The Centre for Excellence in Islamic Finance (CEIF), IBA held an International Forum on 'Unlocking Islamic Finance Potential in CPEC and Beyond' at IBA City Campus.
The China-Pakistan Economic Corridor (CPEC), often called a game-changer in this region, primarily consists of $45 billion worth of domestic infrastructure projects planned by the government of Pakistan, said a statement issued here on Tuesday.
In this Forum, the effects and impact of CPEC on the Islamic Finance industry in Pakistan were analyzed, since it provides a great opportunity for the industry to channelize excess liquidity into innovative financing instruments.
High profile panelists representing the governments of Pakistan and China, Islamic Finance Experts, Academicians and Regulators discussed how this sector can capitalize on growth opportunities stemming from CPEC and related projects.
Ahmed Ali Siddiqui, Director of CEIF said that since CPEC passes through 27 Muslim countries, it is not right to ignore its potential impact on the field of Islamic finance.
'We should try to get the maximum benefit from this. Keeping in mind the Pakistani culture and Muslim majority population, the onus is on us that the financing for CPEC is structured in a Sharia compliant manner' remarked Siddiqui .
All major stakeholders have to act fast to ensure a seamless flow.
Thus, it is a critical topic to be discussed. Mr. Siddiqui also hoped that this forum will provide food for thought on how to further make CPEC a strategic asset for Pakistan.
Dr. Farrukh Iqbal, Dean and Director, IBA, said that the work of the World Bank has essentially been related to long term financing - funds are lent for thirty plus years for development purposes.
Since CPEC is a development project, Islamic finance is very critical for long term development of finance.
Irfan Siddiqui, President and CEO of Meezan Bank first question which he raised was whether 'CPEC would be a game-changer? In order to answer this, it is significant to understand what the CPEC is exactly.
It is a project, which covers 60 countries - more than half of these are Islamic. It will also reduce the distance of Western China to Europe by 5000 km, a distance taking around 45 shipping days.
Consequently, working capital requirements also reduce by one quarter.
Saeed Ahmed, Deputy Governor, State Bank of Pakistan, mentioned how policymakers all over the world are taking a keen interest in Islamic banking especially after the recession of 2007.
The size of the global Islamic finance industry is also approximately Rs. 2 trillion now. The right way to finance projects under the CPEC - ports, roads, motorways - is not from commercial banks, but from specifically designed products by Islamic banks such as Ijarat.
Dr. Nadeem Javaid, Chief Economist, Government of Pakistan, Ministry for Planning, Development and Reform, stated that there are four main components of CPEC: Energy, Infrastructure Development, Economic Incentives and Industrial Cooperation.
He said that CPEC will greatly lower the per unit cost of energy, incentives such as exemption from local duties and materials, whereas suspension of trade union activities, will give opportunities to investors. Therefore, designing cost-effective, Shariah compliant finance options is the need of the hour.
© Pakistan Press International, source Asianet-Pakistan