IDA pushes IFSC as major hub for Islamic banks and funds
IDA Ireland is understood to be planning to lead a roadshow to the Middle East as part of an effort to turn the International Financial Services Centre (IFSC) into a European hub for Islamic banks and funds.
This year's Finance Act introduced a number of specific tax measures aimed at luring this increasingly important segment of global finance.
It comes as a number of countries, such as the UK and Malaysia, position themselves for a slice of this $700bn market, which is growing at 10pc a year.
Former head of Bank of America Merrill Lynch's Irish unit Mike Ryan, who became deputy head of the financial watchdog in Qatar, held meetings with accountancy firms in Dublin recently, telling them about opportunities in finance compliant with Sharia law.
At the heart of Islamic banking is the belief that money has no intrinsic value and that interest can neither be charged nor paid. Under the system, loans are offered with a pre-determined profit margin for the bank.
Islamic banks have devised a form of bond known as a sukuk, which generates an agreed profit, not interest, for creditors. It is tied to a specific asset, such as a building, and conveys ownership. The IDA declined to comment yesterday.
The Minister for Finance noted in February, as he unveiled his Finance Bill, that Islamic finance was the fastest-growing segment of the international financials services industry and it was important that Ireland attract this new type of investment.
It is hoped that former Taoiseach John Bruton will be fully on board in the new position of IFSC 'tsar' by the time of the Middle Eastern charm offensive.
The Irish Independent first reported last month that Mr Bruton, who returned to Ireland in January following a five-year stint as EU ambassador to Washington, was the only remaining candidate to front a massive rebranding and promotion of the IFSC abroad.
The IFSC is already home to 5pc of Islamic, or Sharia, funds globally -- and 20pc of such funds established outside of the Middle East.
The Financial Regulator set up an ad hoc team in late 2008 to specialise in the authorisation of Sharia funds and to develop a familiarity with regulatory regimes in Arab states. The Department of Finance's international financial section has also been focusing on this area for some time.
Ireland has also been working on reaching double taxation agreements with Middle Eastern countries. It struck a treaty with Bahrain last October and is currently in negotiations on new agreements with Kuwait, Saudi Arabia, United Arab Emirates and Egypt, among others.
News of the new IDA focus on the Persian Gulf states comes as US pharmaceuticals giant Pfizer, the development authority's biggest client company, announced it was cutting up to 785 jobs in Ireland over the next five years.