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eChapter
The Islamic Finance
Handbook contains
a country-by-country
breakdown of the state of
modern Islamic finance,
detailing the information
professionals need to
effectively do business
in these jurisdictions.
Presented in a way that
allows quick identification
and location of topics of
interest, each country
report is organized
into well- structured
subsections that facilitate
easy comparison of factors
between countries. 978-1-118-81441-3 | Cloth | 592 pages

Written by leading experts in the field, the book provides

an overview of the sector as well as insights into the
unique mechanisms that contribute to the growth and
function of the Islamic finance industry, including current
macro- and micro-economic conditions, regulations,
and politics.

Available wherever books and ebooks are sold

www.wiley.com/buy/9781118814413

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Extracted from The Islamic Finance Handbook published in 2014 by John Wiley
& Sons Singapore Pte. Ltd., 1 Fusionopolis Walk, #07-01, Solaris South Tower,
Singapore 138628. All rights reserved.

Copyright 2014 by John Wiley and Sons Singapore Pte. Ltd.

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any
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Requests for permission should be addressed to the Publisher, John Wiley & Sons Singapore Pte
Ltd., 1 Fusionopolis Walk, #07-01, Solaris South Tower, Singapore 138628, tel: 65-6643-8000, fax: 65-
6643- 8008, email: enquiry@wiley.com
 Contents

Foreword ix
Preface xiii

Introduction 1
Daud Vicary Abdullah, President and Chief Executive Ofcer,
INCEIFThe Global University of Islamic Finance
Mohd-Pisal Zainal, Director of Research and Publication,
INCEIFThe Global University of Islamic Finance

CHAPTER 1 Australia 11
Michael T. Skully, Professor of Banking, Department of Banking
and Finance, Monash University

CHAPTER 2 Bahrain 23
Hatim El-Tahir, Director, Islamic Finance Group, Deloitte & Touche
(Middle East)

CHAPTER 3 Bangladesh 43
Mohammad Abdul Mannan, Managing Director and Chief Executive Ofcer,
Islami Bank Bangladesh Limited

CHAPTER 4 Brunei 59
Muhd Jamil Abas bin Abdul Ali, Legal Advisor, Abrahams, Davidson & Co.
Tan Thiam Swee, Partner, Abrahams, Davidson & Co.
Lee Yun Chin, Partner, Lee & Raman

CHAPTER 5 Canada 77
Jeffrey Graham, Partner, Borden Ladner Gervais LLP

CHAPTER 6 China 93
Wang Yongbao Ahmed Musa, Associate Professor, Xian International
Studies University

CHAPTER 7 Egypt 119

Walid S. Hegazy, Managing Partner, Hegazy & Associates in association with
Crowell & Moring
Hussein M. Azmy, Associate, Hegazy & Associates in association with
Crowell & Moring

v
vi CONTENTS

CHAPTER 8 Hong Kong 129

Anthony Chan, Chief Executive Ofcer, New Line Capital Investment, Ltd.
Jess Lee, Legal and Project Development Manager, New Line Capital
Investment, Ltd.

CHAPTER 9 India 141

H. Jayesh, Founder and Partner, Juris Corp

CHAPTER 10 Indonesia 155

Rifki Ismal, Assistant Director, Islamic Banking, Bank Indonesia

CHAPTER 11 Iran 175

Farhad Nili, Director, Monetary and Banking Research Institute,
Central Bank of Iran

CHAPTER 12 Japan 213

Etsuaki Yoshida, Adjunct Research Fellow, Center for Finance Research and
Waseda Graduate School of Finance, Accounting and Law,
Waseda University

CHAPTER 13 Jordan 227

Khawla Al Nobani, Specialist in Islamic Financial Advisory Services

CHAPTER 14 Kazakhstan 239

Yerlan Alimzhanuly Baidaulet, Member of Executive Directors Board,
Islamic Development Bank Group

CHAPTER 15 Kenya 251

Rahma Hersi, Director and Founder, Awal Consulting Limited

CHAPTER 16 Kuwait 261

Issam Al Tawari, Chairman and Managing Director, Rasameel Structured
Finance Company

CHAPTER 17 Luxembourg 287

Bishr Shiblaq, Head, Dubai Representative Ofce, Arendt & Medernach
Florence Stainier, Partner, Arendt & Medernach

CHAPTER 18 Malaysia 303

Wan Abdul Rahim Kamil, Consultant, Islamic Capital Market, Securities
Commission Malaysia

CHAPTER 19 Maldives 337

Aishath Muneeza, Deputy Minister, Ministry of Islamic Affairs, Maldives
Contents vii

CHAPTER 20 Nigeria 355

Auwalu Ado, Internal Shariah Auditor, Jaiz Bank

CHAPTER 21 Oman 369

Azmat Raque, Head, Islamic Banking, Al Yusr Arab Bank

CHAPTER 22 Pakistan 385

Mohammad Shoaib, CFA, Chief Executive, Al Meezan Investment
Management Limited

CHAPTER 23 Qatar 413

Steve Troop, Advisor to the Chairman and Board of Directors,
Barwa Bank

CHAPTER 24 Saudi Arabia 421

Nabil Issa, Partner, King & Spalding
James Stull, Senior Associate, King & Spalding

CHAPTER 25 Singapore 433

Lee Ka Sing, Head, Debt Capital Markets, Maybank Kim Eng Securities
Pte. Ltd.
Ian Yeo Tian Chiang, Senior Associate, Debt Capital Markets,
Maybank Kim Eng Securities Pte. Ltd.

