CPA Australia – Accommodating Islamic finance critical to Australia’s economic future


Australian tax laws should be amended to attract Islamic finance and other forms of alternative finance to benefit the economy, says CPA Australia.

In a submission to the Board of Taxation, CPA Australia says Islamic Finance will ultimately boost the Australian economy and help establish Australia as a financial services hub in the Asia-Pacific region.

Paul Drum, head of business and investment policy, CPA Australia, said attracting capital and investment through Islamic finance is a huge opportunity for Australia and would ultimately be good for economic growth.

‘Australia has emerged from the global financial crisis with strong economic position and a good regulatory regime. With our geographic position we are well placed to attract this increasingly significant component of global finance, and we need to take advantage of that,’ he said.

‘As a net importer of capital it is essential that we establish the right framework to attract and maintain a wide range of capital and financial products. Achieving this will be key to addressing many of our key economic issues including the funding of major infrastructure projects.’

Islamic finance is based on the principles of Islamic law (Shariah) which prohibits earning interest and instead focuses on profit sharing based on the buying and selling of tangible assets such as property.

‘Islamic finance offers huge potential for Australia’s financial services sector, but tax laws will need to be amended to accommodate other forms of alternative finance.

‘Some of Australia’s tax laws have a very specific legal based application which can exclude forms of alternative finance. Taking a broader economic and macro approach to policy in this area will be more beneficial and provide better long term benefits for Australia. It’s also more consistent with how tax law has developed in other areas such as taxation of financial arrangements.’

The CPA Australia submission also suggests Australia could adopt a similar approach to the United Kingdom, where only minor legal and regulatory reforms were required.

‘To achieve all of this will require significant work to align the accounting and tax treatment of Islamic and other alternative financial products. This must be a priority and CPA Australia looks forward to contributing to this process.’

Banking on the ummah – Malaysia leads the charge in Islamic finance

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OF MALAYSIA’S claims to fame, leadership in financial services is not an obvious one. Yet in some ways the country is the world’s most important Islamic-finance centre. Just over a fifth of the country’s banking system, by assets, is sharia-compliant; the average for Muslim countries is more like 12%, and often a lot less. Malaysia dominates the global market for sukuk, or Islamic bonds. The country issued the world’s first sovereign sukuk in 2002; in the first three quarters of 2012 it was responsible for almost three-quarters of total global issuance (see chart). Malaysia is also home to the Islamic Financial Services Board, an international standard-setting body.

These are big achievements for a relatively small country of just 30m people, of whom only about 60% are Muslim. In neighbouring Indonesia, which is home to the largest Muslim population in the world, only about 4% of the financial sector is sharia-compliant. Although the much richer Gulf states and Saudi Arabia have bigger Islamic banks, it is Malaysia, argues Iqbal Khan of Dubai’s Fajr Capital investment fund, that is the centre “for thought leadership in Islamic finance”.

How did the country carve out this niche? Malaysia’s Muslim heritage, outward-looking nature and links with financial hubs like Britain and Singapore made the place a natural candidate to bridge the worlds of religion and capitalism. The central bank, the Bank Negara Malaysia, is also supportive.

Two institutions in particular, both set up by the central bank, have contributed to Malaysia’s pre-eminence in the field. The first is the International Centre for Education in Islamic Finance (INCEIF). Established in 2005 and boasting about 2,000 students, INCEIF is the world’s leading university for the study of Islamic finance. The International Sharia Research Academy, housed within INCEIF, brings together scholars to produce an internationally acceptable rule-book for Islamic finance.

The second institution is the Islamic Banking and Finance Institute of Malaysia (IBFIM). It concentrates on vocational training, offering a variety of certificates in Islamic finance. IBFIM also acts as a consultancy to banks and firms that want to become sharia-compliant.

Zeti Akhtar Aziz, the head of the central bank, says that these bodies are the “pipeline to provide the banks with talent”. And not just in Malaysia. There are currently students from 80 countries at INCEIF; and IBFIM has taught people from Afghanistan, Nigeria, Palestine and elsewhere.

All of which gives Malaysia greater status within the ummah, the global Islamic community, important to a country that often feels on the periphery of the Muslim world. There are more tangible benefits, too. The Islamic subsidiary of Maybank, a big local lender, already accounts for about half of the group’s customers and is expanding abroad: it set up a subsidiary in Singapore 18 months ago and has also moved into Indonesia.

Ms Zeti argues that sharia-compliant banks are inherently more stable than conventional peers. Speculation is forbidden, and because charging interest is prohibited under sharia law, returns are based on profit-sharing. Perhaps. Islamic finance is hardly foolproof: Dubai’s debt crisis in 2009 showed that sukuk can help to inflate debt to unsustainable levels. But whatever its pros and cons, Malaysia will provide much of the evidence either way.

