With the introduction of Islamic finance, Oman could tap a substantial part of the large Islamic wealth pool available globally.
Islamic finance may bring Oman substantial amounts of foreign direct investment (FDI), Islamic sukuk, project financing and infrastructure investment, according to bankers and industry experts.
According to consulting firm Ernst & Young's estimate, the size of the global Islamic fund industry is US$55bn whereas the potential Islamic wealth pool is around US$480bn at present. So there is a huge potential for Islamic investment in new markets like Oman.
Speaking to Muscat Daily on the sidelines of a seminar on 'Introduction to Islamic finance' at the Muscat Holiday Hotel last week, Ashar Nazim, head of Islamic financial services at Ernst & Young for MENA region, said that in the GCC, there is huge Sharia-sensitive wealth waiting to be invested.
"Oman would be a new investment destination for Islamic funds. Islamic funds are looking for Sharia-compliant assets and new markets to invest in. Once Oman introduces Islamic finance in the country, fund managers will also be looking at Oman for investment in the form of FDI, Islamic sukuk and other alternative investments.
Oman could tap a substantial part of Islamic wealth pool. There is a huge potential to attract foreign direct investment in form of Sharia-compliant investment in a new market."
Nazim said that Ernst & Young is committed to mobilising foreign investments to be invested in Oman's Islamic finance sector and investing resources to developing Islamic banking in the country.
"There is huge Sharia-sensitive wealth in the GCC, which will also make its way into Oman. We will play facilitator," he added. Nazim added that necessary institutional and regulatory framework has to be in place to attract foreign direct investment from the Islamic financial market.
Echoing Nazim's views, Lo'ai Badie Bataineh, head of investment management group at Oman Arab Bank, said, "Being a new market for Islamic finance, Oman definitely will attract external investors and Islamic funds who prefer sharia compliant investments.
If there would be a market for Islamic sukuk in Oman, foreign investors would invest in sukuks and in financing projects. I believe a market for Islamic sukuk would be created in Oman soon and blue chip firms may also raise money by issuing Islamic sukuk."
"We have been investing in Islamic sukuks in Dubai and Saudi Arabia. A lot of Omani companies and banks had invested outside the country in sharia compliant product, part of that investment might be bring back to Oman," Bataineh added.
© Muscat Daily 2011
