Kuwait has potentials to become hub of Islamic finance: Expert
BRUSSELS: There is currently a tremendous opportunity for Kuwait to profile itself as a hub for Islamic finance and Islamic banking, according to a prominent expert. Professor Laurent Marliere, head of ISFIN, the world’s leading advisory for the Islamic Markets, said that Kuwait has “a wonderful card to play” and that the Global Conference organized by Central Bank of Kuwait on November 11 in Kuwait can define the guidelines towards this goal. “With the new vision of the Central Bank, Kuwait could take a challengers position in the region and benefit from the numerous advantages of the country to pioneer new ways of conceiving Islamic finance. It comes at an appropriate time as Islamic finance itself is being challenged to redefine its model, not to mimic conventional finance,” he told the Kuwait News Agency (KUNA) in an interview.
“There are great expectations around the globe concerning Islamic finance and Islamic banking, which is discipline that does not belong to the Muslims exclusively but has turned into a global phenomenon. The participation of the IMF is a strong sign of the value of the event,” said the Belgian expert on global economics and finance.
He said that historically “Kuwait is actually a pioneer in Islamic banking, “noting that Islamic banking institutions in Kuwait are regulated by the Central Bank of Kuwait, established in 1968 under the Central Bank of Kuwait Law (CBK).
CBK Law provides for the Islamic banking regulatory and supervisory framework and sets the requirement for the Shariah Governance framework. “This means that the legal framework is ready to enhance banking activities including the ones recognized by customary practices and the Shariah law compliance. The country’s Islamic banking industry is set to embark on the market without being hindered by substantial legislative formalities. A lot of time can be gained using pre-existing legislation,” explained Marliere.
He said that the real challenge is to tap into the Islamic Economy and the Halal industry. “Islamic Finance is just one chapter of the Islamic Economy which should act as support to the full-fledged economy. After the 2008 recession, people are aware that growth is not a one-way street and the shrinking oil prices are a second reminder,” he said.
“After the first Blessing of Oil, Kuwait could find in Islamic Finance and the Islamic Economy a second blessing. With oil prices going down, it is the moment to invest carefully its sovereign and corporate resources into the right markets and seize the opportunity. It takes vision and power to achieve this,” opined the expert on Islamic markets.
He noted that “Islamic Finance in Kuwait relies heavily on the domestic retail sector, saving and consumer lending market in the country. That is not going to be enough. Islamic Finance industry in Kuwait needs to target and work outside Kuwait.
He said that “unfortunately most of the Islamic Banks and finance companies focus entirely on the local market. If this sector wants to grow they have to compete in global markets. But, more companies are now coming into the Kuwaiti market targeting the same retail segment,” said the Belgian academic. “It is clear that the Islamic Finance sector is not growing as much as we had expected. On a global level, the Islamic Finance sector is growing, but the size of the sector is very small,” he added.
Brussels-based ISFIN is considered as the world’s leading platform of advisory firms specializing in Islamic Finance, investments from and to the Muslim world and the Halal industry. The alliance covers more than 60 jurisdictions around the world.