Islamic banking to be introduced into China
Malaysia’s Bank Muamalat Malaysia Bhd and Bank of Shizuishan will open an Islamic bank in Ningxia Province within two years.
Located in northwest China, Ningxia is home to China’s largest Islamic population. Many of these Muslims belong to the Hui ethnic group that dominates Ningxia and who constitute China’s largest Muslim population. There are over 30 million Chinese Muslims.
Bank Muamalat CEO Datuk Mohd Redza Shah Abdul Wahid said the two banks will work together to build the framework for Islamic banking in China. The partners will first offer shariah-compliant products in Ningxia at Bank of Shizuishan’s network of 23 branches. They will then look at setting up a separate Islamic bank in Ningxia within the next two years.
"This partnership will definitely provide the necessary critical mass to attract talents and nurture them, as well as to create an Islamic banking accessibility and opportunity with diversity in products and services," he said.
"We will educate them first, on the ethical side of Islamic banking and then work with them on the legal and tax issues in China, such that they can offer Islamic banking products at a competitive rate.”
Bank of Shizuishan chairman Li Deng Fang said the bank is one of the largest in Ningxia and claims a third of the province's population as its customers. Li said the bank's total assets stood at US$3.9 billion as of this June while net profit came to US$42 million.
Malaysia, which has 16 Islamic banks and five international Islamic banks, aims to become a world leader in Islamic sukuk financing. Global sukuk issuance as of April amounted to US$134 billion, of which 60% was issued in Malaysia and 25% in the Middle East.