Trillion Dollar Halal Market
For a long time, the halal simply meant buying meat from a halal butcher, who slaughtered in accordance with Islamic principles. But the halal food market has exploded in the past decade and is now worth an estimated $632 billion annually, according to the Halal Journal, a Kuala Lumpur-based magazine. That's about 16% of the entire global food industry. Throw in the fast-growing Islam-friendly finance sector and the myriad other products and services — cosmetics, real estate, hotels, fashion, insurance — that comply with Islamic law and the teachings of the Koran, and the sector is worth well over $1 trillion a year, according a recent report in Time magazine.
Time attributes the rise of the halal economy to the world's 1.6 billion Muslims, most of whom are younger and, in some places at least, richer than ever. Seeking to exploit that huge market, non-Muslim multinationals like Tesco, McDonald's and Nestlé have expanded their Muslim-friendly offerings and now control an estimated 90% of the global halal market.
McDonald's, Nestle and Tesco are not only non-Muslim owned and managed companies capitalizing on the growing demand for halal products. New ones, such as Canada-based Al Safa, whose products are found in major North American supermarket chains, are joining the fray.
A Muslim name, some Muslim employees, a logo containing Arabic, date palm tree, and a masjid, slick flyers announcing its Halal food products and a 1-800- number with a message greeting you with a Salam and a recording in English and Arabic.
But Al Safa Halal is not a Muslim owned company, according to Sound Vision website. The Kitchener, Ontario-based entity is actually owned by non-Muslim (Jewish) private investors, cashing in on the North American Muslim market.
Beyond halal food, the global economic crisis has brought attention to Islamic finance as an alternative for both Muslim and non-Muslim customers. In a recent article, the Vatican newspaper Osservatore Romano has voiced its approval of Islamic finance. The Vatican paper wrote that banks should look at the rules of Islamic finance to restore confidence amongst their clients at a time of global economic crisis. “The ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service,” the Osservatore Romano said. “Western banks could use tools such as the Islamic bonds, known as sukuk, as collateral”. Sukuk may be used to fund the “‘car industry or the next Olympic Games in London,” the article says.
Investors are attracted by Islamic banking's more conservative approach: Islamic law forbids banks from charging interest (though customers pay fees) and many scholars discourage investment in excessively leveraged companies. Though it currently accounts for just 1% of the global market, the Islamic finance industry's value is growing at around 15% a year, and could reach $4 trillion in five years, up from $500 billion today, according to a 2008 report from Moody's Investors Service.
Pakistan's Islamic banks plan to expand their network of outlets this year to take advantage of rising demand for Shariah-compliant financing according to Pervez Said, director of Islamic banking at the State Bank of Pakistan. These banks have 500 branches, after adding 210 outlets last year. Pakistan is promoting growth in Islamic finance to expand the reach of the banking sector which has less than 25 million deposit accounts. Shariah-compliant facilities are forecast to rise to 277 billion rupees ($3.5 billion) this year from 185 billion in 2008, according to central bank data.
French retail giant Carrefour has been selling Halal products in many Muslim countries for several years now. In fact, Carrefour Malaysia created a unique program in collaboration with the Ministry of Domestic Trade and Consumers Affairs. The company has a dedicated team to monitor and assist small and medium-sized enterprises to develop Halal products, which will be distributed through the Carrefour chains in Malaysia and other countries. Carrefour is the second largest hypermarket in the world, while Carrefour Malaysia set up its Halal Department in 2006.
Carrefour is now looking to expand in several more Muslim countries, including Pakistan. “We are not interested in what I call ‘French North Africa’, so in the west we won’t go beyond Libya. To the east we are looking at markets like Iran and Pakistan. India is too far away for us.” François de Montaudouin, chief executive of Majid Al Futtaim Group, said recently.
Former Nixon adviser and now an American-Muslim commentator, Robert D. Crane, recently described "the universal principles of what may be called Islamic economics, not the glitzy stuff of the so-called Islamic banks but the maqasid al shari’ah or universal and essential purposes of justice as taught principally in the haqq al mal of classical Islamic thought, first revived in the modern era by Grand Mufti Ibn Ashur’s book, Maqasid al Shari’ah, published in 1946 and translated by the International Institute of Islamic Thought in 2007". Crane says that "these provide a new paradigm ready to replace the bankrupt paradigm of concentrated power that dominates in both socialism and capitalism."
