Gulf witnesses increased Sukuk activity

With economic activity once again on the rise in the GCC economies, more and more investments and fund-raising are being done through sukuk (Islamic bond) issuance, according to experts at a key banking summit in Bahrain.

The Islamic funds and investments market must achieve critical mass at a global scale for long-term success, they said at the seventh Annual World Islamic Funds and Financial Markets Conference 2011, which opened on Monday at the Gulf International Convention and Exhibition Centre, Gulf Hotel, Bahrain.

It saw more than 400 leaders in the international Sharia-compliant funds and investments industry engage in critical discussions that focused on developing forward-thinking strategies to get the industry back on the high-growth track, achieve critical mass, and adapt to the new global economic landscape.

Held under the strategic partnership of Central Bank of Bahrain (CBB), the two-day event opened with a special keynote address by Abdul Rahman Mohammed Al Baker, executive director – Financial Institutions Supervision at the CBB, who provided insights on enabling growth and creating a deep and vibrant Islamic investment market.

This was immediately followed by a special international plenary session led by Germain Birgen, chairman of LFF Islamic Finance Task Force, chairman of Alfi Islamic Finance & ME Working Group, the MD of Global Head at HSBC Amanah Securities Services (Luxembourg) and Gary Palmer, chief executive, Irish Funds Industry Association.

The session assessed select jurisdictions that have exciting growth potential for Islamic funds and investments.

‘Financial centres across the globe are vying to become domiciles of choice for Islamic funds,’ said conference managing director David McLean.

‘With many new international markets now opening their doors to Islamic finance and investments combined with the increasing internationalisation of large-scale transactions, it is vital to understand the rapid development of the most dynamic regions and build a deeper relationship between the key markets – so that top institutions are better placed to compete on a global scale,’ he added.

National Commercial Bank chief economist Dr Jarmo Kotilaine said after a brief setback in 2010, the GCC region is witnessing increased activity in the sukuk market.

‘Driven by favourable demography and infrastructure development needs, economic activity is rising again in the GCC economies and major investments and fund-raising are done through sukuk issuance,’ he remarked.

According to him, the funds raised through sukuk in the GCC in 2011 has reached 38 per cent of global issuance by September, which was only 28 per cent and 22 per cent in 2009 and 2010, respectively.’

He also said that the corporate sukuk issuance revived in 2011.

The World Islamic Funds and Financial Markets Exhibition, which was held along the sidelines of the conference, showcased the latest products, services and innovations from more than 25 exhibitors.

Commenting on their participation, Aderi Adnan, Islamic finance and banking advisor at Labuan IBFC said, ‘Islamic financial services is a long standing pillar of Labuan IBFC, in fact the first Labuan Sukuk was issued in 2001 and today over $5 billion flows through the island’s Islamic financial system.’

‘With the passing of the Labuan Islamic Financial Services and Securities Act 2010, the world’s first omnibus legislation governing all Islamic business, we are gaining even further ground,’ he noted.

‘Our support for the annual WIFFMC as a gold strategic sponsor, once again reinforces our commitment to the growth and development of the Islamic financial services industry,’ said DDCAP director Cassim Docrat.

‘We at Capinnova Investment Bank are delighted to be the Gold Strategic Partners for the conference in Bahrain,’ said CEO Jamal Hijres.

‘We are confident about the Islamic finance industry’s future and Bahrain will continue to be one of the leading financial centres in the region due to the efficient regulatory policies adopted by the sector,’ he added.
source : TradeArabia News Service

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