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Islamic VCs, the next frontier of Islamic finance: expert

DUBAI — Islamic Venture capital is the next frontier of Islamic finance that will enhance the co-operation among diverse Islamic financial institutions around the world, said Dr Mohamed Abdu Moustafa, from the College of Business & Economics, UAE University.

Presenting a paper on 'The Venture Capital: Proposed Cooperation Strategy between Islamic banks' at a conference on Islamic Financial Institutions at the DCCI, Dr Moustafa said venture capital is very close to the Islamic instruments and very suitable to Islamic countries because of its positive impact on economic growth and development. The paper proposed adopting the venture capital as a strategy for cooperation between the Islamic banks, either on country-base, regional-base or worldwide -base. In order to implement such a strategy, the potential Islamic banks which are willing to cooperate should establish a committee to be responsible for setting up the outline of the strategy.”

The conference organised by College of Shari'a & Law, University of UAE and Dubai Chamber of Commerce & Industry (DCCI) discussed a number of participating researches and announced the final recommendations.

Dr Mohammed Abdullah Omar, from Saleh Kamel Center for Islamic Economy, Al Azhar University, Egypt, presented a study entitled 'International Commodities Murabaha', which aimed at the clarification of the dealing nature of the commodity and the extent of the suitability of the Islamic banks dealing in it by the 'Murabaha' style from the legitimate and economic side and by what agrees with the nature of the Islamic banks and the Islamic economy characteristics.

A study on coexistence of Islamic finance along with conventional finance was presented at the conference. Dr Qutb Mustafa Sano, International Institute for Islamic Nation Unity, Malaysia, presented a paper entitled 'The prospects of coexistence between conventional & Islamic banks: The Malaysian experience as a model'. The paper found that the success of Malaysian experience was due to the political will and popular support and the possibility of establishing banking system based on non- interest approach. “It is a common belief that banking system must be based on interest. This was proven unfounded,” said Dr Sano.

The coexistence between conventional and Islamic banking systems could be used as one of the main keys for Islamisation of banking sector. “The coexistence proved that Islamic banking system is universal and human in its principles and principal in its applications. Consequently, non-Muslims were allowed to benefit from it. The coexistence contributed to the development of the activities of Islamic banking in terms of creativity, innovation and discipline. It also showed the openness and respect of Islam to others,” he said in the paper.