First study on Morocco’s retail Islamic finance sector launched

IFAAS (Islamic Finance Advisory & Assurance Services), the international Islamic finance consultancy, has announced the imminent launch of its exclusive report entitled, Islamic Finance in Morocco – sizing the retail market, analysing the consumer retail market for Islamic financial products and services in Morocco. The report is the first of its kind for the country and is due to be launched in June. It is the result of an independent survey performed on a representative random sample of the Moroccan population across all major regions of the Kingdom.

Islamic Finance in Morocco – sizing the retail market, sets out the market opportunities for financial institutions with interest in the Moroccan market.  The report measures the potential market size for Islamic retail banking, finance and Islamic insurance Takaful and assesses how it will compete with mainstream, conventional finance.

This report will be of particular importance for financial institutions looking to set-up their Islamic operations in Morocco as IFAAS’ report provides full analysis of the consumer demand for Islamic finance in the Kingdom.  It profiles consumers according to their existing use of financial products and services, evaluates their attitudes towards Islamic Finance and reports on their tendency to take out Islamic products and services.  The report also analyses consumer understanding of how Islamic financial products and services work and their likely behaviour when Islamic financial products become available in the Moroccan market.


First study on Morocco’s retail Islamic finance sector launched.

 

With Islamic Finance in Morocco – sizing the retail market, bankers and insurers with interests in the Moroccan market will find answers to a number of key questions including, how receptive are Moroccan consumers to switch from conventional to Islamic products; under which conditions and how quickly? Which Islamic finance products are most desired? How price sensitive is the Moroccan consumer and would more expensive products be acceptable? Do Moroccan consumers understand the difference between a fully-fledged Islamic bank and an Islamic window of a conventional bank? How important is the institution’s compliance with Shari’ah principles and its Shari’ah Board rulings for the consumer? How much new business is anticipated with the launch of Islamic financial products in the country? In a nutshell, IFAAS’ report provides a comprehensive overview on the real potential of the retail Islamic finance within the Moroccan market.

Commenting on the forthcoming launch of the report, Farrukh Raza, managing director of IFAAS said, “Decision makers looking to develop a retail offering need concrete data and consumer insights in order to make critical business decisions”.  IFAAS’ report, Islamic Finance in Morocco – sizing the retail market, based on scientifically validated information, fulfils the demand for this data enabling financial institutions to build appropriate business and product strategies. The report is a must-have for any institution considering its next move in the nascent Moroccan Islamic finance sector.”

IFAAS commissioned a highly reputed local research firm to independently undertake the quantitative survey. Random, face-to-face, street interviews were conducted on a weighted sample size of over 800 individuals, reflecting a true picture of the Moroccan consumer market… The target sample was composed of men and women aged 18 to 55 years, from a variety of socio-economic categories, living in urban and rural areas and consisted of both banked and unbanked groups of the population.  In terms of geographical coverage, the study was conducted in towns and surrounding rural municipalities of Casablanca, Rabat, Marrakech, Agadir, Fez, Tangier and Oujda.

URL: http://www.cpifinancial.net/news/post/14170/first-study-on-moroccos-retail-islamic-finance-sector-launched

Islamic funds forum is a major success

Delegates and speakers from 25 countries took part in the eighth Annual World Islamic Funds and Financial Markets Conference which closed at the Gulf Hotel yesterday. “This has been by far the most international edition of this event that we have hosted so far and that is a reflection of the spread of Islamic finance from just the Muslim world to further afield,” said organiser MEGA Events managing director David McLean.

“We are not just talking about financial institutions here because what we saw this year was a strong representation from corporate entities who are turning from conventional finance to Islamic institutions when it comes to looking at ways to raise money.

“We have had leading institutions from as far apart as Ireland and Luxembourg taking part and a strong showing from Malaysia which has been dominating the sukuk market in recent years,” he added.

