CIMB Islamic bank of Malaysia, the world’s top sukuk arranger, will offer new sharia products this year to expand its business in Indonesia and Singapore, as the Islamic finance market struggles to recover from the financial crisis.

The bank plans to launch products such as Islamic auto financing, structured instruments, derivatives and unit trusts to tap demand in Indonesia, the world’s most populous Muslim nation.

Indonesia’s nascent Islamic finance market now typically consists of home financing, basic deposits and credit and debit cards.

Global sukuk sales totalled $23.3 billion last year, compared with a record $34.3 billion in 2007, according to Standard & Poor’s.

Bankers have blamed the drop on the financial crisis and a ruling from influential Shariah scholar Mufti Taqi Usmani questioning the validity of certain popular structures.

Practitioners expect Dubai’s debt crisis to weigh on the Gulf region, a key sukuk market, this year.

Indonesia’s central bank has forecast that Islamic banking assets will grow 30 percent this year but remain at about 2-3 percent of total banking assets.

A law will take effect in April granting preferential tax treatment for Islamic financial transactions in Indonesia (similar to similar pending laws in Ireland and the UK), but some bankers warn sukuk issuance will be slow due to shariah interpretation issues and a lack of familiarity with Islamic banking.

Singapore has also taken regulatory and tax measures to develop a Shariah finance market but growth has been slow, due partly to its much smaller Muslim population, bankers have said. The fact that the financial jihadists have targeted Singapore, with its small Muslim population, is illustrative of the fact that Shariah finance is in fact a form of missionary work in Islam, designed to promote Shariah and Islam to the non-Muslim world, something which should be resisted and not embraced by non-Muslims and freedom-loving Muslims alike.

The top executive of Singapore-based Islamic Bank of Asia, a unit of Southeast Asia’s largest bank DBS Group, quit last December.

The Singapore operations of Kuwait Finance House, which was set up as a fund management centre, said last month it had not managed any funds since its inception and that it had cut its workforce.

The fact that CIMB has also announced that it will develop derivatives products which are Shariah-compliant should also be noted, since the financial jihadists consider them “unethical” and largely responsible for the financial crisis which the financial jihadists incorrectly claim (over and over) left Shariah Finance virtually unscathed.

http://in.reuters.com/article/businessNews/idINIndia-46023020100209?rpc=401&feedType=RSS&feedName=businessNews&rpc=401&sp=true

 

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