The dramatic growth of interest in Halal business and finance can be measured by many international conferences and expos held each year to bring together various regional and international players. A number of major events are planned this year in Asia, Middle East and Europe.
While the Islamic finance is still early in its early development stage, I see it as a crucial vehicle to ensuring in the future that significant part of the wealth of Muslim investors is invested with Muslim businesses in Muslim nations to help them develop. Already, the biggest foreign direct investors in Pakistan are Muslims from Dubai, Malaysia and the Middle East.
APP reported that Malaysia topped the list of investors making Foreign Direct Investment (FDI) in Pakistan during first six month of year 2008, according to data released by Ministry of Foreign Affairs. The Foreign Direct Investment during the first five months of current financial year reached US$ 1.8 billion registering an increase of 1.5 percent, export reached to US$ 8.2 billion with a growth of 20 percent and foreign remittance at 2.9 billion registered an impressive increase of 15pc.
The May Bank of Malaysia made the biggest investment of US$ 907 million in banking sector followed by Saudi Arabia with an investment of US$ 750 million in steel sector and UAE with an investment of US$ 500 million in power sector in Pakistan.
The global economic meltdown has not deterred the foreign investors, including Malaysia, from investing in Pakistan, as the Pakistan’s economy showed extreme resilience and defied the economic recession with registering growth in FDIs, Export and Foreign Remittance.
Islamic bonds, called Sukuk, are a great way for Muslim nations to raise development funds from Muslim lenders, rather than do Euro or dollar offerings in Europe and America. This Islamic bond market is also beginning to develop.
It is important for Muslim businessmen and entrepreneurs to seize the opportunity from the projected phenomenal growth of the halal markets. There are a whole range of products and services from food and medicine to finance to travel and entertainment that can come out of the halal movement. It is clearly a mutli-trillion dollar opportunity during the next three to five years.
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A Muslim name, some Muslim employees, a logo containing Arabic, date palm tree, and a masjid, slick flyers announcing its Halal food products and a 1-800- number with a message greeting you with a Salam and a recording in English and Arabic.
But Al Safa Halal is not a Muslim company. The Kitchener, Ontario-based entity is actually owned by non-Muslim (Jewish) private investors, intent on cashing in on the North American Muslim meat market.
While one of Al Safa Halal's proprietors, David Muller, refused to speak with Sound Vision, he directed our call to its Customer and Consumer Relations Manager AbdelKader Muhammad. Muller also would not disclose exactly who and how many people owned Al Safa Halal, saying this information is confidential.
Providing Halal meat products for Muslims was the first type of business Muslims in North America established long ago. After Masjids, the Halal grocery store became a need of the Muslim community in North America. Such stores have become part of the landscape.
Enter Al Safa Halal. While it was only launched last year, it emerged from the company MGI Packers, which is based in Kitchener, Ontario, Canada and had been in business as a slaughterhouse since 1987.
Assets held by the world’s 100 biggest Islamic banks grew 66 per cent in 2008 from the previous year despite the financial turmoil that clobbered mainstream lenders, a report said Friday.
The top 100 Islamic banks held assets totaling 580 billion US dollars last year, up from 350 billion dollars in 2007, according to an annual report by The Asian Banker, a magazine for financial professionals.
In the same period, Asia’s 300 biggest banks saw their assets rise by a much slower 13.4 per cent, it said.
A financial storm sparked by a crisis in the US housing market swept across the world late last year. Its impact spilled over into the general economy and sent several countries into recession.
Prominent US investment bank Lehman Brothers collapsed into bankruptcy, while several other major Western banks suffered massive losses.
‘Despite the financial turmoil in late 2008 that crippled so many large Western institutions, Islamic banks have continued to grow in prominence and size,’ the magazine said in a press statement.
Emmanuel Daniel, the magazine’s president and chief executive, added: ‘Islamic finance has seen an incredible surge in popularity, based on stronger regulatory regimes and a better international understanding of its dynamics.’
Islamic banking fuses principles of sharia or Islamic law and modern banking. Islamic funds are banned from investing in companies associated with tobacco, alcohol or gambling.
Iranian banks were the biggest players in the global Islamic banking sector, holding seven out of the top 10 rankings and 12 out of the 100, but Saudi Arabian lenders were more profitable, the report said.
