Mauritius aims to develop itself as an Islamic financial centre, adding to its rapidly growing banking and non-banking finance sectors, a senior investment official said on November 20. Islamic finance has been expanding quickly in recent years, linked to enormous oil profits in the Middle East.
Meanwhile, Mauritius' financial sector - including banks, insurance, stockbroking and leasing - is expected to grow 7.2 percent this year from 7.0 percent in 2006 when it accounted for 10.4 percent of the Indian Ocean nation's $6.1 billion GDP.
"The biggest niche for Mauritius would be to couple the provision of Islamic banking and finance with the fact that we are an IFC (international financial centre)," said Assad Abdullatiff, head of the financial services cluster at Mauritius' Board of Investment.
Islamic finance prohibits the payment or receipt of interest and prohibits investments into non-Islamic industries such as gambling or alcohol. Abdullatiff said he expected regulation on Islamic finance in the coming months to be followed by a greater availability in Mauritius of Islamic products such as trusts, funds, wealth management, and insurance.
"We have had some interest from a Dubai-based bank to come and set up a bank here," he told Reuters. "They are waiting for the law to be finalised before they decide." Abdullatiff said Muslims accounted for some 15 percent of the 1.3 million population, but added that Mauritius should also be attractive to Islamic business for its tax treaties, political stability, low costs, and legal framework. The Indian Ocean island nation has Africa's best regulatory environment for business, according to a recent World Bank report.
Mauritius aims to be a regional financial hub, linking it to Africa, India, and the Middle East, he said. Mauritius' 33 bilateral tax treaties include one with Delhi that has made it the most popular route for foreign direct investment (FDI) into India, accounting for almost two fifths of India's $4.9 billion FDI in the second quarter of this year.
"I anticipate there will be a lot of Islamic funds set up in Mauritius for tax planning purposes," Abdullatiff said, noting the presence of banks in Mauritius, such as HSBC and Deutsche Bank, with experience of Islamic finance.
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