Inauguration of Ceylinco Faculty of Islamic Finance                                 

20^TH November 2006 – 29^th Shawwal 1427- Hilton Hotel, Colombo.

بسم الله الرّحمن الرّحيم

ربّ اشرحلي صدري ويسّرلي أمري واحلل عُقدة مّن لُّلساني يفقهو قولي

الحمد لله ربّ العالَمين والعاقبة اللمتّقين والصّلوةُ والسّلام على رسولك سيّدنا محمّد

وأاله وأصحابه وأهل بيته وأهل طاعتك أجمعين - أمّا بعد                        

أعوذ بالله من الشيطان الرّجيم

بسم الله الرّحمن الرّحيم

فَوَرَبِّ السَّمَاءِ وَالأرْضِ إِنَّهُ لَحَقٌّ مِثْلَ مَا أَنَّكُمْ تَنْطِقُونَ

1.     Her Excellency The High Commissioner of Malaysia in Sri Lanka –  

     Madam Nazeerah Hussain;

2.     Deshamanya Dr. Lalith Kotelawala, Chairman, Ceylinco Consolidated

3.     Madam Kotelawala – Chairperson, Ceylinco Consolidated.

4.     The Deputy Governor – Bank Negara – Mr. Dato Muhummed Razif Abdul Qadir

5.     The Chairman, International Centre for Education in Islamic Finance – Dr. Rozali Muhummed ‘Ali

6.     The CEO of the International Centre for Education in Islamic Finance – Mr. Agil Natt.

7.     Head of Islamic Financial Market Faculty- International Centre for Education in Islamic Finance - Prof. Dr. Saiful Azhar Rozli

8.     The Deputy CEO Kuwait Financial House – Madam Jameela Jamaldeen.

9.     The Deputy Chairman of Ceylinco Education and Financial Services –

     Mr. Jayatissa.

10. The Chairman of Ceylinco International Reality – Mr. Shanka Wijesinghe.  And

11.  The Executive Director Ceylinco Global Profit Sharing Investment Corporation Ltd., Mr. Z.M.Rafeek

Distinguished Invitees, my dear friends - Ladies and Gentlemen,

Please permit me to address all of you with out any exception as my dearest brothers, my dearest sisters and my dearest children – I greet you all with the Islamic Greetings of Peace and Blessings :

 السّلام عليكم ورحمة الله وبركاته

I would have preferred to lecture on Islamic Banking and its’ accompaniment The institution of Takaful as a subject; but since the theme is Opportunities in Islamic Banking, I have to restrict myself to certain conceptualizations only - and the time constraint of 10 to 12 minutes limits me further to be more specific.

Before I proceed with the subject proper, I would like refer to the Quranic verse I quoted at the beginning:

فَوَرَبِّ السَّمَاءِ وَالأرْضِ إِنَّهُ لَحَقٌّ مِثْلَ مَا أَنَّكُمْ تَنْطِقُونَ

51.23 Then, by the Lord of heaven and earth, this is the very Truth, as much as the fact that you can speak intelligently to each other.

The Holy Quran says :

When you are speaking – speak intelligently, - use Maxims. adages, comparabilities, exemplifications - quote unprecedented novel examples. extract the root.  –

Meaning - The more the intelligence in your speech, the more the truth that will be expounded – that will be made manifest.

At the sametime, our holy Prophet Muhummed [S] issues us a warning   

قال رسولُ الله (ص):ءافةُالعلم النسيان

وَ إضاعته عن تحدث به غير ًٌَُاهله

THE Messenger of Allah said: “the calamity of learning,  is forgetfulness –

the calamity of acquiring knowledge is forgetfulness

And the destruction of knowledge, the ruination of knowledge, the waste of

knowledge is your talk therewith with those not deserving of it. 

Please think, reflect and ponder on these gems of wisdom.

To begin with the first item on the theme, you will see and you are aware that For a majority of Muslims the word interest or “riba” is anathema, an execration, an abomination - as a result billions of dollars are  lying idle all over the world - in  current accounts or in other modes -  

Totally unproductive to the individual or a company.  

By introducing the Islamic Banking system and Islamic financial products,  These Billions can be brought into the main stream.

It is an accepted fact that there are sufficient Muslim investors and borrowers in both Islamic and non-Islamic countries to warrant the attention of traditional banks who seek to serve such clients and capture a potentially profitable slice of a still relatively untapped market.

To date, for a number of reasons including risk-aversion and conservatism - opposing to radical changes, this need has gone largely unfilled.

So something had to be done by Muslim intellectuals to clear away some of the mystery and show how some financial products can fit alongside a conventional interest-bearing banking system.

The basic principle is that interest usury or Riba, used interchangeably, is prohibited on the principle of 'No pain - No gain'.

This 'pure' Islamic banking is structurally very similar to Venture Capital Finance, Non-recourse Project Finance or Ordinary Equity Investment.

The investor takes a share in the profits, if any, of the venture and is liable to lose his capital - It involves investing but not lending.

To cut a long story short, Even though, in spite of the fact that Islamic Banking was introduced in Egypt during the early 1960s, with the introduction of savings accounts. It was not until the 1990s, that it really took off, with the

development of Sharia investment funds.

However, it has been seen that according to estimates by expert analysts, current banking has only reached 30% only of the potential clients in the Islamic world.  Consequently, 70% of  clients needs are not being addressed.

Due to the culture and unique value, most people do not go to a bank, until the point when they feel  they do not have any choice at all.

However, in spite of this since Islamic Finance is soaring around the world owing to an influx of petro-dollars from the Middle East and growing demand by investors, both Muslim and non-Muslim -   

the world has seen excellent developments in the field of Islamic Banking – where even Non-Islamic institutions are actively participating in the promotion of Islamic Banking.

