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Friday, 7 September 2007

Tax Issue Hampers Islamic Banking Growth In Thailand

BANGKOK, Sept 6 (Bernama) -- The growth of Islamic financial services in Thailand has been hampered by double-taxation, lack of products and general misunderstanding that it's not for non-Muslims, a Thai banker said Thursday.Tong-u-rai Limpiti, senior director at Bank of Thailand, said the bank has to purchase the assets of potential borrower to comply with the syariah requirements, endure the process of transferring title deeds twice as well as paying tax two times."This is one issue the Ministry of Finance and tax department have to solve to ensure the growth of the Islamic financing," she told the First Thailand Islamic Finance Conference here today.Furthermore, she said, there were not many Islamic financing products available in the market while customers in the Buddhist majority kingdom have a perception that such facilities were not offered for non-Muslims. She said the Islamic Bank of Thailand (IBT), launched in 2002, currently has 26 branches and the syariah-compliant funding from Krung Thai Bank was transferred to the former in 2005."Since BOT introduced Islamic window several years ago, there were not many takers. After Krung Thai's transfer, there were no applications ... I am just waiting," she said.Meanwhile, IBT chairman, Kitti Patpong Pibul, said to ensure the faster growth of Islamic financial system in the country, related agencies have to solve the taxation issue.He said the bank was keen to develop more products, especially the sukuk bonds."The sukuk bonds offer big potential and the bank is ready to work and learn from Malaysian counterparts, including Aseambankers Malaysia Bhd."You (Aseambankers) come in at the right time. Sukuk is good if it's competitive," he said.
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