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Hamilton
(Bermuda): Luring Islamic funds into the British
island, Bermuda has introduced a set of new laws to launch Sharia-compliant
platform amid efforts to become the first western center for the
growing global industry, The Royal Gazette reported recently.
“We are looking at the Sharia side of Bermuda’s legislation to
become the first Western centre for Islamic finance,” said Peter
Hughes, director of Apex Fund Services group.
Hoping to become a western hub for Islamic finance, executives
from the Island have been actively reviewing existing laws to
launch a Sharia-compliant platform for investors.
These efforts began last November when Hughes, along with Business
Bermuda CEO Cheryl Packwood, led a group at the 18th World Islamic
Banking Conference in Bahrain.
The delegation tried to show the Island was open for businesses
and clients from Asia and the Middle East, being capable of
handling Sharia-compliant financial structures.
“We are looking to launch a Sharia platform that will allow us to
have Sharia vehicles and products that would enable us to become
the first one of its kind,” Hughes said.
“We have made a real push into this niche area,” he added.
Islamic banks have proved a success because of rules that forbid
investing in collateralized debt obligations and other toxic
assets that cause financial crises.
Islam forbids Muslims from usury, receiving or paying interest on
loans.
Islamic banks and finance institutions cannot receive or provide
funds for anything involving alcohol, gambling, pornography,
tobacco, weapons or pork.
Sharia-compliant financing deals resemble lease-to-own
arrangements, layaway plans, joint purchase and sale agreements,
or partnerships.
The new Sharia complaint rules succeeded in luring new clients
from Islamic finance hubs in Asia and Middle East.
“We now have strong links in Bahrain and there is a commonality of
wanting to create a niche jurisdiction for Sharia compliancy, that
is closer to the US timezone,” Packwood, Business Bermuda CEO,
said.
“We are also focusing on Kuala Lumpur in Malaysia, as it has an
enormous sukuk market.
“The process for getting this off the ground may be slow but we
have the Bermuda Monetary Authority and the Bermuda Stock Exchange
behind us.”
The Islamic banking system is being practiced in 50 countries
worldwide, making it one of the fastest growing sectors in the
global financial industry.
Starting almost three decades ago, the Islamic banking industry
has made substantial growth and attracted the attention of
investors and bankers across the world.
A long list of international institutions, including Citigroup,
HSBC and Deutsche Bank, are going into the Islamic banking
business.
Currently, there are nearly 300 Islamic banks and financial
institutions worldwide whose assets are predicted to grow to $1
trillion by 2013.
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