KUWAIT, Oct 16 - Thai Prime Minister Yingluck Shinawatra reaffirmed close ties between Thailand and Kuwait and pledged that Thailand is ready to cooperate with the Middle Eastern country to produce Halal food for the world.
The Thai premier made her remarks as she hosted a reception for the Thai and Kuwaiti business communities as she arrived in Kuwait, at the opening of her three-day visit there.
Ms Yingluck said Thailand and Kuwait have had a close relationship for nearly 50 years and the value of mutual trade between the two countries has increased by 185 per cent in the past five years.
In the first half of this year, about 40,000 Kuwait tourists visited Thailand, she said.
The Thai prime minister stated that Thailand's economic fundamentals remain strong: some US$74 billion is being invested for additional basic infrastructure development including transport routes connecting Thailand with neighbouring countries, expansion of international airports, and joint investment in Myanmar's Dawei deep-sea port which will link Thailand with India and the Middle East.
Regarding economic cooperation between Thailand and Kuwait, Ms Yingluck highlighted the concept "Kitchen to the World". She said that exports of Halal food have increased by 30 per cent compared to last year, and an efficient standardised Halal food industrial estate has been established in the country's southern region.
She said Thailand expects to cooperate with Kuwait in producing and exporting Halal food to the world community.
Ms Yingluck added Thai businesspersons who accompanied her during this trip are also keen to invest in the energy, public health and tourism industries here.
The Thai premier is scheduled to attend the opening ceremony of the Asia Cooperation Dialogue (ACD) summit, along with the leaders of 32 countries today.
As Thailand is an ACD coordinating country, Ms Yingluck will speak on Thailand's role in tourism, finance and human resources.
ACD was inaugurated in June 2002 in Cha-Am, Thailand, where 18 Asian Foreign Ministers met together for the first time. A continent-wide forum, ACD aims to build links in Asia incorporating every Asian country, building an Asian community without duplicating other organisations or creating a bloc against others.
The grouping currently comprises 30 countries from East to West Asia, including Bahrain, Bangladesh, Brunei, Bhutan, Cambodia, China, India, Indonesia, Iran, Japan, Kazakhstan, Republic of Korea, Kuwait, Lao PDR, Malaysia, Mongolia, Myanmar, Pakistan, Philippines, Oman, Qatar, Russia, Saudi Arabia, Singapore, Sri Lanka, Thailand, United Arab Emirates and Vietnam, Tajikistan and Uzbekistan.
Turkey is on track to becoming the next hub for Islamic banking and finance. Given the Ottoman legacy, the last seat of the Islamic viceregency, the government of Turkey was only required to show its commitment to Islamic finance before other players in the industry were going to join her in building a vibrant Islamic banking and finance industry.
The recent successful dollar-denominated $1.5 billion sovereign Sukuk issue, followed by a lira-denominated $900 million sovereign Sukuk have put the country on the global platform of Islamic banking and finance. It is expected that many Middle Eastern Islamic banks and financial institutions will enter the Turkish market in the future.
Kuwait Finance House (KFH) entered Turkey in 1989 well before an explicit commitment came from the then government that had been rather hostile towards any non-secular developments. It preceded KFH’s move into other markets like Malaysia, Bahrain and Jordan over several years.
Despite personal encouragement by then governor of State Bank of Pakistan (SBP), Dr Ishrat Husain, KFH did not enter the Pakistan market and remains reluctant. On the other hand, Albaraka Bank set up a participation bank (a Turkish term used to describe Islamic banks) in 1984, well before it entered the Pakistani market in 1991.
It will not be surprising if Turkey starts posing competitive threats to Pakistan, in terms of becoming a destination of preference for many Middle Eastern investors who currently invest in Pakistan and Malaysia, as for many institutions in the Middle East it makes more logistic sense to do business in Turkey rather than travelling to the Far East.
Pakistan presents the most Shariah authentic model of Islamic banking in the world. Being a predominantly Hanafi – a stricter school of Islamic jurisprudence in matters related to business and finance – country, Turkey can also achieve the kind of Shariah authenticity that Malaysia has yet to develop, if she attempts to learn from the Shariah governance regime developed by the SBP. Hence, a Turkey-Pakistan alliance will not only help to promote Islamic banking in Turkey, but is also expected to bring a new juristic approach to product development and structuring.