Source :

Malaysia hailed as most vital Islamic-finance hub

Islamic Finance

KUALA LUMPUR: Malaysia is the world’s most important Islamic-finance centre, although the richer Gulf states and Saudi Arabia have bigger Islamic banks and Indonesia the largest Muslim population, influential financial news magazine The Economist says.

Malaysia also dominates the global market for sukuk, or Islamic bonds, the magazine said in an article headlined Banking on the ummah:Malaysia leads the charge in Islamic finance, in its latest issue on Jan 5.

“Leadership in financial services is not an obvious one. Yet, in some ways the country is the world’s most important Islamic-finance centre,” said the magazine.

“Just over a fifth of the country’s banking system, by assets, is Syariah-compliant; the average for Muslim countries is more like 12%, and often a lot less,” it added.

On the Islamic bonds, the magazine said the country issued the world’s first sovereign sukuk in 2002 and in the first three quarters of 2012, it was responsible for almost three-quarter of total global issuance.

It said Malaysia was home to the Islamic Financial Services Board, an international standard-setting body.

“These are big achievements for a relatively small country of just 30 million people, of whom only about 60% are Muslims.

“In neighbouring Indonesia, which is home to the largest Muslim population in the world, only about 4% of the financial sector is Syariah-compliant.

“Although the much richer Gulf states and Saudi Arabia have bigger Islamic banks, it is Malaysia that is the centre for thought leadership in Islamic finance,” said the magazine, quoting Dubai’s Fajr Capital investment fund founder and CEO Iqbal Khan.

The magazine said Malaysia’s Muslim heritage, outward-looking nature and links with financial hubs like Britain and Singapore made the place a natural candidate to bridge the worlds of religion and capitalism. The central bank, Bank Negara Malaysia, is also supportive.

It said two institutions in particular the International Centre for Education in Islamic Finance (INCEIF) and the Islamic Banking and Finance Institute of Malaysia (IBFIM), both set up by the central bank have contributed to Malaysia’s pre-eminence in the field.

INCEIF, set up in 2005 and boasting about 2,000 students, is the world’s leading university for the study of Islamic finance.

The International Syariah Research Academy, housed within INCEIF, brings together scholars to produce an internationally acceptable rule-book for Islamic finance.

The IBFIM concentrates on vocational training, offering a variety of certificates in Islamic finance as well as acts as a consultancy to banks and firms that want to become syariah-compliant.

Bank Negara head Tan Sri Dr Zeti Akhtar Ungku Aziz was quoted by the magazine as saying that these bodies were the “pipeline to provide the banks with talent” and not just in Malaysia.

“All these give Malaysia greater status within the ummah and the global Islamic community,” she said, adding that they were important to a country that often felt on the periphery of the Muslim world.

Dr Zeti argues that Syariah-compliant banks are inherently more stable than conventional peers.

“Speculation is forbidden and, because charging interest is prohibited under syariah law, returns are based on profit-sharing,” she said.

Source : The Star

Islamic Banking Knocks Germany’s Doors


CAIRO – Turkey’s Kuveyt Turk investment fund plans to open the first Islamic bank in Germany in October, amid hopes of overcoming the bad effects of the ongoing euro crisis and get a share of the successful Islamic banking pie.

“The idea of an Islamic bank is that it adheres to Islamic investment guidelines and principles,” Zaid el-Mogaddedi, founder and director of the Institute for Islamic Banking and Finance (IFIBAF) in Frankfurt, told Deutsche Welle on Saturday, September 1.

Istanbul-based financial institute Kuveyt Turk would open the first Islamic bank of its kind in Germany next October.

Germany Tastes Islamic Finance

The bank was introduced as many Europeans hope to sign on to a banking institute that offers only transactions backed by tangible assets rather than highly speculative financial management which caused the ongoing euro crisis.

“You have to see that it in the Islamic financial system are also mechanisms that mimic the interest rate effect – though it is not the same,” said Martin Schulte, an Islamic banking expert at the Association of Foreign Banks in Germany.

“Money is fruitless, that is to say that simply transferring money does not create economic value,” he said.

“It is a medium of exchange, which itself has no economic power.”

Conventional banking, however, is partly based on the concept that lending money is a service in itself that is worthy of compensation.

“But in the Islamic understanding it is possible to develop products that are economically useful and complement the conventional banking business from a macro perspective very well.”

Islam forbids Muslims from usury, receiving or paying interest on loans.

Islamic banks and finance institutions cannot receive or provide funds for anything involving alcohol, gambling, pornography, tobacco, weapons or pork.

Shari`ah-compliant financing deals resemble lease-to-own arrangements, layaway plans, joint purchase and sale agreements, or partnerships.

