China the next big market for Islamic finance: Prudential

CHINA is the next big Islamic finance market, as demand grows for ethical funds, but Asia's fastest-growing economy must first sort out tax issues, a unit of British insurer Prudential said yesterday.

A large Muslim population and growing wealth provide a ready retail Islamic banking market in China, a senior executive of Prudential's Kuala Lumpur-based fund management unit said.

The US$1 trillion (RM3.47 trillion) Islamic finance industry is targeting rapidly growing Asian economies such as China and India and new markets like Kazakhstan and Sri Lanka to offset slowing growth in its traditional base of Gulf states.

Islamic banks are touting wheat-based deposit products and metal-based funds as ethical investments to appeal to investors burnt by the recent conventional banking crisis.

"China is like Indonesia, a sleeping giant," said Zulkifli Ishak, syariah investment director with Prudential Fund Management Bhd which manages about US$4.03 billion (RM13.98 billion). Kuala Lumpur is Prudential's Islamic finance hub.

"If Islamic finance can tap Muslims, especially in Xinjiang, then there will be a huge potential for the Islamic space in China," he said in an interview.

China has a Muslim population of about 37 million.

Non-Muslims make up over half of the investors of most of Prudential's Islamic retail funds in Malaysia, Zulkifli said. - Reuters

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