Richard Melson

June 2006

Shingetsu: Islamic Banking

Shingetsu Institute

Newsletter No. 312 (Islamic Banking)

The Shingetsu Institute for the Study of Japanese-Islamic Relations


As Japan enters the 21st century, it is sure to face a host of new and unprecedented challenges and opportunities as a member of the global community. Undoubtedly, one important dimension of Japan’s future will relate to Japan’s dealings with Islamic nations and peoples. Indeed, in past decades, events such as the oil shocks of the 1970s and the Persian Gulf Crisis of 1990-1991, as well as recent developments such as the September 11 attacks and the Iraq War, have had an extraordinary impact not only on Japan’s foreign policy, but also on Japan’s political and economic system as a whole. This being the case, there is an increasing need for all Japanese, inside and outside of government, to be well informed, knowledgeable, and sympathetic toward the culture, beliefs, and political challenges of the Islamic world.

The Shingetsu Institute aims to help fill an institutional gap in Japanese society. In Japan there are few places and opportunities for people to learn about Islamic peoples, or even about the history or current status of Japanese-Islamic relations. This is especially true for Japanese in Western Japan, far from the center of the national government in Tokyo.

The Shingetsu Institute has missions at the global, national, and local levels. Globally, the Institute will endeavor to promote international peace and understanding through education and enlightenment. Nationally, the Institute will be a center of research that will chronicle and explain the history and current state of Japan’s relations with Islamic peoples. And locally, the Institute will provide educational services to Japanese citizens in Western Japan, as well as cultural support for Muslim residents of the region.

The Shingetsu Institute is headquartered in the city of Kitakyushu at one of the closest points in Japan to the Asian mainland. This region, which includes the Kanmon Straits between the islands of Honshu and Kyushu, has long served as a crucial juncture between Japan and the outside world. We would be pleased to see this region once again play a vital role as an intellectual gateway for a peaceful and productive relationship between Japan and the world at large.

1-10-203 Wakafuji-machi, Kokurakita-ku

Kitakyushu-shi 802-0063 JAPAN
Japan Tel: 070-5549-5382

Newsletter No. 312
June 20, 2006


Nihon Keizai Shinbun has reported that several major Japanese banking
groups are planning to enter the Islamic banking market. This project is led
by the government-backed Japan Bank for International Cooperation (JBIC),
and will also include participation from the Sumitomo-Mitsui Banking Group,
Mizuho Corporate Bank, and the Bank of Tokyo-Mitsubishi UFJ.

These groups have already established a four-person advisory panel that
includes authorities on Islamic banking from Malaysia, Pakistan, and Saudi
Arabia. The Japanese government will also take part as an observer in the
Malaysia-based Islamic Financial Service Board in order to learn more about
Islamic banking. Separately, a smaller outfit called the Japan Asia
Investment Company has set up an advisory panel of Islamic legal scholars to
help it manage its Sharia Asian Investment Fund.

There are said to be about 300 Islamic banks worldwide, which manage about
US$300 billion overall. Every year their assets are growing, especially in
the Arab Gulf countries. With the dramatic rise in oil prices, no doubt
Islamic banking will also experience massive growth in the next few years.
British and German financial institutions have already made some moves
toward participating in this market, and clearly Japan is now taking notice
as well.

It will be interesting to see how this story develops.

The Shingetsu Institute for the Study of Japanese-Islamic Relations
Wakafuji-machi, Kokurakita-ku
Kitakyushu-shi 802-0063 JAPAN
Japan Tel: 070-5549-5382
Attn: Michael Penn

The Shingetsu Institute for the Study of Japanese-Islamic Relations

June 17, 2006