Islamic investment products

Dear Mr. Tan Kin Lian,

I am an avid reader of your blog and must thank you very much for all the help and info you provided. Unfortunately I invested in Minibond before getting to know about your blog.

Though not urgent, perhaps you could write something about Islamic Investment products in your blog. I somehow feel that the current fiasco involving Minibond, Jubilee, Pinnacle, High Notes 5 products etc WOULD NOT have occurred had these products been structured according to Islamic investment guidelines.

From the little I know about Islamic investments, they are governed by certain principles viz:-

> Full transparency in the product structure. Product should not knowingly hide bad points and boast about the good points.
> There must be no intent to deceive investors, nor sell knowingly worthless products.
> Product should not involve highly risky companies whose values may swing very high or very low.
> Product should not be speculative in nature, but rather based on solid long-term fundamentals.
> Investment should not be linked to immoral activities eg gambling, drug trafficking, prostitution etc.
> “Interest” should not be paid to investors, but modest “dividends” may be distributed to investors based on product profitability.
> Above all, the investment product must comply with Islamic religious scriptures.

I feel such products are what we need in this age of uncertainty. They will be very reassuring for the bulk of investors who are mainly low-risk type. Certain Middle East countries are moving fast in this direction, including targeting women investors who are traditionally risk-averse and are now coming out of the closet.

In the book that you are planning to write, pls dedicate several detailed chapters on Islamic Investment products. The world is full of western-style investment gurus, but short on Islamic Investment advisers.

I don’t see much of Islamic investment opportunities for the retail sector in Singapore. There are some, but are meant more for institutional investors or having a high entry level. Any pointers on this pls? Thank you very much for your continued efforts to educate investors.

VS

REPLY
I am not knowledgeable on Islamic principles. But, I must say that I like all of the principles that have been described above (except the "above all" principle, which is relevant only to the Muslims).