Western Companies Seen Eyeing Islamic Bonds

REUTERS: LONDON/MANAMA - Cash-strapped Western companies are considering issuing Islamic bonds to tap Middle Eastern investors but face a challenge in choosing the right instrument, bankers and asset managers said.

Companies, especially in the UK and France, are looking to Islamic compliant investors as alternative sources of finance as the global crisis restricts their usual funding routes.

"There is a lot of interest from corporates to issue sukuk. My feeling is that as liquidity in the West gets scarce, they will look into the Middle East," said London-based Adnan Aziz, head of sharia advisory and structuring at asset manager BMB Group.

British retailer Tesco (TSCO.L) issued its first sukuk -- or Islamic-compliant debt --in 2007 for its Malaysian unit as well as raising conventional debt.

Islamic bonds do not pay interest, which is banned under Islamic law or Sharia, and are structured as profit-sharing or rental agreements, underpinned by physical assets such as real estate or commodities.

"We have discussions with clients, conventional issuers in Europe and we pitch both solutions, (bonds and sukuk) that is going to be a trend going forward," said Vikrant Bhansalim, who works for French bank Societe Generale (SOGN.PA) in London.

"In today's world the corporate sector is interested in the right price, the format is not as important," he said. >>> Reuters | Tuesday, February 10, 2009

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REUTERS:
Indonesia Reports Strong Demand for First Retail Sukuk >>> Reuters | Tuesday, February 10, 2009

SMART BRIEF: Report Details Growth of U.K.'s Islamic Finance Sector

A report by International Financial Services London found that the Islamic finance sector in Britain, with $18 billion in assets, is much larger than that of Pakistan, Turkey, Egypt and Bangladesh, countries where Islam is the primary religion. The report also states that the U.K. leads Western countries in the number of financial institutions focused on Muslims and sharia-compliant products. >>> The Telegraph | Tuesday, February 10, 2009

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Islamic Finance Moves into Mainstream as Investors Seek Ethical Alternatives
Image courtesy of Google Images
TIMESONLINE: Our correspondent looks at the steady rise of Sharia-compliant banking across Britain

Amjid Ali tells a story about when he was setting up the UK operations of HSBC Amanah, HSBC’s Islamic bank, in 2003. Mr Ali, now a senior manager at the global Amanah business, said: “I had a young, white, Christian man working with me. His surname was Bacon, which wasn’t ideal, but he embedded himself in the community so well that he became known as Mr Halal Bacon.”

His point was that although Islamic, or Sharia-compliant, finance was designed to enable Muslims to buy financial products that comply with the tenets of their religon, it is no longer a niche business. “There’s no need to be Muslim to work here or to buy the products,” Mr Ali said.

The global Islamic finance market is growing at 15 per cent a year and is expected to be worth $1,000 billion by 2010. In the UK it has grown to more than £500 million. A recent Mintel report said that 400,000 Muslims in Britain held Islamic products.

Moreover, although the official estimate of the Muslim population in the UK is two million, it is likely to be closer to three million, which means that there is a huge potential market.

NonMuslim Britons are getting a taste for Sharia-compliant products. Steven Amos, head of marketing at the Islamic Bank of Britain, said: “We’ve got nonMuslim customers, including some really famous names, because they like the ethical standpoint we take.”

The Islamic Bank opened in 2004 and is listed on AIM. Last year its customer base shot up by 38 per cent to 42,000, while deposits grew 61 per cent to £135 million and assets went up 51 per cent to £15.8 million. Muslim demographics in Britain offer the potential for even greater growth. Islamic Finance Moves into Mainstream as Investors Seek Ethical Alternatives >>> By Christine Seib | September 16, 2008

Related - ABC NEWS (AU):
Federal Opposition Leader Brendan Nelson says under no circumstances would he support Australia recognising Sharia law.

Dr Nelson's comments came after Britain's Archbishop of Canterbury Rowan Williams said he believed the adoption of certain aspects of Sharia (Islamic) law in the UK was unavoidable.

Dr Williams said British Muslims could choose to have marital disputes or financial matters dealt with in a Sharia court.
But Dr Nelson says everyone who comes to Australia should accept the existing laws.

