Islamic Banking & Finance in South-East Asia

Transcription

1 Islamic Banking & Finance in South-East Asia Its Development & Future 3rd Edition

2 ASIA-PACIFIC BUSINESS SERIES (ISSN: ) Series Editor Philippe Lasserre Emeritus Professor of Strategy and Asian Business INSEAD Published Vol. 1 Vol. 2 Vol. 3 Vol. 4 Vol. 5 Vol. 6 Guanxi and Business by Yadong Luo From Adam Smith to Michael Porter: Evolution of Competitiveness Theory by Dong-Sung Cho & Hewy-Chang Moon Islamic Banking and Finance in South-East Asia: Its Development and Future (2nd Edition) by Angelo M. Venardos Asian Models of Entrepreneurship From the Indian Union and the Kingdom of Nepal to the Japanese Archipelago: Context, Policy and Practice by Leo-Paul Dana Guanxi and Business (2nd Edition) by Yadong Luo Islamic Banking and Finance in South-East Asia: Its Development and Future (3rd Edition) by Angelo M. Venardos

3 Asia-Pacific Business Series Vol. 6 Islamic Banking & Finance in South-East Asia Its Development & Future 3rd Edition Angelo M Venardos World Scientific NEW JERSEY LONDON SINGAPORE BEIJING SHANGHAI HONG KONG TAIPEI CHENNAI

4 Published by World Scientific Publishing Co. Pte. Ltd. 5 Toh Tuck Link, Singapore USA office: 27 Warren Street, Suite , Hackensack, NJ UK office: 57 Shelton Street, Covent Garden, London WC2H 9HE Library of Congress Cataloging-in-Publication Data Venardos, Angelo M. Islamic banking and finance in South-East Asia : its development and future / by Angelo M. Venardos. -- 3rd ed. p. cm. -- (Asia-Pacific business series, ISSN ; v. 6) ISBN-13: (pbk) ISBN-10: (pbk) 1. Banks and banking--southeast Asia. 2. Banks and banking--islamic countries. 3. Banks and banking--religious aspects--islam. 4. Southeast Asia--Economic conditions. 5. Islamic law--southeast Asia. I. Title. HG A6.V dc British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library. Copyright 2012 by World Scientific Publishing Co. Pte. Ltd. All rights reserved. This book, or parts thereof, may not be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording or any information storage and retrieval system now known or to be invented, without written permission from the Publisher. For photocopying of material in this volume, please pay a copying fee through the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA. In this case permission to photocopy is not required from the publisher. Typeset by Stallion Press enquiries@stallionpress.com Printed in Singapore.

5 This book is dedicated to my daughters Alexandra and Christina.

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7 Contents Foreword by Arfat Selvam... xv Preface to 3rd Edition... Acknowledgements... Introduction... Chapter 1 Islamic History The Quran The Five Principles of Islam The Mosque Muhammad and the Origins of Islam The Spread of Islam The Golden Age of Islam Decline and Fall A Revival of Fortunes Middle-Eastern Oil Islamic Nationhood in the Late Twentieth Century The Iranian Revolution and After Islamic Banking and Islamic Revival xvii xix xxi vii

8 viii Islamic Banking and Finance in South-east Asia (3rd Ed) Chapter 2 Shari ah Law and Islamic Jurisprudence From the Obligatory to the Forbidden The Quran, the Sunnah and the Hadith The Five Major Schools of Islamic Law Classical Islamic Jurisprudence and the Processes for Ascertaining the Law The Concept of Fatwah From Revelation to Codification: Scholasticism and the Formulation of Doctrine Closing of the Door of Ijtihad Shari ah and State Law in the Modern Era Chapter 3 Islamic Commercial Law Islamic vs. Non-Islamic Commercial Transactions Principal Requirements of the Shari ah in Relation to Commercial Activities Islam: the Difference between Equity and Debt Rationale of the Prohibition of Interest Conventional Banking and the Prohibition of Riba in Islam Treatment of Deposits with Interest Profit and Loss Sharing Profit-Sharing Enterprises Islamic Contract Law Types of Contract in Shari ah Islamic Financing in a Contemporary Setting The Problem of Uncertainty ( gharar) Summary Chapter 4 Islamic Financial Products The Emergence of Islamic Banking Different Paths, Same Goal What Investment Products are Permissible under Islamic Shari ah Law Shari ah Investment Principles... 49

