. 416] RE: EV PM vs conventional PM, Sent: Sat 11/28/2009 6:46 PM