He said he believed the quality of speakers was again extremely high and the feedback he had so far was very positive.

“We are committed to bringing this conference back to Bahrain next year and we have already had a lot of delegates asking about how they can sign up for the ninth edition,” he added.

“Islamic finance may remain fairly small compared with conventional finance but it is a fast growing industry which is attracting more international interest across a wide range of financial service sectors.

“One of the fast growing sectors is Islamic insurance and because of that we will be launching a dedicated conference on takaful in Bahrain in October this year as well as returning with the World Islamic Banking Conference towards the end of the year,” he added.


Islamic funds forum is a major success

 

Islamic finance still has to achieve critical mass if it is to address problems of liquidity, according to KPMG Fakhro Bahrain partner “The sukuk market is definitely growing but it has yet to reach the necessary critical mass.

“The industry needs sukuk and interbank lending to meet its liquidity needs but unfortunately the bigger banks that have excess liquidity are not over keen to lend to smaller banks that do not have ratings.

“We will need to see more consolidation in the banking market and that is something that we are already seeing,” he added.

He said that while the sukuk market was expanding, almost 100 per cent of the issuance in 2011 was in Malaysia.

He added that the other problem the industry faced was a lack of standardisation on how banks deal with each other and on the issue of regulation.

“The industry is moving forward in developing standardisation but it is a slow process compared with the growth in the industry,” he said.

URL: http://www.gulf-daily-news.com/NewsDetails.aspx?storyid=330533

Qatar aiming to adopt best global judicial practices

Qatar is pursuing to learn and adopt the world’s best judicial and legal practices as well as build capacity of its judges and lawyers to keep pace with the rapid development in all spheres, the country’s top legal expert said here yesterday.

 

Speaking at a media conference held at Grand Hyatt Hotel here yesterday on the sidelines of the event titled ‘Global Symposium on Judicial and Legal Education”, organized by Qatar International Court and Dispute Resolution Centre (QICDRC), president of the Centre for Judicial and Legal Studies, Dr Mubarak bin Nasser al-Hajri, who is also member of the Supreme Judicial Council, said, “We are listening to the experiences and best practices of international judges and academia and also discussing the need to train and build capacities of Qatari judges and lawyers.


“We do have our own indigenous training programmes in Qatar. However, this symposium is dedicated to learning from the advanced practices used in different parts of the world. As the sole centre for practicing lawyers and judges we have extended our hands to benefit from the world’s best practices.”
Tops judges, law experts and academia from United Kingdom, USA, Australia, Canada, France and hosts Qatar heard experiences on educating the judiciary and development ideas for Qatar at the one-day symposium.
Answering a question, Dr al-Hajri, said, “There are different approaches in different judicial systems of the world. However, we need to understand that regardless of the difference, the judicial system is one. If we have problems we can look at it in different ways to find a solution. The objective of this symposium is to focus on how to resolve disputes between parties and we are trying to learn from the world’s different judicial and legal systems how to solve the same problem. Ultimately, justice is same all over the world.”
Reiterating this point, QICCDRC deputy president Sir David Keene said, “We are not trying to produce an amalgamation of the different systems of the world, but to present a choice.
“However, there are certain common themes emerging. One of those, in so far as judicial training is concerned, is that judges should, in general terms, be in charge of and in control of the training of judges, so as to ensure that the judges are independent of the executive (the government).”
Speaking to QNA, QICDRC chief executive office Robert Musgrove said, “It is important to us that national Qatari and Arabic-speaking lawyers are able to appear in our courts. We have already had very successful appearances by Qatari lawyers in international courts, but we feel it is the responsibility of the court and this education programme to further develop the transitional skills to allow Qatari national lawyer to appear here and other English-speaking courts.”
Regarding developing local lawyers’ legal English-speaking capacity, “This programme is looking at the development of legal English to build those skills and also transitional skills that will help Qatari lawyers to move from the domestic civil code system into feeling comfortable in a court that is more of a common law background.”
This education programme that Sir David Keene talked about empowerment and this symposium is a market place in which all the best traditional training in the world, both from common law and civil code, are able to demonstrate what is best for Qatar, he said.
“The report (at the conclusion of the symposium) will provide a series of options to decision-makers like Dr Mubarak al-Hajri and will have a choice to choose from that market on what they think are the best products to build a successful strategy for educating Qatari judiciary and Qatari lawyers,” added Musgrove.
Training course on Islamic finance
The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), with the support of Mazaya Qatar Real Estate Development Company will hold the annual training course on Islamic finance for the first time in Qatar from March 11 to 14.
The AAOIFI is an Islamic non-for-profit international corporate body that prepares accounting, auditing, governance, ethics and Shariah standards for Islamic financial institutions and the industry.
The AAOIFI is independent, supported by more than 200 institutional members from some 45 countries including central banks, Islamic financial institutions, and other participants from the international Islamic banking and finance industry, worldwide.
The CSAA course programme is designed to equip candidates with the understanding and professional skills for Shariah compliance and the review process for the international Islamic banking and finance industry.
It provides knowledge on roles and functions of various Shariah compliance and review processes; the correlation between Shariah compliance and review processes, mechanisms to ensure compliance with various decrees and fatwas; a technical review of banking and financial operations to determine compliance; and establishing of foundations to gain stakeholders’ trust and confidence in institutions’ Shariah compliance.Mazaya Qatar will be the sole sponsor of the course.

