CAIRO - Staying reluctant for years to taste the booming industry, Germany is finally getting Islamic investment funding as the globally-thriving industry is already making inroads into the European country's economy.
"Islamic finance is for everyone," Daud Abdullah, president of the Global University of Islamic Finance in Malaysia's capital Kuala Lumpur, told Deutsche Welle.
"If you look at [Islamic finance] globally, 60 percent of investors are not Muslims."
Despite the impressive strides Islamic finance has achieved in several European countries, Germany remains wary to adapt its laws to the Shari`ah-compliant industry.
But this attitude has changed after Islamic finance was introduced by Malaysia-based CIMB-Principal, the only registered Islamic investment fund in Germany.
"I want to share the new i-word with you. It doesn't stand for iPad, iPhone or inflation-but for Islamic banking," Noripah Kamso, chief executive of Malaysia-based CIMB-Principal, said in a press conference in Frankfurt recently.
Islam forbids Muslims from usury, receiving or paying interest on loans.
Islamic banks and finance institutions cannot receive or provide funds for anything involving alcohol, gambling, pornography, tobacco, weapons or pork.
Shari`ah-compliant financing deals resemble lease-to-own arrangements, layaway plans, joint purchase and sale agreements, or partnerships.
Investors have a right to know how their funds are being used, and the sector is overseen by dedicated supervisory boards as well as the usual national regulatory authorities.
The new Islamic finance targets Germany's roughly 4 million Muslim residents, along non-Muslims.
"Most Muslims in Germany are from the second or third generation," Kamso said.
"Many of them have good jobs."
According to studies by the firm, 23 percent of German Muslims want to put their money in Islamic investments.
CIMB-Principal's second phase is to target non-Muslim investors, a hard task in the shadow of little experience of Islamic firms in Germany.
"German firms are making Islamic bond portfolios and investment funds available," manager Karim Zaazou said.
"But they only offer these products in Arab countries, to get a share of the petro-dollars."
Germany has between 3.8 and 4.3 million Muslims, making up some 5 percent of the total 82 million population, according to government-commissioned studies.
Bankers believe that the booming Islamic finance industry would easily gain the confidence of German investors.
"If people invested more in Islamic finance, the world would not have such problems," said Abdullah, the president of the Global University of Islamic Finance in Malaysia's capital Kuala Lumpur.
"Then we wouldn't have highly speculative instruments that provide no economic benefit, but get countries deep into debt."
Islamic banking is one of the fastest growing financial sectors in the world.
Islamic financial products got their first major boost after the 9/11 attacks on the United States.
Many Arabs withdrew their money from the US at the time, and some of those funds, according to Abdullah, ended up in Malaysia and the Gulf states.
A second boost came during the international financial crisis, when Islamic financial products actually showed profits.
The Dow Jones Islamic Market Titans Index, which tracks the 100 biggest Islam-compliant businesses in Europe, the US and Asia, has nearly doubled over the last five years.
The Shari`ah-compliant system is now being practiced in 50 countries worldwide, making it one of the fastest growing sectors in the global financial industry.Currently, there are nearly 300 Islamic banks and financial institutions worldwide whose assets amounting to $1.6 trillion (1.2 trillion euros).
Reproduced with permission from OnIslam.net