Bermuda pushes for a share of booming Islamic finance market
Thousands of miles away and eight hours ahead, representatives from Bermuda are making a big push for a slice of a world financial market worth an estimated $1 trillion.
At the 18th World Islamic Banking Conference held in Bahrain this week, Business Bermuda and an entourage of Bermuda advisers held court with the world’s Islamic financial industry leaders to show the Island is open for their business and can handle Shariah-compliant financial structures.
Shariah law is the moral and religious code of Islam, within which financial industries in those markets must operate. It’s an emerging market that is being wooed by offshore jurisdictions all over the world.
Global Islamic banking assets with commercial banks will hit $1.1 trillion in 2012, a jump of 33 percent from their 2010 level of $826 billion, according to Ernst & Young’s inaugural World Islamic Banking Competitiveness Report 2011.
Belaid Jheengoor, director of asset management for PricewaterhouseCoopers in Bermuda and chairman of Bermuda’s Islamic finance task force who is representing the Island at the conference, believes there is more growth to be seen.
“Global Islamic finance is fairly new, only having been in existence for the last 25 years and the market currently stands at about $1 trillion,” he said. “Numerous studies by global industry leaders say that this $1 trillion, within the next three to five years, could grow to be anything north of $3 to $6 trillion.
“Even a small share would have a significant impact on our economy in terms of job creation and enhancing our international business sector.”
It is Business Bermuda’s first time at the conference, which gathers industry leaders from more than 50 countries to discuss the current status and future of global Islamic finance.
Cheryl Packwood, chief executive officer of Business Bermuda and Mr Jheengoor are taking part in two panel discussions today at the conference and have hosted a VIP reception with dignitaries and key figures in the Bahraini financial services sector.
“We have a strong relationship with Bahrain and recognise its pre-eminence as the Middle East’s Islamic Finance centre,” said Ms Packwood, who is fresh off a visit to South Africa where she met with the director of capital markets at their National Treasury.
“Bermuda is a growing centre in the West for Islamic Finance and there is a great deal to be gained from a closer working relationship with colleagues in Bahrain.”
Mr Jheengoor also took part in two pre-conference panel discussions and will today sit alongside Ms Packwood in a session that will review needed improvements to the current regulatory frameworks and assess new international regulatory developments.
Mr Jheengoor will also represent Bermuda with Fawaz Elmalki, director at Conyers Dill & Pearman at a Country Focus Roundtable that will explore new international high-growth markets, such as Bermuda, for Islamic finance.
“In our two pre-conference panels we spoke about Bermuda as a choice domicile for sukuk [Islamic equivalent of bonds] issuances,” he explained. “[During the conference] we are speaking from the offshore perspective, what they should be looking for in a regulatory environment in an offshore jurisdiction.”
Speaking to The Royal Gazette from Bahrain, Mr Jheengoor said the scope, exposure and high-profile nature of the conference will serve Bermuda well.
“This is by far the largest Islamic financial conference in the world and has delegates here as far as Asia, Canada, London and Africa,” he said, adding that the group has been meeting with potential investors, institutions and government representatives. “It is critical for Business Bermuda to be here on behalf of the Island.”
Bermuda’s major competitors are all attending the conference with Mr Jheengoor calling it “critical for Bermuda to be seen” among them “supporting the growing Islamic finance industry”.
“It’s been very promising for Bermuda to emerge as a stable jurisdiction for the offshore structuring of Islamic financial products,” he said. “Bermuda’s robust regulatory framework which is based on common law principles offers the flexibility to accommodate Islamic finance structures. Bermuda’s tax neutrality offers not only effective tax structuring but also speed to marketing for innovative and complex Islamic financial products.”
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