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Prospects bright for industry in Middle East
While protestors are raging in several Middle Eastern capitals demanding political and economic reforms, regime changes and an end to corruption, there’s been speculation on the impact on Islamic finance.
March 21, 2011 2:11 by Arab News
The reaction of investors in times of turmoil or potential tension is as predictable as night follows day. Investors, especially fund managers, are essentially fair-weather friends who would not think twice of abandoning a market after exploiting every opportunity to maximise returns including raising the pricing, yield and cost of capital even at the whiff of trouble. That is the nature of fund management.
But seasoned Islamic finance officials and market players, who wish to remain anonymous, see exciting new medium-term opportunities in countries that have been politically flipped such as Egypt and Tunisia, and possibly Libya.
Egypt under the regime of ousted President Hosni Mubarak was downright hostile to Islamic finance, albeit that it tolerated it up to a point to allow some flow of investment into the economy. For instance, the government allowed Dar Al-Maal Al-Islami (DMI), headed by Prince Muhammed Al-Faisal, to establish the Faisal Islamic Bank of Egypt, which since its establishment in the 1980s has been subject to a range of regulatory and management difficulties. Similarly, the government gave Saleh Kamel a license to establish the Saudi Egyptian Finance House, which effectively was the takeover of the troubled Pyramid Bank.
But institutionally at the level of some state-owned institutions especially the Ministry of Finance, the Central Bank of Egypt and the government banks, there was deep-seated antagonism against Islamic finance, on the spurious grounds that it is a child of Islamic radicalism and in the Egyptian context of the Ikhwan Al-Muslimoon (the Muslim Brotherhood).