The Case For Muslim BRIC: Saudi, Ankara (Turkey), Malaysia & Indonesia, or SAMI

By Rushdi Siddiqui, Global Head, Islamic Finance & OIC Countries, Thomson Reuters

The investing and financing world is about country linkages that are economic and financial opportunities clustered as growth stories. The most recognized country linkage is BRIC - Brazil, Russia India and China - it conjures mental images of geographies, growth, size, demand, etc.

Another term that is increasingly invoked by businesses looking for opportunities is ‘RDE,’ or Rapidly Developing Economies, and includes examples of Brazil, China, India, Mexico, and so on. To put theory into practice, globally committed companies, like Thomson Reuters, have established positions like Global Head of RDE.

But, as this column is about Islamic finance, halal industry, and Muslim countries, we now need to think [but I say have] a ‘Muslim BRIC.’ But, why? The simple answer is ‘why not,’ but the relevant answer is the present Muslim country clusters news and information is more about coverage than investing and trading opportunities.

The acid test is this: are Muslim country investors, from middle class to high net-worth to institutional, investing in a meaningful way in fellow Muslim majority OIC countries like Albania, Benin, Comoros, Gabon, Kyrgyzstan, Mali, Niger, Somalia and/or Yemen?

Today, we have 57 Muslim countries and 1.6 billion Muslims, we need a Muslim BRIC that conjures similar focused images of potential, opportunity, and accessibility. We can look at the Silk Route countries, OIC (Organization of Islamic Conference) countries, CIS (Commonwealth of Independent States) countries, and so on, yet, outside of conferences in or about Muslim countries, such clusters are not capturing the investors’ imagination or attention.

SAMI
On April 4, 2011, Thomson Reuters, along with their partners, IdealRatings, and World Halal Forum launched the SAMI Halal Food index, the world’s first Halal food index with the former Malaysian Prime Minister, Tun Abdullah Badawi. The SAMI Halal food index stands for Socially Acceptable Market Investments.

The index is about the beginning of convergence between Islamic finance and Halal industry. But, more importantly, its about Muslim country inward investing as Muslims, presently as ‘consumer investors’ in these halal food companies (via product purchase) become shareholder investors!

Now, within the ‘BRIC context,’ SAMI stands for Saudi, Ankara, Malaysia and Indonesia. Without getting into the multitude of economic and financial numbers for these four countries on GDP growth, inflation, foreign direct investment, exports, debt capital market development, population growth patterns, and so on, we have a compelling established emerging market story that happen to be Muslim countries on the old Silk Route.

Branding
The question is why the SAMI acronym? As with any branding exercise, it comes down to recall, recognition and reach whilst conveying a visual message of sustainable and scalable opportunities. The opportunities have become increasingly de-linked to the political minefield commonly found in emerging markets, which happen to be all Muslim countries.

Some general observations about SAMI countries include:

1. Three countries are G-20 countries: Saudi Arabia, Turkey (Ankara), and Indonesia. But, these countries are also the anchors for their respective geographies; Saudi Arabia for GCC (6) countries, Indonesia for ASEAN (10) countries, and Turkey for (5) CIS countries and beyond. These regions, especially GCC and CIS, may be viewed as pre-RDE countries!

2. One country is the recognized global leader in both Islamic finance and Halal Food: Malaysia. Much has been written about Malaysia achievements here, but the real take away message for any country, Muslim or non-Muslim, wanting to be a hub, is the holistic and consistent approach of the country since 1983 on the two inter-related sectors.

3. One country is the largest oil producer and largest halal food importer: Saudi Arabia. The political crisis in the Arab world has shown the importance of Saudi Arabia, as the country to stepped up oil production to more than off-set loss of Libyan oil from the markets.

4. One country has the largest Muslim population and growing: Indonesia

5. One country is the ‘sizeable’ bridge to the east and west: Turkey, as led by the present Islamist party.

Indexes & MNEs
One of the many spin-off possibilities here is a four country SAMI equity indexes for Shariah compliance, halal food, and conventional. Much like BRIC indexes convey a pulse of health, opportunities, fund flows, etc., the SAMI indexes would present not only ‘conventional,’ but Islamic and halal food (consumer non-cyclical sector) opportunities, information and insights.

From Indexes come companies that become the alter-ego of the country. The Financial Times had an interesting observation on Multinational Enterprises (MNEs) from RDEs, like Petro-China, Embraer (Brazil), Wipro (India), as these companies have become global brands and country ambassadors in short period of time. The ‘good will’ created and disseminated globally by such companies about their countries has basically detached them from the exploding political landmines often associated in the emerging markets.

In the Muslim world, according to Dinarstandards (DS), Muslim MNEs, as part of the DS-100 index, may be the next hidden gems for all investors. Thus, companies like Petronas (Malaysia), Emirates Airlines (Dubai), Kuwait Finance House (Kuwait), Ulker (Turkey), Indomie (Indonesia), and others represent tomorrow’s Muslim country global ambassadors of investable opportunities.

Thus, the Muslim BRIC, SAMI, has arrived in Malaysia!