"The idea that in some way you would change your basic values, culture and law to accommodate some people who feel that they don't want to see themselves as Australians first, above all else - under no circumstances would I support that," he said. Sharia Law Not an Option: Nelson >>> | February 8, 2008

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Canada’s Hot New Banking Trend: Shari’ah-compliant Finance
ISLAM BANK: TORONTO, ONTARIO -- It's an unlikely image: staffers at the Office of the Superintendent of Financial Institutions - surely one of Ottawa's driest regimes - are busy brushing up on the fine points of sharia law these days to cope with the anticipated expansion of Islamic financial services in Canada.

"Lately we have had more expressions of interest," said Normand Bergevin, managing director at OSFI's approvals and precedents division.

Several people on his staff are learning about business plans, legal structures, accounting methods, types of governance and other issues related to Islamic finance.

"It's fairly new to us," he said. "There's not a whole lot of experience here in terms of supervising or even understanding the different types of products. They all have little twists on them that make them very unlike anything we've ever seen before."

They're likely to see a lot more. Islamic finance is becoming one of the hottest areas in banking and insurance in the world as the Muslim population grows and wealth increases. A Hot New Banking Trend: Sharia-compliant Finance >>> By Tavia Grant | September 14, 2008

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Putting Profit above Principle
It has been announced that Tony Blair wants to ’devote his life to faith’. By ‘faith’ I suppose we are to understand ‘interfaith dialogue’, so as to try and ensure that we all live together in harmony.

This is a noble ambition indeed; unfortunately, however, there is one stumbling block: The nature of Islam!

For ‘interfaith dialogue’ to be meaningful, there has to be a readiness by all parties, in this case especially Jews, Christians, and Muslims, to compromise, for without compromise, interfaith dialogue becomes a meaningless exercise.

In Islam we find an implacable faith, an unyielding belief system founded on totally different principles than both Judaism and Christianity.

Christianity is based on love: The love of God, the love for God, the love of humanity. Islam, by contrast, is not a religion based on love; rather, it is based on total submission to Allah, and where there is no total submission to Him, we find the sword used to rein in the people. Indeed, Muhammad himself announced the sword to be an instrument of faith. Who, then, are we to argue with Muhammad’s declaration? How can we put a positive spin on that?

It is interesting to note that there is a maxim used by Muslims which states the following: ‘To convince stubborn unbelievers, there is no argument like the sword.’ [Source: Washington Irving: Mohammed]

For this reason, if for no other, it is difficult to see what Tony Blair hopes to achieve with his devotion to interfaith dialogue. How does he hope to change the nature of the faith of Islam? It is impossible to change nature. Indeed, can we change the nature of anything? And if this is so, then what hope have we of changing the nature of Islam, especially after more than fourteen hundred years?

The only man who could have changed its nature was the Prophet Muhammad himself. But as he is no longer around to make any changes, it is not going to be possible for mere mortals to change anything in that religion. You see, Islam is not a religion like Christianity anyway. Christianity has evolved, and has undergone a reformation. This reformation was made possible partly because Christianity, being based on the Bible, especially the New Testament, is to all but fundamentalist Christians considered to be a book that is inspired by God. The words contained therein are not generally considered to be God’s actual words.

In this respect, Islam is very different. Islam, as we all know, is based on the Qur’an, and that book is not considered be inspired by Allah; rather, Muslims consider the book to comprise the actual words of Allah as dictated to Muhammad by the Angel Gabriel in the form of a recitation. In fact, the very meaning of ‘Al Qur’an’ is ‘The Recitation’.

The result of this difference between the holy books has led to two quite different civilizations and cultures. Muslims are very defensive of Islamic culture and civilization in a way that Westerners are not defensive of theirs.

Take our leaders. They are reluctant to face up to the fact that we have a huge problem on our hands with Islam in general, and with the rapid growth of Islam in the West in particular. In this reluctance, they are doing us no favours. On the contrary, they are remiss in their duties as guardians of our way of life, as guardians of our Judeo-Christian civilization.

What, for example, are our leaders doing to protect our values and our way of life? Interfaithing will offer no protection; actually, on the contrary, it will probably lead to compromise – the compromise of Westerners. To me it seems like a cop out. It is a smokescreen to enable the top echelons to put profit above principle.