9 Contents ix 4.5 Equity-Financing and Debt-Financing in Pre-Islamic Arab Society Islamic Equity-Financing and Debt-Financing Equity Securities: Profit-Sharing Contracts Debt-Financing Contracts Debt Securities Shari ah Qualifications in Leasing Other Risk-Taking Products Islamic Insurance Takaful Insurance in a Contemporary Context Takaful Compared with Conventional Insurance Summary Chapter 5 Issues and Challenges of Islamic Banking Today Obstacles to the Application of Islamic Law to Present Day Banking Derivation from Revealed Sources Methodological Differences Pluralism of Fatwahs The Problem of Applying Islamic Law in a Western Legal Environment Accounting and Corporate Regulatory Practices Depositors and Regulators Regulators Concerns Legal Challenges Developing an Efficient Regulatory Framework Special Requirements of Islamic Banking Assessment and Management of Investment Risks Proposals for a Regulatory Framework for Islamic Banking Conclusion Chapter 6 Islam in South-east Asia The Coming of Islam to South-east Asia European Rivalries and Colonisation The Road to Independence... 96

10 x Islamic Banking and Finance in South-east Asia (3rd Ed) 6.4 Post-Independence: A New World Order The Philippines Indonesia Malaysia Brunei Islam in South-east Asia Today Chapter 7 Colonial Legacies: Islam and State Law in South-east Asia Shari ah vs. State Law British Malaya The Introduction of English Common Law to Malaya Out of India Muslim Law in Malaysia Conflict between Muslim Law and English Common Law Maria Hertogh: A Case in Point Post-Independence Chapter 8 Malaysia: A Leading Islamic Finance Jurisdiction Introduction A Leading Islamic Finance Jurisdiction Legislation Regulatory Bodies The MIFC Initiative Incentives for Islamic Finance The Financial Industry The Islamic Banking Sector Sukuk Fund Management Takaful Other Securities Education and Human Capital Conclusion

11 Contents xi Chapter 9 Indonesia: An Islamic Banking Giant Awakens Introduction Banking Sector Early Islamic Banking Islam in Indonesia Key Islamic Banking Legislation Taxation of Shari ah-based Activities Financial Industry in Indonesia Islamic Banking Sukuk Takaful Fund Management Conclusion Chapter 10 Labuan: A Growing Niche in Islamic Finance Labuan A Jurisdiction of Increasing Substance The Labuan Islamic Financial Services and Securities Act 2010 (LIFSSA) Labuan Offshore Companies Currency and Exchange Control Tax Incentives Labuan International Financial Exchange Islamic Finance in Labuan Sukuk Takaful/Retakaful Moving Forward with Islamic Banking Conclusion Chapter 11 Brunei: Size Really Doesn t Matter Introduction A Thriving Muslim Country Brunei s Financial Industry Financial Institutions Division (FID) Brunei International Financial Corporation (BIFC) A New Authority

12 xii Islamic Banking and Finance in South-east Asia (3rd Ed) The Exclusion of Money Laundering a First Priority Financial Legislation International Insurance and Takaful Order 2002 (IITO) Islamic Banking Order 2008 (IBO) Takaful Order 2008 (TO) Islamic Finance in Brunei Sukuk Issuance Islamic Finance Education Some Challenges Conclusion Chapter 12 Singapore: Small But Significant Introduction Government Business Environment Legal System Financial Services Industry Islamic Banking Regulations Regulatory Treatment of Common Islamic Finance Products Common Funding Structures Common Financing Structures Providing Incentives to Financial Institutions Islamic Banking in Singapore Islamic Bank of Asia (IBA) Maybank Sukuk Exchange-Traded Funds (ETFs) Real Estate Investment Trusts (REITs) Investment Funds Takaful Takaful Challenges Education Strengthening Economic Ties Conclusion

13 Contents xiii Chapter 13 An Overview of Islamic Succession Planning Introduction Development of Islamic Succession Planning Islamic Succession Planning Products Waqf Wasiat Hibah Distribution Products in the Marketplace Conclusion Chapter 14 Conclusion Introduction Islamic Finance Immune to the Subprime Crisis? IFSB Response Strategies to Strengthen the Resilience of the Islamic Financial System Conclusion Glossary Bibliography Index

