Islamic Banking

SINGAPORE : Some of the top bankers from the Gulf are in Singapore to encourage Asian countries to take advantage of the growth in Islamic banking.

Arab bankers want to tap into Asia’s experience. A special Arab Asia Financial Forum was held on the sidelines of the IMF/World Bank meetings.

Unlike conventional banking, Islamic law prevents the collection of interest payments or trading in financial risk, which is seen as gambling.

And it is big.

According to the Union of Arab Banks, there are some 470 Arab banks managing assets worth more than US$1 trillion, US$632 billion of which are deposit-based.

While growth in this sector is healthy in the Gulf states, banks there are looking to expand beyond the Arab world and Asia is one destination.

Dr Joseph Torbey, President of the Union of Arab Banks, said: "Also let me take the opportunity to express the Union of Arab Banks’ willingness to further cooperate in the future with international organisations to enhance the cooperation between Asian and other organisations, and contribute effectively and increasing the volume of economic exchanges between Asian countries and the Arab world."

Resource-rich states like Qatar are looking beyond just refining crude oil in Singapore.

Mr R. Seetharaman, Deputy Chief Executive of Doha Bank, said: "We need professional intermediaries, knowledge-based by collaboration. Also, billions of dollars have been going on capital expenditure for infrastructure creation as well as industry expansion from Qatar. Singapore banks can participate in the project financing opportunities."

But the synergies, knowledge transfer, and investments cannot flow if challenges are not tackled.

Islamic bankers say upgrading Islamic banking to international standards is one key factor in making the sector flourish.

Dr Torbey said: "Today some Arab markets specifically Bahrain, Qatar, Saudi Arabia, and UAE, are in the process of building comprehensive financial hubs to attract most Arab and international capital as well as international financial and banking institutions."

Mr Seetharaman added: "Singapore has been the third largest partner for Qatar. You look at its objective. Qatar is a huge reserve of oil and gas, and you have a refinery here. Singapore is in between Japan and Qatar, the largest trading partner for Qatar is Japan.

"As a financial centre, it can add value. We need Islamic finance, we need professional intermediaries knowledge-based by collaboration. Also billions of dollars have been going on capital expenditure for infrastructure creation, as well as industry expansion from Qatar. Singapore banks can participate in the project financing opportunities." - CNA/de

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