Investors have a right to know how their funds are being used, and the sector is overseen by dedicated supervisory boards as well as the usual national regulatory authorities.


Introduced years ago in different European countries, experts hope German new Islamic funds to be more successful than that of UK and France.

“The decisive point will be whether the Islamic banks offer an attractive product portfolio and good services,” El-Mogaddedi from the Institute for Islamic Banking and Finance, said.

Also “whether the communication is clear enough to bring Muslims and non-Muslims to the bank as an attractive alternative,” he added.

A study published in 2012 by the Stresemann Institute found that “Islamic finance” had failed in European countries because Muslim customers had lower income levels and thus little investment potential.

But El-Mogaddedi said the failure of Islamic financial products in Europe came down to bad marketing.

Staying reluctant for years to taste the booming industry, an Islam-conform investment fund was established in Germany in May 2012 by the Malaysian asset manager CIMB Principal.

The fund was approved by the German Financial Supervisory Authority (BaFin).

Germany has between 3.8 and 4.3 million Muslims, making up some 5 percent of the total 82 million population, according to government-commissioned studies.

The new Islamic finance targets Germany’s roughly 4 million Muslim residents, along non-Muslims.

Islamic banking is one of the fastest growing financial sectors in the world.

Islamic financial products got their first major boost after the 9/11 attacks on the United States.

Many Arabs withdrew their money from the US at the time, and some of those funds, according to Abdullah, ended up in Malaysia and the Gulf states.

A second boost came during the international financial crisis, when Islamic financial products actually showed profits.

The Dow Jones Islamic Market Titans Index, which tracks the 100 biggest Islam-compliant businesses in Europe, the US and Asia, has nearly doubled over the last five years.

The Shari`ah-compliant system is now being practiced in 50 countries worldwide, making it one of the fastest growing sectors in the global financial industry.

Currently, there are nearly 300 Islamic banks and financial institutions worldwide whose assets amounting to $1.6 trillion (1.2 trillion euros).

India’s Halal Hospital

CHENNAI – Hoping to boost medical tourism from Muslim countries, c, in the eastern Indian state of Tamil Nadu, has acquired a halal certificate for its hospital services to assure Muslim patients on the quality of the services offered to them, Two Circles website reported.

“With about two billion Muslims worldwide and a major number of international health travelers coming to Global Health City from the Islamic nations, we see Halal Certification as a form of approval that boosts our patients’ trust and confidence in our range of hospital services,” said Dr. K. Ravindranath, Chairman & MD, Global Hospitals Group.

“To earn the certification, Global Health City had to meet strict Islamic guidelines dealing with hygiene & dietary regulations of global standards.”

Global Health City, Chennai is a 500-bed super specialty tertiary care facility, with a capacity to expand to 1000 beds.

Being a world class hospital, the Global Health City has been keen on assuring its patients on the standard of services offered to them.

Applying for the halal certificate, it received the Halal certification for its hospital services by Halal India – an independent Halal certification body registered with government of India.

The certificate was recognized by IHIA (International Halal Integrity Alliance, Malaysia); a partner of the Islamic Chamber of Commerce and Industry (Kingdom of Saudi Arabia).

It requires offering halal food and other services as well, including medicines and other treatment, Mohammad Noman, General Manager (operations), said.

Halal friendly medical tourism services include Food, Prayer Hall, Qibla Direction mark, Payer mate, copies of Quran, for woman patients woman doctor’s appointments.

Noman added that the hospital follows the Malaysian Standards and Practice in offering halal slaughter.

“We do the site audit and ensure that meat supplier must follow the Shari`ah Compliance based on Malaysian Standards,” he said.

“Also Butcher must be practicing Muslim and undergo Halal India’s one day training and obtain the name batch and certifications.”

Promising Market

Being the first hospital in India to acquire a halal certification, the health city’s managers said that the new market was in its first steps.

“Still this market is not matured in India unlike other countries like Malaysia, Singapore,” Noman, the operations general manager, added.

“We need to educate Muslims to seek Halal Certified medicines in future (Lot of capsules in India made with gluten (Pig or Beef).”

Mohamed Jinna, CEO, Halal India, agreed.

Yet, he confirmed that they had a unique opportunity to lead the new halal medical market in India.

“We have great heritage for service and hospitality in India which also signifies that we can take good care of patients,” Jinna said.

“The state of art technologies available in medical care is just perfect for overseas patients. All we need to do is understand their culture and custom so that we accommodate them well and make them feel truly at home”

“This way we can respect their values and belief and at the same time cater to this niche market in India,” he further added.

Muslims account for 160 million of India’s 1.1 billion people, the world’s third-largest Muslim population after those of Indonesia and Pakistan.

