Monday, June 15, 2009

Is Halal Business Real?

For a long time, the halal simply meant buying meat from a halal butcher, who slaughtered in accordance with Islamic principles. But the halal food market has exploded in the past decade and is now worth an estimated $632 billion annually, according to the Halal Journal, a Kuala Lumpur-based magazine. That's about 16% of the entire global food industry. Throw in the fast-growing Islam-friendly finance sector and the myriad other products and services — cosmetics, real estate, hotels, fashion, insurance — that comply with Islamic law and the teachings of the Koran, and the sector is worth well over $1 trillion a year, according a recent report in Time magazine.

Time attributes the rise of the halal economy to the world's 1.6 billion Muslims, most of whom are younger and, in some places at least, richer than ever. Seeking to exploit that huge market, non-Muslim multinationals like Tesco, McDonald's and Nestlé have expanded their Muslim-friendly offerings and now control an estimated 90% of the global halal market.

McDonald's, Nestle and Tesco are not only non-Muslim owned and managed companies capitalizing on the growing demand for halal products. New ones, such as Canada-based Al Safa, whose products are found in major North American supermarket chains, are joining the fray.

A Muslim name, some Muslim employees, a logo containing Arabic, date palm tree, and a masjid, slick flyers announcing its Halal food products and a 1-800- number with a message greeting you with a Salam and a recording in English and Arabic.

But Al Safa Halal is not a Muslim owned company, according to Sound Vision website. The Kitchener, Ontario-based entity is actually owned by non-Muslim (Jewish) private investors, cashing in on the North American Muslim market.

Beyond halal food, the global economic crisis has brought attention to Islamic finance as an alternative for both Muslim and non-Muslim customers. In a recent article, the Vatican newspaper Osservatore Romano has voiced its approval of Islamic finance. The Vatican paper wrote that banks should look at the rules of Islamic finance to restore confidence amongst their clients at a time of global economic crisis. “The ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service,” the Osservatore Romano said. “Western banks could use tools such as the Islamic bonds, known as sukuk, as collateral”. Sukuk may be used to fund the “‘car industry or the next Olympic Games in London,” the article says.

Investors are attracted by Islamic banking's more conservative approach: Islamic law forbids banks from charging interest (though customers pay fees) and many scholars discourage investment in excessively leveraged companies. Though it currently accounts for just 1% of the global market, the Islamic finance industry's value is growing at around 15% a year, and could reach $4 trillion in five years, up from $500 billion today, according to a 2008 report from Moody's Investors Service.

Pakistan's Islamic banks plan to expand their network of outlets this year to take advantage of rising demand for Shariah-compliant financing according to Pervez Said, director of Islamic banking at the State Bank of Pakistan. These banks have 500 branches, after adding 210 outlets last year. Pakistan is promoting growth in Islamic finance to expand the reach of the banking sector which has less than 25 million deposit accounts. Shariah-compliant facilities are forecast to rise to 277 billion rupees ($3.5 billion) this year from 185 billion in 2008, according to central bank data.

French retail giant Carrefour has been selling Halal products in many Muslim countries for several years now. In fact, Carrefour Malaysia created a unique program in collaboration with the Ministry of Domestic Trade and Consumers Affairs. The company has a dedicated team to monitor and assist small and medium-sized enterprises to develop Halal products, which will be distributed through the Carrefour chains in Malaysia and other countries. Carrefour is the second largest hypermarket in the world, while Carrefour Malaysia set up its Halal Department in 2006.

Carrefour is now looking to expand in several more Muslim countries, including Pakistan. “We are not interested in what I call ‘French North Africa’, so in the west we won’t go beyond Libya. To the east we are looking at markets like Iran and Pakistan. India is too far away for us.” François de Montaudouin, chief executive of Majid Al Futtaim Group, said recently.

Former Nixon adviser and now an American-Muslim commentator, Robert D. Crane, recently described "the universal principles of what may be called Islamic economics, not the glitzy stuff of the so-called Islamic banks but the maqasid al shari’ah or universal and essential purposes of justice as taught principally in the haqq al mal of classical Islamic thought, first revived in the modern era by Grand Mufti Ibn Ashur’s book, Maqasid al Shari’ah, published in 1946 and translated by the International Institute of Islamic Thought in 2007". Crane says that "these provide a new paradigm ready to replace the bankrupt paradigm of concentrated power that dominates in both socialism and capitalism."

The dramatic growth of interest in Halal business and finance can be measured by many international conferences and expos held each year to bring together various regional and international players. A number of major events are planned this year in Asia, Middle East and Europe.

While the Islamic finance is still early in its early development stage, I see it as a crucial vehicle to ensuring in the future that significant part of the wealth of Muslim investors is invested with Muslim businesses in Muslim nations to help them develop. Already, the biggest foreign direct investors in Pakistan are Muslims from Dubai, Malaysia and the Middle East.

APP reported that Malaysia topped the list of investors making Foreign Direct Investment (FDI) in Pakistan during first six month of year 2008, according to data released by Ministry of Foreign Affairs. The Foreign Direct Investment during the first five months of current financial year reached US$ 1.8 billion registering an increase of 1.5 percent, export reached to US$ 8.2 billion with a growth of 20 percent and foreign remittance at 2.9 billion registered an impressive increase of 15pc.

The May Bank of Malaysia made the biggest investment of US$ 907 million in banking sector followed by Saudi Arabia with an investment of US$ 750 million in steel sector and UAE with an investment of US$ 500 million in power sector in Pakistan.

The global economic meltdown has not deterred the foreign investors, including Malaysia, from investing in Pakistan, as the Pakistan’s economy showed extreme resilience and defied the economic recession with registering growth in FDIs, Export and Foreign Remittance.

Islamic bonds, called Sukuk, are a great way for Muslim nations to raise development funds from Muslim lenders, rather than do Euro or dollar offerings in Europe and America. This Islamic bond market is also beginning to develop.