Mazaya Qatar CEO Seraj al-Baker said, “As a Shariah compliant company, we are committed to these principles, and the support of Islamic finance and financial institutions in the region. We are proud to be the company which brings this important training course to Qatar for the first time, and hope it is the first of many”.

http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=491530&version=1&template_id=36&parent_id=16

AP sources: Congress to seek new sanctions targeting all Iranian banks

WASHINGTON — Lawmakers will seek to levy sanctions on all Iranian banks, part of a sweeping effort to push the Obama administration to further squeeze the Islamic republic’s economy and force Tehran to abandon its nuclear program, an aide said Tuesday.

The congressional aide said House and Senate lawmakers would soon introduce bipartisan legislation compelling the Obama administration to expand U.S. sanctions to every Iranian bank. More than 20 Iranian banks, including the powerful Central Bank and all of Iran’s largest state-owned banks, are currently subject to sanctions under Treasury Department rules. But several other Iranian institutions are still able to do business around the world.

The legislation also would sanction government-owned foreign financial institutions, including foreign central banks, engaged in non-oil transactions with Iran, the aide said. Under current U.S. law, those institutions will only be sanctioned for oil purchases beginning in late June.

The pending legislation aims to tighten loopholes in current U.S. laws. The legislation is being pushed Rep. Brad Sherman, D-Calif., and Sen. Mark Kirk, R-Ill., who is recovering from a stroke.

A second person briefed on the matter confirmed the legislative plans. Both sources spoke on the condition of anonymity because they were not authorized to speak publically.

Lawmakers were pushing forward with the tougher sanctions even after Israeli Prime Minister Benjamin Netanyahu said in meetings on Capitol Hill this week that sanctions were not an effective strategy for dealing with Iran.

The Obama administration is urgently trying to persuade Israel not to launch a military attack on Iranian nuclear targets, and instead give sanctions and other economic pressures time to take hold. At a White House news conference Tuesday, Obama defended the utility of economic pressure, saying “Iran is feeling the bite of these sanctions in a substantial way.”

U.S. officials acknowledge privately that they can’t be sure the economic pressure will lead Iran to abandon its nuclear ambitions.

Lawmakers have been pushing forward in recent months on increasingly stringent sanctions, in some cases seeking even tougher penalties than those preferred by the Obama administration.

