Kuwait Islamic banking institutions urged to bolster ties with Japan

Kuwaiti Ambassador to Japan Ghassan Al-Zawawi yesterday spoke highly of Japan's strong interest in Islamic finance stems from various Japanese institutions, while urging Kuwaiti Islamic banking industry to build cooperative ties with Japanese players."I am not much impressed with the level of attendees from the Middle Eastern countries participating in Japan's first major seminar on Islamic finance, particularly Kuwait, a market leader in this industry," Al-Zawawi told Kuwait News Agency.Al-Zawawi made remarks after the two-day international forum, which drew about 300 delegates including policymakers, banking regulators, commercial bankers, investors, economists, researchers as well as Islamic banking practitioners from the Middle East and Asia."I was expecting to see better participation from Kuwaiti financial institutions to take this opportunities gaining leverage on the world's second largest economy," Kuwaiti ambassador emphasized the importance of realising that the Japanese side is keen to entering Islamic finance industry.Japan's first full-fledged seminar on Islamic finance is aimed at facilitating further understanding of the global Islamic banking industry among local financial community, according to the Islamic Financial Services Board (IFSB), co-organiser of the event.It is the first such seminar organised by the IFSB in G8 major countries-Japan, US, Britain, Canada, France, Germany, Italy and Russia. Japan will be the first state among G8 to issue Islamic bond known as Sukuk later this year. Established by Muslim nations, IFSB's membership includes Kuwait Finance House (KFH), Boubyan Bank and nine other Kuwaiti financial institutions.With half of the world's Muslim population living in the Asia-Pacific region, the Japanese Islamic banking market has the potential for long-term growth. Boasting the Asia's biggest bourse and foreign exchange trading centre, for Japan, this is an opportunity to attract funds from oil-producing countries, which have ballooned to some USD 2 trillion.Mohammed Saleem, Treasurer of Kuwait Investment Authority (KIA) told Kuna that he is attending the seminar in order to "give confidence" to Japanese financial institutions by sending a strong message that the Kuwaiti government is supporting this event, which Al-Zawawi took an initiative to realise. "KIA also wants to explore business opportunities here and to share ideas and experiences with Japanese attendees how to convince more institutions to join Islamic banking industry," he added.Asked whether KIA has an interest in issuing Sukuk by Japanese lenders, Saleem did not rule out the possibility. "If it meets KIA's guidelines and policy, we will be happy to be involved in".According to Takeshi Maeda, Director General of the government-backed Japan Bank for International Cooperation (JBIC), JBIC plans to structure Shariah compliant financial products in Asian market with a view to intriguing the petro-dollars to strategic projects and infra structure building in Asia. JBIC set up last May a joint panel with three major Japanese commercial banks, including Bank of Tokyo-Mitsubishi UFJ, the world's biggest bank, to study Islamic financial practices. Wholly funded by the government, JBIC also plans to issue up to $500 million worth of Sukuk in Malaysia later this year, becoming the first Japanese lender to issue bonds managed by rules in accordance with the Quran's teachings.Islamic financing is based on Shari'ah, or Islamic law, which prohibits charging or paying interest. Instead, there are schemes for partnerships in trade in goods and services, direct investment and renting as well as profit sharing. Shari'ah also bans financing businesses related to alcohol, pork, gambling and weapons.With its assets worth more than $300 billion and annual growth exceeding 15 percent, Islamic financial service industry promises great potential, according to the IFSB. - Kuna