Toronto: Canada is looking to position itself as the regional hub for Islamic finance in North America, Emirates 24/7 news reported. According to the World Economic Forum, Canada is considered to having one of the most effective and safest banking systems in the world.
Its main competitor in the region, the United States, is a much larger market overall, but Canada has a proportionately larger Muslim population.
This advantage is coupled with an arguably more favourable federal regulatory regime and an outward looking orientation that is potentially more favourable and conducive to the growth of Islamic finance.
"Canada's commercial ties with the countries of the Organization of Islamic Corporation (OIC) are growing fast. Canada is keen to explore ways to forge new partnerships and to create new opportunities for long-term, collective prosperity both in Canada and in the Muslim world", said Arif Z Lalani, Canada's Special Envoy to the OIC and current Ambassador of Canada to the UAE.
Thomson Reuters, the provider of information for businesses and professionals, and the Toronto Financial Services Alliance (TFSA), a public–private partnership dedicated to growing Toronto’s financial services cluster, today unveiled a major study, the Canada Islamic Finance Outlook 2016, during the World Islamic Banking Conference (WIBC) held in Bahrain.
The domestic Islamic banking system has a strong potential to develop, with a growing domestic Muslim population estimated to be more than 1.3 million (3 percent of the population) in Canada and expected to rise to 3 million (6.6 percent of the population) by 2030.
Currently, there is a potential of over $2 billion in Shariah-compliant mortgages in Canada, a figure that is expected to increase to $18 billion by 2020, which provides a strong base to support the development of the domestic Islamic banking system.
International sukuk (Islamic bonds) is another area where Canada can potentially attract more foreign capital to support infrastructure need amounting in total to $130 billion, or 9 percent of Canada’s GDP.
It is also noteworthy that Canada’s asset managers have a wealth of international experience in the responsible finance and Shariah compliant investment space that positions them well to capture a share of the estimated $23 billion responsible Islamic investments market across the OIC. This is in addition to the potential for domestic Shariah compliant assets.
Furthermore, Canada has significant trade links with Muslim majority countries around the world, which can be leveraged. "Canada and Toronto have all the ingredients to become a North American hub for Islamic finance a sound economy and stable political environment; a wealth of assets that are conducive to Islamic finance, traditionally strong risk management skills, a large and growing Muslim population; an openness to doing business with the world; and an effective regime of regulation and supervision," said President and CEO, Toronto Financial Services Alliance Janet Ecker.