Saudi Arabia’s Al Rajhi Bank had the highest net income of 1.74 billion dollars, which is more than five times the earnings of Bank Tejarat, Iran’s most profitable lender.
Iranian banks also took up 40 per cent of the total assets of the top 100 banks, with the UAE, Malaysia, Saudi Arabia and Kuwait accounting for a combined 40 per cent. Smaller banks in 10 other markets accounted for the rest.
Outside of the Middle East, two Islamic banks in Britain made it to the top 100, according to the report.
Asian and North African banks ‘are still very small’ compared with the Middle Eastern players, it said, adding that ‘only Malaysian and Bangladeshi Islamic banks have a significant amount of assets’.
Indonesia, the world’s most populous Muslim nation, had only two banks on the list, Pakistan had three, while regional financial centre Singapore and the Malay Islamic kingdom of Brunei had one each.
The speakers at a concluding session of the two days international conference on halal industry in Pakistan stressed the need for focusing on halal industry in the country, as it can give boost to the national economy.
The conference was organized by Halal Research Council in collaboration with PAMCO and Livestock & Dairy Development Department Punjab in which research papers on various topics like export of Halal products from Pakistan, promotion of Pakistan’s Halal Industry internationally, International Halal Research & development and Certification, opportunities of promotion in the Global Halal Industry and the potential of Halal Industry in Punjab were presented.
In that conference, the MoU was signed amongst Philippine and Mauritius for the sake of promoting the Pakistan Halal products. The main subject of the conference was the proposal from Justice Khalil ur Rehman for the formation of Halal Authority which was unanimously appreciated by all.
Other accepted proposals include the Halal awareness Campaign, Research in the field of Halal and Halal Publications.
During the early months of 2010, Adnan A. Durrani found himself frequently thinking of kosher hot dogs. To be more precise, he was thinking of an ad campaign for them created decades earlier by the Hebrew National company. Its well-known slogan went, “We answer to a higher authority.”
Let it be said that Mr. Durrani was, in many ways, an unlikely recipient for such a revelation. An observant Muslim born to Pakistani parents, a Wall Street refugee turned natural-foods entrepreneur, he was then trying to create a line of frozen-food entrees adhering to the Muslim religious standard of halal for the American market.
And Mr. Durrani was doing so in an especially forbidding political climate, with a demagogic battle raging against a proposed Muslim community center in Lower Manhattan depicted as the “ground zero mosque,” and judicial and criminal attacks against a mosque being constructed in Murfreesboro, Tenn. “Perfect timing,” he recalled dryly.
Yet the Hebrew National mantra attested to the goal that Mr. Durrani had set for his nascent company, Saffron Road: to hit both the bull’s-eye of a specific religious audience and appeal to the concentric ring of other consumers inclined to impute positive traits to any food with a sanctified aura.
By the late summer of 2010, the first Saffron Road entrees landed store shelves. This year, as the Muslim holy month of Ramadan approaches, bringing with it daytime fasts and nightly iftar meals, the company has put out more than 50 different products and built annual sales on a pace to reach $35 million.
As significant, thanks to a close partnership with the Whole Foods chain, Saffron Road’s products have moved beyond a core audience of observant American Muslims and into the commercial mainstream. In that respect, Saffron Road is among the first halal producers to follow what might be called the kosher model of simultaneously serving and transcending a communal constituency.
“What it takes for an ethno-religious food to cross over into the mainstream is, first of all, buy-in from the general public — a perception that this food has something of value that other food does not,” said Sue Fishkoff, author of the book “Kosher Nation.” That something, she continued, might be a sense, even if inaccurate, that the food is healthier, purer or of higher quality because it has been produced under religious supervision.
The challenge for a halal product, then, is a foundational one. Instead of entering a marketplace that has an innocuously favorable view of a religion and its clergy, such as Judaism and Christianity enjoy in America, a brand like Saffron Road runs the risk of colliding with and even provoking Islamophobia. All of which makes its commercial success more notable, and one might say more heartening.
As of 2014, about two-thirds of Saffron Road’s products are gluten-free and about one-third do not use genetically modified ingredients. They are sold in such mainstream supermarket chains as Costco, Publix and Kroger.
