Islamic Finance

Malaysia’s Minister for International Trade and Industry, Datuk Seri Rafidah Aziz, has urged Indian businessmen, especially those based in Mumbai, to leverage on Malaysia’s well-developed Islamic banking facilities, a move which can strengthen its position as Indian financial hub.


Rafidah, said Malaysia has strong foundation in Islamic banking and has a comprehensive Islamic financial system that included best practices in legal and regulatory infrastructure, a diversity of market players and a wide range of products and services.


”Given that Mumbai is a hub for financial services in India, the business community can leverage on Malaysia’s well-developed Islamic banking facilities.” Malaysia welcomes collaborations with India’s Muslim population, estimated at 145 million, the world’s third largest Muslim population,” she told some 360 businessmen at the seminar on Malaysia-India Business Opportunities in Mumbai.


Rafidah leading a 63-member trade and investment mission to India said the government also provided incentives for interested foreign companies to further boost the Islamic financial sector. Bank Negara Malaysia (BNM) assistant governor, Muhammad Ibrahim, said Malaysia, which currently accounted for 60 to 70 per cent of the global sukuk market, was well-known not only in Islamic bond market but also in Islamic banking and financial system.


”A few corporations have expressed interest to raise sukuk in Malaysia. Indian corporations have shown great interest to raise funds in Malaysia as the country has a vast experience in the market, with control of a significant share in the global sukuk market” he said. “They want to diversify their sources of funding and want to diversify investor base for their funds and to be based in Kuala Lumpur,” he said. Muhammad Ibrahim was part of the 63-member team to India.


The participation of BNM in the mission is to promote Malaysia’s Islamic banking and finance and to share expertise and experience with the interested Indian parties.


Muhammad said BNM also allowed multinational corporations to set up base in Malaysia and issue conventional bonds out of Kuala Lumpur. “We have many incentives. There is tax deduction for all costs associated with the issuance of bonds and sukuk and there’s no withholding tax in Malaysia.


”Besides that, the pricing is competitive and (market here) can attract a wide base of investors or subscribers,” he said. He said for the last few years, sukuk growth has been in double digits and the momentum was expected to continue next year.


On concerns that London was fast becoming another Islamic financial hub and for sukuk issuance, he said: “It is an emerging sector. It is like banking finance still developing, so there are a lot of areas for participation.”

Bahraini Islamic investment bank Gulf Finance House signed a deal to develop a $10 billion economic development zone near Mumbai that would tap booming sectors such as energy and telecommunications, reports Economic Times.


The bank in October had raised $630 million for an Indian infrastructure project.


The zones would be developed on the lines of media city in Dubai and energy city of Qatar. The bank has acquired 1,600 acres of land and signed an MoU with the Maharashtra Government.


The plan is to develop four exclusive zones for sectors such as energy, telecommunications, software and entertainment with offices, residential complexes, roads and all other infrastructure facilities, said Mr. Esam Janahi, Chairman of Gulf Finance House, at a press conference.


He said the bank had already raised $630 million in a private placement for the first phase of construction. The balance funds would be raised through equity and debt. The zones are expected to generate jobs for three lakh people.


The agreement signed with the State government is a follow-up on an earlier MoU signed on October 5, 2006. The earlier MoU was only for a 300-acre exclusive energy zone with $2 billion investment.


Mr Peter Panayiotou, Acting CEO of Gulf Finance House, said that $10 billion would be raised from 3,000 high net worth individuals and financial institutions in the GCC countries. An initial spend of $650 million would be purely for infrastructure in the energy zone. About $400 million would be spent on the software and telecom zones while the cost of entertainment zones is yet to be determined. About five years would be required for setting up the zones.


Mr Panayiotou added that once the master plans for the zones are ready, the bank would approach Indian developers for further developing the areas. Though the funds for the project would be raised largely from the bank’s client base overseas, the bank may consider raising funds from India also, he said.

Dubai Islamic Bank has been adjudged the recipients of the ‘Best Islamic Bank Award’ and the ‘Best Islamic Finance Wealth Management Firm Award’ by organised by CPI Financial Publication for the year 2007. Khalid Al-Kamda, managing director, Dubai Islamic Bank group accepted ‘the Best Islamic Bank Award’ during a ceremony held on Dec. 12 in Dubai. Adel Rahman, senior vice president, wealth management, of Dubai Islamic Bank received the best Islamic Finance Wealth Management Firm Award.

Jeddah-based Islamic Development Bank (IDB) has allocated a whopping $5bn for poverty alleviation all over the world, a senior bank official said here recently, reports daily Peninsula.


Dr. Azhari Gasim Ahmed said the IDB does not differentiate between Islamic and non-Islamic countries and its funding for social uplift is for the needy all over the world.


Ahmed was taking part in a symposium on ‘Global Development and Institutions Inspired by Faith’ which discussed faith-based non-governmental organizations (NGOs), their role in carrying out charitable works and their relationship with secular NGOs worldwide.


The symposium was held by the Centre for International and Regional Studies (CIRS) at Georgetown University School of Foreign Service in Qatar, the Berkley Centre for Religion, Peace and World Affairs and the Henry R Luce Foundation.