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» New Development in Oman's Islamic Finance

The First Sovereign Sukuk in Oman
The Sultanate of Oman has issued its first sovereign sukuk in the development of the Omani Islamic finance sector.
The Oman News agency quoted that an official said, “The first issue of sovereign Islamic bonds of the Sultanate of Oman has attracted strong subscriptions”.
The Advisor to the Minister of Finance and the Chairman of the Committee that holds the issuing said that the Ijara sukuk amounting to 200 million riyals with a five years term attracted 22 applications at a total value of 336 million riyals in the Subscription period between the eighth and the twenty-second of October 2015. The results and the allotment ratios will be announced on the third of November.
This issue will provide a much-needed efficiency tool for liquidity management for the Omani Islamic banks, insurance companies and funds, which will help to increase profitability.

Demand for Islamic funds could reach $185 billion
“The European Islamic Investment Bank” group which specializes in asset management and investment financing services, produced a study on Islamic funds entitled “Dubai, The Global Islamic Finance Centre”, that concluded that in spite of the great potential that Islamic asset management enjoys, and the high global demand, the sector has not yet achieved the required growth.
The conclusions can be summarized as:

  • The Sector hasn't yet succeeded in strengthening its position in the basic markets. The total volume of Islamic assets under management represents a small percentage of the volume of global funds.
  • Investors in the Gulf demand more products compliant with Islamic law for savings, retirement and insurance funds, as well as Investment Joint Funds.
  • Islamic pension funds have a long way to go in order to make inroads on their counterparts at a global level. Therefore, there is an urgent need to create a platform for a joint pension fund that includes the Gulf States.
  • Pension funds globally total more than 27 trillion dollars yet Islamic pension funds constitute less than 0.001%, whilst Muslims constitute a quarter of the world's population.
  •  If only 20% of The Gulf’s pension funds were converted to Islamic funds, this would increase global Islamic managed funds by $36Bn.
  •  It is expected that Islamic funds will grow from $60 billion as of today to at least $77 billion by 2019.Some studies suggest that latent demand could reach $185 billion in the same period.