Cambodia Muslims dream of Islamic finance

 

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.

Islamic Law

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.

 

 

http://www.shafaqna.com/english/component/k2/item/936-cambodia-muslims-dream-of-islamic-finance.html

Islamic banks 'need mergers to fill in West gap'

Small and medium-sized Islamic banks may need to merge if they want to become bigger regional players capable of filling the funding hole left by shrinking Western banks, the head of Islamic finance at Deutsche Bank, told Reuters.

‘There are mismatch challenges,’ Salah Jaidah said on the sidelines of the Euromoney Islamic finance summit in London.

‘Their size, their appetite for long term funding, their ability to finance at competitive pricing. I see this as a big challenge and not happening already now,’ he added.

Most Islamic banks in the Middle East and North African region hold less than $13 billion in assets. Conventional banks, by comparison, hold an average of $38 billion in assets, a report by Ernst and Young estimated.

In the past, said Jaidah, it was the international banks which led oil and gas development and infrastructure projects in the region because they had the balance sheet, pricing mechanisms and appetite for long term funding.

Whilst Islamic banks might not immediately be able to face the challenge, Jaidah believes that within time they will be able to reposition themselves.

‘They might raise capital, might have more competitive prices and ultimately there might be some mergers between small-to-medium sized banks who want to become bigger players regionally.’

The GCC region has over 100 Islamic banks, ranging from Al Rajhi Bank of Saudi Arabia with a $25 billion market cap to small unlisted lenders, a Deutsche Bank report published in November said.

Deutsche Bank selected a list of potential winners which included Al Rajhi – the world’s largest Islamic bank – and Alinma bank in Saudia Arabia, AMMB Holdings in Malaysia and Bank Mandiri in Indonesia.

The idea of a so-called Islamic ‘mega-bank’ has already been touted in the region by Bahrain-based Al Baraka banking group .

Islamic finance prohibits the lending of money for interest and other activities such as speculation that violate religious principles.

Deutsche Bank, which first established a presence in the UAE in 1999, says that despite the current global economic turmoil there are still opportunities within the industry.

‘With the changes taking place in Mena region and our eagerness to reposition ourselves as a lead player within the industry, I expect that the portion of profit and earnings will be lucrative and will grow year after year,’ said Jaidah.

He sees encouraging signs from Oman, home to around 3 million Muslims, where the central bank last year reversed its secular stance on finance, allowing Islamic banks and subsidiaries to establish themselves in the country.

There might also be new geographic openings in North Africa, following the upheaval in the region and countries such as Turkey where the government plans its first-ever issue of Islamic bonds this year.

Globally, Islamic bond issuance rose to $23.3 billion last year from $13.9 billion in 2010, according to Thomson Reuters data.

On the corporate front, Deutsche Bank, which has advised on deals including Saudi Aramco Total Refining and Petrochemical Company’s (Satorp) $1 billion sukuk also sees more non-Islamic corporates tapping Islamic finance.

 

http://www.gulfbase.com/News/islamic-banks-need-mergers-to-fill-in-west-gap-/200578

BLME Signs Islamic Banking Deal With Global Marine for Wind

Bank of London and The Middle East Plc, the London-based Islamic bank, signed a 14 million-pound ($22 million) deal to help Global Marine Systems Ltd. buy a vessel to install subsea power cables at offshore wind farms.

The leasing transaction with the Essex, England-based marine technology and engineering company is the Shariah- compliant bank’s first in the renewable energy industry, according to a statement from the bank.

The deal “allows us to contribute indirectly to the U.K.’s attempts to diversify its sources of energy,” Jervis Rhodes, head of corporate banking at BLME, said in the statement sent by e-mail yesterday.

Nations from the U.K. to Germany are installing wind turbines offshore to curb fossil-fuel emissions and meet targets for renewable power. The U.K. plans to reach 18 gigawatts of capacity from offshore wind parks by 2020 while Germany is targeting 10 gigawatts by then. Parks will be built further from shore in deeper waters as developers seek to industrialize the technology to bring down costs.

The barge, called Cable Enterprise, will install subsea power links that help transport power generated by the turbines for use by consumers. As an Islamic bank, the transactions and contracts BLME undertakes are Shariah compliant, or follow principles of Islamic law.

 

http://www.bloomberg.com/news/2012-02-21/blme-signs-islamic-banking-deal-with-global-marine-for-wind.html

HSBC Amanah set to tap huge opportunities in the Middle Eas

Dubai: HSBC Amanah provides a full range of Islamic financial services to the retail, corporate and institutional customers in the Middle East, Asia and the UK.

It has a team of dedicated Islamic banking professionals in most major financial centres such as New York, London, Riyadh, Dubai, Hong Kong, Malaysia and Singapore. With the size of the Muslim population expected to reach 2.2 billion by 2030, or 26 per cent of the world population, HSBC Amanah expects huge growth in their target markets.

