East-West cooperation in Islamic Finance
LFF was on a road show this week in Asia. During the course of a financial seminar in Kuala Lumpur, Marc Theisen interviewed Dr Mohn Daud Bakar, President and CEO of Amanie Islamic Finance Learning Centre, Dubai, and Amanie Business Solutions.
Dr Bakar, why did you choose Luxembourg as your platform in Europe?
Luxembourg is the second largest investment fund market in the world and it is the place where people go to domicile their fund. It is important to be close to clients and to the largest players. I have been coming to Luxembourg every six months for the past five years. The Government is very proactive, which sends out a strong signal.
You can also take advantage of a vast network of lawyers and bankers; however, shariah compliant knowledge is missing, which our company can offer. Luxembourg is more central than London. Many of our clients are very satisfied with the EU passport features. We are also discussing the possibility of establishing a corporate company in Luxembourg.
What is your outlook for Islamic investments and what role could Luxembourg play to develop this market?
We have seen reputable families moving away from offshore centres and Luxembourg is often their top choice. Indeed, people prefer a better regulated and a more tangible place. Luxembourg has proven to be an excellent fund domicile. An equity and sukuk fund managed by Amanie will be domiciled in Luxembourg.
The Luxembourg Government is still hesitating in issuing a sovereign sukuk. Could Luxembourg be a first mover?
If the Government wants to issue a sukuk it needs some advice. Somebody has to coordinate the orchestra. Investors need a clear signal from the Government about the taxation implications of subscribing to a sukuk issued out of Luxembourg.
Luxembourg has companies that are well placed to issue sukuk funds because they have strong asset classes and good cooperation with Malaysia.
How do you rate Luxembourg as a sukuk listing centre?
Luxembourg has about 16 sukuk but London has more than 40. London has a strong domestic market. So we have to create a more active market in Luxembourg including trading sukuk out of Luxembourg.
How can Malaysia and Luxembourg boost the Islamic finance market?
Malaysia can benefit from UCITS regulation. Malaysian companies can either set up a fund in Luxembourg or they can set up ETFs over here that are linked to UCITS domiciled in Luxembourg. But in order to create an ETF platform the Government of Malaysia must put the infrastructure in place in terms of currency trading so that people can have the right exposure to Luxembourg and the European market. Malaysia can become a UCITS hub for this part of the world. In this global market we have to work together.
What is your opinion with regard to market education and training in Islamic finance?
It takes 3-4 years to get the necessary experience. A more focused education is needed for specific issues, such as a University in Islamic Finance or a recognised profession like that of chartered accountants. ES