This week Ireland became the second EU nation to seek a financial rescue package in an attempt to avoid a repeat of the recent Greek debt crisis that destabilized the euro. Even as signs showed that adversity was imminent, certain quarters of the republic pressed on in their pursuit of Islamic finance as a plausible means for salvation.
Last month the Irish Revenue published its report on tax treatments of Islamic financial transactions. PricewaterhouseCoopers Ireland gave a positive review on the republic’s status as being amenable to Islamic finance. The report by PwC Ireland also lists the benefits and potential of Ireland particularly as a European leader of Sukuk issuance and a genuine player in the choice of special purpose vehicle domicile.
It may well be that the UK, amid fervent protests, will fork out billions of sterling to help the Irish situation. The UK has always been an attractive location for foreign conventional and non-conventional or Shariah compliant investors to invest in opportunities across all sectors including real estate. The report by PwC London looks at cross border financing in the UK, and details a typical financing structure in the context of UK real estate investments by non-UK resident investors.
When it comes to cross border financing, the Dutch foundation, stichting, provides a well suited solution for facilitating Islamic finance transactions as a trustee or Wakeel. According to the report on the Netherlands by law firm Loyens & Loeff, a stichting is very quick to set up with marginal compliance costs.
France’s fitful relationship with Islamic finance can be traced to a real fear of both radical Islam and assertive secularism, according to Altran Financial Services. Their report also says regardless of the French government’s recent initiatives and breakthroughs, a primary impediment to the development of Islamic finance in France is the absence of internationally recognized Islamic finance Shariah scholars in the French-speaking world.
Another country that may have the same language impediment is Korea, where there is not a high level of understanding between Korea and the Islamic finance community. Law firm Lee & Ko states in their report that a substantial amount of time and effort is required before any large scale Islamic investments will take place in the country. They attribute this to lackluster efforts in attracting overseas investors, and not providing targeted Middle East investors with enough information on Korea.
Shari’ahsim is an economic system that evolves based on fatwas accumulated over the years, stipulating guidelines and rules derived from sources of Shariah. Investment banking firm Rusmal Partners proposes this concept as an ideal way to unify, consolidate and differentiate the Islamic financial system from other economic systems.
The Islamic Development Bank’s Trust Service’s US$500 million trust certificates pursuant to the US$3.5 billion trust certificate issuance program is featured in the Termsheet.
Our Meet the Head this week features Haissam Arabi, CEO and fund manager of Gulfmena Alternative Investments who talks of a new standalone, one-stop Shariah compliant asset management company.