It is important for Muslim businessmen and entrepreneurs to seize the opportunity from the projected phenomenal growth of the halal markets. There are a whole range of products and services from food and medicine to finance to travel and entertainment that can come out of the halal movement. It is clearly a mutli-trillion dollar opportunity during the next three to five years.

Related Links:

Halal Journal

Islamic Finance News

Top 10 Islamic Funds Performance

Pessimism is the Ultimate Kufr

Islamic Finance Summit

Foreigners Eying Farmland in Pakistan

FDI Rising in OIC Economies


Anonymous said...

I have yet to see the benefits of "Islamic Banking". The banks in Pakistan, who call themselves as Islamic banks charge the same amount of interest. They just call it a different name. I have myself observed this at Meezan Bank.

Anonymous said...

Islamic finance in vogues is not what the prophet wanted the society to follow. IT is old wine in the new bottle.

Even when u go to an islamic bank they still charge u an intesest in the name of profit. So the script is used by the intention is dead.

Further if u look closely at the GCC SWF, they invest in the debt instrument of USA as they are not comfortable with the concept of equity as it does not exist in their land.

As per duetche bank report approximately 2.5 trillion usd has been lost by the GCC swf. STill their underlying transaction are in dollar and they invest in dollars.

Riaz Haq said...

While the Islamic finance is still early in its development, I see it as a crucial vehicle to ensuring in the future that most of the wealth of Muslim investors is invested with Muslim businesses in Muslim nations to help them develop.

Already, the biggest foreign direct investors in Pakistan are Muslims from Dubai, Malaysia and the Middle East.

Sukuk is a great way for Muslim nations to borrow money from Muslim lenders, rather than do Euro or dollar offerings in Europe and America.

We should all support this development of Islamic Finance any way we can, even if it does not immediately show results.

Anonymous said...

Well the institutions who claim to be practicing "Islamic Banking" they do not claim that their's is a step towards Islamic banking, they claim THIS IS THE Islamic banking.

A guy who runs a so called "Islamic Financing Company" in Canada, tried to raise capital from investors in M.E. No body bothered as they are not interested if the *profit* is even less than 10%.

Islamic Banking is interesting to Western Banks as they see an opportunity to profit 15% instead of 5%. They have no problem to call the terms whatever words as long as the ROI is better:)

Offcourse as a Muslim I too have great expectations out of Islamic Banking. This can only be offered by institutions which are looking for khair in the akhira more than the ROI

Riaz Haq said...

Islamic Finance is in very early stages of development. I expect it to evolve and offer many different financial products to fulfill various financial needs of consumers and investors. It currently accounts for just 1% of the global market but the industry's value is growing at around 15% a year, and could reach $4 trillion in five years, up from $500 billion, according to a 2008 report from Moody's Investors Service.

While the Islamic finance is still early in its early development stage, I see it as a crucial vehicle to ensuring in the future that significant part of the wealth of Muslim investors is invested with Muslim businesses in Muslim nations to help them develop. Already, the biggest foreign direct investors in Pakistan are Muslims from Dubai, Malaysia and the Middle East.

APP reported that Malaysia topped the list of investors making Foreign Direct Investment (FDI) in Pakistan during first six month of year 2008, according to data released by Ministry of Foreign Affairs. The Foreign Direct Investment during the first five months of current financial year reached US$ 1.8 billion registering an increase of 1.5 percent, export reached to US$ 8.2 billion with a growth of 20 percent and foreign remittance at 2.9 billion registered an impressive increase of 15pc.

The May Bank of Malaysia made the biggest investment of US$ 907 million in banking sector followed by Saudi Arabia with an investment of US$ 750 million in steel sector and UAE with an investment of US$ 500 million in power sector in Pakistan.

Since there is heavy emphasis on equity participation and/or leasing while leverage is discouraged, it'll probably be good for raising venture capital as well, but a case is going to be made by the entrepreneurs to give an outsize returns.

Anonymous said...


If the wealth lost is 2.5 trillin which could be 25% of their networth. The the remaininig is 7.5 trilliion usd. Pls see the total amount of islamic bonds. If might be few million usd or a maximum couple of billion against 7500 billion usd.

Further human greed has no end that is the reason they invest more in the so called developed economy than in developing economy.

Further most of the gcc swf goes to us fund manager who invest in bric. They pay 15% to the swf and make cool profit another 30%.

Islamic finance in the true sense is too noble for ordinary human to practice.

Riaz Haq said...


As far as I know, most managed funds in the US have underperformed relative to the S&P500 benchmark over the last 10 years or more, hence the popularity of the index funds in America. The record of many of the hedge funds is not much better, with the credit and commodity bubble bursts of the last year. By their own admission, an average hedge fund lost 18.1% last year, the reality could be far worse after their toxic holdings are written down.

I expect new regulations to restrict the hedge funds activities an more disclosure requirements because of the massive negative impact they've had on the Main Street in America.

Islamic funds are clearly not yet large enough or diverse enough to accommodate big investors, but they are beginning to offer an alternative to investing elsewhere. And they don't suffer from the downsides of the hedge funds that are usually heavily leveraged and make extremely risky bets on derivatives and commodities.

Almost all ME sovereign have lost tons of money on their investments in US ad Europe.

At 15% per year growth and fresh interest in the Muslim world and the West, I expect to see a lot more money flow into them over the next 5-10 years. And they are going to have compete, just like non-Islamic funds for the investors' money.

Anonymous said...

Growth in GCC. Riaz you must be really joking. GCC can keep on building hotels and mall in km horizontal or vertical.

What is the value addition the economies are doing ? Export base product and even for that they pay an arm and leg as royalty. Royalty is some where between 25 to 40%.

Once again these gcc wealthy countries are controlled by the powerfull american politicians. After the overthrow of sadam with WMD lie no ruler in gcc will have the sense to take american on their wrong side.

There is no transparency of these swf of what is the oil money they got and what is the invested where. So it will be joint loot by american and GCC rulers family at the cost of the economy.