In a recent interview with Gulf News, Razi Fakih, Deputy CEO of Global HSBC Amanah, said that about 80 per cent of the world’s Muslims live in Asia and the Middle East. Given that these regions are set to grow faster than the world average, Islamic finance is thus likely to continue growing faster than conventional banking.

Gulf News: What are your expectations for the overall growth of Islamic banking, especially in the region?

Razi Fakih: The Islamic banking industry has been growing at double-digit compounded annual growth rates over the past few years. Markets such as Malaysia, Turkey and the GCC (Gulf Cooperation Council) countries in particular, have been beneficiaries of the strong growth. Growth is likely to extend beyond the traditional markets of Saudi Arabia and the UAE as more countries adopt regulations that are friendly to Islamic finance.

Looking at the recent trends, do you expect to see a long term surge in sukuk issuance?

Sukuk sales have definitely rebounded. With a healthy pipeline of mandates, we expect the number of issues HSBC Amanah manages in 2011 to beat last year’s and our record year in 2007. The market has been incredibly active. At one point in May 2011, three sukuk were launched in one week in Mena alone. HSBC Middle East’s sukuk was a landmark issue for various reasons. Besides being the first benchmark sukuk by an international bank, it uses a new structure which paves the way for other financial institutions to issue sukuk.

How do you assess HSBC Amanah’s performance in the region in recent years?

We are the leader in Islamic debt capital markets and we intend to keep this position. For GCC sukuk, we are the No 1 underwriter with a 40 per cent market share. HSBC Amanah has also witnessed significant growth in our commercial banking business in the Middle East this year. Customers are increasingly turning to Islamic finance because the proposition is now on par with conventional banking.

Our retail banking and wealth management business continues to do well after the launch of HSBC’s new international Islamic banking. HSBC Amanah’s fund management business is also doing well. With the largest range of Islamic equity funds globally, we are a leading international Islamic asset manager.

What will be the role of Islamic markets and institutions in global trade and trade finance?

HSBC’s recent Trade Forecast report sees global trade jumping 73 per cent to $49 trillion by 2025, with Malaysia, Indonesia and the UAE emerging as major trade players. Muslim countries such as Malaysia, Indonesia, the UAE, Saudi Arabia and Egypt are expected to account for 5 per cent of the world’s trade by 2025, with Egypt likely to play a larger role in Islamic trade finance.

Emerging and Islamic markets are expected to lead growth in global trade volumes over the next 15 years as non-traditional markets in Asia and the Middle East drive demand. To realise the full potential, however, key concerns raised by exporters and importers through HSBC’s Trade Confidence index need to be addressed.

What is your assessment Islamic banking in the region in the post Arab Spring?

Post the Arab Spring, countries in the Middle East will be looking to rebuild themselves. Key projects will be infrastructure and basic social facilities such as roads, hospitals, power plants and schools so that people can enjoy a minimum standard of living.

To finance these projects, governments and private sector developers should consider Islamic financing since Islamic banks have stronger balance sheets and are better able to fund these multi-billion dollar projects at a time when the liquidity pool is shrinking given tightening credit lines and higher regulatory requirements for banks.

For many Middle Eastern countries and corporates, sukuk has become a mainstream source of financing. The outlook for sukuk is strong because there is high liquidity and more importantly, it has performed really well in the after-market.

http://www.zawya.com/story.cfm/sidGN_04122011_051217

Islamic finance past $1trn mark (Continues to strengthen and gain global acceptance)

Despite the global economic slowdown, the Islamic financial industry has crossed its $1 trillion mark, according to the industry leaders who gathered at the Middle East Islamic Finance and Investment Conference in Dubai.
With an increasing appetite for Shari’ah-compliant alternatives in the areas of banking and finance among the investment community, corporate end users, consumers and intermediaries, Islamic finance in the Middle East has witnessed dramatic and exponential growth in the past few years.
Those gathered at the event agreed that the Islamic finance industry is rapidly resuming its growth path and is increasingly gaining attention in various jurisdictions across the globe in the post-crisis global financial landscape. Continue reading

Islamic finance 'is registering growth'

DUBAI: With an increasing appetite for Sharia-compliant alternatives in the areas of banking and finance among the investment community, corporate end users, consumers and intermediaries, Islamic finance in the Middle East has witnessed exponential growth in the past few years.

Despite the global economic slowdown, the Islamic financial industry has crossed its $1 trillion mark and the leaders gathered at the two-day first annual Middle East Islamic Finance and Investment Conference (MEIFIC 2011) which began yesterday at Dusit Thani Dubai, agreed that the industry is rapidly resuming its growth path and increasingly gaining attention in various jurisdictions across the globe in the post-crisis financial landscape.