The concept of halal, — meaning permissible in Arabic — has traditionally been applied to food.

Muslims should only eat meat from livestock slaughtered by a sharp knife from their necks, and the name of Allah, the Arabic word for God, must be mentioned.

Now other goods and services can also be certified as halal, including cosmetics, clothing, pharmaceuticals and financial services.a

Halal tourism on the rise in Egypt

While Egypt’s tourism sector continues to suffer losses as a result of the country’s fluctuating security and political situation, the latest Ministry of Tourism data show the decline in foreign tourist arrivals is being offset to a certain extent by Arab tourism.

These Arab visitors, from Saudi Arabia in particular, are coming to Egypt after some hotels and cafés started offering halal service.

Mahmoud al-Muhammad, a board member at the Chamber of Travel Agencies at the Ministry of Tourism, told Al-Shorfa, “The number of Arab tourists saw a remarkable increase, from 160,000 last year to 258,000 this year, including 110,000 from Saudi Arabia alone, representing over 40 percent of the total number of Arab tourists.”

“Foreign tourists continue to refrain from coming to Egypt, as the figures show that only 875,000 Western tourist entered Egypt compared to 1.3 million in the same period last year,” al-Mohammad said.

Dr. Hala Hakeem, a Lecturing Professor at Faculty of Tourism at Cairo University, said the numbers reflect what is happening on the ground.

“Westerners have grown wary and apprehensive about the [security] situation, and the kidnappings and lawless acts that occur from time to time,” she said, adding that tours of Egypt have essentially been excluded from many 2012 tourism programmes and that many foreign companies have refrained from contracting for tours with their Egyptian counterparts.

Hakeem said the high number of Arab tourists, especially the Saudis, is not surprising in light of the election of Islamists to power in Egypt and frequent talk of sharia law being implemented in a number of hotels, cafés, restaurants, and tourist resorts.

“All this does is indicate the potential for halal tourism called for by Islamist parties,” she said, adding that the call for halal tourism is bolstered by its success in a number of countries, Malaysia and Turkey in particular.

Success of halal tourism facilities

Khaled Abdul-Hamid, director of “Cairo Khan” hotel in downtown Cairo said the hotel committed some time ago to abide by Islamic standards. It does not serve alcoholic drinks and permits free mixing between genders only within families.

“Very few hotels offer similar services,” he said, adding that these standards have had no adverse effect on the number of customers. “On the contrary, our customers, who are of various European and Arab nationalities, do not complain about the lack of services other hotels offer.”

During a tour of Cairo, Al-Shorfa noted a number of other hotels that do not serve alcohol, such as Al-Qaoud hotel in the Manial, and the Grand Hyatt in Garden City, in addition to numerous cafés that have stopped serving alcohol in order to attract Arab tourists.

Islam Abdel Aziz, a shareholder in Muslim Café, which opened units in Alexandria and al-Banha three months ago, said, “The halal service concept was born some time ago and is premised on providing service in a manner that does not conflict with religious standards.”

Shisha tobacco products of all kinds, and mixing between genders are banned in Muslim Café. Certain areas of the café are designated for young people and others for families, separated by curtains to offer each family a measure of privacy. Popular music is also missing, replaced with Islamic prayers, invocations and music.

“The café provides a smoke-free environment and does not allow overstepping the bounds of morality or religion,” Abdul Aziz said.

Demand for halal tourism ‘contrary to the truth’

However Mohammed Sharif, a restaurant manager in Sharm El-Sheikh, told Al-Shorfa, “Islamist parties are trying to convey to the local and Western media the impression that halal tourism is in demand by patrons and tourists, which is contrary to the truth.”

“Promoting halal tourism in the media and creating the impression the Egyptian people demand it will significantly damage the Egyptian tourism sector and add to the losses it is currently incurring,” he added, ruling out the possibility halal tourism will be adopted in seaside tourist resorts.

Sharif said that he expects the implementation of halal tourism will be limited to certain areas.

“I think that is the most appropriate solution, as it would satisfy all parties,” he said.

Source : By Waleed Abu al-Khair in Cairo

After Islamic food and banking: halal travel

In his days as a jet-setting telecom executive, ready-to-eat meals were a regular part of Fazal Bahardeen’s luggage. Many of the hotels he stayed in did not have halal-certified restaurants for Muslim travellers like the 47-year-old Sri Lankan-born Singaporean. Rooms lacked markers pointing to Mecca for prayers and staff were unable to answer questions from Muslim guests about their particular needs.

“Half of my life was spent in hotels and airplanes,” Fazal told AFP.

“But being a Muslim, I was getting frustrated by the travel industry or the hotels not being able to provide the right services. You don’t know what the prayer time is, where the prayer direction is, and you can’t find halal food.”

