São Paulo – A high liquidity market currently worth US$ 1.2 trillion and poised to reach US$ 2.6 trillion in 2017. Such is the Islamic finance market, which involves all of the Muslim countries, such as the 22 Arab countries, Asian powers such as Malaysia, Thailand and Indonesia, and leading European market like United Kingdom and France.
“The Islamic finance market is wide open, and considering the amount of funds that can be tapped into, it is worth knowing,” said Ângela Martins, the regional manager for Latin America at the National Bank of Abu Dhabi (NBAD), during the workshop Introduction to Islamic Finance and Capital Market, held this Thursday (27th) at the Arab Brazilian Chamber of Commerce.
Martins was welcomed by the Arab Chamber’s Culture director Silvia Antibas and Market Intelligence director Luis Conrado. Spectators included executives from major Brazilian banks and enterprises.
Martins explained the history and workings of some Islamic operations and the principles by which they abide, such as the prohibition of usury and speculation and the restrictions on shares of products such as alcohol and pork.
“The payment of interest is not allowed, because you cannot make money for the sake of it. You must add value to a commercial operation. Thus, your earnings can be quite high,” said the executive.
To explain how these operations work, Martins gave a simple example, of a natural person who wishes to buy a house and resorts to an Islamic bank. Instead of lending money to the person and charging financing charges like a traditional bank would, Islamic institutions will buy the house and resell it to the buyer in instalments, charging an extra as profit for facilitating the deal.
“Due to the fact that they buy the house up front and then sell it in instalments, they are entitled to profit,” says Martins. According to her, the purchase of real estate entails virtually no risk to the bank, but in every purchase and sale operation, the risk is equally assumed by bank and client alike. “If they win, they both win; if they lose, they both lose,” she claims.
She explained that the first Islamic bank was founded in Egypt in 1963. In Brazil, organizations looking to enter this market can operate in tandem with foreign banks. “We have partnerships with Brazilian banks. The important thing is to seek information so as not to miss the existing opportunities in Islamic finance,” she stressed.
*Translated by Gabriel Pomerancblum
