Muamalat plans Islamic finance in China

Bank Muamalat Malaysia will offer Islamic financing in China through booths as a step toward setting up the first full-fledged syariah-compliant lender in the world’s fastest-growing economy.
Malaysia’s second-oldest syariah bank plans to start offering loans and deposits by December at branches of local partner Bank of Shizuishan in the north-western region of Ningxia once it gets approval from regulators, Kuala Lumpur- based chief executive officer Mohd Redza Shah Abdul Wahid said in an Aug 28 interview.

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source : business times

Islamic Banking Can Boost Trade Between China, Muslim States

China has been urged to consider introducing Islamic banking practices to boost trade with the Arab and Muslim world.

China is already the area’s biggest commercial partner but economists and experts in the industry say this can be greatly increased.

“Most of the money in Islamic banking comes from Gulf countries and these oil-rich countries prefer Islamic banking tools, so for China to invest in this regard, there is big potential for growth and business,” said Wajdi Makhamreh, CEO of the Amman-based Noor Investments brokerage.

“There is a dire need for networking between Chinese banks and their counterparts in Arab and Muslim banks to cooperate in introducing Islamic banking tools,” Makhamreh told Xinhua.

Faeq Hjazin, economist and expert in the Islamic banking sector, said: “If Chinese banks and investors consider introducing Islamic banking tools, they will help boost their country’s commercial exchange with the Arab and Muslim world at a faster pace.”

The experts said China could play a larger role in the region and increase its involvement in mega projects in the Arab and Muslim world once it started providing Islamic banking products.

Fouad M. Alaeddin, Middle East Managing Partner and Head of Markets at Pricewaterhousecoopers, said the potential for growth in the sector was huge.

The experts said the return on investment in the Islamic banking sector was sustainable and lucrative as the sector was less risky than conventional banking.

“Islamic banks rely on genuine collaterals. They do not rely on debt, and they do not deal with hedge funds and derivatives and other toxic financial instruments that caused the global financial crisis,” Makhamreh said.

“This is the reason they were the least to be affected,” he said.

Hjazin said China would benefit from thinking about Islamic banking styles as these were preferred by over one billion Muslims across the world.

source : china gate

Yinchuan, China is expected to become center for Islamic finance

Regional party committee, government support for local commercial banks to provide Islamic banking business, and wishing to cause mainland China Yinchuan fight Islamic financial center.

December 24, the reporter from the Ningxia banks offer Islamic banking pilot launch ceremony was informed that the Banking Board for approval of Ningxia, Ningxia bank became the first pilot run of the Islamic banking financial institutions.

During the pilot, Ningxia banks to set up Islamic finance division, responsible for the Islamic banking business operations and management; establishment familiar with the teachings of Islam and Islamic commercial law experts, academics Ningxia Islamic bank financial advisory committee to examine the cause of Islamic financial products are developed by the Department of Shariah-compliant.

The first choice in Ningxia Wuzhong branch banking, the square sub-branches, bright sub-branches, Xinhua West Street branch and the Metro branch of the establishment of Islamic financial services window, the majority of customers of Islamic banking products and services.

The pilot will initially be launched investment accounts (deposits), financial management and increase trade in 3 products.

It is understood that the Islamic banking and conventional banking, the difference is that: first, to follow the teachings of Islam; followed by emphasis on risk-sharing, profit sharing, product revenue is designed to rental income and profits in the form of sharing rather than interest; 3 is the product and services are based on tangible assets, the transaction must have a practical purpose, better able to evade the impact of financial market volatility, and the economic bubble of false prosperity and effective boycott; 4 is to fulfill contractual obligations and the disclosure of information enshrined in the responsibilities, engage in Islamic banking financial institutions are equipped with specialized agencies of financial institutions abide by the teachings of monitor the situation.

According to British “Banker” magazine reported in 2008 registered in Islamic financial institutions worldwide had reached 614, operational control of the assets of 639.1 billion U.S. dollars.

Which is China’s Ningxia Hui neighborhood, there are 2.2 million Hui people, the country’s total Muslim population, 1 / 5. At the same time, our region has to provide Islamic banking services needed a good cultural, political, economic base. With the Islamic business and further development, our region’s economic and trade exchanges with the Middle East, Muslim countries, in-depth, will attract more money into the Middle East, the western economic development.

Source : Xplus

Proposal for Development of Islamic Finance in China

As a big oil importer, China’s long-term and Muslim countries have maintained friendly cooperative relations, efforts to attract Middle East oil dollars for investment, not only conducive to China’s economic development, and also has to protect our energy security, strategic significance.  

With regard to China’s development “Islamic finance” proposal The Central Committee of Chinese Kuomintang Revolutionary Committee “Islamic finance” is based on financial activities carried out by Islamic law. According to Islam, “Islamic finance” of transaction is that all products and services are based on asset-based, meaning that all transactions must have a real purpose, such as trade financing, or railways, Or is to buy machines are based on real asset-based, rather than purely for the purpose of making money, such as “futures” of such financial derivatives, is absolutely prohibited.”

Over the last few years, international oil prices have rocketed in the Middle East nation’s oil wealth makes the rapid accumulation, triggering strong investment demand, “Islamic finance” in the global context has developed very quickly become a global financial system, an important part. In the by the U.S. sub-prime crisis evolved over the financial turmoil, “Islamic Finance” by virtue of its own characteristics, maintaining a stable development trend.

According to estimates, the current “Islamic finance” has reached a global scale, about one trillion U.S. dollars, and the estimated annual growth in more than 15%.Currently more than 70 countries around the world there are 250 Islamic mutual funds, more than 300 “Islamic finance” institutions, it holds a 550 billion U.S. dollars in assets.

