{"id":303964,"date":"2021-12-08T16:05:00","date_gmt":"2021-12-08T19:05:00","guid":{"rendered":"https:\/\/anba.com.br\/?p=303964"},"modified":"2021-12-08T20:55:19","modified_gmt":"2021-12-08T23:55:19","slug":"southeast-asia-requires-islamic-funding-in-halal","status":"publish","type":"post","link":"https:\/\/anba.com.br\/en\/southeast-asia-requires-islamic-funding-in-halal\/","title":{"rendered":"Southeast Asia requires Islamic funding in halal"},"content":{"rendered":"

S\u00e3o Paulo \u2013 The Southeast Asia market has required that halal-certified products come from companies the use only Islamic funding. So said Zubair Mughal, CEO of AlHuda Centre of Islamic Banking & Economics (CIBE), which is affiliated with the International Islamic Microfinance Network (IMFN) and Pakistan\u2019s Halal Research Council, on Wednesday (8) at the Global Halal Brazil<\/strong> business forum held by the Arab Brazilian Chamber of Commerce<\/strong> and the Federation of Muslim Associations in Brazil (FAMBRAS Halal).<\/p>\n

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Mughal participated remotely<\/figcaption><\/figure>\n

\u201cIn Southeast Asia, we\u2019re facing some issues as some large institutions say that when we carry out the halal certification of any food or non-food item, we must check its sources of funding, too. If the funding is not Sharia-compliant or Islam-compliant, we must consider if the certificate should or not be offered,\u201d Mughal said, participating in the event remotely. Sharia is the set of Islamic laws.<\/p>\n

Brazil is a major supplier of halal<\/strong> items, particularly poultry and beef, but has not yet established Islamic finance. \u201cI know that Brazil is one of the largest exporters of halal products, particularly poultry, dairy products, and beef. If we applied this principle to Brazil, sources of funding of halal manufacturers basically cut off a country like Brazil,\u201d he said. Interest-based finance models are not allowed in Islam.<\/p>\n

Mughal started his participation at the panel \u201cIslamic Finance<\/strong> \u2013 How Its Growth Contributes to Improving the World Economy and Prospects for Investment in Halal in Brazil\u201d by saying that there\u2019s a difference between halal industry and Islamic finance. The halal industry provides markets with products fit for Muslim consumption. Islamic finance are Sharia-compliant financial instruments with principles like interest-free banking and risk-sharing finance.<\/p>\n

Brazil in Islamic finance<\/strong><\/p>\n

More and more Islamic financing instruments are used for investing and funding halal production. In Brazil, the discussion on this finance is recurrent, but the country has no legislation regarding it. Moderating the panel, First Abu Dhabi Bank chief representative and Latin America country manager Angela Martins asked the participants to point some ways for Brazil in the sector.<\/p>\n

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Martins: Work for Islamic finance<\/figcaption><\/figure>\n

Martins said one barrier for applying Islamic finance in Brazil is double taxation on products like Sukuk<\/strong>. A sukuk is an Islamic financial certificate, similar to a bond. \u201cAssets are purchase on a cash basis, then resold for a deferred time limit, but here in Brazil, if we set up something like this, we\u2019d have a double taxation making this type of investment impossible,\u201d she said.<\/p>\n

Mughal said he believes sukuks could be an important instrument for investing in the Brazilian halal sector. He suggested Brazil could use Islamic fintechs as an option. \u201cI know that in Brazil you don\u2019t have a regulation facilitating Islamic finance, but having a fintech platform, with a limited use of products, could make it easier for the Brazilian halal industry to have access to this market,\u201d he said. Martins added that a work has been done together with FAMBRAS and the ABCC to develop Islamic finance in Brazil.<\/p>\n

The experts participating in the panel maintained that Brazil is a breeding ground for Islamic finance as it is one of the world\u2019s largest producers and exporters of halal products and argued that these instruments could finance or support local halal industry, thus attracting investments from Islamic countries. In a panel of the forum on the previous day, Malaysia\u2019s LBB International CEO & founder Marco Tieman explained how the Islamic markets are currently ranked in various stages of requirements, and that some look at factors like the use of Islamic finance in the halal supplying industry.<\/p>\n

United Kingdom<\/strong><\/p>\n

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Dar: Spreading knowledge<\/figcaption><\/figure>\n

United Kingdom\u2019s Cambridge Institute of Islamic Finance director-general Humayon Dar brought the experience of the UK to the panel. The Institute is a think tank that specializes in countries with developed Islamic finance. He said the UK has five Islamic banks and a large flow of capital from countries like the Gulf Cooperation Council (GCC) states and Malaysia. \u201cThe UK government has participated in Islamic finance industry for ages,\u201d he said. Dar explained the topic is taught at universities and that the UKS has issued sovereign Sukuks, followed up by Luxemburg, Hong Kong, South Africa, and Nigeria. The director said that spreading knowledge in the sector is major and could be a path for Brazil.<\/p>\n

Natural resources<\/strong><\/p>\n

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Nabil: Brazil is promising<\/figcaption><\/figure>\n

Al Baraka Forum development coordinator Ibrahim Nabil said Brazil has a promising future in Islamic finance. He talked about financial products focused on natural resource-based industries like mining, agriculture and oil extraction, which are sectors in which Brazil has much to offer. \u201cBrazil is reaching USD 21.8 trillion in natural resources,\u201d he said. Al Baraka is a think tank that holds a symposium on Islamic finance and works for producing, spreading and publishing knowledge on the matter.<\/p>\n

Global Halal Brazil business forum took place from Monday (6) through Wednesday (8) in a hybrid format with the support of Trade and Investment Promotion Agency (Apex-Brasil), BRF, Pantanal Trading, Portonave, and Iceport. The in-person part was offered for guests in the Renaissance hotel in S\u00e3o Paulo.<\/p>\n

Follow the complete forum coverage:<\/em><\/p>\n