But halal travel is now gaining popularity as demand for products and services permitted by Islam extends beyond food and interest-free financial instruments, and affluent Muslim travellers make their influence felt.

Halal travel is expected to be worth 100 billion US dollars annually within two years, said Fazal, who resigned from a senior management job at a major telecom firm in 2006 and set up his own company to tap into the expected boom.

Fazal’s Crescentrating Pte Ltd is believed to be the only company in the world that rates hotels globally for their friendliness to Muslim travellers.

Its online booking portal also promotes halal tours.

Travel commentator Yeoh Siew Hoon told AFP there is a real demand for halal travel, led by tourists from Southeast Asia and the Middle East.

“Take Indonesia — it is one of the fastest growing outbound markets in Asia, and is the number one source of visitors to Singapore,” said Yeoh, who operates an industry website

“Tourism Australia also produces a guide to halal restaurants due to the growing numbers of travellers from Muslim countries,” she added.

Greg Duffell, chief executive of the Bangkok-based Pacific Asia Travel Association (PATA), said China’s sizeable Muslim population is another potential source of outbound travel.

“A lot of suppliers are now amending their products to meet halal standards,” Duffell told AFP.

“It is a trend that started a few years ago. Since then, restaurants and resorts in Singapore, Thailand and Vietnam too have begun adapting their standards, so it’s beginning to branch out,” he said.

“There are more designated halal restaurants in hotels now, and prayer facilities on the premises, especially at the airports.”

Crescentrating’s hotel grading system ranges from one to seven and is based on the availability of halal food as well as prayer rooms and mats — and the non-availability of forbidden items like alcohol and adult TV channels.

A rating of one is given to a hotel with no such facilities but whose employees are trained to answer questions from Muslim guests.

This can be raised a notch if the hotel has a list of halal-certified restaurants in its vicinity — even if it does not have one itself.

The company’s highest ratings, six and seven, require a hotel to be free of alcohol, discos and TV channels showing movies unsuitable for families and children. In addition, all food and beverages must be halal.

Globally, only Dubai’s Al Jawhara Garden Hotel has a rating of seven, while three hotels in Saudi Arabia and one in South Africa are rated six.

The halal food industry is worth 600 billion to 650 billion dollars a year, according to Fazal and industry reports.

Islamic finance meanwhile boomed when Muslims began to look for investments approved by their religion, and the sector has attracted non-Muslims too after the global financial crisis.

“The halal consciousness is rapidly going beyond food and finance,” said Fazal, arguing that with 1.6 billion increasingly wealthy Muslims worldwide, halal-friendly travel is likely to be the next growth area.

Muslim travellers account for seven to eight per cent of global tourism expenditure, which totalled around 930 billion dollars in 2009, up from just three-four per cent 10 years ago, Fazal said.

This share is expected to expand to 10 per cent in the next two years.

Crescentrating also hopes to stamp halal-friendly ratings on theme parks, convention venues, cruise ships, shopping malls and hospitals used by medical tourists.

Meeting Halal Test

You might think of Nestlé as the least likely company to venture into such a ticklish market as religious food. The Swiss multinational has, after all, attracted more than its share of protesters with other product lines (namely, infant formula and chocolate). But far from shying away from the halal market–food that passes muster with Islamic authorities–Nestlé has jumped in with both feet.

For centuries the men who decided whether food was halal were bearded and worked in mosques. But Othman Mohamad Yusoff–not a mullah but a clean-shaven Nestlé executive–has forged a career as a halal expert. He’s in charge of Nestlé Malaysia’s halal lines, making sure they’re free of alcohol, pork or any product from an animal not slaughtered according to Islamic guidelines. This covers everything right down to KitKat bars that are free of flavorings that have traces of alcohol.

Othman, 45, was a food engineer in Groupe Nestlé’s R&D headquarters in Switzerland more than a decade ago when he was asked to help hammer out a strategy on supply chains, including how to keep them halal. It proved to be a good career break. Nestlé has become the biggest food manufacturer in the halal sector, with more than $3 billion in annual sales in Islamic countries and with 75 of its 481 factories worldwide producing halal food. “Nestlé’s set the pace on halal for multinationals,” says Abdulhamid Evans of KasehDia, a Kuala Lumpur consulting company.

Nestlé is tapping into a vast market. With 1.6 billion Muslims worldwide and Islam the fastest-growing religion, halal food sales are now worth $580 billion annually, according to Malaysia’s Halal Industry Development Corp. “Food companies are not going to be global unless they’re halal,” says Joe Regenstein, a professor of food science at Cornell University. And an increasingly affluent and savvy base of Muslim consumers means that the halal industry is growing in sophistication as well as size. Well beyond being just about meat, it now embraces products from lipstick to vaccines to savings accounts. In 1990 the Islamic Food & Nutrition Council of America had only 23 clients paying for its halal certification services. Last year it certified products for 2,000 companies worldwide.