People follow their ruler and they are also blowing off the money rather than creating value. All this will go till the oil is the king and many part of the world depends upon oil as energy for their economy.

Riaz Haq said...

Anon: You think GCC growth is a joke. Have you heard about Singapore? Do you know how Singapore got to where it is? By making a center of trade and finance. That's what made it one of the wealthiest and most productive economies. Look at Singapore Airlines, Singaporean banks and financial institutions, Singapore tourism...all of these sources of wealth for its economy.

Global trade and investment has always been a way to grow and it is becoming more and more important. Even London, NY and Paris depend mainly on global trade and investment for their wealth.

Anonymous said...


You are out of sync. Comparing the most discipline multipe cultural singapore with the medival oriented oil rich gcc.

Singapore earns by trading, facilitation and not by exporting the oil and spending the same as economy.

uae - gdp - 184 billion ud
kuwait 149 billion
saudi 582 billion
pakistan - 452 billion
india - 3.267 trillion usd.

all three gcc countries are just pumping out oil nothing else. What is ever is coming is spent on all luxuries and enjoyment. what is the value addition by the economy ?????????????????!!!!!!!!!!!!!!!

Riaz Haq said...

Anon: I think you are out of sync with the reality in Gulf nations.

GCC countries have been diversifying their economies for over a decade now. Dubai's economy is already well diversified. Oil now contributes only 5 per cent of the gross domestic product (GDP). The trends show progress in this direction among other GCC nations.

Whether trade, finance or tourism, you see signs of diversification everywhere in Gulf nations.

These shaikhs running Gulf nations are not dumb. They are even turning their attention to high-quality education in collaboration with top western universities. Aljazeera is a shining example of the growth of media business in the Muslim world.

Anonymous said...

dubai's economy. Once again you are joking. The real estate market has fallen by 50% without any buyers in the market.

Thanks to fall, most of the expats have been thrown out of jobs which in turn has reduced the economy. Further as per CIA site at least 25% of gdp is out of oil export and the remaining are the bye product of the consumption.

High quality education is true, please go and see the participation of the same.

Tourism in desert. What happens in thailand open happens inside black rooms.

None of the GCC countries including UAE is a nation. It is a a federal of convenience. That is the reason that the balance sheets of all these emirates are different.

Riaz Haq said...

Anon: It seems you have some deep anger and resentment against the GCC nations, to the extent that you claim they are only about oil and nothing else.

But let's assume for the sake of argument that you are right. Do you think their oil money and massive sovereign funds can be a source of money for Islamic finance and investments in Pakistan and other Muslim nations? Do you not believe that many billions of dollars have flowed and continue to flow as FDI and remittances into Pakistan?

Anonymous said...


I donot have any hatred about gcc. I am just trying mock the hypocracy in the GCC. Nothing else as i know even this will pass away.

swf will not put their money in islamic funds as they want return on funds. So it will not happen. Even if that happen it will be a percentage point

With regard to the funds flowing into pakistan from any gcc countries purely depends upon USA. They will not invest in any place not shown by USA.

Acutally the money of export never comes to these gcc countries as it is deployed through the network of banks in europe and usa.

GCC countries does not want taliban in their backyard nor wants to invest in place where there is risk.

Please verify the investments of the gcc on any intangible asset based company like softwares or service. Generally they understand the gross substance and hence their investments are in more real estate as they are comfortable with. Their dependency can be displayed by their undying loyalty to dollar when everbody in the world is feeling that dollar is bound to depreciate.

"From Bubble to Bubble to Bubble The printing presses never stopped. Trillions of dollars
backed by nothing were magically manufactured. The US government assumed nearly a trillion dollars of debt by mid-fiscal year 2009. It issued $3.25 trillion worth of
Treasuries (nearly four times more than floated in 2008), and would chalk up a fiscal deficit equal to 12.9 percent of its GDP."

This is from trendsresearch report extract.

Anonymous said...

Once a King called upon all of his wise men and asked them "Is there a mantra or suggestion which works in every situation, in every circumstance, in every place and in every time? Tell me is there any mantra?"
After a lengthy discussion, an old man suggested something which appealed to all of them. They went to the king and gave him something written on paper. But the condition was that king was not to see it out of curiosity.Only in extreme danger, when the King finds himself alone and there seems to be no way, only then he’ll have to see it. The King put the paper under his Diamond ring.
After a few days, the neighbors attacked the Kingdom. It was a collective surprise attack of the King’s enemies. King and his army fought bravely but lost the battle. King had to flee on his horse. The enemies were following him. He could hear many troops of horses following him and the noise was coming closer and closer. Suddenly the King found himself standing at the end of the road - that road was not going anywhere. Underneath there was a rocky valley 1000 feet deep. The sound of enemy’s horses was approaching fast. The King became restless.
Then suddenly he saw the Diamond ring shining in the sun, and he remembered the message hidden in the ring. He opened the diamond and read the message. The message was very small but very great. The message was – “This too will pass."
The King read it. Again read it. Again & again he read it. Suddenly something struck him- Yes! It too will pass. Only a few days ago, I was enjoying my kingdom. I was the mightiest of all the Kings. Yet today, the Kingdom and all the pleasure have gone. I am here trying to escape from enemies. However when those days of luxuries have gone, this day of danger too will pass. Calm come on his face. The revelation of the message had a great effect on him. He relaxed and forgot about those following him.
After a few minutes he realized that the noise of the horses and the enemy coming was receding. They moved into some other part of the mountains and were not on his path. The King was very brave. He reorganized his army and fought again. He defeated the enemy and regained his lost empire. For a moment King said to himself," I am one of the bravest and greatest Kings. It is not easy to defeat me..:
People were dancing and singing. With all the reception and celebration he saw an ego emerging in him. Suddenly the Diamond of his ring flashed in the sunlight and reminded him of the message. He opened it and read it again: "This too will pass" He became silent. His face went through a total change –from the egoist he moved to a state of utter humbleness!
“If this too is going to pass, it is not yours. The defeat was not yours, the victory is not yours. You are just a watcher. Everything passes by. We are witnessing all this. We are the perceiver. Life comes and goes. Happiness comes and goes. Sorrow comes and goes.”
There is nothing permanent in this world…..Every thing changes except the law of change. If there are problems in the present, they too will pass away – including the current Financial Crisis – because nothing remains forever. Joy and sorrow are the two faces of the same coin. They both will pass away!
“Take no pride in your possession, in the people at your command, in the youthfulness that you have - Time loots away all these in a moment. Leaving aside all these, after knowing their illusory nature, realize the state of Brahman and enter into it!” – Adi Shankaracharya
Even this wealth of nation will pass away. Day before yesterday was UK, Yesterday was USA, tomorrow could be any body ??????

