Islamic Economics

:A joint Treasury–FSA consultation on proposals for the legislative framework for the regulation of alternative finance investment bonds, which include sukuk, was launched on December 11 by Economic Secretary to the Treasury, Ian Pearson.
“The Government wants to ensure no one in the UK is denied access to good financial services on account of their religious beliefs.

We value the contribution Islamic finance makes to London’s position as an international financial centre and we want to see this sector continue to grow and prosper in this country.”

Sweden’s Shar‛ah pension fund outperforms market

A Swedish pension fund that abides by Shari‛ah laws has outperformed the Stockholm stock exchange since its launch in October.

The Shari‛ah fund, a part of the Premium Pension Authority's (PPM) fund system, was conceived to give Muslims a chance to have their retirement money grow without being placed in stocks which earned money by charging interest.

As such, the fund doesn’t invest in financial stocks and has thus avoided many of the losses suffered by other investors during the recent financial crisis.
Over the last three months, the fund has performed better than the Stockholm stock exchange, dropping only 20 percent in value, compared to the 28 percent losses suffered by the OMX-index.

Shari‛ah-compliant pensions

The scheme to provide retirement funds for millions who do not already have a company pension is likely to include a special option that would not invest in companies deemed sinful under Islam.

When the Personal Accounts Delivery Authority launches in 2012, as many as 10 million people who do not have a decent occupational pension will become automatically enrolled and made to save a minimum of 4 per cent of their earnings a year, matched by a 3 per cent contribution from their employer and 1 per cent tax relief from the Government.Savers will be able to choose from a range of funds into which their money will be invested, with one option likely to be Shari‛ah-compliant.

Germany not ready for Islamic finance

Despite a huge potential client base, Germany has refused to adapt its legal and tax systems to attract Islamic finance.

However Islamic investment funds based abroad are beginning to make considerable inroads into the property market of Europe’s biggest economy.With some 3.5 million Muslims, mainly of Turkish origin, Germany offers enormous potential demand for banks providing retail Islamic financing, said Zaid el-Mogaddedi, President of the Institute for Islamic Banking and Finance in Frankfurt last month.

However, German banks have been quick to offer products that conform to Islamic Shari‛ah but only outside Germany.German officials are wary of Islamic finance apparently because certain funds are said to be shaky and sometimes lacking in transparency.