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15 Foreword Islamic finance and banking is an interesting area for me both professionally and personally. As a corporate finance lawyer for over 40 years, I can say that I have witnessed many of the major developments in the financial services market in Singapore and South-east Asia. Then in 2005, I began to observe another exciting development taking root. In his keynote address at the March 2005 Asian Banker Summit, Mr Ong Chong Tee, Deputy Managing Director, Monetary Authority of Singapore, spoke on Singapore s Perspective on Islamic Finance. He mentioned that in recognition of the global trend, we, at the MAS, have also begun to look at our own capabilities as a financial centre and how we can or should plug in. Islamic banking and financial services law is unlike conventional commercial law that people are familiar with. Apart from being able to marry my personal faith as a Muslim and my professional experience as a corporate lawyer, this area of practice allows one to include principles of social responsibility and ethical considerations in commercial activities. Such principles have yet to gain widespread acceptance in the business world as we know it. When Angelo in 2005 published the first edition of this book Islamic Banking & Finance in South-east Asia: Its Development & Future, it was one of the first few books on the subject in South-east Asia. It was particularly interesting to me that he is a non-muslim and was able to make what I consider to be a significant contribution to the industry. The book expectedly has been well received and I am honoured to be writing this Foreword for the 3rd edition. Whether new to Islamic finance or even familiar with its workings, you would find it beneficial to a have a copy of Angelo s book in your xv

16 xvi Islamic Banking and Finance in South-east Asia (3rd Ed) collection. He writes with clarity and importantly, he brings a neutral and sincere perspective of the industry in South-east Asia, free of any bias, commercial, religious or otherwise. I congratulate Angelo for his efforts and a job very well done. I believe that you will find this 3rd edition to be a valuable resource to your work and study in Islamic finance. Arfat Selvam Managing Director Alliance LLC, Singapore

17 Preface to 3rd Edition I am pleased that this book is in its 3rd edition, which tells me clearly of the wide and increasing interest in the topic of Islamic banking & finance around the world. This 3rd edition contains updates of statistics and the development of Islamic banking in Malaysia, Labuan, Singapore, Indonesia and Brunei. One additional topic which I have added, and has been of popular interest, is Islamic succession planning. While Islamic banking is generally about accumulating and managing wealth, Islamic succession planning is about the distribution of one s wealth upon death. This book serves as an overview of the development of Islamic banking and finance in South-east Asia specifically and is not meant to be a practitioner s guide to all the aspects of Islamic banking per se. It offers a more accessible and less exhaustive alternative to other more philosophical and technical books on Islamic banking. I am pleased that the rights of this book have been sold and translated into Arabic by the leading Islamic University King Saud in the Middle East. Angelo M Venardos xvii

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19 Acknowledgements The genesis of the first edition commenced with my attendance, as a banker from the conventional system, at the first International Islamic Finance Forum held in Dubai in March This then led to a research paper as part of a doctoral degree programme at Bond University Law School, Australia, out of which the present study has grown. My thanks and sincere appreciation goes to Mr Robert Miller, the then Head of the Brunei International Financial Centre for his encouragement to write this book; to Mr Keon Chee my colleague who helped with research for some of the chapters; and to Ms Juliet Lee Ley Chin, my editor at World Scientific Publishing, who has worked tirelessly with me to produce this book. Every effort has been made to cite and acknowledge all sources of reference materials used. Omissions, if any, are unintentional and the author apologises in advance should this be found to be the case. Angelo M. Venardos xix