It is important for Pakistan to show more commitment to Islamic banking and finance and use it as a strategic tool to seek help from Turkey in order to raise funding for a number of infrastructural projects that need external financing. Through adopting a leadership role in Islamic banking and finance, Pakistan can regain its lost standing in the Organisation of Islamic Cooperation (OIC) block. A number of OIC-level projects came to Pakistan, eg International Islamic Chamber of Commerce and Industry, which either failed or moved to other countries because of lack of support and commitment from the government.
It is now a good opportunity for Pakistan to strike a deal with Turkey to share her expertise in the field of Islamic banking and finance. While the likes of Malaysia have invested millions of dollars to set up institutions like INCEIF to develop required human resources for Islamic banking, Pakistan can develop a state-of-the-art centre of excellence for Islamic finance by investing a small amount in Darul Uloom Karachi, developing it into a teaching and research university specialising in Islamic banking and finance.
If Turkey can play a role in this project, it would be a fantastic way of starting an everlasting collaboration in Islamic banking and finance between the two countries.
The Darul Uloom model of education is certainly more cost effective as compared with INCEIF, which has a huge annual budget. Close cooperation between Pakistan and Turkey can prove to be an efficient way of producing talent for the global Islamic financial services industry if right channels are created and maintained between respective parties.
MUSCAT — KPMG, a leading International firm providing Audit, Tax and Advisory services yesterday organised at the Grand Hyatt, a seminar on Islamic Finance-Lessons Learnt from abroad & Challenges faced in Oman.
This was the latest in a series of Breakfast Seminars that KPMG held earlier and is planning to hold over the coming months. This Seminar brought together people involved with Islamic Finance industry, the regulators and the support organisations.
Khalid Ansari, Partner in Charge of Advisory Services of KPMG in Oman, highlighted that the seminar had received an enthusiastic response, with representatives attending from a wide variety of Islamic Finance industry groups and regulatory organisations. The seminar was delivered by Khalid Yousaf, Director Islamic Finance Advisory Services of KPMG in Oman.
The seminar provided a comparative analysis of Islamic Finance models adopted by various countries around the world, their experiences and the pros and cons of their approaches.
Khalid highlighted the aspects of lessons learnt from other countries and how a methodical approach for the development of Islamic Finance industry infrastructure could be taken for best results in Oman. The challenges and issues relating to Islamic Finance in Oman will require government and regulatory authorities’ attention and support for the industry to achieve a successful launch and rapid growth.
He emphasised that since the introduction of Islamic Finance in Oman is demand-driven from markets and customers, its future is secure. The growth after a steady start is likely to overtake the conventional banking assets by 2020.
The audience actively participated in the discussions with questions, practical problems and suggestions throughout the presentation which made the seminar highly interactive and interesting.
Khalid Ansari mentioned that KPMG is running similar Breakfast Seminars in the coming months covering topical issues in Islamic Finance. He also invited the participants to suggest topics which could be addressed in future seminars.
After at least five years of delays, Islamic finance experts in Saudi Arabia and Malaysia are renewing efforts to create common regulations for scholars.
Malaysia’s International Shariah Research Academy for Islamic Finance is working with its Middle Eastern counterpart on guidelines that will address the number of boards on which scholars can sit to reduce conflicts of interest, according to Executive Director Mohamad Akram Laldin in Kuala Lumpur. An institution will also be established to provide global accreditation, said Akram, who helped set up a body last year to oversee advisers’ activities in the Southeast Asian nation.
The industry needs such measures to boost confidence and improve transparency, Abas A. Jalil, Kuala Lumpur-based chief executive officer of Amanah Capital Group Ltd., said in an interview yesterday. Discussions have faltered in the past because of Persian Gulf experts’ more stringent interpretations of Shariah law, which could still hinder progress, he said.
“The main challenge is to get everyone on the same page,” Abas, who has helped form Islamic funds in Bahrain and Kazakhstan, said. “Scholars in Malaysia are more liberal. In the Middle East, their products focus mainly on local investors so they don’t mind not being flexible.”
