Japan Can Get Better Financial Positioning In Int’l Market Through Islamic Finance

Dubai – UAE: Japan, a country renowned for its low or even negative interest rates and as the third-largest national economy in the world, has significant potential to enhance its financial standing in both international and regional markets through Islamic banking and finance. This was highlighted by renowned Islamic financial expert Mr. Muhammad Zubair Mughal, the Chief Executive Officer of AlHuda Center of Islamic Banking and Economics, during his recent participation in the Japan Halal Forum in Tokyo and meetings with various stakeholders in the banking and finance industry.

Mr. Mughal emphasized that Islamic finance is no longer confined to the Muslim world. Non-Muslim countries such as the USA, South Africa, and the UK have also benefited significantly from Islamic financial products. Therefore, Japan has a promising opportunity to diversify its financial offerings by entering this niche market. By adopting Islamic banking and finance, Japan can stimulate financial and economic activities within the country through the unique features of Islamic financial products. This move will also strengthen Japan’s financial ties with other regional financial centers, such as Malaysia, Indonesia, and Singapore, and expand its financial vision to the Muslim world, particularly oil-rich states like the UAE, Qatar, and Saudi Arabia. This diversification can enrich the product mix of the Japanese financial industry.

Mr. Mughal noted that entering the Islamic financial market is not a new phenomenon for Japan. Some Japanese banking and financial companies already provide Islamic banking and Takaful (Islamic insurance) services in Malaysia, the Middle East, and other regions. Additionally, Japan has experience issuing Sukuk (Islamic bonds) following amendments to its financial regulatory regime to facilitate Islamic financial products, a move that was highly appreciated by the international financial community. The Tokyo Stock Exchange, Asia’s largest stock exchange, can also attract a new investor base through Islamic indices and Sukuk listings, marking another milestone for the Japanese economy.

He highlighted the benefits of Islamic finance in Japan, noting that Islamic banking and finance products are primarily based on trade modes that create real economic activities. The expected returns from these activities are promising and can lead to job creation, entrepreneurship, and business advancements, potentially yielding higher returns than the low-interest-rate benchmarks of the Japanese banking market. Furthermore, Islamic banking and finance can develop Japan’s Halal industry, boosting Halal food exports, attracting millions of new tourists through Halal tourism, and developing other allied services in the Japanese market.

Mr. Mughal announced that the AlHuda Center of Islamic Banking and Economics has a long-term vision for developing the Islamic banking and finance industry in Japan. In the initial stage, they are offering capacity-building services for the Japanese banking and financial market. He was pleased to announce a series of specialized training workshops for the Islamic banking and finance industry in Tokyo, scheduled for the end of February 2015, in association with the Nippon Asia Halal Association. These programs will be conducted in Japanese to ensure accessibility and effectiveness.