The Senate Banking Committee approved tough new penalties in January that would target Iran’s Revolutionary Guard Corps, require companies that trade on the U.S. stock exchange to disclose any Iran-related business to the Securities and Exchange Commission, and expand penalties for energy and uranium mining joint ventures with Tehran.

The bill also would deny visas and freeze assets on individuals and companies that supply Iran with technology that could be used to crack down on its citizens, such as tear gas, rubber bullets and surveillance equipment.Iran insists it does not seek to build a bomb, and is developing its nuclear program for peaceful purposes.

http://www.washingtonpost.com/politics/federal_government/ap-sources-congress-to-seek-new-sanctions-targeting-all-iranian-banks/2012/03/06/gIQA1p0XvR_story.html

Tunisia Eyes Sukuk Share

TUNIS – Seeking to finance its budget deficit following last year’s uprising, Tunisia’s Islamist government is planning to issue the country’s first Islamic bonds (sukuk) this year.

“The Tunisian government is planning to issue an Islamic sovereign bond before the end of this year,” Adnan Ahmed Yousif, chief executive of Bahrain-based Al Baraka Banking Group, an Islamic banking conglomerate with operations across North Africa, told Reuters.

“They’re very serious about it and are now in talks with banks, said Yousif, who is also chairman of the Beirut-based Union of Arab Banks, an industry association.

“It will be Tunisia’s first sovereign sukuk.”

Sukuk, which conforms to Islam’s prohibition of usury, typically work as profit-sharing vehicles.

Firms that issue sukuk make payments to investors using profits from the underlying business, instead of paying interest.

The money, however, can’t be invested in alcohol, gambling, tobacco, weapons or pork.

Sukuk have often proved to be more stable than conventional bonds during the global financial crisis.

The sukuk market has reached $111.9 billion in the eight years to 2008, according to the International Islamic Financial Market.

Global sales of sukuk have reached $6.6bn in 2012, from $2bn a year earlier, according to data compiled by Bloomberg.

Islamic Hub

A sukuk issue could allow Tunisia to tap a pool of billions of dollars of Islamic investment funds in the wealthy Arab Gulf.

“I believe Tunisia has the potential to become the Islamic finance hub for Africa,” Yousif told Reuters.

“It’s working towards having all the requirements needed for that.

Tunisia’s government, led by the moderate Islamist Ennahda party, expects its budget deficit to rise to 6 percent of gross domestic product in 2012 from an estimated 4.5 percent for 2011 as it boosts spending to revitalize the economy after the ouster of president Zine Al-Abidine Ben Ali.

Before last year’s uprisings in North Africa, authoritarian governments restricted or refused to promote Islamic finance for political reasons.

In the wake of the regime changes, growth in the industry is expected to accelerate.

Egypt is reportedly preparing to raise about $2 billion through its first issue of sukuk this year.

Starting almost three decades ago, the Islamic banking industry has made substantial growth and attracted the attention of investors and bankers across the world.

A long list of international institutions, including Citigroup, HSBC and Deutsche Bank, are going into the Islamic banking business.

Currently, there are nearly 300 Islamic banks and financial institutions worldwide whose assets are predicted to grow to $1 trillion by 2013.

http://www.onislam.net/english/news/africa/456054-tunisia-eyes-sukuk-share.html

Bank Negara clarifies Fatwa ruling on forex trading

KUALA LUMPUR: Bank Negara Malaysia said today that only licensed financial institutions and money changers are allowed to conduct foreign currency trading.

This statement came about after the National Fatwa Council’s ruling on Wednesday that forex trading is forbidden for Muslims.

The Council’s statement on it being permissible among banks and money changers was not prominently mentioned in the media, which created some confusion among the public.

BNM said licensed commercial banks, Islamic banks, investment banks and international Islamic banks are allowed to buy and sell foreign currency in Malaysia, as provided under the Exchange Control Act 1953.

And under the Money Services Business Act 2011, so too are licensed money services business providers or money changers.

