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Friday, 7 June 2013

Emerging Markets See Islamic Finance As A Serious Alternative - Study

Islamic trade finance is predicted to become the preferred investment choice by emerging rapid growth markets in the next decade as companies look for serious alternatives to traditional channels, a study by Ernst & Young reveals.
According to the firm's Global Islamic Banking Centre, RGMs such as Turkey, Indonesia, Qatar, Malaysia, Saudi Arabia and the UAE are fast becoming a significant driver of the global economy.
"Trade will grow between these markets, with predominantly Islamic Middle Eastern countries trading increasingly with other RGMs. Banking, insurance and other financial sectors will grow as the economies mature and wealth levels rise," said Gordon Bennie, financial services industry leader for the Middle East and North Africa (MENA) at Ernst & Young.
The firm said that in order to compete effectively, Islamic institutions should align their trade finance operations with global common practises and that businesses should have a clear understanding of how Islamic institutions can add value to them. Talent management is also an integral part of the strategy, as there is a shortage of staff with extensive experience in Islamic markets.
It can be recalled that during the 2008 global financial crisis, Islamic financial institutions and investments were relatively unscathed because of their zero exposure to interest rates. Asian countries hold around 13 per cent of global Islamic banking assets -- the highest outside of the Middle East.
(Wealth Briefing / 07 Jun 2013)

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London Aspires to be Islamic Finance Hub


CAIRO – Seeking to take a share of the booming industry, a British minister will be calling Thursday, June 6, for turning London into a global center for Islamic finance.
“It’s about making Britain the preferred choice for the Muslim world to invest in and do business in,” senior Foreign Office minister Baroness Warsi will say in a speech to the Oxford Center for Islamic Studies cited by London Evening Standard.
Islamic banking is one of the fastest growing financial sectors in the world.

Currently, there are nearly 300 Islamic banks and financial institutions worldwide whose assets are predicted to grow to $1 trillion by 2013.The Shari`ah-compliant system is now being practiced in 50 countries worldwide, making it one of the fastest growing sectors in the global financial industry.

Warsi opines that London has a golden chance to get a good share of the booming Islamic finance.
“It is not a silver bullet but it is a golden opportunity,” she will say.
Islam forbids Muslims from usury, 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.
Shari`ah-compliant financing deals resemble lease-to-own arrangements, layaway plans, joint purchase and sale agreements, or partnerships.
Investors have a right to know how their funds are being used, and the sector is overseen by dedicated supervisory boards as well as the usual national regulatory authorities.
Landmarks
Baroness Warsi says Islamic finance has been used to fund London’s landmarks as the Shard, the Olympic Village and redevelopments at Chelsea Barracks and Harrods.
“Each is a powerful reminder of the sector’s rapid rise and the importance of engaging with potentially lucrative new markets in the Muslim world and beyond,” the minister will say.
She unveils that the British government is considering a major overseas promotion for British financial institutions to draw Islamic investments.
“There is a clear demand which must be met and, in order to retain London’s status as the financial center of the world, the City must respond.”
The United Kingdom is one of the leading countries in the European Union to have Islamic banks. It is also developing its takaful market for Islamic insurance.
The UK also has a strong foothold in developing products such as commodity murabaha – Islam’s version of interbank short-term lending and syndicated loans.
Moreover, London has established the first secondary market in sukuk outside the Islamic world to help Islamic investors who seek to buy property and assets in the UK in a way that fits in with their religion, which bans earning interest, speculating or risk-taking.
London is also advanced in Islamic retail services, with institutions offering a range of Islamic banking products, such as mortgages and car loans.
The Islamic Bank of Britain, granted a license in August 2004, became the first Islamic bank in the UK and has continued to attract customers for mortgages.


(On Islam / 06 Jun 2013)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

The Monetary Authority of Singapore (MAS) to boost Islamic finance in Singapore


SINGAPORE: The Monetary Authority of Singapore (MAS) is working on measures to further boost Islamic finance activities in the country.
Deputy Chairman of the MAS, Lim Hng Kiang said that includes a review of the regulatory and tax treatment to speed up the issuance of Islamic financial instruments.
The growth potential for Islamic finance in Singapore has yet to be fully realised and at the opening of the Annual World Islamic Banking Conference on Tuesday, Mr Lim, who is also Trade and Industry Minister, said Singapore will tap on its strengths to support the growth of the sector.
Mr Lim said: "Singapore can play a role in giving growth of cross-border Islamic financing an even greater push. Towards this end, the MAS is presently working with other government agencies as well as with the industry to identify and address time-to market issues to further facilitate Islamic finance activities in Singapore.
"This includes looking into providing greater clarity and certainty in the regulatory and tax treatment to expedite the issuance of Sukuk and other Islamic capital market instruments."
Industry estimates show that the assets of the global Islamic financial services industry grew by some 20 per cent on-year to US$1.6 trillion as at the end of last year and industry players said prospects ahead are bright.
A big opportunity lies in the rising connectivity between the Middle East and Asia, as well as robust growth in both regions.
Industry players said Islamic finance has the potential to offer funding for infrastructure development and lending through Islamic micro-finance.
Toby O'Connor, chief executive officer of The Islamic Bank of Asia, said "The issue is how do we get the absolute amount of assets up in the Islamic finance. When you look at growth in the global economy, a lot of the growth comes from Islamic countries that have strong inter-connectivity with one another.
"We have seen a lot of growth in Turkey, we have seen a lot of growth from Saudi as well as Malaysia and Indonesia. There is a huge bright spot for the continued growth of the industry."
Industry players said the lack of critical mass in Islamic banking as compared with conventional banking and the absence of a supportive legal framework for Islamic finance transactions could hamper growth in the sector.
(Channel News Asia / 04 Jun 2013)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

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