The jihad which is being waged against the West threatens us all. It is not something we can afford to ignore; yet people are ignoring it, largely in the hope that it will go away. It won’t. If anything, it will get worse.

The jihad has many guises. One of the latest is the economic jihad being waged against capitalism. Only this morning, it was reported that there have been calls for Ireland to introduce Shari’ah-compliant finance as a matter of urgency. As a matter of urgency, no less! Why? So that Muslims living and working in Ireland can live their lives according to their faith, without feeling conflicted by the terms and conditions of living in the ‘evil’ capitalist system.

One can but ask oneself one question here: If living under capitalism is so onerous for these Muslims, then why did they come here to live in the first place?

The leaders of finance houses who are working so hard to introduce Shari’ah-compliant financial services and products seem to be oblivious to the fact that Islamic economics is competing in every respect with capitalism. Isn’t it true to say that the interest rate is the keystone of a capitalist economy? Take that keystone away and the whole system will start to fall apart.

In Islam, riba is frowned upon. But let’s get one thing straight: Riba is generally translated as usury, not as the interest rate per se. There is a world of difference between usury, which is the charging of extortionate rates of interest for loans, and the general interest rate which is not to be equated with such extortion. Yet nobody seems to be making any difference between them. The financiers appear to have been hoodwinked into believing that the interest rate is itself frowned upon in Islamic economics. It must be said that one’s definitions in this matter depend on the Islamic scholars one reads: Some scholars frown upon the interest rate altogether, calling it all usury, whilst others take a more liberal approach and make a distinction between a reasonable rate of interest and an extortionate rate.

Whichever is the case, the fact remains that Islamic economics is not compatible with the long-term interests of a capitalist economy. One can but worry about the tentacles of Islam tightening their grip on Western economies. Lest we forget, the old adage, He who pays the piper calls the tune comes to mind. We need not wait to learn that this is indeed true. We can discern the verity of the adage already when we look around us. Take the power of the petrodollar as a case in point. Its power is profound, and it can be felt around the globe.

It is one reason why our leaders and business people are reluctant to speak out. They are overcome by greed and fear: They are greedy to earn back the petrodollars, and they are fearful that if they speak out they will incur the wrath of the Muslims living in the West, and cut off our oil supplies into the bargain.

You see, they do not have the stomach for any form of confrontation. The sad reality is, however, that the West will not survive this onslaught without a confrontation of some kind or other. It’s just not possible. Muslims are too determined to replace our Judeo-Christian civilization with an Islamic one, too determined to replace capitalism with an Islamic economic system.

But by confrontation, I do not necessarily think that we need to go to war (though that cannot, of course, be ruled out in the long-run). But we do need to protect our own values and our own way of life. Alas, this is not happening. Our leaders are giving in at every turn. Appeasement of Muslims both at home and abroad is the norm of the day. It will do nothing for the West except accelarate the demise of our civilization, and accelerate the demise of capitalism, too.

Can’t the people in power see what they are doing? Are bankers and financiers so greedy that they are willing to bring down the West for their own short-term gain? Do they not realize that they are playing with fire? Do they really believe that capitalism and Islamic economics can co-exist? Can they really be that ignorant?

Personally, I think they are not; rather, I think these people are out to get all they can before the house of cards is brought down. Remember the fall of communism? Capitalism will fall equally easily if we do not pay more attention. It’s hard to believe, I know. But the introduction of Shari’ah-compliant finance and other Shari’ah-compliant products is just the start. It is the introduction of Shari’ah law by the back the door. Today it’s banking; tomorrow it will be Shari’ah enshrined in the laws of the land, enshrined in the constitutions of Western countries. How foolish our leaders, bankers and financiers are!

Before 9/11, it would have been hard to imagine that the West could have been so weak and unwilling to fight for a way of life we have come to expect and love. But it all started going wrong after those attacks, because we were too reluctant to state the case against Islam, clearly and unequivocally. The politicians have busied themselves making excuses for Islam and have deceived the public in so doing; the business people and bankers have busied themselves making money from the countries awash with petrodollars. And in so doing they have chosen to turn a blind eye to the financing, by Saudi Arabia, of the propagation of Wahhabi Islam in the West.

