Karachi : Pakistan, the world's second-largest Muslim nation, plans to expand its Sharia-compliant banking industry and attract more investors from the Arabian Gulf by boosting sales of sukuk bills.
State Bank of Pakistan is seeking to sell sukuk maturing in a year or less in the domestic market in the quarter ending in September, spokesman Syed Wasim Al Deen said yesterday. The plan is part of an effort to double Islamic banking services in the next three years to 12 per cent of the total. The securities pay profit rates rather than interest.
"Islamic banks and Sharia-compliant mutual funds are dry in terms of investment opportunities," Irfan Malek, Head of Fixed Income at National Fullerton Asset Management, which has the equivalent of $160 million (Dh587.55 million) in assets, said Thursday in an interview in Karachi. "Securities of less than one-year maturity and Islamic interbank lending will attract local and foreign investors. We will participate in the auction."
Pakistan, whose population of 170 million is second to Indonesia among Muslim nations, is aiming to attract the wealth of the oil-rich Arabian Gulf to help finance its budget deficit and revive an economy hurt by nine years of fighting with the Taliban. The government said last month the $150 billion (Dh551.7 billion) economy has suffered a loss of about $35 billion (Dh128.52 billion) since the fight against the Taliban that spread from neighbouring Afghanistan in 2001 hurt investment. The cost to deploy 100,000 troops in the northwest tribal areas widened the country's budget deficit to 5.6 per cent of gross domestic product in the last fiscal year which ended June 30.