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21 Introduction The key feature, or principle, that distinguishes Islamic banks from any other kind of bank is the rejection of interest-based financial transactions. The Quran s ban on giving or receiving interest is known to all devout Muslims. The words from Chapter 2, Verse 278 of the Quran are, in fact, quite specific: O you who believe! Have fear of Allah and give up what remains of what is due to you of usury If you do not, then take notice of war from Allah and His Messenger. Just how serious a sin is paying or receiving interest? Shaykh Nizam Yaquby, an Islamic scholar who is trained in both economics (at McGill University in Canada) and in Islamic Shari ah law (in Saudi Arabia, India and Morocco), noted that Christianity and Judaism got over their hangups about it sometime during the Middle Ages the Old Testament also includes several stern warnings about interest but Islam never really budged. Back in the days of Muhammad, the reasons for deploring interest were self-evident. Loan-sharking was rampant, and failure to repay a loan could mean slavery. By outlawing interest, Islam advocated an economy based on risk-sharing, fair dealing and equity in both the financial and social-justice senses of the word. Islamic scholars believe this system is superior on several counts. It leads to more prudent lending, they say, by encouraging financiers to invest directly in an entrepreneur s ventures. A financial system without interest is more interested, says Shaykh Yusuf DeLorenzo (a Virginiabased Islamic scholar). Accordingly the scholars believe that interest-free finance would also prevent future Enrons and Argentinas. One reason for prohibiting interest is to keep everybody spending according to his limit, says Yaquby. This consumerism society was only created because of the banking system, because it encourages buy today, pay tomorrow. You also xxi

22 xxii Islamic Banking and Finance in South-east Asia (3rd Ed) have poor economies in debt to rich ones. This is because of borrowing and lending with interest. So this is creating big economic chaos in the world. Non-Muslims find Islamic finance appealing as well. The OCBC Al- Amin Bank in Malaysia, for instance, has non-muslims making up half of the bank s Islamic banking customers. 1 To quote the Vatican s official newspaper Osservatore Romano, 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. 2 Against such a background, there are many who see Islamic finance as a possible way forward to a brighter and more socially responsible future. Standard & Poor s estimates that assets of the top 500 Islamic banks expanded 28.6 per cent to total US$822 billion in 2009, compared with US$639 billion in Today, there are over 300 Islamic financial institutions in more than 50 countries, though they are mainly concentrated in the Middle East and Southeast Asia, but are also gaining popularity in Europe and the United States. 4 They include banks, mutual funds, mortgage companies, insurance companies in short, an entire parallel economy in which Allah, not Alan Greenspan, has the final say. Industry growth has averaged 10 to 15 per cent a year, and sniffing opportunity, conventional banks like Citibank and Hongkong & Shanghai Banking Corporation (HSBC) have opened Islamic windows in the Gulf. And whilst the industry s market share is still modest about 10 per cent in Bahrain its very existence challenges the modern assumption that global capitalism flattens all before it. At the beginning of the twenty-first century, many Western, Middle Eastern and Asian financial institutions recognise Islamic banking as an important new opportunity for growth and have adopted Islamic practices to serve this expanding market. Islamic mutual funds have also sprung up 1 More non-muslims trying Islamic banking: OCBC, Business Times, 1 December As reported in The relevance of Islamic finance principles to the global financial crisis, Harvard Law School Paper, 27 March Standard & Poor s Islamic finance outlook Al-Salem, Faoud (2008), The size and scope of the Islamic finance industry: An analysis, International Journal of Management, May 2008 (online version).

23 Introduction xxiii which invest client monies in ways that do not conflict with the conscience or practical interests of Muslims. In this respect they are rather like socially responsible funds in the West. The prohibition of interest the ethical core of Islamic banking derives from Islamic law, which is enshrined in the Shari ah. The word shari ah literally means a waterway that leads to a main stream, a drinking place, and a road or the right path. It is a term that encapsulates a way of life prescribed by Allah for his servants and it extends to every department of daily life, including commerce and financial activities of every kind. Since the advent of Islam dates back to the seventh century, the application of ethical principles that were first established fourteen centuries ago to modern situations and circumstances can be a complex matter. Naturally, ancient texts are mute on such matters as derivatives and stock options, which means that modern-day Islamic scholars must extrapolate. Currency hedging, for instance, is prohibited on the basis of gharar, a principle that says that one should not profit from another s uncertainty. Futures contracts are not allowed, since Muhammad said we should not buy fish in the sea or dates that are still on the tree. As for day trading, it is too much like gambling. Bonds have been an area of divergent thinking. Malaysian scholars have approved the issuance of specially designed Islamic bonds or sukuk. But some Middle Eastern scholars, who take a harder line than their Far Eastern counterparts, have roundly criticised them. Playing semantics with God is very dangerous, warns Yaquby. Calling fornication making love doesn t make it any different. Yet their stance may be slowly softening. According to Standard & Poor s 2009 compilation, Malaysia leads with global Islamic bond issuance of 54 per cent, while Saudi Arabia, UAE and Bahrain together garner a respectable 33 per cent. Everybody can agree on one matter, though: It is okay to buy and sell stocks, since stocks represent real assets. And now they can be traded safely, using the Dow Jones Islamic Market Indexes. Launched in 1999, these indexes offer a pre-screened universe of stocks for the devout stock picker. Today, the Dow Jones Islamic Market Index family includes thousands of broad-market, blue-chip, fixed-income and strategy and thematic indexes that have passed rules-based screens for Shari ah compliance. The indexes are the most visible and widely-used set of Shari ah-compliant benchmarks in the world.