CHAPTER 26 South Africa 443

Amman Muhammad, Chief Executive Ofcer, Islamic Banking Division,
First National Bank

CHAPTER 27 Sri Lanka 461

Reyaz Mihular, Managing Partner, KPMG

CHAPTER 28 Tanzania 477

Uwaiz Jassat, Acting Head, Absa Islamic Banking, and Head, Absa Takaful

CHAPTER 29 Thailand 485

S. M. Aamir Shamim, Senior Vice President and IB Specialist,
Treasury and Investment Group, Islamic Bank of Thailand

CHAPTER 30 Turkey 505

Eser Sagar, Expert, Capital Markets Board of Turkey
Atila Yanpar, Expert, Capital Markets Board of Turkey
viii CONTENTS

CHAPTER 31 United Arab Emirates 521

Shaikh Dr. Hussain Hamed Hassan, Chairman, Sharia Board, Dubai Islamic
Bank, Managing Director, Dar Al Sharia Legal & Financial Consultancy

CHAPTER 32 United Kingdom 533

Fara Mohammad, Legal Consultant

CHAPTER 33 United States 547

Andrew M. Metcalf, Partner, Middle East and Islamic Finance Practice Group,
King & Spalding
Isam Salah, Senior Partner and Global Head, Middle East and Islamic
Finance Practice Group, King & Spalding

About the Editors 559

List of Contributors 561

Index 563
 Foreword

F our decades ago, it was a strange thought, but now it has emerged as a wonderful
reality. I am referring to Islamic nance.
Indeed, it is a newly born but very fast growing industry in comparison to its
counterparts. Islamic banking does not have a history spread over centuries, but its
core principles were entrenched in seventh century AD. In fact, its roots are as deep as
the roots of humankind itself, because Islamic banking is based on divine values
the values of justice and fairness that the God Almighty has ordained no sooner than
he created man.
Islamic nance has become a vital and growing reality and is based on divine
guidance, which has no room for injustice, discrimination, nontransparency, and
greed among human beings; it is fully in synch with the laws of nature.
The journey of Islamic nance is quite fascinating, and is indeed very benecial as
it is about applying a viable alternative to the conventional banking and nance
industry, which is fast losing trust due to successive crises that are forcing people to
write off their lending to conventional nancial institutions.
Throughout this book, you will see the shining present and promising future of
Islamic nance all over the world. Although there are regulatory issues (which were
raised by some of the authors), political and economic challenges (as also highlighted
by the respected authors), and lack of awareness and misconceptions by the general
public, the future is bright and the opportunities outweigh the challenges as gathered
by almost all of the authors.
On one hand, Michael T. Skully discusses in detail the potential of the Islamic
nance industry in Australia, which has the fourth-largest fund management industry
in the world and has recently started to offer Islamic products. On the other hand,
Hatim El-Tahir presents Bahrain as a global leader in the cross-border international
sukuk market.
With regard to Bangladesh, a Muslim-dominated country, Abdul Mannan
establishes that the Islamic nance industry is experiencing faster growth than its
conventional counterpart. He concludes that sukuk may constitute a strong and
sustained capital market instrument for quickly transforming Bangladesh into a
middle-income country.
A write-up on Brunei explores a few areas in which Islamic nancial instruments
can work efciently; the authors of that chapter see a fresh impetus to rekindle the
spirit of Islamic nance in the Abode of Peace.
Wang Yongbao Ahmed Musa describes the efforts made to introduce Islamic
nance industry in China, and Jeffrey Graham establishes Islamic nance as one of the
most rapidly growing segments in Canada, with Toronto possibly emerging as a
North American center for Islamic nance.
Egypt had experienced some primitive form of Islamic banking in mid-1960s, but
due to political reasons it did not continue, and Hegazy and Azmy discuss in detail the