In most countries there’s no limit to the number of entities to which a scholar can advise on Shariah compliance, Akram at Malaysia’s academy, said in an Oct. 10 interview. To avoid conflict of interest in the Southeast Asian nation, the central bank doesn’t allow Islamic experts to sit on more than one board involved in the same business.
The new rules being worked on in conjunction with the Islamic Research & Training Institute in Jeddah, Saudi Arabia, will also determine if religious scholars can own shares in companies they advise and govern the disclosure of information relating to products they help structure, Akram said.
“A universal Shariah governance framework will enhance competitiveness and growth of Islamic financial institutions,” Abdul Rahim Abdul Rahman, a scholar who advises HSBC Amanah Malaysia Bhd. in Kuala Lumpur, said in an Oct. 14 e-mail. “Shariah governance will ensure the achievement of accountability toward stakeholders.”
The $1.3 trillion global Islamic finance industry is seeing annual average growth rates of 15 percent, Malaysia’s Securities Commission said in a June 27 statement. The proposed regulations from the two academies come as sales of Shariah-compliant debt, which pays returns on assets to comply with Islam’s ban on interest, climbed to a record in the six-member Gulf Cooperation Council, which includes Saudi Arabia.
Issuance in the GCC rose four-fold to $19.2 billion in 2012 from a year earlier to account for 49 percent of the $39.1 billion worldwide, which is also an all-time high, according to data compiled by Bloomberg.
Global Islamic bonds returned 8.1 percent this year, the HSBC/Nasdaq Dubai US Dollar Sukuk Index shows, while debt in emerging economies gained 16 percent, according to JPMorgan Chase & Co.’s EMBI Global Composite Index.
Average yields on sukuk fell five basis points last week to a record low of 2.92 percent, after dropping 42 basis points in the July-to-September quarter, according to the HSBC/Nasdaq index. The difference between the average and the London interbank offered rate, or Libor, narrowed one basis point, or 0.01 percentage point, to 195 basis points.
The Bloomberg-AIBIM Bursa Malaysia Corporate Index, which tracks 57 local-currency sukuk in the world’s biggest Islamic debt market, gained 0.5 percent last week to 101.085. It reached an all-time high of 101.1963 on Sept. 26.
The proposed guidelines would strengthen an industry which now has varying degrees of supervision for religious experts, Megat Hizaini Hassan, partner and head of the Islamic finance practice at Kuala Lumpur-based law firm Lee Hishammuddin Allen & Gledhill, said in an e-mail yesterday.
Engku Rabiah Adawiah Engku Ali, a scholar who sits on Bank Negara Malaysia’s Shariah Advisory Council in Kuala Lumpur, said in an Oct. 12 interview that a more robust framework would reinforce the public’s trust.
Islamic experts versed in Shariah law are generally required to have recognized university degrees before they can act as advisers to banks and companies. A shortage of trained personnel means they tend to sit on a number of advisory boards simultaneously.
“Some Islamic Scholars with the highest qualifications from top religious schools do not have a good knowledge of economics and financial products, yet they sit on various boards because of their influence in the Islamic world,” Amanah Capital’s Abas said.
Mohammad Daud Bakar, a scholar who heads Bank Negara’s Shariah committee also sits on boards of Malaysia’s Securities Commission, Islamic Bank of Asia Ltd., BNP Paribas SA and Noor Islamic Bank among others, according to the institutions’ websites.
Mohamed Ali Elgari, an expert in Kuala Lumpur, holds positions on boards including those of HSBC Amanah Malaysia Bhd., Islamic Bank of Asia, National Commercial Bank, and Abu Dhabi Islamic Bank PJSC, the lenders’ websites show.
Islamic markets would benefit from rules overseeing scholars although it could be a challenge to create a set of guidelines that are applicable worldwide, according to Hong Kong-based law firm Norton Rose.
“Scholars operate on a global basis and it is very difficult to create regulations and systems which apply across borders,” Davide Barzilai, a partner with Norton Rose, said in an e-mail yesterday. “Scholars are self-regulated by the market and of course by their own conscience and Shariah.
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