Nestlé, which had $81 billion in sales last year and ranks number 51 on forbes asia’s Global 2000 list, caught the wave when the halal industry was pretty much a matter of uncle-and-auntie butchers and the neighborhood bazaar. In the 1980s Nestlé Malaysia started a halal committee–a group of 11 executives who oversaw halal standards from farm to fork. In the early 1990s this division decided to make all of its imports and exports halal “to reassure customers that we were taking the business of halal very seriously,” says Nestlé Malaysia’s managing director, Sullivan O’Carroll. That has resulted in its food scientists occasionally engaging in angels-on-a-pinhead debates. “Alcohol is not allowed,” he says. “But if a product has natural alcohol in it, for example, from fruit, it is allowed. So there can be a debate as to whether the alcohol is there naturally or has been put in.” Nestlé Malaysia has pioneered halal standards for Nestlé worldwide, with Othman and his staff flying off to consult with executives from India to West Africa.

The lengths to which Nestlé must go to meet these standards can be seen at the Maggi noodle factory outside of Kuala Lumpur. It looks ordinary enough, with its bright lights, conveyor belts and white-coated workers bent over noodle vats. But for one thing, if animal bristles are used in the factory’s machine brushes, they’ve been checked to make sure they don’t come from pigs or animals not slaughtered in accordance with Islam. And petroleum grease, rather than animal-derived grease, lubricates the equipment.

Like the rest of Nestlé’s hundred halal lines, the noodles have been subjected to an intensive screening process, starting with the R&D. A halal checklist runs around 30 pages for each product and includes such questions as “Does product contain pork or parts thereof, e.g. enzymes, bacon … ?” Then the Muslim scholars at Jakim, Malaysia’s Department of Islamic Development, must approve the checklist.

Producing halal products takes time and money, but Othman sees it simply as “the cost of doing business.” Scale–and building halal factories from scratch, rather than modifying old ones–have kept costs down, notes O’Carroll. “When we compare our factories in Malaysia with other Nestlé factories around the world, we are at least as cost-effective,” he says.

Increasingly, the halal industry no longer stops at production. The latest buzzword is “logistics,” with shipping and storage companies from Dubai to Rotterdam positioning themselves as protectors of halal purity. “It’s fashionable nowadays to talk about ‘halal logistics,’” says O’Carroll. For Nestlé, the logistics are pretty simple, he notes. A box of Maggi soup “has an outer box. Then it’s in shrink wrap and then in a container. So if we send it to [British supermarket chain] Tesco, we don’t feel that needs ‘halal logistics.’”

Nestlé might not, but many Muslim customers do. Last autumn Malaysia’s national shipping company, MISC, launched the weekly Halal Express Service, a liner to carry Australian and New Zealand halal beef from the Straits of Malacca to the Middle East and beyond. It’s also building a halal logistics hub at Port Klang, west of Kuala Lumpur, which will have cold-storage facilities, sterilization units and a lab to test products to ensure they’re halal.

The Halal Express is just one of many projects designed to make Malaysia a global halal leader. Eager to capitalize on its strengths in manufacturing and halal-production know-how, Malaysia is making a bid to beat out Thailand and Singapore as the region’s “halal hub.” Malaysian firms export such sophisticated products as Vigor Power Ice, a bright blue halal energy drink, and halal gelatin capsules for pharmaceuticals and vitamins. Last May in Kuala Lumpur, the Malaysian government hosted the first World Halal Forum, which brought together Islamic scholars, small businesses and multinationals such as Nestlé, Tesco and McDonald’s (nyse: MCDnews - people ). Last year the government budgeted $26 million for its halal drive, including support for halal industrial parks and entrepreneurs developing halal products. And there’s a big publicity drive that has included a slick halal-industry magazine and a TV series beamed across Southeast Asia, covering halal issues from banking to cooking.

Earlier campaigns by Kuala Lumpur to build industry hubs–such as recent plans for a high-tech hub–have sputtered out, warn longtime Malaysia industry watchers. But Darhim Hashim, a former venture capitalist who’s a director at the halal development outfit, argues that this bid is different because Malaysia already has strong government-enforced halal standards and an established Islamic financing industry. Thailand–also trying to build its halal industry–and Singapore, with its peerless infrastructure, simply don’t have Malaysia’s Islamic credentials, says KasehDia’s Abdulhamid, whose firm works with the government to promote Malaysia’s halal industry. “Malaysia has credibility in the Muslim world and represents the crossover between the Muslim world and the non-Muslim market,” he says.

