December 12, 2024 (MLN): Islamic finance and Islamic capital markets can play a pivotal role in helping Pakistan remain steadfast on the road to macroeconomic stability, Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb said while addressing the inaugural session of the Second International Islamic Capital Markets Conference & Expo.
He mentioned that Pakistan had encountered major economic challenges in recent years.
However, these issues are now being effectively managed, placing the country on the right path toward macroeconomic stability and sustainable growth.
He further stated that Islamic finance, particularly Islamic capital markets, could play a crucial role in this journey.
Instruments like sukuk, equity funds, and Shariah-compliant investment vehicles not only attract investment but also reduce dependence on interest-based borrowing.
In his keynote address, the Finance Minister described the conference as a reflection of Pakistan’s growing commitment to building a strong Islamic capital market.
He highlighted the country’s dedication to transforming its financial system by Shariah principles.
He stated that the Government of Pakistan remains committed to transforming the financial system in line with Shariah principles.
Also mentioned that, as of June 30, 2024, 56% of the market capitalization at the Pakistan Stock Exchange consists of Shariah-compliant securities.
“In the collective investment segment, 48% of assets under management of mutual funds, 66% of assets under management of voluntary pension funds, and 95% of assets under management of REITs are already Shariah-compliant.
These statistics deflect the progress that we have made over the years.”
Senator Muhammad Aurangzeb underlined the need for “an economic system that is not only in line with our faith but also capable of inclusive and sustainable economic growth”.
“Only then, we will be able to extend the benefits of all our efforts to the citizens of Pakistan,” he added.
He said that Islamic finance and instruments like sukuk, equity funds, and Shariah-compliant investment vehicles are vital for mobilizing resources for key sectors such as infrastructure development and poverty alleviation.
These tools also ensure adherence to ethical and transparent principles.
“With these mechanisms in place, Pakistan has the potential to emerge as a leading global hub for Islamic finance,” he added.
He noted that a growing interest in Shariah-compliant investment products was a testament to the increasing global demand for ethical and sustainable financial solutions.
“The steady and healthy growth of Islamic finance, both in Pakistan and internationally, reflects the shifting preferences of investors towards value-based financial systems,” he said, adding.
“This demand has spurred interest from market participants across sectors, both within and outside of banking, which is contributing to the creation of a comprehensive Islamic finance ecosystem”.
The Finance Minister emphasized that realizing the full potential of Islamic finance requires collaboration among scholars, financial institutions, regulatory bodies, and industry practitioners.
He stressed the need to address challenges, develop innovative Sharia-compliant products, and build public trust.
“We must ensure that Islamic finance is not only rooted in Shariah principles but also practical, transparent, and capable of meeting the evolving needs of our people,” he added.
In the end, the Minister commended SECP’s efforts in advancing Islamic finance in Pakistan and creating a supportive regulatory environment for the non-bank financial sector.
He also praised SECP for establishing Shariah-compliant indices, introducing governance frameworks, and developing guidelines for Islamic financial services.
He, however, urged the SECP to continue to make dedicated efforts toward innovation and inclusivity in Islamic capital markets.
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Posted on: 2024-12-12T16:42:49+05:00
