ECONOMY

Islamic finance forum

ISTANBUL – A major Islamic finance forum was launched here yesterday with calls to introduce new Sharia-compliant investment products and to eye US, European and Far East markets. «We need new approaches and instruments to meet consumer demands of Muslims and to spread to Europe, the United States and the Far East,» Ufuk Uyan, president of special finance houses (Islamic banks) in Turkey, told the opening session. Some 60 Muslim scholars, academics, bankers and investors from 20 countries are due to address around 400 participants from 40 countries during the three-day International Islamic Finance Forum on issues related to the multibillion-dollar Islamic finance industry. The forum, the sixth of its kind and the second in Istanbul, is to address urgent issues on Islamic financial laws, regulation, new Islamic financial and investment products and other issues. Dubbed one of the world’s fastest-growing industries at 15 percent annually, Islamic finance is currently estimated to be worth more than 300 billion dollars with more than 200 Islamic finance institutions operating. Hundreds of conventional banks and investment companies, some Western, have established special units to deal in products compliant with the Islamic laws of Sharia. The Islamic Bank of Britain (IBB) was launched on Wednesday as the first bank in Europe to specifically address the financial needs of Muslims, who number 1.8 million in Britain alone. Islamic Sharia law imposes a series of restrictions on banks, including a ban on charging interest for loans and prohibiting clients’ money from being invested in activities linked to alcohol, tobacco and pornography. To deal with the no-interest rule, Islamic financial institutions, with the help of religious scholars, have introduced several products based on the concept of profit-and-loss partnership. The notion of Sharia-approved finance first emerged in Egypt at the start of the 1960s, and was developed over the past three decades in the oil-rich Gulf Arab states. Speakers at the opening session raised a number of questions highlighting disputes and conflicting interpretations of Islamic law and methods of its application to financing. «Fatwas (religious edicts) vary by time, place and circumstances,» said Mahmoud el-Gamal, an economics professor at Rice University, Texas, who was recently appointed by the US Treasury Department as its first scholar-in-residence on Islamic finance. «Jurists must start to think dynamically and not statistically,» said Gamal, asking, «Do we have Islamic finance or Islamized conventional finance?» and hinting that the gap was narrowing. But Imran Usmani from Pakistan’s Center for Islamic Economy stressed the distinct difference between conventional banking and Islamic finance, insisting that the process of earning should be compliant with Sharia law. Organized by the Dubai-based Institute for International Research (IIR) in association with Dow Jones Indices, the forum is held twice a year in Dubai and Istanbul respectively.