Islamic Finance Emerging as Blue Ocean

koreatimes:While major economies were rattled by the global financial crisis following the U.S. subprime mortgage trouble, some were relatively safe. Islamic finance is one of them. It survived the crisis thanks to stable management of assets based on Islamic law, and the world is paying attention to it as an alternative to Western-style finance.

Islamic Finance Growing Rapidly

Though still alien to most Koreans, Islamic countries form a major pillar of the world. They make up 17.8 percent of the global economy and the Muslim population represents 24 percent of the world's total. The number of Muslims is expected to reach 3 billion in 20 years.

Islamic finance, or financial transactions and products that suit Islamic law, has been growing by between 15 and 20 percent each year.

The total assets of Islamic finance stood at over $700 billion as of 2007, and are expected to breach the $1-trillion mark within two years, upon oil price hikes and the growing interest of oil-producing countries in financial investment as they ponder how to manage huge amounts of oil money.

``The continuous oil price hike between the 1990s and 2000s enabled the Middle East to accumulate 'oil money.' Oil producers with political stability like Saudi Arabia, the United Arab Emirates, Kuwait and Iran had the fund grow steeply,'' the Korea Trade-Investment Promotion Agency (KOTRA) said in a report.

The issuance of Sukuk, or Islamic bonds, grew to $42 billion as of 2007, increasing by over 40 times from 2002. The issuance of Sukuk, mainly used to fund infrastructure projects in the Middle East, is estimated to reach $150 billion by 2012. Continue Reading