By Blake Goud
When a US-based company collaborates with a prominent New York-based Islamic finance professional at a global firm to develop an index that tracks Halal food companies in 15 Muslim markets, where do they announce the product?
The answer is Malaysia, but this might as well be a rhetorical question showing the quiet role of the United States in the global Islamic finance industry. The formal announcement of the SAMI (Socially Acceptable Market Investments) Halal Foods Index by Thomson Reuters and Ideal Ratings was made in Malaysia, which reflects the development of the Islamic finance and Halal food industries in that country.
Ideal Ratings is a San Francisco-based company that provides an equity screening service to Islamic funds around the world. The participation of Thomson Reuters is undoubtedly down to its head of Islamic finance, Rushdi Siddiqi, better known for his previous role as head of the Dow Jones Islamic Index series.
Siddiqi has long tried to connect the Islamic finance and Halal industries, which he describes as “twins separated at birth”. Despite having similar origins the industries have developed independently. Halal food companies often turn to conventional bank loans and debt and the Islamic finance has not – at least publicly – made much of a commitment to helping the companies refinance their debts Islamically.
In Siddiqi’s words: “As Muslims, we can consume their Halal products, yet many of these companies fail [on] the debt ratio, hence, [we] cannot invest in such companies!”
Perhaps the reunion between them can be led by financial institutions in North America who can overlook the “standardization” issues in Halal food that seems to have scared off Islamic financial institutions elsewhere from bringing the twins back together. To date, the SAMI index has outperformed several leading global food indexes from March 2010 to March 2011 by 20%, according to Ideal Ratings.
Source: Zawya.com, The Islamic Globe
