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Thai Government Eyes Islamic Bank
JAKARTA, Sept 4 (IslamOnline & News Agencies) - Thailand is drawing up plans to establish an Islamic bank in an effort to attract investment from Muslim customers, particularly from the Middle East, a news report said Tuesday.
"I believe the Islamic bank will be operating as a full bank quite soon," Thai Prime Minister Thaksin Shinawatra was quoted as saying in the English-language daily
Business Day.
Thaksin said Thailand's finance ministry was preparing draft legislation for the government-run Islamic bank, which is aimed at boosting the "insufficient" level of investment from Muslim customers.
The Cabinet has assigned the Finance Ministry to draw up these guidelines for the setting up the Islamic bank, as part of government efforts to attract investment.
"The Finance Ministry will submit its draft of the Islamic Bank bill this week. The government will then present the draft to parliament prior to the closure of the current parliamentary session."
A government source told the daily that the bank was a crucial step towards wooing funds from oil-rich Middle Eastern states at a time when Thailand is desperate for foreign investment.
"The measure is one of the few remaining options for attracting foreign funds at a time when the country is badly in need of fresh capital," the source said, adding that the plan would help revive local companies.
The present level of funds generated from Muslim customers through the Government Savings Bank, and the Bank for Agriculture and Agricultural Cooperatives, is not sufficient, Thaksin said.
According to the source at the Government House, the Islamic bank will be set up according to the Islamic Banking Act D - crucial legislation for attracting funds from oil-rich and affluent Middle Eastern countries.
The government intends to mobilize partial funds from domestic investors, as well as depositors through the Islamic bank, to offset the decline in foreign direct investment.
The downside is that, if investment projects funded by the bank fail, the bank can seize and sell off the unprofitable businesses to new investors, the source said, adding that operators of such businesses would have little room for negotiation.
The planned Islamic bank would operate in a similar manner to an investment bank, by providing financing for companies, and buying up quantities of stocks for sale in smaller units to investors.
It would also provide an option for cash-strapped small and medium-sized enterprises in need of capital that had previously been turned down for bank loans.
The Islamic Bank would also take deposits, but would mainly raise investment returns through shares and provide depositors with dividends, rather than interest - which is prohibited by Islamic doctrines.
The Islamic bank, however, would ensure that depositors would be able to receive their principal savings in full.
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