Malaysia’s hope–and Nestlé’s–is that halal will reach an audience beyond Muslims. But how do you sell halal to an infidel? Talk about health, purity and ethics. That image would dovetail with Nestlé’s new push as a health-and-wellness company–and with Malaysia’s own ambition to be seen as a moderate, industrialized multicultural nation. “We see halal as something that can develop along the lines of organic food,” says Abdulhamid. Opening the halal forum last year, Malaysian Prime Minister Abdullah Badawi invoked halal as “that which is good, healthy, safe and high quality in all aspects of life. [It] represents values that are held in high regard by all peoples, cultures and religions.”

There could be a nice side effect from pushing the halal market beyond its traditional customer base. Halal’s association with purity and animal welfare could help overcome Islamophobia. “Halal could be an extremely good platform for changing perceptions,” notes Abdulhamid.

Still, selling foods internationally is harder than selling a commodity such as petroleum. Country-to-country differences in halal methods and standards have created headaches for manufacturers for decades. Middle Eastern import companies used to send halal slaughterers to South America to kill the chickens themselves. A couple of years ago, when Muslim scholars in Australia decided that stunning was an Islamically permissible way to kill animals, Australian beef–20% of Malaysia’s beef imports–suddenly fell afoul of Malaysia’s halal standards. The government banned Australian beef, and Nestlé Malaysia, which was importing all its beef fat from Australia, had to look for alternative sources overnight. The company scrambled to import from South America, but making the change took months. As long as different countries interpret forms of killing in slightly different ways, “it makes trade challenging,” says O’Carroll.

Devising global standards is a key goal of the second World Halal Forum in Kuala Lumpur, to be held in May. But getting Islamic scholars from Dacca to Detroit to agree will be tricky. Darhim, of the halal development unit, argues that not just Islamic scholars but trade experts and food scientists must be involved in setting the standards. “We need to apply science to the discussion,” he says. “There has been a tendency in Islam to make issues out of things that aren’t issues.” Nestlé’s Othman says the industry needs to be demystified. “Halal is not that difficult,” he says. “A lot of things are halal. Not so many things are not.” And as the industry grows, that’s likely to be truer with every passing year.

Source :

Islamic Perspectives on Poverty & Debt

Can we work together to make things better?

ìIf the debtor is in a difficulty, grant him time till it is easy for him to repay. But if ye remit it by way of charity, that is best for you if you only knew. (Quran: 2.280) 

With one fifth of the world’s population living on less than a $1 a day, something is clearly wrong. Poverty and debt are so often “partners” in a destructive ëdanceí that is condemning families and nations, our fellow global village neighbors, to a downward spiral into ruin and misery.

To work for solutions requires working in partnership between all those who campaign for social justice.  And partnership requires understanding and trust between partners.  Sadly, lack of interaction, ignorance, prejudice and social tensions often hinder partnerships between different communities and faith groups.

In an effort to address ignorance, I shall briefly explore the starting points of Muslims and their perspectives on poverty and debt, and in so doing will hopefully illustrate why partnership should be both a natural and essential step for all to take.

Why should Muslims be called on to play a part?

The undeniable fact is the global Muslim community has an essential role to play in addressing the injustice of global poverty: Firstly, Muslims constitute over a fifth of humanity, and so have tremendous capacity to bring to bear, and secondly, millions of those who suffer from poverty are themselves Muslim.  Above all, Islam has historically made a dynamic contribution to civilization, and Muslims believe their faith has much to offer in helping to face the challenges of modernity.

Muslims have been a part of the problem (the role petrodollars had to play in exacerbating the debt crisis is not to be underestimated); Muslims are suffering from the crisis, and so Muslims should be at the forefront in campaigning and providing the solution.

How then does Islam as a faith, and Muslims as potential activists, approach these issues of social injustice?

  • First, a Muslim maintains that overall sovereignty of creation lies with God ñ the God of all the prophets. sent to Mankind including Adam, Noah, Abraham, Moses, Jesus and Muhammad (peace be upon them all)
  • God has appointed human beings as His stewards, duty bound to struggle to maintain the balance in the Universe; to establish justice and harmony within themselves, and between all humans and the rest of creation.
  • And to reverse discord, and challenge injustice and inequality, each human being has to cultivate and harvest a charitable disposition.
  • And so self less charity and a sense of service should be ready to mobilize the Muslim community to respond to those who are suffering the world over.

In responding to the local and global situation, a Muslim is exhorted towards charitable behavior to his or her neighbor, irrespective of that neighbour’s color, creed or clan.

