Islamic asset market to hit $4 trillion by next year

Peninsula:The Islamic asset market is expected to reach $4 trillion by next year, according to a Retail and Wealth Management executive quoting international rating agency Standard and Poor.

Yahia El Batrawi, Deputy CEO at Doha-based Ahlibank said GCC countries' Islamic banks account for 25 percent or $ 125bn worth of Islamic assets in the world, while the global sukuk market will be worth $ 200bn by 2010.

With over 300 Islamic financial institutions spread across 75 countries, Islamic banking has grown by over 10 to 15 percent yearly, over the past 10 years as per International Monetary Fund (IMF), said El Batrawi speaking at the recently concluded 3rd World Islamic Infrastructure Finance Conference here.

In his presentation entitled 'Product Innovation and Next Generation of Islamic Banking', El Batrawi said Islamic banks and institutions accounted for 30 percent share out of the total project finance in the Gulf.

Besides, the total share of Islamic institutions in major project finance deals totaled $ 9bn since 2001. Islamic banks and institutions mainly focus on such areas as real estate, petrochemicals, aircraft and ship financing.

El Betrawi said Islamic banking provides various tools to serve the needs of industry like construction, agriculture, infrastructure, oil sector, trading and contracting.

He also pointed out that Islamic banking is unaffected by the current global crisis and that recent analysis have shown there has been no or very little impact of the global credit crisis and predicted in future also, such issues would not impact much.

There are several factors why Islamic banking is less affected by such turmoil, he said pointing to the fact that Islamic banking does not deal with debt trading and do not rely on bonds or stocks.

Among other reasons, is that Islamic banking distances itself from market speculation and also caution is taken against embarking upon projects that entail large difficulties or risks.

In addition, Islamic banking have better alternative in financing which is based on the particular need and can be provided through Ijara and Mubarabaha among others. Besides, Islamic banks do not get involved into transaction which are intangible or which take place without brokers.