“In addition, Shariah-compliant financial products, including foreign exchange related transactions, offered and transacted by licensed Islamic financial institutions are approved by Shariah Committee of the respective financial institutions with endorsement from the Shariah Advisory Council of BNM,” said the central bank.

International Shariah Research Academy for Islamic Finance (ISRA) head of Research Affairs, Dr Asyraf Wadji Dusuki when contacted, said he lauded the National Fatwa Council’s decision as it is targeted at Muslim individuals who engage in forex trading via the Internet.

He said ISRA research on online forex trading raised a few concerns such as the leverage, rollover interest, the issues of qabd and qabl (status of ownership), and the element of gambling.

Asyraf said it is common from brokers to offer a loan in the form of leverage, which is against Islamic practice.

“For example, when an investor wants to have an open position worth US$1,000, the individual only needs to provide a capital of US$10 while the balance is offered by the broker in the form of a loan,” he said.

This practice, he said, can lead to riba (interest), whereby the broker will profit through what is known as spread – the differences between the bid and ask prices where the broker sells the currency to the trader at a high price and buying it at a low price.

Dr Asyraf added that according to ISRA’s study, almost all forex online platforms are operating without valid licences.

 

Meanwhile, National Fatwa Council chairman Professor Emeritus Tan Sri Dr Abdul Shukor Husin clarified yesterday that not all the foreign exchange trading (forex trading) is forbidden to Muslims.

 

In a statement, he said the decision by the council on Wednesday was misreported in several media and explained that it was only referring to foreign currency scheme by individual spot forex through electronic platform.

He said the decision was taken as there were many doubts about the individual spot forex and it involves the trader to use the Internet, with uncertain outcomes.

“Such trading are against the Syarak laws and the Malaysian law,” he said in the statement.

However, he said the decision did not apply to other forms of trading in foreign currencies, such as by licensed money changers or between banks.

He said such trading are permissible as they do not involve currency speculation or uncertain outcomes.

http://www.nst.com.my/top-news/bank-negara-clarifies-fatwa-ruling-on-forex-trading-1.47541

BRUNEI – EDUCATION – Centre for Islamic Banking, Finance & Management launched

new.brunei.fm – Her Royal Highness Princess Hajah Hafizah Sururul Bolkiah yesterday attended the official launching of the Centre for Islamic Banking, Finance and Management (CIBFM) and its first flagship, the Fiqh Mu’amalat Professional programme.

Held at the Indera Kayangan Ballroom of The Empire Hotel and Country Club, the launch opened with recitations of surah al-Fatihah and doa led by Pehin Orang Kaya Paduka Seri Raja Dato Paduka Seri Setia Ustaz Hj Awg Suhaili Hj Mohiddin. (source)

On hand to officiate the launch of the centre and the programme was Acting Minister of Finance II at the Prime Minister’s Office Dato Paduka Awg Hj Bahrin Abdullah.

In his opening remarks, Permanent Secretary (Policy) at the Ministry of Finance cum Chairman of the Board of Directors for the Centre for Islamic Banking, Finance and Management c, in his capacity as chairman of the event, highlighted the objective of the establishment, function and roles of CIBFM, as well as the unique features of the Fiqh Mu’amalat Professional programme.

He emphasised on the centre’s role towards providing continuous learning and development programmes through a balanced mix of Islamic and conventional focus including the required soft skills.

He also shared future plans of the centre, which expects to offer and conduct some 50 programmes targeted for about 800 participants this year.

The launch saw the attendance of members of the Syariah Financial Supervisory Board, senior government officials, CEOs, managing directors and representatives of financial institutions and the first batch of the flagship.

In conjunction with the launching, a seminar in the form of special presentations and penal discussions by both local and well-known Syariah scholars and speakers were also held.

Following the opening ceremony, a special presentation was presented on Syariah Advisors for Islamic Financial Institutions – ‘Expectations and Challenges’ by a leading shariah scholar in Islamic Finance, Dr Mohamed Ali Elgari.