So what exactly is Tony Blair going to achieve with his lifetime spent interfaithing? Is he merely going to sell the West farther down the river? And in any case, what are his qualifications for doing this job? What does he know about Islam? And where has he learnt that which he does know?

One thing is for certain: People like Tony Blair are not going to learn the true nature of Islam by sitting in five star hotels in Bethlehem, talking to fabulously rich Muslims from oil-rich countries. To learn about the true nature of Islam one has to mix and talk with people at the grassroots level. The rich are generally Western-educated, indulge in alcohol, spend enormous amounts of money in casinos, live in the lap of luxury, and generally do not adhere strictly to their faith. They are also generally well-travelled; so they are not representative of the ordinary man in the Arab street. Ergo, little can be learnt from them when it comes to the faith of Islam.

Isn’t it high time that we all started taking stock? Isn’t it high time that we woke up to the reality which confronts us? Isn’t it high time that we started to put principle before profit?

©Mark Alexander

All Rights Reserved

Turning towards Mecca
THE ECONOMIST: CHINA is not the only financial powerhouse with its hungry eye on Africa. Flush with oil wealth, the Gulf states, too, are spying profitable opportunities among the hundreds of millions of Muslims who live just a hop across the Red Sea. Africa's economies are growing fast, thanks in large part to the commodities boom. Although many people on the continent do not have a bank account, the banking systems in some countries are growing increasingly sophisticated. Bankers from the Gulf hope that the middle class, particularly in the Muslim north, will turn to Islamic finance, and that firms will raise money through Islamic bonds, known as sukuk. Moody's, a credit-rating agency, reckons that although Islamic finance was worth a puny $18 billion at the end of last year, its potential is close to $235 billion—about half what it estimates as the GDP of Africa's Muslim population.

So far, forays from the Gulf into Africa have been limited to a few countries. Sudan—where only sharia-compliant finance is allowed in the north—dominates, holding over half of Africa's Islamic-banking assets. A number of Gulf banks, familiar with the country's language and oil resources, have joined forces with Sudanese investors to open Islamic banks. Last year the first sukuk from Africa was issued by a Sudanese cement firm. Reportedly, the government also tapped the market in January—selling bonds to Gulf investors to sidestep American economic sanctions over the massacres in Darfur.

But Sudan's banking industry remains embryonic and few African countries combine the strong desire to promote Islamic banking with heavy demand from Muslim customers. “Islamic banking is a luxury product,” admits Anouar Hassoune of Moody's: it tends to do better in places with established banking systems, such as South Africa and Kenya. South Africa's only Islamic bank, Albaraka, was set up in 1989. Last year the Kenyan authorities licensed two Islamic banks, Gulf African Bank and First Community Bank, both backed by Gulf investment.

Western banks are also dipping their toes in. In Kenya Barclays was the first to offer an Islamic bank account appropriately named La Riba, meaning “no interest”. South Africa's ABSA opened an Islamic banking division in 2006. It offers phone, internet and branch banking. Its head, Ahmed Moola, says the division was profitable last year, though he declines to discuss numbers. Turning towards Mecca: Islamic banks join the race for Africa >>> |May 8, 2008

The Dawning of a New Dark Age (Paperback - UK)
The Dawning of a New Dark Age (Hardback - UK)
Mecca,

A Muslim's Viewpoint: Bilal Philips - Interest and Islamic Banking

The Dawning of a New Dark Age (Paperback - UK)
The Dawning of a New Dark Age (Hardback - UK)

Riyazi Farook: Islamic Banking and Finance

The Dawning of a New Dark Age (Paperback - UK)
The Dawning of a New Dark Age (Hardback - UK)

How Shari’a-Compliant Financing Curtails Your Economic Freedom
FAMILY SECURITY MATTERS: There has been much talk about Shari’a-compliant finance (SCF) in recent months, but many Americans are still in the dark about exactly what it is and what it portends for the American economy and the freedoms Americans enjoy.

This may be why the judge in the Holy Land Foundation trial in Dallas last fall declared a mistrial and five of six defendants face a retrial (one was found not guilty of most of the charges against him). Terror expert Douglas Farah surmised at the time that part of the reason might have been because “perhaps the prosecution tried to cram too much information in with a group of jurors largely unfamiliar with anything to do with the case.” And Steven Emerson of the Investigative Project on Terrorism had a heated exchange with Alan Colmes of Fox News’ Hannity & Colmes about whether the mainstream news media had even managed to get the story right.