Riaz Haq said...

McDonald's, Nestle and Tesco are not only non-Muslim owned/managed companies capitalizing on the growing demand for halal products. New ones, such as Al Safa, whose products are found in North American supermarket chains, are joining the fray. Here's the Al Safa story from Sound Vision:

A Muslim name, some Muslim employees, a logo containing Arabic, date palm tree, and a masjid, slick flyers announcing its Halal food products and a 1-800- number with a message greeting you with a Salam and a recording in English and Arabic.

But Al Safa Halal is not a Muslim company. The Kitchener, Ontario-based entity is actually owned by non-Muslim (Jewish) private investors, intent on cashing in on the North American Muslim meat market.

While one of Al Safa Halal's proprietors, David Muller, refused to speak with Sound Vision, he directed our call to its Customer and Consumer Relations Manager AbdelKader Muhammad. Muller also would not disclose exactly who and how many people owned Al Safa Halal, saying this information is confidential.

Providing Halal meat products for Muslims was the first type of business Muslims in North America established long ago. After Masjids, the Halal grocery store became a need of the Muslim community in North America. Such stores have become part of the landscape.

Enter Al Safa Halal. While it was only launched last year, it emerged from the company MGI Packers, which is based in Kitchener, Ontario, Canada and had been in business as a slaughterhouse since 1987.

Anonymous said...

Halal business is great as it sell. But who does the selling. Who get the profit out of the transaction matters. If this is being done by any GCC / pakistan based company then it would be great.

You paying money for them to do the hallal. I think customer is the king and that is nothing great about the same.

Anonymous said...

I would say this is great. Shiva sena is trying to take out of mumbai vada pav to all over the world whether it is a success or not it is to sell once concept to others.

If any company in gcc could sell halal concept to the world and then make money that would be creative.

Think for a while will these company sell with endeavour in case the gcc markets dry out of oil riches.

Riaz Haq said...

I think it is ludicrous to compare Sena's vada or RSS's Gau Jal with the halal food products market.

At almost a trillion dollars, the halal market is real and growing. It has very little to do with a small GCC population but everything do with the 1.5 billion Muslim consumers (from Indonesia to Middle East to Asia, America and Europe) around the world.

Anonymous said...


Hallal market for muslims is taken for granted. That market is also exploited by the western companies. HOw that can be great ? Probably you might feel that it is a recognition by the west of the muslim preference. If that recognition is what musim world expect then it is great.

However they pay the price for that recognition to the english and they make their profit.

It could have been great if any enterprise in gcc could have make the hallal as a great enterprice then it would have been great.

Coming to the practices of hinduism, it does not have money to offer any person to practice. Yoga has grown and recognized beyond the border of hinduism.

Latest is the topukaranam "which is done by hindus before ganapathy" is taken as superbrain yog. Earlier this is used to be called as blind belief and used to be rediculed by the western and rationalist. Today yale universtiy is trying to patent the same.

Who knows what white has got an explanation offering for the practices which are mentioned just now by you as blind belief only time has to unravel the same.

Riaz Haq said...

Agence France-Presse AFP Singapore is reporting as follows:

Assets held by the world’s 100 biggest Islamic banks grew 66 per cent in 2008 from the previous year despite the financial turmoil that clobbered mainstream lenders, a report said Friday.

The top 100 Islamic banks held assets totaling 580 billion US dollars last year, up from 350 billion dollars in 2007, according to an annual report by The Asian Banker, a magazine for financial professionals.

In the same period, Asia’s 300 biggest banks saw their assets rise by a much slower 13.4 per cent, it said.

A financial storm sparked by a crisis in the US housing market swept across the world late last year. Its impact spilled over into the general economy and sent several countries into recession.

Prominent US investment bank Lehman Brothers collapsed into bankruptcy, while several other major Western banks suffered massive losses.

‘Despite the financial turmoil in late 2008 that crippled so many large Western institutions, Islamic banks have continued to grow in prominence and size,’ the magazine said in a press statement.

Emmanuel Daniel, the magazine’s president and chief executive, added: ‘Islamic finance has seen an incredible surge in popularity, based on stronger regulatory regimes and a better international understanding of its dynamics.’

Islamic banking fuses principles of sharia or Islamic law and modern banking. Islamic funds are banned from investing in companies associated with tobacco, alcohol or gambling.

Iranian banks were the biggest players in the global Islamic banking sector, holding seven out of the top 10 rankings and 12 out of the 100, but Saudi Arabian lenders were more profitable, the report said.

Saudi Arabia’s Al Rajhi Bank had the highest net income of 1.74 billion dollars, which is more than five times the earnings of Bank Tejarat, Iran’s most profitable lender.

Iranian banks also took up 40 per cent of the total assets of the top 100 banks, with the UAE, Malaysia, Saudi Arabia and Kuwait accounting for a combined 40 per cent. Smaller banks in 10 other markets accounted for the rest.

Outside of the Middle East, two Islamic banks in Britain made it to the top 100, according to the report.

Asian and North African banks ‘are still very small’ compared with the Middle Eastern players, it said, adding that ‘only Malaysian and Bangladeshi Islamic banks have a significant amount of assets’.

