Current And Future Challenges In Islamic Finance

This is an extract of the report Planning Committee on Financial Institutions Japan

Director, Division Yamasaki Toshikuni at Keidanren Kaikan, Otemachi, Tokyo, and invited the Director of the Bank for International Cooperation Maeda Masashi financial capital, heard about the current and future challenges of Islamic finance in Japan

On the tenets of Islam, and equate the interest is unearned income (Riba) are forbidden to be taken will be made to take the form of the loan sale and lease on the facts. In addition, expanding around the world to Malaysia and the Middle East now that the market is said to be the one that has exceeded a trillion dollars. The most basic form of “lava waste” is a summary of the investor funds, increasing operating profits by investing the funds to the employer how to take it back to the investors as dividends. Because of the dividends received by investors because of investment management companies necessarily match those of Reforms to ban the Riba, and the reason is that Sharia should disqualify.

However, in Japan, because the bank could not do business products such as spot trading, Islamic finance could not handle. However, the revised Financial Instruments and Exchange Law is pending in the regular session, after banks and insurance companies can be revealed by the company with his brother, a subsidiary of the same committee about the future for Islamic finance What was the exchange of opinions. Director Maeda, Islamic finance these developments, the original is said to be the retail heart of the Muslims. For example, in Britain is not an  Islamic state, but long-term residents because many Muslim residents in England and the Financial Services Agency is studying early Islamic finance, equal to that of normal competitive conditions in the financial and Islamic finance said he also proceed from the perspective of institutional arrangements.

In addition, explained that Malaysia has contributed significantly to the expansion of this world of Islamic finance. The country’s Islamic financial laws enacted from 1980’s, developing and delivering innovative Islamic financial products, Global 2002 and the first that was issued Soburinsukuku, as do the promotion of Islamic finance as a national goal , Bank Negara Malaysia (central bank) the MIFC initiative (Plan of the Islamic International Financial Center, Malaysia) was introduced that has adopted the.

The Sukuk has a particular focus on Malaysia (Islamic bonds) and the ever-increasing growth in the issuance of itself, and recently received a 30 and was issued to raise a billion Sukuk, the Islamic Government of Malaysia issued A bond rating from BBB also went up and said.

Therefore, the impact of oil money often discussed the relationship is strictly indirect, government investment funds that are directly operated by the oil money in excess of the monetary approach to Islam is that not think the distinction should be pointed out.

Director Maeda, in contrast, shows the view on many issues and will develop Islamic finance in Japan in the future. First, the standard interpretation of the Shari’a Board to determine whether a constant, not necessarily conform to the Sharia, said the status quo tend to be more stringent than that of products such as non-Muslim country of Japan. In addition, Japan has few Muslims, and is unlikely to challenge the demand for retail point.

So, if you work on a new Islamic financial institutions in Japan next, Takaful companies in Japan have already achieved a certain level (Islamic insurance), and we think it is appropriate to start operations in Sukukuarenja said.

In addition, the leading Islamic financial terms, and it should have entered a partnership with Europe and cooperation with Malaysia and have a track record to launch a joint venture to form the framework topper made to foreign partners and also good.

From participants and interpret the reality of Sharia board had a question about the notes continue to improve the tax system on the Cabinet Office and the Financial Instruments and Exchange Law pertaining to the future.

In contrast, Maeda Department can promote the standardization of eligibility decisions by Shari’a Shari’a Board is easy, but in Malaysia, for example, Sharia law, including by foreign examination and registration system with advanced pre-screening and other initiatives that we do make the Sharia Committee, the international organization headquartered in Bahrain AAOIFI (Auditing and Accounting Organization of Islamic Finance Authority) said that such efforts have been interpreted by the criteria. Also, consider hanging a long time about the tax treatment in the UK as well as non-Muslim country, it gradually after the improvement has been institutionalized, to be made in institutional development is still time consuming said matter.

Source : keidanren

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