So what exactly is SCF?

Part of Shari’a Law

SCF is a part of Shari’a law (also known as Islamic law), and dates back to the 9th Century. Shari’a law encompasses every facet of one’s life, and those who seek to impose it upon Muslims – and the world – look to regulate everything from aspects of religious and social customs to political and military responsibilities. Shari’a law is, in fact, the law in countries like Saudi Arabia, Sudan and Iran. The Taliban also recognizes Shari’a law, and subjected all of Afghanistan to it before U.S. forces entered that country after 9/11.

Earlier this year, Britain’s Archbishop of Canterbury faced a firestorm after he suggested in a BBC interview that the adoption of Shari’a law in Britain “seems unavoidable and, as a matter of fact, certain conditions of Sharia are already recognised in our society and under our law, so it is not as if we are bringing in an alien and rival system.” While his seemingly willing acceptance of this might shock, UK Muslims on welfare are eligible to receive extra benefits if they have more than one wife – even though polygamy is considered illegal under British law. So, in essence, the Archbishop was correct when he said “certain conditions” of said Shari’a law are already recognized in today’s British society. How Shari’a-Compliant Financing Curtails Your Economic Freedom >>> The Editors | April 29, 2008

The Dawning of a New Dark Age (Paperback – USA)
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Islamic Finance
INFORMATION CLEARING HOUSE: Islamic finance has become the fastest-growing, most dynamic sector of global finance. Every Western-style financial product has its sharia, i.e. Islamic law, compliant instrument: microfinance, mortgages, oil and gas exploration, bridge building, even sponsorship of sporting events. Islamic finance is innovative, flexible, and potentially very profitable. “Operating in 70 countries with about $500bn in assets, it is poised to expand geometrically.” With more than one billion Muslims eager to support it, analysts project that this system will soon manage approximately 4 percent of the world economy, equivalent to $1 trillion in assets. Such figures explain the eagerness of Western banks to tap into sharia financial services. Citigroup, along with many other Western banking retailers, have opened Islamic branches in Muslim countries.



At the end of 2004, the Islamic Bank of Britain, the first bank catering to a European Muslim client base, floated its shares on the London Stock Exchange. Ironically, Western capitalism’s three major global economic crises - the 1970s oil shocks, the late 1990s Asian crisis, and 9/11 - paved the way to the ascent of Islamic finance. Unlike market economics, Islamic finance centers on the religious tenets of Islam and operates in a way to keep Muslims compliant with sharia, the religious law that comes directly from the Koran. Islamic activists, intellectuals, writers, and religious leaders have always upheld the prohibition of riba, the interest charged by moneylenders, and denounced gharar, which refers to any type of speculation. Under this belief, money must not become a commodity in itself to create more money. Islamic finance thus shuns hedge funds and private equities, because they simply multiply cash by stripping assets. Money serves as a means or instrument of productivity as originally envisioned by Adam Smith and David Ricardo. This principle is embodied in the sukuks, Islamic bonds. Sukuks always link to real investments - for example, to pay for the construction of a toll highway - and never for speculative purposes. This principle springs from the sharia’s ban on gambling as well as on the prohibition of any forms of debt and activities that trade risk. Islamic Finance >>> By Loretta Napoleoni | April 26, 2008

Hat tip: Dr Nasir Khan >>>

The Dawning of a New Dark Age (Paperback - UK)
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Islamic Finance Expands as Wealth Grows
KHALEEJ TIMES: DUBAI - The market for Islamic finance and banking is growing rapidly in the Gulf thanks to burgeoning wealth and attractive financial instruments.

Studies have put the total value of Islamic equity funds in the Gulf region at around 30 billion dollars (19.5 billion euros), said Khaled al-Masri, partner in asset management at Dubai-based Rasmala Investments.

“Investable wealth in the Gulf Cooperation Council is growing by one of the highest rates in the world ... This increase is being met with more product providers and products being launched in the GCC market,” he said.

The Islamic finance industry worldwide is worth around 700 billion dollars, Moody’s Investors Services estimated in a February report.