ix
x FOREWORD

reasons behind such deadlock and conclude that the challenges in Egypt are not
insurmountable.
The chapter on Hong Kong by Anthony Chan and Jee Lee suggests that
participants in the Islamic nance market not overlook role of Hong Kong as being
an excellent nancial infrastructure and gateway to mainland China.
In India, the situation is different, as the potential for the industry to grow is
immense and the existence of Shariah-based funds is very limited. Jayesh explores
many positive factors for the growth of Islamic nance in India. I personally believe
India will be the next big place for Islamic nance, although it may not be called
as such.
In Indonesia, the Islamic banking industry is on a much higher growth trajectory
than that of the rest of the worlds Islamic banking industry, and Rifki Ismal discusses
in detail the current situation of Islamic banking in that country.
Farhad Nili opines that Iran has been a pioneer in both the theoretical and the
operational aspects of Islamic banking, but it has not been well introduced abroad due
to the lack of constructive interaction of the country with the worlds largest Muslim
population.
Etsuaki Yoshida presents a comprehensive picture of Islamic nance in Japan.
Islamic nance in Jordan started in 1978 with 2 million dinars, which has
increased to 125 million dinars. Khawla Al Nobani shares her analytical views
toward this growing market.
While discussing the Islamic nance situation in Kazakhstan, Yerlan Alimzhanuly
Baidaulet highlights the role of UAE as well as IDB Group in the empowerment of the
Islamic nance industry in that country.
In Kenya, Islamic nance is a relatively new concept, but the country is looking to
be the Islamic nancial hub of East Africa. Rahma Hersi discusses many practical
concerns, which must be given due consideration.
Issam Al Tawari expects that Islamic nance will remain strong in Kuwait, based
on the countrys economic fundamentals and the existing strength of Islamic banking
in the country. Kuwait is home to Kuwait Finance House, one of the rst Islamic banks
in the world.
The authors of the chapter on Luxembourg strongly hope that this leading and
highly diversied international nancial center will continue to be at the forefront of
the development of the still young Islamic nance industry.
In the chapter on Malaysia, Wan Abdul Rahim Kamil provides an analytical
overview of the 30-year track record of building a successful domestic Islamic nancial
industry. He recognizes the key role of the countrys regulators in instilling market
condence. Today, Malaysia is regarded as the most robust country in developing and
implementing the Islamic nance industrys regulations.
Aishath Muneeze concludes that the Islamic nance industry is expected to
ourish in the Maldives in the future and will exponentially increase.
Auwalu Ado highlights the great opportunity and potential that Nigeria has to
become the Islamic nance hub in Africa.
In Oman, where Islamic banking was introduced very recently, the healthy
growth of the industry is highly promising; Azmat Rique highlights a few unique
aspects of Islamic banking regulations in Oman.
Mohammad Shoaib discusses various regulatory issues and political and eco-
nomic threats to the Islamic nance industry in Pakistan and concludes that despite all
Foreword xi

of the challenges with such a huge Muslim population, Pakistan is undeniably a land
of untapped potential for Islamic nance.
As per Steve Troops analyses, Qatars growth rate for Islamic nance continues
to outstrip that of conventional nance. In fact, this is a trend I myself have observed in
most of the jurisdictions where Islamic nance is allowed to ourish.
Saudi Arabia has recently introduced a number of new regulations that opens
additional horizons for the growth of Islamic nance. This giant Arab country, which
is proud to be Islams birthplace, will soon show its true potential materialized.
The chapter on Singapore was fair to declare that Islamic nance will remain just
one of many options and not the main driver of growth of Singapores nancial sector.
The growth of the Islamic nance industry is visible in South Africa, and
according to Amman Muhammad, it is becoming a more accessible alternative for
minority Muslims.
In Sri Lanka, as described by Reyaz Mihular, the Islamic nance industry has seen
tremendous development, and increasing acceptance is evident in the small but
economically powerful Muslim population besides the majority Singhalese.
The opportunity for Islamic banking in Tanzania has yet to be realized, even
though it has a large Muslim population.
The Islamic nance industry in Thailand, as explained by Aamir Shamin, is
currently more focused on SMEs and micro SME nancing, but the intention and
potential are there to proceed.
The chapter on Turkey raises an interesting question on how easy it will be for
Turkey to be an Islamic nance center. The authors conclude that the country requires
a paradigm shift to create a better environment for Islamic nance, which is currently
strongly secular.
The chapter on the United Kingdom states an exciting fact that the Islamic
banking and nance system in that country operates in such a way that the market
players develop and expand their businesses globally while being based in London
true to that countrys reputation as being the worlds preferred nancial center.
The chapter on the United States discusses the regulatory issues faced by Islamic
nance, which is proving to be a hindrance toward the penetration of Islamic nance
in the United States.
The author of this Foreword tries to appreciate the role of Dubai and UAE as a
native land of Islamic banking, which is now preparing to take a global leadership role
in promoting Islamic economics and nance.

Shaikh Dr. Hussain Hamed Hassan,

Chairman, Sharia Board,
Dubai Islamic Bank,
Managing Director, Dar Al Sharia Legal &
Financial Consultancy
About REDmoney
REDmoney is a publishing and events
company focusing purely on the global
Islamic finance market. The company
was started in mid-2004 in Kuala Lumpur,
Malaysia, by Andrew Morgan and Andrew
Tebbutt, and initially rolled out two
products: Islamic finance training and
Islamic finance news. Since then, a range
of other products have been introduced
including conferences, print media, and
consulting.
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