The ‘Successfully Adapting to New Market Realities for Islamic Finance in the Middle East’ conference was opened with keynote addresses by Noor Islamic Bank chief executive officer and Noor Investment Group CEO Hussain Al Qemzi and Rusd Investment Bank chairman Dr Saleh Malaikah.

“The Sharia-compliant finance and investments sector is gradually building momentum and popularity around the world, and is expected to lead the re-emergence of the overall global financial industry over the next five years,” Mr Al Qemzi said.

“The Noor Investment Group is eager to scale new heights and are confident,” he added. Continue reading

Islamic finance industry 'crucial growth engine'

MANAMA: Islamic finance has significantly surpassed its niche industry status to become an established component of the financial system.

The fact that over recent years Islamic financial institutions have grown at a faster pace than their conventional peers confirms the increasing demand for Sharia-compliant financial products and services.

With the unprecedented growth of major economies in the Middle East, the region is increasingly becoming a more competitive and sophisticated market and the key players are targeting a greater share of the exciting growth potential for Islamic finance, according to David McLean, chief executive of Mega Events, organiser of 1st Annual Middle East Islamic Finance & Investment Conference (MEIFIC 2011).

The event, to be held on April 12 and 13 at Dusit Thani Dubai, will set the stage for key players in the region to successfully adapt to new market realities in the Middle East, he said.

“The exclusive opening keynote session at MEIFIC 2011 will examine the current state of and the future prospects for Islamic finance in the region and the next wave of growth opportunities for Middle East players,” he said.

“The session will also share critical insights on how the leading market players are re-tuning their businesses to succeed in the Middle East Islamic finance market.”

Key players in the Middle East Islamic finance and investments industry will be gathering at MEIFIC 2011 to explore the growth potential that the Islamic finance and investment market in the Middle East offers.

The conference will feature groundbreaking debates as the region taps into the next growth phase in the post-crisis landscape.

http://www.gulf-daily-news.com/NewsDetails.aspx?storyid=299745

Deloitte eyes 'significant opportunities' in Islamic finance

Deloitte & Touche is targeting the Islamic finance sector for future growth as it provides a significant opportunity, the company’s Middle East chairman and CEO said.

Globally Islamic financial institutions hold $960bn in assets, of which 60 percent are concentrated in the GCC, Omar Fahoum said.

“Islamic finance is here to stay. This is not a fad. This is not a flash in the pan. The numbers are substantial in terms of the assets with Islamic financial institutions,” he told journalists in Dubai.

He said 80 percent of Islamic financial institutions are based in the GCC.

“Islamic finance activities have been growing at the rate of 20 percent for the past five years,” said Joseph el Fadiof of Deloitte’s financial services industry.

“It has seen a slow down in 2009 and 2010 but still this market is growing, just not as before.”

Banks have started to create windows for Islamic finance products rather than switching all their products to Islamic finance, he said.

Deloitte has continued to expand in the region and has hired more than 1,000 staff in less than two years, taking its total Middle Eastern staff to 2,200 employees.

Fahoum said he was optimistic about regional economies returning to growth due to stable oil prices and investment in public spending.

“Public spending in GCC countries is at unprecedented levels higher than previous years. How does that translate to our business? We definitely have the confidence that were making the necessary investments,” he said.

“Naturally if the view from our end was other than an optimistic view we wouldn’t be making these investments.”

http://www.arabianbusiness.com/deloitte-eyes-significant-opportunities-in-islamic-finance-360669.html

HSBC Amanah's Deputy CEO Says to Offer Islamic Finance in India, China

HSBC Holdings Plc, the largest bank in Europe, plans to offer Shariah-compliant services in India and China to tap economic growth after the countries issue regulations to develop their Islamic financial markets.

HSBC Amanah also plans to expand in Egypt and Oman, said Razi Fakih, the deputy chief executive officer of the bank’s Islamic unit. The lender, which has operations in 10 nations including Malaysia and Saudi Arabia, is seeking to increase bank branches globally to about 125 over the next two years from 100 at the end of 2010, he said.

“Our ability to expand in these markets depends on how the regulatory environment changes in those countries,” Fakih said in a telephone interview from London today. “Licensing to foreign banks is restrictive in certain markets. We would certainly like to see ourselves in the entire Middle East.”

HSBC is trying to strengthen its brand in a market that has attracted competitors such as Barclays Plc, Citigroup Inc. and Standard Chartered Plc to tap wealth from the world’s 1.6 billion Muslims. Global assets held by Shariah-compliant financial institutions may climb to $1.6 trillion in 2012 from about $1 trillion, the Kuala Lumpur-based Islamic Financial Services Board said in April.

Continue reading