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Tuesday, 29 May 2007

More demand for syariah products

The Star 29 May 2007


KUALA LUMPUR: Increased trade and investment flows between Asia and the Gulf States have led to greater demand for syariah-compliant banking services such as trade and project finance as well as investment services.
Standard Chartered Bank (StanChart) regional chief executive officer (Middle East and North Africa) Shayne Nelson said more Muslims were tempted to take part in and profit from the Asian growth story and to diversify their investments out of the US and Europe.
As such, Asian countries that were best prepared (from legislation, banking regulations and market structure perspectives) to service wealthy Muslim investors and corporates would be best positioned to enjoy an influx of oil money, he added.
“A new partnership between China, India and the Muslim world is forming a 'New Silk Road'. The inter-regional complementary trade relationship forms its backbone, from which spurs rapid growth in cross-border direct investment and portfolio investments flows.
“It has an uplifting effect on the services sector and Islamic banking has been gaining the most attention,” he said in his presentation on China & India: Partnership with the Muslim World, held in conjunction with the Third World Islamic Economic Forum yesterday.
Nelson said the oil boom had resulted in massive capital and liquidity around the Middle East but a lot of money had been wasted. “They have learnt their lesson and diversified from resources to service. There is a shift in the way they invest,” he said.
In reducing economic dependency on the oil-related sector, countries such as United Arab Emirates (UAE) had made significant efforts to develop industries such as cement, building materials and fertilisers. Investors from the region had also begun to acquire larger stakes in multinational corporations and undertake long-term investment in various industries across the world.
On StanChart's Islamic banking segment, Nelson said growth had been very good as reflected in its recent first quarter result. “Our Islamic banking is growing at double the rate of conventional banking in the markets that have embraced the former. “We are expanding and we offer a wide range of derivatives. Commodity derivatives is something we want to build up as we go forward,” he told StarBiz.
Currently, the bank has Islamic banking operations in UAE, Pakistan, Bangladesh, Indonesia and Malaysia. Nelson said StanChart was always looking at expanding Islamic banking to more countries. In Malaysia, StanChart was considering all options to transform its Islamic banking window into a full-fledged subsidiary, he said. “When we get the scale, it makes sense. If we form a subsidiary it should have a full governance structure,” he said.

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