24 xxiv Islamic Banking and Finance in South-east Asia (3rd Ed) To determine their eligibility for the indexes, stocks are screened to ensure that they meet the standards set out in the published methodology. Companies must meet Shari ah requirements for acceptable products, business activities, debt levels, and interest income and expenses. The screening methodology is subject to input from an independent Shari ah supervisory board. By screening stocks for consistency with Shari ah law, the indexes help to reduce research costs and compliance concerns that Muslim investors would otherwise face in constructing Islamic investment portfolios. Today there are 9 global and regional indexes, 69 country indexes, 7 blue-chip indexes, 2 strategy and thematic indexes and 1 bond index. 5 For example, one screen may remove companies that make more than 5 per cent of their revenues from sinful businesses. That expels such notables as Vivendi (alcohol), Citigroup (interest), Marriott (pork served in hotel restaurants), and FORTUNE s parent company, AOL Time Warner (unwholesome music and entertainment). A second screen may eliminate companies with too much debt, the cut-off being a debt-to-marketcapitalisation ratio of 33 per cent. A third screen applies the same standard to a company s cash and interest-bearing securities, whilst a fourth makes sure that accounts receivable do not exceed 45 per cent of assets. Islamic investing is low-debt, non-financial, social ethical investing, explained Rushdi Siddiqui. But demand for Islamic mutual funds is booming. By the end of 2009, the number of Islamic mutual funds is estimated to have reached 925, representing an annualised growth rate of 28 per cent since The influx of capital generated by rising oil prices has spurred massive investment in infrastructure and real estate development projects in the GCC, driving demand for Islamic bonds and loans. The liquidity has also led to significant wealth accumulation among individuals, prompting the need for Islamic asset management services. Assets under management by Islamic financial institutions now exceed US$600 billion, making the sector a viable option for investors and a competitive form of financing for commercial 5 Overview of Dow Jones Islamic market indexes ( com/islamicmarket/).

25 Introduction xxv enterprises. It is also allowing for the further diversification of risks and is contributing to an efficient international allocation of resources. 6 The first Muslim-owned banks were established in the 1920s and 1930s, but they adopted similar practices to conventional banks. Then in the 1940s and the 1950s, several experiments with small Islamic banks were undertaken in Malaysia and Pakistan. The first significant success was in the Egyptian village of Mit Ghamr, which set up a bank that conducted business according to Islamic principles in Other successes include the establishment of the Inter-Government Islamic Development Bank in Jeddah in 1975, and a number of commercial Islamic banks such as the Dubai Islamic Bank, the Kuwait Finance House and the Bahrain Islamic Bank in the 1970s and 1980s. Commercial banks have also realised the potential of this new field, and a number of major worldwide institutions have grasped Islamic banking as a significant mechanism for more diversified growth. 7 Although Islam is traditionally associated with the Middle East, North Africa, Pakistan and India, the countries of South-east Asia also make up an important component in the Islamic community worldwide. In 2009, it was estimated that there were 280 million Muslims in South-east Asia, which represents some 17 per cent of Muslims worldwide. Malaysia, Indonesia and Brunei Darussalam, though constitutionally secular states, are the principal Islamic countries in the region, but there is also a sizeable Muslim population in the Philippines and significant Muslim representation in Thailand. Indonesia, which has a Muslim majority of 202 million, is the most populous Muslim country in the world.11 The introduction and implementation of Islamic banking in Southeast Asia is not as far advanced as in the Middle East, but the potential of this as yet untapped market is immense, making it an extremely attractive proposition to every kind of investor, including both Islamic bankers and conventional bankers alike. Malaysia was the first South-east Asian country to develop an Islamic banking sector with the introduction of 6 Islamic finance: Opportunity for long-term growth, Rod Ringrow, State Street Global Advisors, 18 March Al Tamimi & Company, Islamic finance: A UAE legal perspective, International Islamic Finance Forum, International Institute of Research, Dubai, March 2002, p. 1.