Indonesia, the world’s most populous Muslim nation, had only two banks on the list, Pakistan had three, while regional financial centre Singapore and the Malay Islamic kingdom of Brunei had one each.

Anonymous said...

There is more information about this at

Riaz Haq said...

Pakistan, bidding to nearly double Islamic banking in the South Asian state by 2015, is focusing on poor, conservative villages to drive growth and has ordered Islamic lenders to open 20 percent of all new branches in rural areas, according to Reuters:

Islamic banking will help draw the funds of rural customers, a less sophisticated client base who also traditionally shun conventional banks due to concerns over interest which is forbidden under Islam, said Saleem Ullah, director of the Islamic banking department at the State Bank.

"Islamic banking, primarily being a faith-driven industry, has a significant potential in Pakistan as the concept directly appeals to the religiously sensitive segment of the society," Ullah said. "The share of the industry in the banking system has risen to over 7 percent from just 0.5 percent in 2002."

Pakistan's plan is to raise that figure to 12 percent from 7 percent currently by 2015.

Islamic finance growth has faced challenges due to the worsening geopolitical and security situation in Pakistan. But with a population of around 180 million Muslims, the small South Asian nation is still considered as one of the hottest growth areas for the industry.

Pakistan has five fully-fledged sharia-compliant banks and twelve conventional banks with Islamic operations, creating a network of 800 branches in Pakistan. Ullah anticipates that 150 new branches will open by the end of the year.

Islamic banking currently accounts for 497 billion rupees ($5.74 billion), or 7.3 percent of the country's overall banking system.

"Historically, the poor and oppressed in a society are more inclined to follow the norms of their religion than the affluent," said Muddassir Siddiqui, an Islamic scholar and partner at law firm SNR Denton in Dubai.

The combination of aggressive advertising and more Islamic branches in rural areas should drive the industry, Zahid Mansoor, treasurer at DIB Pakistan, a unit of Dubai Islamic Bank , said.

"The new regulatory requirements are a good first step by the government to reaching those in rural areas, where there is little trust for banks and people prefer to keep money under their pillows," he said.

"If you create awareness in the minds of these people, there is significant potential to take Islamic finance beyond a niche market and make it the main choice for banking."

DIB Pakistan, which currently has 59 branches throughout the country, should have 80 branches by the end of the year, Mansoor said.

The prospects for growth is already attracting interest from both the conventional banks in Pakistan and foreign institutions, primarily out of the Gulf region.

Both Dubai Islamic Bank and Bahrain's Al Baraka Bank have subsidiaries in Pakistan and Standard Chartered Saadiq, the Islamic arm of UK-based Standard Chartered , also launched operations in the country.

"We currently have 100 branches in Pakistan and consider it to be a growth area for us," said Adnan Ahmed Yousif, chief executive of Al Baraka Bank. "At our bank, we are looking to get to 200 branches over time. The country definitely has a lot of potential within Islamic finance."

Riaz Haq said...

Here's an excerpt from a recent Washington Post report on Islamic banking in Pakistan:

Business experts say the burgeoning popularity of Pakistan’s Islamic banks — where deposits have gone from about $3 billion to nearly $4 billion in the past year — reflects both a reaction to the turmoil afflicting Western financial systems in recent years and a surge of religious feeling in an overwhelmingly Muslim society in which many people believe their faith is under assault from the West.

“Islamic banks have existed on the fringes of the banking industry for many years, but the global financial crisis has brought them into the limelight,” said a recent report in the Business Recorder, Pakistan’s daily financial newspaper. Today, it said, Islamic banking is “in fashion” and has “earned a shine that continues to attract funds.”

Meezan Bank, the largest of a half-dozen Islamic banks in Pakistan, draws Muslim consumers to its 54 branches by promising “the best of both worlds.” Its brochures advertise quick car loans that are “halal,” or in accordance with religious rules, and new-home mortgages that are “riba-free,” meaning that no interest is charged.

“Interest is a curse that must be eliminated from society,” said Irfan Zulqernain, a Meezan officer who has an MBA and a vision of Islam as a socially transformative force. “We don’t treat money as a commodity, which just makes a few people richer and everyone else poorer. Our way generates economic activity and spreads money throughout society.”

Islamic finance is based on a system of asset leasing and partnerships rather than outright moneylending, which Islam bans. The bank is allowed to turn a profit, but it does so by charging extra fees rather than interest — a distinction that critics say is virtually meaningless and intended solely to make Muslim customers think they are doing the right thing.

Religion as selling point

Banks are not the only businesses to capitalize on the new religious mood among consumers. More and more products are labeled “halal” even when there is no religious blessing involved. At a leading bookstore here in the capital, one of the hottest-selling items is a digitalized miniature version of the Koran that sells for $80.

“This is a precious object for us, and now it as easy to use as a mobile phone. You can just press a button and listen to any verse,” said Samira Imran, a customer who was buying one for her mother. “Our parents like to recite the Koran all the time, but this is a way to connect the new generation as well.”

Riaz Haq said...

Here's an excerpt from a piece by Pankaj Mishra published in Businessweek:

Nov. 18 (Bloomberg) -- During the worldwide depression of the mid-1930s, the poet and Islamic modernist Muhammad Iqbal, often called Pakistan’s spiritual founder, wrote a poem dramatizing the inadequacies of Western political and economic systems.

Democracy and capitalism had empowered a privileged elite in the name of the people, Iqbal felt. But he was not much fonder of Marxism, which was then coming into vogue among anti- colonial activists across South Asia and the Middle East:

But what’s the answer to the mischief of that wise Jew That Moses without light, that cross-less Jesus Not a prophet, but with a book under his arm For what could be more dangerous than this That the serfs uproot the tents of their masters

(Rooh-e-Sultani Rahe Baqi To Phir Kya Iztarab
Hai Magar Kya Uss Yahoodi Ki Shararat Ka Jawab?