Economies of the six GCC member states -- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates -- have been enjoying remarkable growth over the past few years on the back of record oil prices.

The robust economic performance has inflated local wealth in this Muslim region where many might prefer to seek profit through investments that do not contradict their beliefs.

The basic principle of Islamic finance is the prohibition of Riba (usury), which is correlated with interest in today’s banking.
Islamic funds are also banned from investing in companies associated with tobacco, alcohol, pornography, pork or gambling, all considered taboo by devout Muslims.

Some 125 Islamic equity funds are based in the GCC out of around 320 globally, said Mark Smyth, UK-based managing director of Failaka Advisors, an Islamic fund research company.

“Increasing familiarity with Islamic products combined with the presence of longer and more established funds seems to be driving the current growth, combined with strong returns,” Smyth told AFP.

Islamic finance provides a “solution for investors and consumers who want to adhere to sharia-compliant principles in their investment and consumption decisions,” said Masri, referring to principles in line with Islamic law.

He also pointed out that the sukuk (Islamic bonds) have become appealing at the corporate and government levels as a tool to raise finance, which in turn increased the size of the sector.

A report by the US-based Morgan Stanley investment bank published by the local press in February put outstanding issued sukuk at more than 90 billion dollars worldwide. Islamic finance expands as wealth grows >>>

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Islamic Finance and the Square Mile
Image courtesy of Google Images
TIMES ONLINE: How does Sharia fit into the heated debate about the relationship between the British legal system and religious codes?

Here’s a thought. If all the sub-prime deals in the US had been governed by Sharia there would have been no massive defaults and the credit crunch would never have loomed over our shopping expeditions.

Instead, Islamic law’s requirements for prudent lending, the sharing of risk and a ban on the earning of interest would have insulated the borrowers and the world economy at large from the debacle of the past six months. And for that even the Archbishop of Canterbury’s harshest critics might have been a mite grateful.

So how does Islamic finance — now increasingly practised by law firms in London and New York — fit into the heated debate about the relationship between the British legal system and religious codes?

The Prime Minister in particular needs to have an answer to that. Last week he was quoted as saying that: “British laws must be based on British values and religious law should be subservient to British criminal and civil law.” How come then that Gordon Brown, when Chancellor, wanted “to make Britain the gateway to Islamic finance and trade”? And, to support that, government introduced changes to the taxation regime to accommodate Sharia-compliant transactions.

To appreciate the full impact of Sharia on City law and business you have only to go to Clifford Chance where Islamic finance is an important activity. The firm was named Euromoney Islamic finance firm of the year in 2007 and it has scores of lawyers both in the Middle East and in London practising Sharia. Habib Motani explains: “Doing deals that are Sharia compliant is a standard part of what we do. It’s part of the mainstream.”

But does this mean that there is now a rival jurisdiction operating in London? Has Sharia sneaked into the Square Mile by the back door while the good Archbishop waits befuddled at the front? Well, in the spirit of Canterbury unclarity, the answer is Yes (and a little bit No). What is clear is that transactions hatched in London by UK lawyers are being reviewed by Sharia scholars in the Middle and Far East who judge whether or not they comply with Islamic law. If they do not, they do not go ahead. So in practice the jurisdiction of Sharia is now well established in Britain. Islamic finance and the Square Mile >>> By Edward Fennell

TIMES ONLINE:
London risks losing its lead in Islamic finance: Reports that the Government has gone cold on plans to issue its own sukuk, or Sharia bond, is a blow for the City By Michael Herman

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Shari’ah Finance: Plenty of Interest in No Interest
THE TELEGRAPH: The Halal banking revolution is taking off, says Kara Gammell

The British Government is believed to be planning to raise funds by issuing Shariah-compliant bonds in the Middle East, which would be the first time a Western country did so, but many British banks already provide financial services in accordance with Islamic law.

Junaid Abbas Bhatti, an expert in Islamic Finance said: "The industry is growing at 15pc a year, so it's no surprise that the Western world's financial markets are starting to sit up and take notice of the Halal banking revolution.

"Islamic banking is far more complex than a simple prohibition on the giving and receiving of interest."

Emile Abu-Shakra of Lloyds TSB said there are now 2m Muslims in the UK. He added: "Our research tells us that three quarters want banking services that are in line with their faith.