26 xxvi Islamic Banking and Finance in South-east Asia (3rd Ed) an Islamic Banking Act and the simultaneous establishment of the Bank Islam Malaysia Bhd in As of end-2009, Malaysia s US$93 billion of Shari ah assets account for 19.6 per cent of the country s total banking industry, according to Bank Negara Malaysia s website. The nation has RM 279 billion (US$87 billion) of outstanding Islamic debt, according to data compiled by Bloomberg. 8 Islamic banking in Indonesia is not nearly as well developed as it is in Malaysia with Islamic banks holding 1 to 2 per cent share of the assets in the banking system. However, as mentioned, Indonesia is the world s most populous Muslim nation and in this respect the country represents a potentially huge market with enormous scope for growth and expansion. In order to accommodate the public need for the existence of a new banking system, the Indonesian Government introduced legislation in 1992 which implicitly allowed the development of Shari ah-compliant banking operations as an adjunct to the conventional banking system in effect a dual banking system. Subsequent legislation in 1998 and 1999 gave authority to Bank Indonesia to conduct its operations according to Shari ah principles. 9 Islamic banking in Indonesia is implemented under a dual banking system. As of May 2010, there were 9 Islamic commercial banks, 24 Islamic banking units or windows and 2 State Islamic banking units. 10 The progress of Islamic banking in Indonesia has been impeded by the lack of comprehensive and appropriate framework and instruments for regulation and supervision, limited market coverage, lack of knowledge and understanding on the part of the public, lack of efficient institutional structures supporting efficient Shari ah banking operations, operational inefficiency, domination of non-share-based financing and limited capability to comply with international Shari ah financial standards Islamic U.S. mutual funds flocking to Malaysia: Islamic finance, by Soraya Permatasari, 16 August 2010, Bloomberg Businessweek. 9 The blueprint of Islamic banking development in Indonesia, Bank Indonesia, September Islamic banking in Indonesia in brief, found in Bank Indonesia website (www. bi.go.id/web/en/perbankan/perbankan+syariah/). 11 Bank Indonesia, op. cit.

27 Introduction xxvii Brunei Darussalam is as tiny as Indonesia is great in terms of population and geographical extent, but it is politically stable, enormously wealthy and has recently introduced a series of major legislative changes specifically intended to encourage an exciting banking and finance environment. While it is a predominantly Islamic country, it has the infrastructure, legal institutions and government support to recommend itself as a potential modern financial centre, running parallel banking systems to the benefit of both Islamic and traditional investors. In this last respect, Brunei Darussalam represents perhaps the most interesting player in the region in relation to the future development of Islamic banking in South-east Asia. To do business with Muslim clients, and to engage in crossborder financing, one needs to be familiar with current Islamic financial practices and potential avenues of innovation. Students and scholars of Middle Eastern and Islamic culture will likewise benefit from understanding this important aspect of Islamic life. As a non-muslim, it has become a timely interest of mine to study and examine the emergence of Islamic Banking and Finance, particularly with regard to its rapid development in South-east Asia. There is a silent financial revolution taking place, and it is spreading to non-muslim countries as well. The importance and potential of Islamic Banking has prompted the International Monetary Fund (IMF) to facilitate the establishment of the Islamic Financial Services Board (IFSB) to address the need for a more suitable regulatory framework, new financial instruments and institutional arrangements to provide an enabling operational environment for Islamic finance. 12 To those who fail to understand the Islamic way of life, it may seem odd a non-muslim should be involved in the detail of the subject matter of this particular work. However, such an involvement is welcomed by my Muslim friends. As the reader will learn, Muslims welcome participation in their financial dealings by all who are prepared to abide by the rules. Those rules proscribe usury in the broader sense, and it is this aspect of charging interest, of causing cost without return, that is widely known but imperfectly understood in the conventional or non-muslim world. 12 Sundararajan, V. and Errico, Luca, Islamic financial institutions and products in the global financial system: Key issues in risk management and challenges ahead, International Monetary Fund, November 2002.