This was then followed by panel discussions on ‘Effective Human Capital Development – Mitigating the Gap on Applied Syariah Knowledge and Finance’ and another special presentation on ‘Value Propositions of Syariah Board in Contemporary Islamic Financial Market.’

The presentation delivered by founder and chairman of Amanie Advisors (Kuala Lumpur, Dubai, Luxembourg and Cairo), Dr Mohd Daud Bakar, concluded the morning event.

Later in the afternoon the event saw a continuation of panel discussions on Development of Islamic Investment Products and Services – A Local and Global Perspective and ‘Syariah Compliance Review – An Art or Science?’

http://islamicfinanceindonesia.blogspot.in/2012/02/brunei-education-centre-for-islamic.html

QNB Group moves up 77 places to 114th place amongst the world's top 500 banking brands

The Banker’s Top 500 Banking Brands report was published on 1 February 2012 and featured a number of leading banks and financial institutions from the Middle East and North Africa, most notably QNB Group which rose to the status of the region’s most valued banking brand.

The survey is conducted every year by The Banker magazine, an affiliate publication of The Financial Times in partnership with Brand Finance, the leading specialist in the field of brand valuation research.

In the 2012 survey, QNB leaped five places to become the number 1 brand in the MENA region, and moved up 77 places to 114th place amongst the world’s top 500 banking brands.

The process of assigning value to each brand takes into account the bank’s size, geographical presence, reputation, gearing and brand rating. According to the brand rating calculator used in the survey, QNB is classified as an AA+ brand, or a very strong banking brand.

This rating is independent of ratings assigned by credit rating agencies and represents only the health and future growth potential of the brand in intangible indicators and brand value.

QNB Group was able to deliver outstanding financial results in 2011, driven by on-going expansion across the range of its activities both domestically and internationally along with the adoption of a conservative approach to risk management that resulted in further enhancing the Group’s leading position amongst financial institutions in the Middle East and North Africa region.

QNB Group’s Net Profit for 2011 exceeded QR7.5bn, representing an increase of 32% over 2010, with Total Assets increasing by 35% to reach QR302bn. The Bank was also able to maintain a low non-performing loans ratio at 1.1% of total loans, which is considered the lowest amongst banks in the Middle East and North Africa.

Total operating income increased to QR10.2bn, up by 34% compared to 2010, while Net interest income and income from Islamic financing activities increased substantially, up by 37% to reach QR7.8bn. The efficiency ratio (cost to income ratio) improved to 15.7%, compared to 17.0% in 2010, one of the best ratios among financial institutions in the MENA region.

QNB Group’s capital adequacy ratio also increased to 22.0% in 2011, far higher than the regulatory requirements of Qatar Central Bank and Basel Committee. The Group is keen to maintain a strong capitalisation in order to support future strategic plans.

QNB Group’s market capitalisation also increased by 34% during the year to reach QR96.7bn at year-end 2011.

QNB Group’s leading role in the banking sector and the high quality of its assets, along with its capabilities to achieve sustained growth in all activities, are demonstrated clearly in its credit rating, with Standard & Poor’s, Fitch and Moody’s affirming the Bank’s ratings during 2011, which are among the highest in the region.

Also, Capital Intelligence upgraded the Bank’s Financial Strength Rating from A+ to AA- and affirmed all other ratings in recognition of QNB’s sound financial position, high asset quality and leading role in the banking sector.

In 2011, QNB Group completed the acquisition of a controlling stake of 70% in Bank Kesawan in Indonesia, a deal which boosted the Group’s presence in South East Asia that also includes a branch in Singapore. QNB also launched its operations in Lebanon and South Sudan through the inauguration of its branches in Beirut and Juba.

