Dear Members & Friends,
Upon its establishment in 2006, The Arab Chamber of Commerce & Industry drafted a 5-year strategic plan in which it called for the formation of a Hong Kong based financial institution guided by Islamic principles by 2009. The raison d’être of such a financial institution was the provision of financial services to members who conduct their lives and businesses in accordance with the tenets of Shariah as well as those people who are not bankable in the traditional sense of the word.
Such a financial institution would identify and implement creative ways for Muslims to adhere to religious restrictions that, among other things, prevent them from collecting interest on savings or paying interest on loans.
What was a vision and a strategic objective in late 2006 has become reality! On the 27th of May 2009, government regulators approved Hong Kong’s first cooperative Shariah compliant financial institution.
Islamic finance is an ethical and equitable mode of finance that derives its principles from the traditions of Islam through Shariah (Islamic law) in governing matters of banking and finance.
The concept of Islamic finance is based on themes of community banking, ethical and socially responsible investing. These themes are based on core principles, which include individual responsibility, reliance on Halal (Islamically permissible) market mechanisms, commitment to economic and social justice and mandatory care for the environment.
Shariah scholars argue that in Islamic finance everything is allowed except that which has been specifically forbidden. In essence, a believing Muslim’s view of economics is based on man's obligation to organize affairs in accordance with the will of Allah 'Subhanahu Wa-Ta'ala' (God 'Glorious and Exalted He is') as his representative and vice regent on Earth.
The main goal of Islamic finance is not equality but an avoidance of gross inequality along with an injunction that wealth should not become "a commodity between the rich among you". Islamic finance is firmly embedded in the commercial, real and value-producing economies.
We are confident that Amwal Credit Union will be a role model for the development of credit unions in those parts of Asia that have large Muslim populations. This includes the People’s Republic of China, which is recognized as the country with the world’s third largest Muslim population.
Traditionally, credit unions tended to be conservative and risk averse, as their respective Boards of Directors stuck to the tried and tested because of the perceived expense and risk involved in trying new approaches.
We believe that such an approach would not serve the best interests of members, in particular if credit unions are to survive and thrive in new challenging economic environments. We are convinced that in order to survive, and thrive, innovation is in order.
The traditional business model of borrowing short, lending long and living on the spread no longer works for most credit unions as the fee income used to make up the difference is getting more difficult to impose. Invitation to join, support and become part of Hong Kong’s first Shariah compliant cooperative financial institution.
What’s the answer?
It is our opinion that the fundamental principles supporting credit unions conform to Islamic ideals. For example, credit unions pay dividends to their members, which mean they participate in the success of their credit union. This is not an interest payment, it is profit sharing. Moreover, loans granted by credit unions to their members are generally required to benefit society. Thus making a profit serves to reduce the operating costs of the credit union and pay a return to members.
It is thus with a great anticipation, and barely concealed pride, that I present to you a range of products launched by Amwal Credit Union, Hong Kong’s first and only Shariah compliant cooperative financial institution. This launch affirms Amwal Credit Union’s commitment to introduce to its members cutting edge, innovative financial solutions that meet the criterion of Shariah compliance, in addition to providing attractive risk adjusted returns over the medium term.
For further information on innovative products, or if you are interested in identifying new opportunities to support and/or take part in this first Shariah compliant cooperative financial institution in Hong Kong, do not hesitate to contact us without delay.
Lord Edwin E. Hitti, President
Amwal Credit Union