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Luxembourg firm develops Sharia-compliant concept for Muslim world projects

BY Nawab Khan BRUSSELS, Nov 22 (KUNA) -- A financial firm in Luxembourg has developed a concept combining some of the modern financial techniques with the principles of Sharia (Islamic law) to design a new type of investment set up which it has named "Imtiaz".
"Islamic finance is an opportunity for the world to develop a new ethical approach in financing a variety of projects and, definitively, in encouraging entrepreneurship," Jean-Paul Letombe, Managing Director of the firm Otim - business solutions, told KUNA in an interview.
He explained that the turmoil in conventional finance was big enough to "force us to reconsider what we did and how we did it for many years".
"Increase of regulation should help but the best of all would be to change in our minds the way we see things, and to adopt new and better practices in designing and running financial products," he said.
Letombe was in Brussels to attend a conference on Islamic banking held last week.
"Here is the point where we should consider Islamic finance as a large part of the answer, especially if we focus on its foundations rather than just on the technical content of its contracts," said the European finance expert.
"With the generous help of people in the Middle East, we have discovered Islamic finance by learning first its foundations and holy values, and next by looking through the different contract types," he stated.
"Progressively we got a better understanding, and when we got enough confidence we humbly combined some of the financial techniques already in our hands with the principles of Sharia, to design a new type of financial product that we named Imtiaz," Letombe added.
Imtiaz is a product involving investors, a financial company, an engineering company, and a state-owned company for a period between 15 to 30 years, and by using the "concession principle" (Imtiaz).
In essence, one or many investors can collectively invest directly into the development of an industrial project where a nominal production can be estimated for example typically in a, but not limited to power/water/vegetable plant.
Under the concept, the design, development, operating and maintenance of the project is managed by the engineering company acting as a Mudarib.
Letombe says Imtiaz has the potential to deliver high returns (six percent to 15 percent and eventually a bit more) without the use of any leverage, speculation, or complex structures.
"Imtiaz will never put excessive pressure to maximize returns to repay debt, because there is no leverage at all. We are open to share and to refine our Imtiaz concept with those Islamic financial institutions that may be interested in the subject," he told KUNA. (end) nk.mt KUNA 221945 Nov 09NNNN