Western financial institutions are increasingly offering products that comply with Sharia law, including Citigroup, Deutsche Bank, HSBC, Lloyds, TSB & UBS

And  Japan will be the first major industrialised country to issue Islamic bonds if the Japan Bank for International Cooperation goes ahead with a recently-announced plan aimed at attracting money from oil-rich Muslim countries.

So you can see opportunities growing.

The number of Islamic retail banks and investment funds number in their hundreds and the Islamic finance sector, compatible with Sharia law based on the Quran, is now estimated between 300 and 500 billion dollars, compared with 200 billion dollars two years ago.

To Quote Rodney Wilson, Director of Postgraduate Islamic studies at Durham University, northeast England. He says:

"The (Islamic finance) industry is doing better than ever,"  "Vast sums of money are flowing into the Islamic finance institutions and conventional banks, which are also offering Islamic finance products.” Unquote 

The world is literally at ones fingertips – and it is imperative that Sri Lanka too keep pace with the global development.

Islamic finance is also enjoying strong growth in southeast Asia.

The central bank of Malaysia is also planning to conduct Islamic financial business in international currencies to help increase investment from abroad.  Sri Lanka too will follow suit no doubt.

One area of Islamic finance which is burgeoning – growing and flourishing - is the bond market, with much of the investment coming from non-Muslim overseas investors.

According to Trowers and Hamlins, whose offices abroad are based mainly in the Gulf region - During the first half of 2006, the value of issued Islamic bonds, or sukuk, more than doubled to 4.585 billion dollars.

Neale Downes, a partner at Trowers and Hamlins said: "There has been a huge inflow of oil wealth into Islamic investment funds which are, naturally enough, seeking Islamically-compliant vehicles, such as sukuks, in which to channel funds," 

He also added:

"Foreign investors represent an increasingly dominant segment of the market for Islamically-compliant debt. What is really significant is that they are now comfortable buying corporate sukuk and not just those issued by sovereign borrowers,"

The Kuwait Finance House In September this year, launched the first sukuk in China to finance construction of a power station, whose profits will be shared among investors.  We have  with us Sister Jameela Jamaldeen of the Kuwait Finance House, who can confirm this.

The German regional state of Saxony, which in 2004 launched the first European sukuk, has seen its initiative mirrored by the World Bank and the Texan oil company, East Cameron Partners.

Even the most opaque of finance sectors are today seeking to join the Islamic bandwagon.

The International Swaps and Derivatives Association has recently signed a deal with the International Islamic Financial Market, based in Bahrain, to define Islamic standards.

Meanwhile the leading Islamic speculative fund, Algo Al-Qayyim Fund, was approved in February to operate on the British island of Jersey.

And according to a study last year, 2005, by the London South Bank University, the European property market is the preferred investment arena for Islamic funds.

With this type of favourable combination of circumstances, it is imperative that younger people acquire an in-depth knowledge of the Islamic Finance System which combines both the Islamic Banking and the Islamic Insurance, the institution of Takaful.

It is indeed laudable, applaudable and commendable that Deshamanya Dr. Lalith Kotelawala, had the foresight in planning prudently for the future to provide education and guidance in this field of extreme importance, by inaugurating and being a pre-cursor – a forerunner of The Faculty of Islamic Finance in Sri Lanka with the able assistance of the International Centre for Education in Islamic Finance, Malaysia – undoubtedly at the right time.

The students who take this opportunity and qualify themselves will, with certainty can expect lucrative opportunities, not only in Sri Lanka, but all over the world as well.

Whilst Thanking Deshamanya Dr. Lalith Kotelawala – The Chairman of the Ceylinco Group of Companies and his able and competent team for having provided me this opportunity to address this august, profoundly honoured and illustrious gathering, I shall wind up with the universal message from the Holy Quran and a Point to ponder.

يَا أَيُّهَا النَّاسُ إِنَّا خَلَقْنَاكُمْ مِنْ ذَكَرٍ وَأُنْثَى وَجَعَلْنَاكُمْ شُعُوبًا وَقَبَائِلَ لِتَعَارَفُوا إِنَّ أَكْرَمَكُمْ عِنْدَ اللَّهِ أَتْقَاكُمْ        

49:13 ‘O human kind, (O mankind) – Covering the entire human race, not just Muslims only – O mankind! We have created you from a single pair of a male and a female, and made you into nations and tribes, so that you shall recognize one another, so that you understand one another, so that you interact with one another and not that you despise one another’ Not hate one another. And

the most honoured of you in the sight of Allah  is the one who has righteousness, who has piety; The one who has good character and excellent

morality.

Point to Ponder.

Luqman al Hakim was a wise man of great reputation in ancient Arabia. (Chapter 31 of the Holy Quran is dedicated to him) - He was a person of extremely good manners, sublime manners and excellent character and a person of great wisdom.  People asked him : “O Luqman,  how is it that you came to acquire such sublime manners and how is it that you are full of wisdom?”

He replied :  "I learned good manners from the bad-mannered, ILL-MANNERED – [when others behave very badly, it is repulsive and revolting to me – and If I behave in that manner - others too will find me repulsive and nauseating.

I learned wisdom from the blind - They do not put their feet forward without feeling the ground first. 

There can never be a spoken or written word from which the wise cannot benefit. 

But even a hundred books of wisdom or a hundred speeches cannot make a fool wiser,

if he is not ready to benefit from them. 

Think deeply, Reflect, Ponder and Meditate on these words of wisdom.

Thank you all for your kind patience.

May Allah in His Mercy Guide us all along the right path – Aameen.

وآخِرُ دَعْوَانَا اَن ِالْحَمْدُ لِلهِ رَبِّ الْعَالَمِيْن

السّلام عليكم ورحمة الله وبركاته