ISLAMIC BANKING ARRIVES IN CHINA

In a bid to further benefit from the Islamic finance system, two leading Qatari banks and Chinese brokerage Southwest Securities signed a memorandum of understanding on Tuesday to foster Islamic finance deals in China. (Photo: On Islam)

Taipei, 28 Jumadil Akhir 1436/17 April 2015 (MINA) – In a bid to further benefit from the Islamic finance system, two leading Qatari banks and Chinese brokerage Southwest Securities signed a memorandum of understanding on Tuesday to foster Islamic finance deals in China.

“We want to help China set up a framework for Islamic finance or direct investment,” Abdulbasit Ahmad Al Shaibei, QIIB’s chief executive, told reporters. “We also want to encourage Qatari banks to have a presence in China, “ On Islam quoted by Mi’raj Islamic News Agency (MINA) as reporting.

“What we saw from the Chinese side is that there is demand for Islamic finance, and the Chinese are looking for ways to export Islamic finance beyond their borders, as well to countries in their region with large populations of Muslims.” Mr. Al Shaibei remarked.

With the growth in Chinese economy, it is apparent that millions of people are in need to deal in Islamic banking and finance. Unfortunately, the system lacks enough facility to face this challenge in China.

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The new company will help the two banks, Qatar National Bank and Qatar International Islamic Bank (QIIB), access China’s markets for financing and investment, directly or indirectly, Qatari executives said.

It will also aim to develop Islamic finance in China and support Southwest Securities in accessing markets in Qatar and the Middle East, they said. Details of the size of the company and when it would start operating were not disclosed.

He added, “What we saw from the Chinese side is that there is demand for Islamic finance, and the Chinese are looking for ways to export Islamic finance beyond their borders, as well to countries in their region with large populations of Muslims.”

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China’s AVIC Capital Co revealed in late December that its unit AVIC Securities had signed an agreement to advise the government of the country’s Ningxia Hui Autonomous Region, which has a large population of Muslims, on the global issue of up to $1.5 billion worth of instruments such as Islamic bonds and US dollar bonds, with maturities of up to five years.

But the deal has not been actualised since then, and no concrete development towards the issue has been announced.

Islam, the second largest religion in China, has a very long history in the western Asian country.

According to official data, China has 20 million Muslims, most of them are concentrated in Xinjiang, Ningxia, Gansu, and Qinghai regions and provinces.

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Unofficially, Muslim groups say the number is even higher, stating that there are from 65-100 million Muslims in China — up to 7.5 percent of the population.

Islam forbids Muslims from 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.

Islamic banks have proved a success because of rules that forbid investing in collateralized debt obligations and other toxic assets that cause financial crises.

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. (T/P006/P3)

Mi’raj Islamic News Agency (MINA)