KUALA LUMPUR: China is the next big Islamic finance market, as demand grows for ethical funds, but Asia’s fastest growing economy must first sort out tax issues, a unit of British insurer Prudential said yesterday.
A large Muslim population and growing wealth provide a ready retail Islamic banking market in China, a senior executive of Prudential’s Kuala Lumpur-based fund management unit said.
The US$1 trillion Islamic finance industry is targeting rapidly growing Asian economies such as China and India and new markets like Kazakhstan and Sri Lanka to offset slowing growth in its traditional base of Gulf Arab states.
Islamic banks are touting wheat-based deposit products and metal-based funds as ethical investments to appeal to investors burnt by the recent conventional banking crisis.
Islamic banking is also marketed as socially responsible investing in non-Muslim countries such as France and India to avoid fanning religious sensitivities.
“China is like Indonesia, a sleeping giant,” said Zulkifli Ishak, syariah investment director with Prudential Fund Management Bhd, which manages about US$4.03bil. Kuala Lumpur is Prudential’s Islamic finance hub.
“If Islamic finance can tap Muslims, especially in Xinjiang, then there will be a huge potential for the Islamic space in China,” he said in an interview.
China has a Muslim population of about 37 million.
Non-Muslims made up more than half the investors of most of Prudential’s Islamic retail funds in Malaysia, Zulkifli said.
Prudential’s RM42mil China equity fund rose 46% in the half year to Aug 31, about the same as some conventional China equity funds run by ING and OSKUOB, he said.
But China had to amend its tax laws which now made Islamic financial transactions costlier than conventional deals, Zulkifli said.
“Regulators in China need to look at the taxation issue,” he said. “Once they do that, then the opportunity for Islamic finance to grow in China would be much greater.” — Reuters
Source: http://thestar.com.my/
No comments:
Post a Comment