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Saturday, 16 November 2013

Demand For Global Islamic Pension Funds Worth $190bn

The pent up global demand for Islamic pension funds is currently valued between $160 billion and $190 billion, according to the Global Islamic Banking Centre at Ernst&Young (EY).

According to EY’s estimates, most of these funds are parked under conventional sovereign pension funds due to a lack of investment options.

“Several fast-growth emerging markets including Malaysia, Saudi Arabia and UAE are seeing strong demand for retirement plans that are Shari’a compliant,” said Ashar Nazim, Partner, Global Islamic Banking at EY.

“With the maturity of the sukuk market and Shari’a compliant equity indices, as well as technology available to screen conventional indices to carve-out Islamic sub-indices, there appears to be sufficient assets available for many of the pension funds to take the first step towards Shari’a compliant propositions.”

EY estimated that greenfield operations would take too long to satiate market demand.

However, Nazim said that a more practical approach would be to work on a partial transformation of existing pension funds to carve out Shari’a compliant tranches. But that involves the valuation of pension funds’ assets at the time of transformation, which could lead to legal, financial and tax implications, he added.

Nazim said that there is a clear preference by individuals to manage their financial affairs in a Sharia compliant manner.

With the focus mainly on shifting from conventional banking to Islamic, the awareness of wealth management and retirement planning schemes in Islamic finance have only picked up pace recently.

The Islamic finance expert said that this has in turn encouraged public pension funds to offer Shari’a compliant alternatives.

“We believe that the emerging demand for Shari’a compliant retirement plans offer significant opportunities for financial institutions to diversify their products and strengthen fee income. This in turn will help improve profitability which is clearly under stress for many Islamic banks,” said Nazim.

“Regulatory impetus will be critical for successful roll-out. Countries that are able to move swiftly are likely to strengthen their global leadership in Islamic finance,” he said.

(Whatsonaward.Com / 10 Nov 2013)
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Prince Charles keen to explore Islamic finance

COLOMBO: Prince Charles is keen to explore Islamic finance as an instrument in managing climate change in countries vulnerable to natural disasters.

The Prince of Wales inquired about Islamic finance to Prime Minister Datuk Seri Najib Razak in their half-hour meeting here Friday at the invitation of Prince Charles.
Prince Charles and Najib are in the capital of Sri Lanka in conjunction with the Commonwealth Heads of Government (CHOGM) Meeting 2013.
Speaking to Malaysian journalists here, he said Prince Charles asked him if needy countries and those categorised as "small and vulnerable" could gain access to Islamic financing.
In response to the inquiry from Prince Charles, the Prime Minister said, he explained that it requires indepth study.   
This is because, he said, it may require the involvement of sovereign funds if they want to issue Sukuk for such financing.
During the meeting, Najib said they exchanged views on the Commonwealth and the future of the organisation.
On his meeting with Sri Lankan President Mahinda Rajapaksa on the latter's invitation on Thursday, he expressed his view on the tourism potential of the island.
He said Malaysia and Sri Lanka also want to improve the good ties following the end of the country's internal conflict.
"In this peaceful time, the potential of Sri Lanka is more visible," he added.

(News Straits Times / 16 Nov 2013)
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