continued... - Islamic Finance News

Islamic Finance news Guide 2008
Page 70
Why Sukuk Pioneer Still the Preferred Venue (continued...)
The Bahrain Stock Exchange was established in 1989 and is
recognized as the most open capital market in the Gulf region.
Meanwhile, the Economic Development Board of Bahrain
(EDB) is vital to the continued development of the fi nancial
sector, with an ongoing strategy for growth designed to
enhance its increasingly competitive business environment.
In May 2006, the EDB established Bahrain Financial Services
Development (BFSD), which provides a dedicated resource
for the kingdom’s fi nancial institutions. The remit of the BFSD
is to encourage foreign direct investment into the country
by identifying and targeting growth sectors including large
international and leading regional companies in the fi nancial
services sector which have yet to build a base in Bahrain.
Both organizations provide evidence of Bahrain’s strong
public/private partnership.
As well as boasting a thriving fi nancial services sector, a 30year
regulatory track record and standardized industry rules,
Bahrain also offers IFIs and related associations a large,
experienced and cost-effi cient domestic workforce, high
caliber raining and excellent communications links with other
Gulf states. The kingdom’s geographical location, centered
between the European and Asian markets and time zones,
provides a gateway to the region and proximity to growing
private wealth in Saudi Arabia. Planning for a new causeway
connection to Qatar is also underway.
Other benefi ts that make Bahrain an attractive destination
for Islamic fi nancial investment include its highly favorable
tax environment, with no corporate, personal, value-added or
withholding tax. The kingdom also boasts 100% foreign ownership
for most categories of business; a sustained low rate
of infl ation of under 2% a year; no restriction on repatriation
of capital, profi ts or dividends; a modern high standard of living
with a cosmopolitan family atmosphere; and a world-class
international airport and regional air traffi c hub.
Bahrain’s reputation as the world’s Islamic fi nancial capital
was cemented by signifi cant developments during 2007. Last
October, the Islamic Bank of Asia (IB Asia), a joint venture
between Singapore-based DBS Bank and 34 investors in
the GCC region, received a banking license from the CBB to
set up a representative offi ce in Bahrain. IB Asia chairman
Abdulla Hasan Saif endorsed the kingdom as the location of
choice for IFIs, explaining: “Bahrain is a renowned and wellregulated
epicenter of the US$1 trillion global Islamic fi nancial
industry.”
New entrants into the market during 2007 included Al Masraf,
which was set up in the kingdom with US$5 billion paid-up
capital, and Global Banking Corporation (GBCORP), which
www.islamicfi nancenews.com
opened as a wholesale Islamic investment bank with a paidup
capital of US$250 million and an authorized capital of
US$500 million.
Meanwhile, fi nancial institution innovation and sophistication
has developed in Bahrain’s Islamic fi nance market over the
last year from the combining of talents and capabilities. In
January 2007, Bahrain-based CIMB Kanoo Islamic Investment
Company BSC(C), a joint venture between CIMB Group and
The Kanoo Group, commenced business. The company
markets and distributes specialized Islamic investment
banking products and services to the Middle East, focusing
on debt and equity capital markets, corporate banking, asset
management and treasury services.
“Bahrain’s reputation as the
world’s Islamic fi nancial capital
was cemented by signifi cant
developments during 2007”
Cross-border expansion was another feature of the kingdom’s
IFI growth this year. Bahrain-based Al Baraka Group acquired
a license to operate a new subsidiary in Syria with a capital of
US$100 million, International Investment Bank bought a 49%
stake in Azerbaijan’s Amrahbank to convert it to an Islamic
bank, and Gulf International Bank (GIB) obtained a license
to establish a securities company in Saudi Arabia, which will
offer corporate fi nance advisory services.
Growth in the Islamic fi nance market globally is evident in the
increasing number of conferences dedicated to the subject,
many of which prefer Bahrain as the venue. The 14 th annual
World Islamic Banking Conference (WIBC), held last year in
Bahrain and developed with the support of the CBB, is an example.
With almost 1,000 delegates from over 35 countries
attending each year, it has become the most signifi cant platform
for decision-makers to explore new and emerging market
opportunities for Islamic fi nance. Bahrain’s reputation as
the preferred location for industry events such as the WIBC is
a signifi cant recognition of the importance of the kingdom as
a center for Islamic fi nance.
Bahrain is in a strong position to take advantage of the global
growth of Islamic fi nance, conservatively estimated at 10% to
15% per year, and meet the increasing demand for Shariah
compliant products and investments driving the industry in
2008 and beyond.
Jane Dellar is managing director of Bahrain Financial
Services Development. She can be contacted at +973
17589870.