Japan is looking to become the first major industrialized nation to issue Islamic bonds in hopes of attracting money from oil-rich Muslim countries, a bank official said yesterday.
Islamic financial practices ban the payment or receipt of interest or any transactions that include alcoholic beverages or gambling, which are banned by the Koran.
"The bank is studying the possible issuance of the bond with Malaysia," said Hiromi Inukai, a spokeswoman of the government-backed Japan Bank for International Cooperation (JBIC).
"The bank has had talks with the central bank of Malaysia with the intention to attract ample petro-dollars not only to Japan but also to the whole of Asia," she said.
She declined to give further details such as how much of the bond JBIC officials, with the support of the finance ministry, would place with Bank Negara Malaysia, the Malaysian central bank, and when.
Japanese news reports have said that the JBIC has formed an advisory board of Islamic legal scholars to study Islamic financial practices. Britain's Financial Times said the bond would be valued at US$300 million to US$500 million and launched around January.
First G7 nation
Japan would be the first G7 nation to issue the Islamic bond, called sukuk, bond on a national basis, although companies in the developed world have already done likewise.
Hideki Nukaya, a researcher at the Institute for International Monetary Affairs, said JBIC's envisaged Islamic bond placement would help diversify funding sources for many large Japanese businesses.
"Japan and its companies could get a foot in the door and become more active players in Islamic financing by gradually making progress and learning the methods," Nukaya said.
"Once JBIC places the sukuk bond and learns the methods, Japanese companies would be able to have more options for financial resources when they need a bulk of money, not only through conventional but also through Islamic bond issuance," he said.
"But compared with conventional projects, Islamic banking requires more preparation, which the Japanese financial institutions are doing right now," Nukaya added.
Japanese companies will likely need to study up on religious regulations, such as rules on interest, as the country has a miniscule Muslim community.
Demand for Islamic financing is growing in countries with significant Muslim populations, particularly in the Middle East.
Largely Muslim Malaysia is the current Asian leader in Islamic banking after introducing services in 1983.
Leading position
To cement its leading position, the country is liberalizing its Islamic financial system and promoting itself as a center for education about Islamic finance.
Total worldwide assets of Islamic financial institutions exceed US$250 billion and are growing 15 percent annually, according to the IMF.
In 2003, the Islamic Bank of Britain opened in London and last year Britain's fifth-largest bank, Lloyds TSB, said it would introduce personal bank accounts compatible with Islamic law.
In 2004, the impoverished eastern German state of Saxony-Anhalt became the first in Europe to issue an Islamic bond in hopes of finding new sources of financing.
WAITING GAME: The US has so far only offered a ‘best rate tariff,’ which officials assume is about 15 percent, the same as Japan, a person familiar with the matter said Taiwan and the US have completed “technical consultations” regarding tariffs and a finalized rate is expected to be released soon, Executive Yuan spokeswoman Michelle Lee (李慧芝) told a news conference yesterday, as a 90-day pause on US President Donald Trump’s “reciprocal” tariffs is set to expire today. The two countries have reached a “certain degree of consensus” on issues such as tariffs, nontariff trade barriers, trade facilitation, supply chain resilience and economic security, Lee said. They also discussed opportunities for cooperation, investment and procurement, she said. A joint statement is still being negotiated and would be released once the US government has made
Authorities have detained three former Taiwan Semiconductor Manufacturing Co (TMSC, 台積電) employees on suspicion of compromising classified technology used in making 2-nanometer chips, the Taiwan High Prosecutors’ Office said yesterday. Prosecutors are holding a former TSMC engineer surnamed Chen (陳) and two recently sacked TSMC engineers, including one person surnamed Wu (吳) in detention with restricted communication, following an investigation launched on July 25, a statement said. The announcement came a day after Nikkei Asia reported on the technology theft in an exclusive story, saying TSMC had fired two workers for contravening data rules on advanced chipmaking technology. Two-nanometer wafers are the most
NEW GEAR: On top of the new Tien Kung IV air defense missiles, the military is expected to place orders for a new combat vehicle next year for delivery in 2028 Mass production of Tien Kung IV (Sky Bow IV) missiles is expected to start next year, with plans to order 122 pods, the Ministry of National Defense’s (MND) latest list of regulated military material showed. The document said that the armed forces would obtain 46 pods of the air defense missiles next year and 76 pods the year after that. The Tien Kung IV is designed to intercept cruise missiles and ballistic missiles to an altitude of 70km, compared with the 60km maximum altitude achieved by the Missile Segment Enhancement variant of PAC-3 systems. A defense source said yesterday that the number of
Taiwanese exports to the US are to be subject to a 20 percent tariff starting on Thursday next week, according to an executive order signed by US President Donald Trump yesterday. The 20 percent levy was the same as the tariffs imposed on Vietnam, Sri Lanka and Bangladesh by Trump. It was higher than the tariffs imposed on Japan, South Korea and the EU (15 percent), as well as those on the Philippines (19 percent). A Taiwan official with knowledge of the matter said it is a "phased" tariff rate, and negotiations would continue. "Once negotiations conclude, Taiwan will obtain a better
RSS