A fifth branch was also established in Oman, as part of the Group’s strategy to expand its customer reach and provide them with global best practices in banking and financial services. With these expansions, QNB Group currently operates in 24 countries around the world through 334 branches, offices, subsidiaries and associate companies, and 7000 staff worldwide.

In January 2012, the Bank announced a Partnership Agreement with the Morocco-based Union Marocaine des Banques (UMB), with plans to acquire a majority stake of its capital.

A new 5-year strategic plan was also approved aiming to reinforce QNB’s position in the region and establish it as a leading icon of the financial sector in the Middle East and Africa.

 

http://www.ameinfo.com/289624.html

Islamic Index Launches on Australian stock market

 

Following last year’s launch of Australia’s first Islamic Australian equity fund, Thomson Reuters and Crescent Wealth have announced the launch of a specialised index that will give investors the means to build an Islamic-compliant Australian equities portfolio.

Crescent Wealth stated that the Thomson Reuters Crescent Wealth Islamic Australian index is the only such benchmarking tool used in the Australian market and a key step towards Islamic investment in Australia, which the investment manager expects will grow to as much as $13 billion in funds under management by 2019.

“Australian markets are stable and have attractive growth fundamentals that Islamic investors are looking for in today’s challenging macro-environment,” said Thomson Reuters global head of Islamic finance and OIC Countries Rushdi Siddiqui.

The index screens Australian Securities Exchange-listed companies for compliance with Islamic investment principles and will initially span 143 securities with a combined market capitalisation of more than $160 billion.

The index excludes banks, conventional financial stocks and companies with high levels of debt or leverage.

According to Crescent Wealth, compliant companies are reviewed on a quarterly basis for continued compliance with the Accounting and Auditing Organisation for Islamic Financial Institutions standards.

Crescent Wealth managing director Talal Yassine said that the index will help to sell the Australian Islamic investment proposition to investors offshore.

“There is a huge untapped potential to grow Islamic-compliant investment in Australia from investors here and in Asia and the Middle East,” he said.

Yassine added that the investment theme of the index has broad appeal to conventional investors, particularly those with an ‘ultra-ethical’ investment strategy.

He said such investors will be attracted to the index’s weighting towards low levels of debt and leverage, low account receivables and the fact that compliant companies invest a greater proportion of their funds back into the business rather than letting it rest in cash or short-term investments.

http://muslimvillage.com/2012/02/03/19242/islamic-index-launchs-on-australian-stock-market/

Kingdom gaining more clout in Islamic finance

As Islamic finance/banking industry is growing at a sky rocketing growth rate of 12 percent – 15 percent per annum, Kuala Lumpur, Dubai, Bahrain and London are chomping at the bit to become the center of the industry, which currently boasts some $1 trillion in assets.

For the moment, Dubai holds the title of Islamic banking hub – but it could soon lose ground, both to traditional competitors like Bahrain, Kuala Lumpur or London or newcomers on the scene like Singapore.

But the country that really laid the foundation and basic infrastructure of Islamic Finance and paid billions of dollars by establishing the prestigious institutes like IDB, ICD and ITFC etc. and spending billions of dollars over last several decades and deserves to be global hub of Islamic finance and banking is Saudi Arabia.

Saudi Arabia, the Gulf’s largest economy and a G20 country, is the strongest and well-deserved contender for the title and has an edge. Its financial clout and the development of the King Abdullah Economic City strengthens the case.

“The only impediment is that it may not be the easiest place to obtain banking licenses especially now, given the plight of the banking industry in Bahrain and Dubai, but Saudi Arabia has always been very cautious.

The Saudi Arabian Monetary Agency (SAMA) guides and supervises the financial sector – that already made Saudi Arabia the safest haven in the world amid the current debt storm.It would be a shame to lose this lifetime opportunity in the presence of prestigious institute like IDB, ICD and ITFC being ideally based and headquartered in Jeddah.

