Non-Muslims Favor Islamic Finance
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CAIRO — Islamic finance, an industry picking up steam worldwide, is increasingly appealing to non-Muslims who find the Shari `ah -compliant service much fairer than traditional banking.
"The terms are better than on conventional loans," David Ong-Yeoh, a Malaysian public relations executive, told the New York Times on Thursday, November 22.
Islam forbids Muslims from receiving or paying interest on loans.
Shari`ah-compliant Islamic banking operates by sharing profit or loss between the bank and its clients.
Financing deals resemble lease-to-own arrangements, layaway plans, joint purchase and sale agreements, or partnerships.
Ong-Yeoh, 41, is one of many non-Muslims opting for a growing range of Islamic products offering competitive returns.
He first sought a 30-year fixed loan from an Islamic financial institution for his home. He later took another Islamic loan for his car.
"It’s just taking advantage of the system."
Ong-Yeoh is not alone.
E-lene Kee, a Buddhist corporate lawyer, advises clients to use Islamic loans to finance construction projects.
"We look at these things just like Apple or Berkshire Hathaway."
At Kuwait Finance House’s Malaysian unit 40 percent of the depositors and 60 percent of its borrowers are non-Muslims.
"It’s about respecting the interests of the different parties, avoiding taking advantage of any situation of any counterparty and putting in place fair treatment," explains Rasheed Mohammed al-Maraj, governor of the central bank of Bahrain.
In addition to Islamic loans, there are Islamic bonds, Islamic credit cards and Islamic derivatives.
Islamic bankers cannot receive or provide funds for anything involving alcohol, gambling, pornography, tobacco, weapons or pork.
Islamic finance is already one of the fastest growing sectors in the global financial industry.
Hang Seng Bank, the second largest bank in Hong Kong and a subsidiary of global banking giant HSBC, launched on Thursday the Hang Seng Islamic China Index Fund, Hong Kong 's first Islamic fund.
"The Fund will help investors capture the potential investment returns generated by growing international interest in these markets," said William Leung, general manager of the bank's personal financial services and wealth management.
Hang Seng is only the latest in a long list of international institutions, including Citigroup, HSBC and Deutsche Bank, 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.
In Asia, Islamic finance is growing in double digits, with predominantly- Muslim Malaysia effectively establishing itself as a regional, if not global, hub.
Indonesia, Thailand and Singapore are also among the countries promoting Islamic finance.
In the Middle East, Saudi Arabia’s largest lender, National Commercial Bank, overhauled its entire retail business to make it Shari`ah-compliant.
Tunisia and Morocco have also authorized their first Islamic banks this year.
Shari`ah -compliant loans and bonds are already available in the US and Britain has decided to do the same.
"This is an industry on its way from a niche industry to becoming a truly global industry," Khawaja Mohammad Salman Younis, the managing director for operations in Malaysia for Kuwait Finance House, told the Times.
"In the next three to five years you’ll see Islamic banks coming out in Australia , China , Japan and other parts of the world."
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