Not only to gather some Muslim countries such as Malaysia, Indonesia, Bahrain, Pakistan, Saudi Arabia, United Arab Emirates and other countries is the importance of Islamic finance, a number of non-Muslim countries and regions, such as the United Kingdom, Singapore, Japan and Hong Kong, in order to enhance and strengthen the international financial center, but also to the development of “Islamic finance” as a key work, have started to change the law and regulatory system to meet the “Islamic finance” requirement, hoping to enhance the attractiveness of the oil capital.

As a big oil importer, China’s long-term and Muslim countries have maintained friendly cooperative relations, efforts to attract Middle East oil dollars for investment, not only conducive to China’s economic development, and also has to protect our energy security, strategic significance.

However, development in the Mainland of China “Islamic finance” business is quite slow, far from the Middle East oil money to invest in China to meet the demand. Therefore, we make the following recommendations to promote “Islamic finance” in China’s development:

First, establish a “Islamic finance” industry, an effective mechanism for co-operation. “Islamic finance” features of business operations, operations conducted in-depth study and actively participate in “Islamic finance” international organizations, organized the domestic financial sector to conduct trade talks with the Islamic countries and study and promote the two sides to expand their “Islamic finance” new products and facilities cooperation.

Second, try to carry out the “Islamic finance” business. China’s Muslim population, mostly concentrated in the western region, with the implementation of the western development strategy, you can take the following measures.

First, consider the western region or the establishment of “Islamic finance” institutions; the second is to allow the Western financial institutions, launched the “Islamic finance” products, in particular, Wealth management tools (such as the Islamic investment funds), to attract capital investment in the Middle East in western building; three western companies to issue abroad “Islamic bonds” or arrange Murabahah trade financing by banks and so on, are also feasible and convenient way; 4 is to encourage financial institutions to the west in the Middle East countries have set up Islamic financial windows.

Third, give full play to the Shenzhen Special Economic Zone “experimental field” role, the first to strengthen ties with “Islamic finance” institutions. Shenzhen borders Hong Kong an international financial center, in the financial personnel exchanges, and international capital and financial markets to cultivate docking with other cities on the irreplaceable advantages, is the country’s fund management center.

And Shenzhen, has a local legislative powers, you can improve the local legislation in support of “Islamic finance” development is conducive to take the lead in the introduction of “Islamic finance” institutions, to promote Shariah-compliant financial products to meet the domestic enterprises and the Middle East investors.

At present, the constraint “Islamic finance” the development of the bottleneck is the training of professionals not keep up with increased demand for speed. Develop”Islamic finance” experts, at least 10 to 20 years.

This is a comprehensive Islamic knowledge, the East-West financial theory with the new knowledge, financial ﹑ rule of law and religion in one of modern economy, and must focus on the practical ability to work. Thus, the domestic colleges and universities should be established as soon as possible “Islamic finance” professional, the United Nations financial institutions, there are plans to train professionals.

Source : Netease financial

China shaping up as next big Islamic finance market

china islamic finance

CHINA is the next big Islamic finance market, as demand grows for ethical funds, but Asia’s fastest-growing economy must first sort out tax issues, a unit of British insurer Prudential yesterday said.

A large Muslim population and growing wealth provide a ready retail Islamic banking market in China, a senior executive of Prudential’s Kuala Lumpur-based fund management unit said.

The US$1 trillion ($1.4 trillion) Islamic finance industry is targeting rapidly growing Asian economies such as China and India and new markets like Kazakhstan and Sri Lanka to offset slowing growth in its traditional base of Gulf Arab states.

Islamic banks are touting wheat-based deposit products and metal-based funds as ethical investments to appeal to investors burnt by the recent conventional banking crisis.

Islamic banking is also marketed as socially responsible investing in non-Muslim countries such as France and India to avoid fanning religious sensitivities.

“China is like Indonesia, a sleeping giant,” said Zulkifli Ishak, syariah investment director with Prudential Fund Management Bhd which manages about US$4.03 billion. Kuala Lumpur is Prudential’s Islamic finance hub.

“If Islamic finance can tap Muslims, especially in Xinjiang, then there will be a huge potential for the Islamic space in China,” he said.

China has a Muslim population of about 37 million.

Islamic law requires investments to be based on a specific asset and bans excessive speculation, interest-based lending and gambling, alcohol and pornography-related activities.

Zulkifli said the syariah’s screening criteria weed out assets with excessive debt, helping them to deliver returns comparable to those of conventional instruments. “The discipline in the syariah helps because you cannot invest in highly leveraged companies.”

Non-Muslims make up more than half of the investors of most of Prudential’s Islamic retail funds in Malaysia, Zulkifli said.

Prudential’s RM42 million China equity fund rose 46 per cent in the half year to August 31, about the same as some conventional China equity funds run by ING and OSK-UOB, he said.

But China has to amend its tax laws which now make Islamic financial transactions costlier than conventional deals, Zulkifli said. “Regulators in China need to look at the taxation issue,” he said.

“Once they do that, then the opportunity for Islamic finance to grow in China would be much greater.”

Syariah finance typically involves the sale and purchase of assets, which would attract tax at each level and increase transaction costs. Indonesia’s parliament passed a law last month, to take effect in April, which will scrap double taxation on Islamic financial transactions.

Bahrain’s Shamil Bank launched a US$51 million Islamic fund in 2006 targeting investments in China’s real estate sector.

China’s economy grew at an annual clip of 7.9 per cent in the second quarter, picking up from 6.1 per cent in the first quarter and on track to hit its full-year growth target of eight per cent.

source : bt