Woh Kaleem Be-Tajalli, Woh Maseeh Be-Saleeb
Neest Peghambar Wa Lekin Dar Baghal Darad Kitab

Iss Se Barh Kar Aur Kya Ho Ga Tabiat Ka Fasad
Torh Di Bandon Ne Aaqaon Ke Khaimon Ki Tanab!)
In any case, Tunisians voting for Ghannouchi and Pakistanis flocking to Khan’s rallies are not the radical revolutionaries or closet theocrats they are often made out to be by a paranoid local elite and a global liberal intelligentsia. Rather, these are people who have simply failed to develop the habit of seeing Islam as a purely religious phenomenon, separate from economics, politics, law and other aspects of collective life.

Whether liberal and secular elites like it or not, there are a large number of socially conservative Muslims who wish to see the ethical principles of Islam play a more active role in public life. The mind-numbing division between “moderates” and “extremists” that often passes for profound understanding of Islamic societies in the West simply fails to account for this invisible majority of Muslims, who are unlikely to plump for secular liberalism either now or in the near future.

For many nationalist and reflexively conservative Pakistanis, Imran Khan’s belief that “if we follow Iqbal’s teaching, we can reverse the growing gap between Westernized rich and traditional poor that helps fuel fundamentalism” is not the empty rhetoric it may sound to a Westernized Pakistani.

Indeed, the history of South Asia and the Middle East has repeatedly shown that the failure of modernizing endeavors, and the widespread suffering it unleashes, has always enhanced the moral prestige of Islam. In the eyes of its victims, the debacle of modernization and secularization has also diminished the credibility and authority of local elites as well as their Western sponsors.

The classic example, of course, was Iran. Visiting the Islamic Revolution after the fall of the secularizing Shah, the French philosopher Michel Foucault claimed that “Islam -- which is not simply a religion, but an entire way of life, an adherence to a history and a civilization -- has a good chance to become a gigantic powder keg, at the level of hundreds of millions of men.”

The 1979 Islamic Revolution in Iran that Foucault rashly cheered on has, in another generational shift, run its course. And revolution per se may be far from the minds of young Pakistanis and Tunisians trying to regain control of their national destiny. But the powder keg of political Islam that Foucault spoke of remains dry elsewhere in the Muslim world; and its potency is only likely to increase as Western political and economic systems and ideologies seem, to many Muslims, feeble, and yet so malign.

Riaz Haq said...

Here are excerpts from The Nation's story on halal industry conference in Pakistan:

The speakers at a concluding session of the two days international conference on halal industry in Pakistan stressed the need for focusing on halal industry in the country, as it can give boost to the national economy.
The conference was organized by Halal Research Council in collaboration with PAMCO and Livestock & Dairy Development Department Punjab in which research papers on various topics like export of Halal products from Pakistan, promotion of Pakistan’s Halal Industry internationally, International Halal Research & development and Certification, opportunities of promotion in the Global Halal Industry and the potential of Halal Industry in Punjab were presented.

In that conference, the MoU was signed amongst Philippine and Mauritius for the sake of promoting the Pakistan Halal products. The main subject of the conference was the proposal from Justice Khalil ur Rehman for the formation of Halal Authority which was unanimously appreciated by all.

Other accepted proposals include the Halal awareness Campaign, Research in the field of Halal and Halal Publications.

Riaz Haq said...

Here's Islamic News Agency on IDB/ADB financing of wind farms in Pakistan:

JEDDAH, 27 Jumada Al-Thani/19 May (IINA)- The Islamic Development Bank (IDB) in partnership with the Asian Development Bank (ADB) has signed a US$133 million agreement for long-term lease finance (Ijara) facility for the development of two wind power projects in the Sindh province of Pakistan.

A consortium of local financial institutions comprising National Bank of Pakistan, Faysal Bank, United Bank Limited, Allied Bank and Meezan Bank are also participating in the transaction. Under an innovative risk participation structure between IDB and ADB, the project companies were able to raise 100% Islamic financing for these important infrastructure projects.

The projects are sponsored by the Fauji Foundation and Tapal Group in Pakistan. Once complete, the projects shall add generation capacity of 100MW to the national grid under long term Energy Purchase Agreement with the National Transmission and Distribution Company (NTDC) of Pakistan and thereby make a significant contribution to improving the power supply situation in the country.

These projects are the first generation wind energy projects that Pakistan has embarked on. “Pakistan has enormous potential to tap wind energy, and successful implementation of these projects is expected to bring in further investment in developing more wind projects in Pakistan.” said Walid Abdelwahab, Director, Infrastructure Dept at IDB.

IDB has been a long term development partner of Pakistan and has been involved in both public and private sector projects. Since its inception, IDB’s cumulative operations in Pakistan have reached to almost US$7.5 billion.

Riaz Haq said...

Here's a NY Times story on a Pakistani-American Halal food entrepreneur:

During the early months of 2010, Adnan A. Durrani found himself frequently thinking of kosher hot dogs. To be more precise, he was thinking of an ad campaign for them created decades earlier by the Hebrew National company. Its well-known slogan went, “We answer to a higher authority.”

Let it be said that Mr. Durrani was, in many ways, an unlikely recipient for such a revelation. An observant Muslim born to Pakistani parents, a Wall Street refugee turned natural-foods entrepreneur, he was then trying to create a line of frozen-food entrees adhering to the Muslim religious standard of halal for the American market.

And Mr. Durrani was doing so in an especially forbidding political climate, with a demagogic battle raging against a proposed Muslim community center in Lower Manhattan depicted as the “ground zero mosque,” and judicial and criminal attacks against a mosque being constructed in Murfreesboro, Tenn. “Perfect timing,” he recalled dryly.

Yet the Hebrew National mantra attested to the goal that Mr. Durrani had set for his nascent company, Saffron Road: to hit both the bull’s-eye of a specific religious audience and appeal to the concentric ring of other consumers inclined to impute positive traits to any food with a sanctified aura.

