Islamic Finance in New Zealand Reasons and Approach Dr. Zainab Radhi SMART Start Business Ltd.

Introduction Islamic Economic and Financial System World Bank and Financial Inclusion Structure of the paper

Features of the Islamic Economic System Economic Freedom Combating of the hoarding of money Encouragement of earning money by working Fair redistribution of wealth Other features (equality, prohibition of monopolies and oligopolies, fair remuneration of labour, fair business rules…etc)

Features of Islamic Financial System Prohibition of interest The requirement of underlying assets. Avoidance of uncertainty and speculations Prohibition of investing in products which are considered inconsistent with the Shari’a and are considered unethical ie Alcohol, gambling, weapon, pornography…etc. Risk sharing

Reasons for the Prohibition of Interest Religious arguments Economic argument Ethical arguments Negative economic impacts of interest

Islamic Finance and IF tools Mudarabah Musharakah Ijarah Sukuk Istisna’ Qard Hasan

Islamic Finance and Microfinance Advantages of IF over Microfinance Consumption Dependency High interest Risk-sharing Enforcement Good investments Sustainability Moral Hazard

Islamic Finance on the global level IF around the world IF in Australia New Zealand and IF

Reasons, Challenges , approach and recommendations Requirements Strategies Recommendations

SUMMARY CHALLENGES Identified challenges, are they still there? REASONS CHALLENGES APPROACHES IES and IFS should be viewed and assessed based on their values, benefits to the economy and society and practicality regardless of their source.   Identified challenges, are they still there? Existing Banks IFS and IFT should be introduced by the government as additional financial tools and leaving it to the people to choose the right tool for them. Establish legal and policies platform to support the new financial products New financial institutions specialized in the new products IES and IFS have many good features: encourage investment and people to earn income, prohibition of interest, requirement of underlying assets and risk sharing Extra risk management measures Foreign banks windows IF status on the global level; growing industry, UK, USA and Australia Marketing Foreign government coordinating with existing institutions New Zealand market; IFT should be offered to everyone. It is the only product which already has established market before it is even introduced Existing Islamic organizations in New Zealand New Zealand foreign trade and the Muslim countries growing market

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