''We have developed a range of products - from current accounts to mortgages - designed to meet the needs of needs of Britain's Muslim community.

"Not only has this made its possible for Muslims to bank according to their principles, but it has also helped to make Britain a real centre for Islamic finance."

The main difference between Islamic and conventional banking is that Islamic teaching says that money itself has no intrinsic value, and forbids people from profiting by lending it, without accepting a level of risk.

In other words, interest - known as "Riba" - cannot be charged. Sharia finance: plenty of interest in no interest >>>

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Shari’ah Now Official in Britain
ANGLO-AUSTRALIAN NATIONAL COMMUNITY COUNCIL: new sharia law controversy erupted last night over Government plans to issue special "Islamic bonds" to pay for Gordon Brown's public-spending programme by raising money from the Middle East.



Britain is to become the first Western nation to issue bonds approved by Muslim clerics in line with sharia law, which bans conventional loans involving interest payments as "sinful".



The scheme would mark one of the most significant economic advances of sharia law in the non-Muslim world.



It will lead to the ownership of Government buildings and other assets currently belonging to British taxpayers being switched wholesale to wealthy Middle-Eastern businessmen and banks.



The Government sees sharia-compliant bonds as a way of tapping Middle-East money and building bridges with the Muslim community.



But critics say the scheme would waste money and could undermine Britain's financial and legal systems.



Senior Conservative MP Edward Leigh, chairman of the Commons Public Accounts Committee, said: "I am concerned about the signal this would send – it could be the thin end of the wedge.



"British Common Law must be supreme and should apply to everyone."



A spokesman for the National Secular Society said: "There are lots of different ways to arrange financing.



"Constructing financial instruments to be sharia-compliant seems to me to involve a lot of unnecessary complication, which will serve only to make a lot of lawyers very rich."



The attempt to embrace Islamic financing would also appear to be at odds with Mr Brown's promise to promote Britishness and British values and institutions.



The Treasury has already faced heavy criticism for removing Britannia from 50p coins.



Other Western nations have been reluctant to issue Islamic bonds. Shari’a now official in Britain >>>

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Amsterdam Investors Can Now Be Shariah-Compliant
SHARIAH FINANCE WATCH: The Arab economic boycott of Israel has mostly disappeared. But now it lives on, in the Dutch stock exchange. Businesses dealing with alcohol, the sex industry, financial services - they are all banned by Sharia law due to what they do. Businesses in Israel are banned due to what they are. Are Arab-Israeli businesses banned as well? Would anybody think it strange?

Apparently, nobody thinks it strange, or hypocritical, that Sharia compliant funds can’t invest in Israeli businesses, while investing in American businesses on a Dutch stock exchange (two countries with military forces in Muslim countries) is completely ok.

—

Investors in the Amsterdam stock exchange can now also invest in shares that conform to the Islamic rules of the Sharia.
There are three exchange trade funds available: a worldwide fund, a fund specializing in upcoming market and a fund investing in American businesses.

Pure Islamic fund are availalbe in other lands, such as the US and the London exchange. In Amsterdam, Barclays Global Investors listed five new exchange traded funds, or ishares, on Tuesday of which three conform to Sharia. These shares will follow a specified index.

Muslims who want to invest according to laws of sharia, may not put their money into companies that do ‘wrong’ business according to Islamic laws.

The Sharia doesn’t allow investing in companies that produce alcohol, have to do with the sex industry or financial institutions. The latter sector works with interest, riba in Arabic, and Muslims can’t collect it according to Sharia. The funds also don’t invest in companies from Israel. Investors in Amersterdam stock exchange can invest in shares that conform to the Islamic rules of Shariah >>> By Allyson Rowen Taylor

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Islamic Investment Instruments
THE NEWS: KARACHI: Many countries in the world are promoting Islamic finance, including Islamic investment instruments (3Is), to cater to the growing demand for Islamic modes of financing and banking.

“Introducing innovative Islamic products in the financial sector has become necessary, as there is increasing demand for Shariah-compliant products, especially the 3Is, in both developed and developing countries,” said Joseph Tan, an economist at Global Research, Standard Chartered Bank.