By the late summer of 2010, the first Saffron Road entrees landed store shelves. This year, as the Muslim holy month of Ramadan approaches, bringing with it daytime fasts and nightly iftar meals, the company has put out more than 50 different products and built annual sales on a pace to reach $35 million.

As significant, thanks to a close partnership with the Whole Foods chain, Saffron Road’s products have moved beyond a core audience of observant American Muslims and into the commercial mainstream. In that respect, Saffron Road is among the first halal producers to follow what might be called the kosher model of simultaneously serving and transcending a communal constituency.

“What it takes for an ethno-religious food to cross over into the mainstream is, first of all, buy-in from the general public — a perception that this food has something of value that other food does not,” said Sue Fishkoff, author of the book “Kosher Nation.” That something, she continued, might be a sense, even if inaccurate, that the food is healthier, purer or of higher quality because it has been produced under religious supervision.

The challenge for a halal product, then, is a foundational one. Instead of entering a marketplace that has an innocuously favorable view of a religion and its clergy, such as Judaism and Christianity enjoy in America, a brand like Saffron Road runs the risk of colliding with and even provoking Islamophobia. All of which makes its commercial success more notable, and one might say more heartening.
As of 2014, about two-thirds of Saffron Road’s products are gluten-free and about one-third do not use genetically modified ingredients. They are sold in such mainstream supermarket chains as Costco, Publix and Kroger.

Predictably, some anti-Muslim reaction has appeared, with a small number of bloggers assailing Whole Foods in 2011 for running a Ramadan promotion of Saffron Road products. Less predictably, however, the brouhaha wound up being a bonanza. Mr. Durrani went on CNN to defend his company and deployed a “rapid-response team” of bloggers, including a rabbi, to attack the attackers. Thanks to all the free publicity, Saffron Road’s sales shot up by 300 percent during that Ramadan.

“We say this is higher-powered,” Mr. Durrani said. “Angels come in from nowhere to help us.”

That part of the story, of course, just may not fit into an M.B.A. case study.

Riaz Haq said...

From Wall Street Journal:

ISLAMABAD—Pakistan raised $1 billion through an Islamic bond issue on Wednesday, its first such issue in nearly a decade, in a bid to boost the country’s economy, finance ministry officials said.

The government initially planned to raise $500 million from the issue, but the bond was oversubscribed, with requests totaling $2.3 billion, the finance ministry said. Offers of $1 billion were accepted for a five-year maturity at a so-called profit rate, which is similar to a yield, of 6.75%.

The issue was part of Prime Minister Nawaz Sharif ’s ambitious plans to boost Pakistan’s economy, which include divestments and privatization of as many as 31 state-owned enterprises.

Finance Minister Ishaq Dar called the bond issue “a reflection of [the] international investor community’s [confidence] in the leadership of Prime Minister Nawaz Sharif and his economic policies.”

Officials on Thursday said the issue had added significance because of the abandoned sale of a part of the government’s stake in the country’s largest oil and gas business, due to poor investor response. That sale had been expected to raise $800 million, but investors tendered bids for only 52% of the shares on offer.

An Islamic bond, or Sukuk, doesn’t rely on interest, which is forbidden in Islam. Instead, the bonds are linked to assets and profits paid to investors based on revenue generated by the assets, or based on the investor’s part-ownership of the asset, depending on the bond’s arrangement.

“This [bond] issue has been very successful; It’s a big boost and a statement of trust from investors,” a senior finance ministry official said, requesting anonymity because he wasn’t authorized to speak to the media. “Our assessments proved correct: that investors were hungry for an Islamic bond.”

In a statement issued after the issue, Pakistan’s finance ministry said the profit rate of the $1 billion Islamic bond “compares favorably with the average weighted cost of comparable domestic debt of about 11%” and will result in annual savings worth 5 billion Pakistani rupees, or nearly $50 million, in debt servicing.

The ministry said the $1 billion proceeds from the bond issue will immediately go to the country’s central bank, which will help boost foreign exchange reserves. Pakistan had liquid foreign exchange reserves of $13.2 billion as of November 21, according to the State Bank of Pakistan. The government wants to increase reserves to $15 billion by the end of this year.

The International Monetary Fund is expected, pending a review by its executive board next month, to release a $1.1 billion tranche of a $6.6 billion loan to Pakistan.

Riaz Haq said...

Called "that rarest of things in popular entertainment, a sympathetic Muslim family at the center of its own show," by The New York Times , web series Halal in the Family went live last week, showing audiences the lighter side of being Muslim in America.

Aired on website Funny or Die Halal in the Family was conceived of by actor-comedian Aasif Mandvi and his writing partner from popular late night show The Daily Show, Miles Kahn.

Halal in the Family follows an average American-Muslim family of four trying to fit in as they go about their daily life of school, groceries, work and socializing. Apart from Mandvi as the dad, the series also stars Sakina Jaffrey of House of Cards fame as the mom.

“We haven’t had it in America,” Mandvi told The New York Times . “Americans haven’t been ready to see an American Muslim family in a sitcom.”

In a separate interview with The Daily Beast , Mandvi said: "Actually I’m more culturally Muslim than religiously but being Muslim is an important part of my identity. I wanted to make this project because as Muslim, I feel it’s important to counter any form of bigotry, be it anti-Semitism, homophobia, racism, etc. These forms of hate share a common denominator of misinformation and intentional fear mongering."

From newspapers to entertainment websites, the series claimed a lot of attention in the US over the past week. Even author and academic Reza Aslan gave the series his stamp of approval.

Riaz Haq said...

#Japan's Ajinomoto to offer #halal seasonings in #Pakistan in collaboration with Lakson Group- Nikkei Asian Review

TOKYO -- Ajinomoto will set up a company in Pakistan to sell halal-certified seasonings, aiming to tap a market of nearly 200 million people as well as gain a firmer foothold near the Middle East and its heavily Muslim population.

