SHAFAQNA (Shia International News Association) Aspiring to a better standard of living, Cambodia’s Muslims are dreaming of introducing the Islamic finance to the Buddhist country to lure investments from the Muslims-majority states in the Middle East and Asia.
“Most investors in the Middle East are certainly looking for Islamic-compliant business in countries that aren’t majority Muslim,” Ashraf Bin Md Hashim, head of consultancy at the International Shari’ah Research Academy for Islamic Finance, “This could open an Islamic banking window here.”
Speaking on the sidelines of Cambodia’s first conference on halal finance, hosted by Cambodian Intelligent Investor Organization, Hashim said the Islamic finance is almost nonexistent among Cambodia’s Muslims.
Cambodian Muslims hope that by introducing Islamic finance, already booming in Malaysia and Middle Eastern countries, they could dominate trade with those countries and attract investment from Islamic banks in the region.
This trade would help in improving living standards for Combodian Muslims, who generally have a lower standard of living than their Khmer countrymen.
“If we look at the Muslim population in Cambodia, we don’t have anything,” Hashim said.
“In business, we have to start from the bottom. We need more resources.”
Muslims make up around 2 percent of Cambodia’s 13 million populations, who are mainly Buddhists.
Cambodian Muslims are generally located in towns and rural fishing villages on the banks of the Tonle Sap and Mekong rivers and in Kampot Province in the south.
The majority of Cambodian Muslims belong to the ethnic group known as Cham– a reference to an ancient empire of warriors.
Islam forbids Muslims from receiving or paying interest on loans.
Islamic banks and finance institutions cannot receive or provide funds for anything involving alcohol, gambling, pornography, tobacco, weapons or pork.
By introducing Islamic finance, Cambodia’s Muslims hope they would live closer to Islamic law.
“There’s a demand from the Muslim community here,” Cambodian Intelligent Investor Organisation CEO Sles Nazy told the Post.
“I have seen some problems because right now Muslims can’t follow Islamic law when they borrow money, even if they want to.”
According to Nazy, Islamic finance would most likely first appear in Cambodia in the form of microfinance that would not collect interest on loans.
Shari`ah-compliant microfinance would also invest small businesses and properties.
The Islamic finance is also expected to boost relations between Cham Muslims and the Middle East.
Muslim-run businesses in Cambodia could attract financing from Islamic banks in Southeast Asia if a better understanding of the practices was developed, said Sulaiman Muhammad, who imports halal food from Malaysia.
“Muslim companies in Cambodia are short on capital,” he said.
“If there was more Islamic finance here, Islamic banks in Malaysia might invest in our companies.”
Islamic banks have proved a success because of rules that forbid investing in collateralized debt obligations and other toxic assets that cause financial crises.
The Islamic banking system is being practiced in 50 countries worldwide, making it one of the fastest growing sectors in the global financial industry.
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.