These institutes have already produced scores of talented bankers (in Islamic finance) that are spread now in the entire region and beyond and serving the Islamic finance and banking industry.But this achievement wouldn’t be easy without full government support. With a strike of a degree, this industry could create thousands of jobs for Saudi men and women.

Dubai, despite its liberal policy and religious tolerance, has benefited from government support in creating a regional Islamic finance hub due to a favorable regulatory environment and strong domestic ties to Islam and Shariah.

It has more listed sukuk, than anywhere else.What’s more, Dubai is cosmopolitan and business-friendly enough to lure talent from far a field.The industry is not just limited to providing jobs to bankers but a lot of other support industry also flourishes like law offices, Shariah-complaint insurance companies, leasing and mortgage companies etc.

In the absence of any competition from countries like Saudi Arabia, Dubai will continue to be a major driver for Islamic finance in the near term, as it attempts to recycle the region’s petroleum wealth into real estate, tourism, technology and other anchors of a truly diversified economy.

Dubai’s attractions are many. In addition to glitzy and modern shopping malls, it boasts numerous free zones that allows for 100 percent foreign ownership, 100 percent repatriation of capital and profits, exemption from corporate tax and no import duties.

But its central role in Islamic finance isn’t assured over the long haul.The recent financial crises have severely dented Dubai’s reputation and its financial soundness.

The Islamic finance market, that was once a local affair, deeply rooted in the Gulf region only, is now spread in Far East and Europe and somewhat in the US while Africa still remains a virgin market, offering enormous potential and unlimited opportunities.

Appreciating the potential of this $ 1 trillion and growing industry (expected to reach $2 trillion by 2013), the British government had voiced its determination to issue a sukuk and asked its Finance Ministry to start working on necessary regulatory changes by next year while it issues licenses to Islamic banks.

It has to be noted that sukuk is a $30 billion global industry.In recent years, Islamic finance has grown rapidly across the world, conservatively estimated at 12 percent a year.Malaysia has been strong in the Far Eastern market for the past decade. But now, Asian countries – with tiny Muslim populations – are also looking to join this process.

Japan wants to be the first nation in the G-7 to issue a sovereign sukuk bond – that is, if Britain doesn’t get there first.Among cities outside the Muslim world, London is the strongest Islamic finance center and it leads race to be Shariah capital.

London will give Malaysia and Dubai and the rest of the Islamic world a run for its money, as London has all the strengths of a traditional financial center, from a solid infrastructure to a qualified pool of prospective employees.Singapore, also seeking to attract Islamic capital, has the same lures but to a lesser degree.

London is already enjoying some success as a focal point for international Shariah-compliant investors, with both corporations and countries listing sukuk bonds in Britain.London is also benefiting from New York’s relative indifference to Islamic finance, which removes from the race a traditional long-standing rival for global capital because America’s financial capital or political leadership has a narrower appetite for Islamic assets than other centers.

So far New York investors have shown an interest in Shariah-compliant equities, but not in Islamic bonds or Takaful, (Islamic insurance).Saudi Arabia deserves all credit for its tireless persuasion to make Islamic banking industry in the world.

Saudi Arabia’s task to introduce Islamic banks into conventional banking systems was challenging and tough. Islamic banking is steadily moving into an increasing number of conventional financial systems.It is expanding not only in nations with majority Muslim populations, but also in other countries where Muslims are a minority, such as the United Kingdom or Japan.

Similarly, countries like India, the Kyrgyz Republic, and Syria have recently granted, or are considering granting, licenses for Islamic banking activities.In fact, there are currently more than 300 Islamic financial institutions spread over 51 countries, plus well over 250 mutual funds that comply with Islamic principles.

This industry is currently experiencing growth rates of 22 percent per annum despite a tough investment climate – and this growth trend is expected to continue.This golden opportunity shouldn’t be missed simply because of arrogance or ignorance and this country should get what it rightly deserves.

http://arabnews.com/economy/islamicfinance/article569065.ece