“He who sleeps on a full stomach whilst his neighbor goes hungry is not one of us.”  (Saying of Prophet Muhammad)

Islam, through the actions of  zakah and sadaqah , emphasizes the duty of charity for the sake of the poor, and the indebted, and also for orphans, travelers in difficulty and for those engaged in the collection and distribution of zakah.

Zakah, which comes from the Arabic verb purifying, is one of the five pillars of Islam and requires a person to make an annual alms payment of 2.5% of his / her excess wealth, accumulated over one year.  This ensures wealth continues to circulate through society.

A Muslim is constantly encouraged to perform charitable action (sadaqa). The Prophet Muhammad pbuh said:

“Even a smile is charity.”

A special form of charity is  waqf, a “legacy for good.” An asset (ex: a business, houses for rent etc) is bought or donated, and the return on the asset is then used to sustain charitable projects ex: schools, hospitals, social welfare programs etc.

Debt, exacerbated by interest payments, is often central to the difficulties faced by the poor. And the response of a Muslim to the taking or giving of loans is governed by the Islamic prohibition on the taking or paying out of usury or interest (Arabic = riba).

Interest is viewed as destabilizing for society as money is made from money, without any productive activity, to be paid irrespective of the success or failure of the venture. As poor individuals and nations are trapped into borrowing their way out poverty, the burden of debt can become swollen by interest, resulting in the widening of the gulf between rich and poor.

“Allah will deprive usury of all blessing, but will give increase for deeds of charity.”  (Qu’ran 2: 276)

In contrast, Islam requires the borrower and the lender to share equally the risk of success or failure, and so loans are organized on a profit-share basis.   This is crucial in encouraging responsible lending by creditors.

If the debtor meets with “straitened circumstances”, relaxing repayment conditions or even the forgiveness of the debt are recommended as gestures that will earn the creditor spiritual reward.

If the debtor is in a difficulty, grant him time till it is easy for him to repay. But if ye remit it by way of charity, that is best for you if ye only knew. (Qur’an 2: 280)

In essence, Islam seeks to encourage people to reflect upon their individual and global responsibilities, as caring neighbors, in the hope that ethical behavior will result in ethical political and economic systems.

By sharing this vision, advocated by Islam and aspired to by millions of Muslims worldwide, an important, and for some, a startling fact, should emerge: the values of Muslims and of those millions of non-Muslims who work tirelessly for social justice are practically identical on so many issues; there is much more that unites people than divides.

In recognizing this common ground, in confronting ignorance and challenging prejudice, “partnership” between communities surely becomes not just a possibility but also an inevitability born out of necessity, for if the canoe which bears humanity continues its present course, then  it will fall  over the edge of a gushing waterfall.

And when partnership between communities becomes a reality, perhaps then one fifth of the world will have a chance to escape the slavery of debt and poverty.

By Muhammad Imran, Development Education Officer, Islamic Relief Islamic Relief  is a U.K.- based aid agency that seeks to alleviate the poverty and suffering of the world’s poorest people. Motivated by the charitable ideals of Islam, Islamic Relief has for the last 18 years, been assisting peoples of all religions and backgrounds through relief and development programs, including non-interest based income generation schemes.

Consuming Islam – the Rise of the Halal Economy

“A vital characteristic of this flourishing capitalism is that is goes so much hand-in-hand with the resurgence of traditional Islamic belief. Those who live by Islam also demand Islamic goods; not just Halal food and headscarves, but Islamic housing, haute couture, banking, education, entertainment, media, consumer goods, and even vacations.

“This upwardly mobile class consumes Islam as much as practicing it, demanding the same sorts of life-enhancing goods and services as middle classes everywhere. Their preference that those goods have an Islamic flavour makes Islam big business. A booming economic sector around the region is catering to this exploding demand, and these rising Islamic consumers comprise as much as one sixth, spread from Morocco to Malaysia, with notable toe-holds from Detroit to Dusseldorf, and Sao Paulo to Singapore.

“Westerners are easily dazzled by the size of China’s economy, the speed of its growth, and the room it has to expand. In recent years, India’s economy has also made remarkable strides. Thinking of the notional ‘Muslim world economy’ provides and interesting basis for comparison. The global Muslim population of a billion-plus is about the same size as both India and China’s populations. In 2008, the GDP of the economies of the largest countries in and around the Middle East–Egypt, Iran, Pakistan, Saudi Arabia and Turkey, with a combined population of 420 million–was $3.3 trillion, the same size as that of India, which has three times the population.

“The bottom line is: a billion consumers have clout. Across economies as diverse as those of Mali, Dubai and Indonesia–and outside the Muslim majority countries, in Muslim diasporas–the demand for Islamic goods and services is strong and growing, and it has already created waves in global markets.”

Quoted from Meccanomics by Vali Nasr, from the chapter The Power of Commerce