1.Fast and Steady Growth
The Islamic financing
industry is growing 50 per cent faster than conventional banking. As of 2011,
the global asset value of the Islamic finance industry is estimated to be at
US$1 trillion. The figure is expected to reach US$5 trillion over the next five
years. Indeed, there is no stopping the fast growth of Islamic banking with
Islamic banks setting up shop in countries under the Gulf Cooperation Council
(GCC), Malaysia, the UK, and even in Africa along with many other regions.
2.Green Financing Platform
Islamic finance offers the
ideal platform to boost ‘green financing’ and promote SRI (social
responsibility investment). As syariah rules prohibit participation in
businesses involving alcohol, pork, and gambling, Islamic banks only support
businesses that adhere to ethical and moral nature values when it comes to
investments.
3.Syariah-Compliant Products
Demand for
syariah-compliant products continues to rise alongside a growing Muslim
population. Muslims predicted to account for more than 25 per cent of the world
population in 2013, growing twice as fast as the world’s non-Muslim population.
Islamic banks address this group’s need and natural inclination to prefer
syariah-compliant financial products.
4.Attracts Even Non-Muslim
investors
Even non-Muslim investors
see the potential for profit in Islamic banking. Islamic financial products, as
a rule, carry lower risk investments while enabling them to earn a profit
and—at the same time—diversify their portfolio to further reduce risk.
5.Global Indexing
Western investors can track
the Islamic financing industry through international rating systems. When
purchasing sukuk or Islamic bonds, they can easily assess the strengths,
weaknesses, and risk of the bonds by simply referring to benchmarks that track
the financial industry.
6.Oil-Wealthy GCC Adopting
Islamic Finance
Countries belonging to the
GCC want Syariah-compliant products for investment.
Those belonging to this
group are some of the wealthiest countries in the world. As the economies of
Europe and the US struggle to stabilise, GCC nations are well-funded and their
needs well met by Islamic banks.
7.Streamlined and Simpler
Islamic financial products,
though they might also come with their own set of complex rules, are far
simpler to understand than their conventional counterparts. For one, they are
stricter with contracts and as focused. Islamic financial institutions also
have scholars that offer consumers guidance with every venture and proceeding.
They follow strict principles that ensure every single transaction is carried
out according to Syariah law.
8.‘No Crisis’ Zone
Islamic financing saw a 25
per cent increase in value of assets from 2007 to 2008, while most of the
world’s economies battled the worst financial crisis. It is, thus, safe to say
that investing in Islamic financing is a possible way to avert potential crises
in the world economy.
9.Shared Responsibility
It is not against Islamic
laws to accumulate wealth but all investors need to exercise awareness and
shared responsibility for poverty in the world. Through the concept of zakat,
or giving a portion of wealth to charity, Islamic finance aims to reduce
economic disparity across the globe.
10.Thoughtful Decision-Making
Islamic investors avoid
choices that cause harm to people and the environment. Through a thoughtful
decision-making process, investors are able to make socially responsible
choices that encourage investments that are good for the long-term.
11.Malaysia Catching Up
Malaysia’s Islamic assets
reached US$65 billion in the financial year 2012/ 2013, reports the Ministry of
Finance. National Islamic banking assets registered an average growth rate of
18 per cent to 20 per cent annually to reach US$ 65.6 billion. The government
just invested in the development of human resources for the Islamic financing
industry so as to ensure it catches up to the industry’s phenomenal growth.
(Borneo
Post Online / 29 Dec 2013)
---Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com
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