The Japanese company will form a joint venture with Pakistani conglomerate Lakson Group in Karachi, Pakistan's largest commercial center. The venture will be capitalized at about 1.2 billion yen ($10.7 million), with Ajinomoto owning 85% and Lakson 15%. It will import such products as fried chicken coating and meat-flavored Masako seasoning from Indonesia and market them across Asia using Lakson's sales network. The two companies are targeting about 1.3 billion yen in sales by fiscal 2022, aiming to eventually turn this into a 10 billion yen business.

Ajinomoto set up an office in Pakistan in July 2014 and has studied trends in the country's food markets and logistics industry. Although it sells its namesake monosodium glutamate flavoring through local stores, it apparently faces an uphill battle against more established Chinese rivals.

Lakson, which works in finance and information technology, also partners with foreign companies to manufacture and sell such items as tea, detergents and soap. Its products are carried by 180,000 retailers across the country. The partnership with Ajinomoto will add high-value-added seasonings such as meat flavorings for lentil soup -- an important part of home cooking -- to Lakson's portfolio.

Ajinomoto expects to report group sales of 1.26 trillion yen for fiscal 2015, with the food segment accounting for about 70%. Domestic food sales are seen totaling 404.5 billion yen and overseas sales 502.7 billion yen. The company has focused on such countries as Brazil, the Philippines and Indonesia as foreign growth drivers. It considers Indonesia key to future growth, positioning it as a base for cultivating the Muslim market.

The company will spend 360 billion rupiah ($27.3 million) to boost Masako production capacity by 30% in Indonesia, where it has had success making and selling halal products. For Pakistan, whose Muslim population is second only to Indonesia's, Ajinomoto will develop products tailored to Muslim dietary habits as well as consider local production.

Riaz Haq said...

#McDonald's Opens in #Quetta — But #Taliban Not Lovin' It. #Pakistan #Balochistan via @nbcnews

All menu items are halal, and there's even a shawarma-meets-gyro type of wrap to get local tastebuds interested: Behold, the McArabia.

You can get a McArabia for just under $3.00. Add a drink and some fries, and you're still at under $5.00.

In a country where pork is banned for religious reasons, Sausage and Egg McMuffins are on the menu — but the sausage is made from chicken.

Senior militant commander Ehsanullah Ehsan, who is a spokesman for one of the Taliban factions in Pakistan, laughed when asked Friday for his thoughts on the hamburger chain.

"Hahahaha, so you are asking me about McDonald's food," the TTP-JA fighter said. "Yes, I know McDonald's and its food but we will never eat it. We don't even consider it as a food. This isn't our food ... We live in the rough, tough mountainous areas and need energy and power to fight against the enemy."

A senior member of the Afghan Taliban told NBC News he had once tasted McDonald's food in the Pakistani city of Karachi but it was "too expensive" and tasteless. He said that Taliban fighters preferred mutton and rice.

However, he conceded that it was "good when you are in a hurry and have no access to proper food."

"We know it's an American food company and our religious scholars have forbidden us from consuming any Western food and beverages," the militant added, saying that he intended to visit the Quetta outlet with friends but would not eat there.

Quetta needs a break. Since the Soviet invasion of next door Afghanistan in 1979, it has morphed from a well-manicured city to a violent, refugee-laden hideout of some of the region's most dangerous militants.

The capital of the insurgency-ridden Pakistani province of Balochistan has has slowly been stabilized and terror incidents have decreased by more than 60 percent since last year, according to the paramilitary Frontier Corps, which is in charge of the city's security.

The new McDonald's is in Millenium Mall, which is located in the highly secured Police Lines neighborhood.

Quetta's under-fire cops have been targeted many times near the fast-food restaurant.

Riaz Haq said...

How #halal food became a $20 billion hit in #America via @business

Sometimes, culinary trends move in sync with political ones. Sauerkraut was renamed “liberty cabbage” when the U.S. was at war with Germany, and a more recent falling-out with the French led to the invention of “freedom fries.”
But sometimes they move in mysterious ways. In an election season dominated by Donald Trump, Muslims haven’t always been made to feel welcome in America. Meanwhile sales of halal food, prepared according to Islamic law, are surging -- and not just among the fast-growing U.S. Muslim population: Adventurous millennial foodies are embracing it too.

Shahed Amanullah could only find about 200 places that served halal food in 1998, when he launched a website to help Americans find it. Today, he’s tracking 7,600, and he says halal is making inroads even among people who are wary of Muslims. “Food is a great medium for cultural sharing,” Amanullah said.
There’s a well-trodden path in America’s food culture, leading from ethnic-specialty status to the mainstream. It happened long ago with Italian cuisine, and to some extent with kosher food, which offers a closer parallel to halal. Like the Jewish equivalent, Islamic rules mandate humane treatment of animals as well as other special preparations.
At every level of the U.S. food chain, halal already occupies a small but rapidly expanding niche.
In grocery and convenience stores and similar outlets, research firm Nielsen estimates that sales reached $1.9 billion in the 12 months through August, a 15 percent increase from 2012.

Overall, from restaurants to supermarkets, halal sales are projected at $20 billion this year, up by one-third since 2010, according to the Islamic Food and Nutrition Council of America, which certifies halal food and promotes education on the topic
Whole Foods Market Inc., which has been among the pioneers, ranks halal among its fastest growing categories, with double-digit sales growth in each of the last five years. It’s been running Ramadan promotions since 2011.
For early-adopting retailers, there’s been some flak -- especially in the corners of social media where Islam comes under regular criticism. Amanullah said his “where-to-find-it” website is often used in such circles as a “who-to-boycott” guide -- though he said such efforts typically backfire and end up helping his business.
When Whole Foods ran its initial Ramadan campaign, it was criticized for failing to tout other religious holidays. Rick Findlay, global grocery coordinator for Whole Foods, says the company wasn’t deterred.
“People look to Whole Foods to be that trend setter,” he said, “We’re happy to be on that cutting edge and take some risks.”