There is now growing demand for the 3Is in the United States, the United Kingdom, Malaysia, Singapore, Pakistan, many of the Middle Eastern countries and India for the 3Is. The current world market for Islamic financial products is estimated around 300 billion US dollars

Experts say Islamic investment products are Shariah compliant. The 3Is are attractive for investors who want a handsome return on their investment or want to acquire loans in cash or kind without the string of Riba (interest) attached to transactions.

Riba has no place in Islamic banking and other Islamic modes of financing. With a Muslim population of almost 95 per cent, according to the 1998 census, Pakistan introduced Islamic Banking Policy in December 2001. In Pakistan, the banking spread of Islamic banks is higher than that of the conventional banks. The banking spread in conventional banking on an average is 7.2 per cent, and in Islamic banking it is 8.7 per cent. Islamic Investment Instruments >>> By Salman Siddiqui

Mark Alexander (Hardback)
Mark Alexander (Paperback)

Frank Gaffney Jr: Shariah’s Trojan Horse
TOWNHALL.COM: Suddenly, a new national debate is beginning about the national security, economic and other implications of Persian Gulf potentates using their petrodollars to buy up strategic American assets. Most recently, the Emir of Dubai’s purchase at fire-sale prices of 4.9 percent of the largest U.S. bank, Citigroup, has caused a level of unease not seen since he tried to buy his way into a large number of this country’s port facilities.

Almost completely unremarked thus far has been a parallel – and in many ways far more insidious – effort to penetrate, influence and dominate America’s capital markets: so-called “Shariah finance.” Some estimates suggest that there are approaching $1 trillion now being invested around the world under this rubric. If present trends continue, all other things being equal, such funds may grow to many times that amount within a few years.

Shariah is, of course, the term used by adherents to the totalitarian ideology practiced by the Saudi Wahhabis, the Iranian mullahs and the Taliban to describe the all-encompassing theocratic code they use to justify repressive rule at home and to extend their dominance elsewhere. While it is often depicted by its promoters as Koranic in character, in fact, it is largely man-made, the product of dictates and rulings by caliphs and scholars over many centuries.

For non-Muslims, Shariah is best known for its sanction for the brutalization of women, homosexuals and Jews. Beheadings, amputations, flagellation and stoning are among the prescribed punishments for those who transgress this barbaric code, punishments plucked from primitive tribal practices in the Arabian deserts dating back to medieval times. Shariah’s Trojan Horse >>> By Frank J. Gaffney Jr.

Frank Gaffney Jr. is the founder and president of the Center for Security Policy and author of War Footing: 10 Steps America Must Take to Prevail in the War for the Free World (Hardcover)

Mark Alexander (Hardback)
Mark Alexander (Paperback)

If Islam Won’t Get Us One Way, It will Get Us Another: Profitable Islamic Investment Strategies Prove Irresistible to Financiers
MEDILL REPORTS – CHICAGO: Islamic investment strategies are proving they’re worth a second look from Muslim and non-Muslim investors alike.

Amana Trust Income, a mutual fund managed by Bellingham, Wash.-based Amana Mutual Funds Trust in accordance with Islamic Shariah law, has increased 13.9 percent year-to-date, compared with a 5.7-percent return for the S&P 500.

It’s a star performance in a rocky investment environment, but Amana Trust Income is hardly extraordinary among Islamic funds. The Dow Jones Islamic Index is up 17.1 percent year-to-date.

So what’s the higher power behind the relative success of Islamic funds?

“These are just better stocks and healthier companies,” said William Redman, managing director and treasurer for Connecticut-based Shariah Capital Inc., which creates Shariah compliant financial products.

In fact, Shariah-compliant does not refer to the nationality of a company, but rather its way of doing business. For example, Brooklyn Center, Minn.-based Caribou Coffee conforms to Shariah Islamic law.

“The threshold for debt is lower,” Redman said. Shariah Capital chooses companies with low debt, low accounts receivable and low cash holdings, in accord with the principles prescribed by the Quran.

Shariah law also forbids the collection or payment of Riba, or excessive interest, as well as investment in companies producing goods or services like alcohol and gambling, that are off-limits to Muslims.

While the rules governing Islamic finance are thousands of years old, very recent changes have led to new opportunities. Have faith: Islamic investing offers strong returns >>> By Alysia Patterson

Mark Alexander