Predictably, some anti-Muslim reaction has appeared, with a small number of bloggers assailing Whole Foods in 2011 for running a Ramadan promotion of Saffron Road products. Less predictably, however, the brouhaha wound up being a bonanza. Mr. Durrani went on CNN to defend his company and deployed a “rapid-response team” of bloggers, including a rabbi, to attack the attackers. Thanks to all the free publicity, Saffron Road’s sales shot up by 300 percent during that Ramadan.
“We say this is higher-powered,” Mr. Durrani said. “Angels come in from nowhere to help us.”
That part of the story, of course, just may not fit into an M.B.A. case study.
The government may issue $500 million of dollar Islamic notes by month-end, Finance Minister Ishaq Dar told reporters in Dubai on Nov. 8, reviving the sale initially scheduled for September. The yield on the nation’s conventional five-year U.S. currency debt sold in April dropped to a five-month low of 6.16 percent and Union Investment Privatfonds GmbH is predicting 6 percent for a similar-maturity sukuk.
Investors have sent the benchmark stock index to a record and the rupee to its strongest in more than two months as they focus back on the economy as Prime Minister Nawaz Sharif overcame pressure from opposition members to step down in August. Global sales of sukuk are heading for the worst fourth quarter since 2008, aggravating a shortage of Islamic securities that may support demand for Pakistan’s offering.
“The macroeconomic outlook of the country has vastly improved,” Vasseh Ahmed, chief investment officer of Faysal Asset Management Ltd., which oversees $85 million in Karachi, said in a Nov. 11 e-mail. “There is expected to be substantial interest owing to the lack of investment avenues for Islamic investors.”
Worldwide sales of Islamic bonds dropped 81 percent this quarter to $2 billion from the previous three months, data compiled by Bloomberg show. Issuance climbed 11 percent in 2014 to $38.9 billion, trailing 2012’s record $46.8 billion total.
Pakistan tapped the international debt market in April for the first time since 2007. It sold $2 billion in total of 7.25 percent non-Shariah-compliant notes due in 2019 and 10-year 8.25 percent bonds whose yield was at a three-month low of 7.46 percent, data compiled by Bloomberg show. Demand exceeded the amount on offer by 14 times.
The nation has no global sukuk outstanding, only local-currency Shariah-compliant notes that were last issued in June.
A five-year note will pay from 6 percent to 6.5 percent and 10-year securities 7 percent to 7.5 percent, Mohammed Sohail, Karachi-based chief executive officer at Topline Securities Pakistan Ltd., said in a Nov. 11 e-mail.
The South Asian nation’s foreign-exchange reserves totaled $14 billion in September, compared with $8.7 billion at end-2013, central bank data show. The fiscal deficit narrowed to 5.8 percent of gross domestic product in the 12 months through June, from 8.2 percent the previous year, according to official data on June 3.
“The key factor will be the domestic political situation,” Sajjad Anwar, chief investment officer at NBP Fullerton Asset Management Ltd., which manages $456 million, said by phone on Nov. 11 from Karachi. “The economy is in better shape now and the response to the sukuk will be very encouraging.”
The nation, which is rated below investment grade at B- by Standard & Poor’s, is still likely to attract investor interest because of its higher yields. Qatar’s global Shariah-compliant debt due in 2023 yields 2.99 percent, while Malaysia’s 2021 sukuk pay 2.93 percent, according to data compiled by Bloomberg.
Pakistan has engaged in economic reforms to meet conditions of an International Monetary Fund bailout. The Washington-based lender said in a Nov. 8 statement that it will seek board approval to release $1.1 billion in loans in December. The reforms are “broadly on track” with growth forecast at 4.3 percent in the fiscal year ending June 2015, the fund said. GDP increased 4.1 percent in the last financial year.
“Pakistan is a very well known name to the sukuk investor community,” Union Investment’s Dergachev said in a Nov. 11 e-mail. “It still offers a very attractive yield compared to other sukuk issuers both in the sovereign and corporate space and that matters in a low-yield environment.”
Nov 17 (Reuters) - Pakistan regulators are merging three small Islamic investment firms after the central bank took control of Karachi-based KASB Bank Limited, accelerating efforts to strenghten financing by investment partnerships.
Last week, the government directed the central bank to reorganize or amalgamate KASB Bank in the next six months, after the lender failed to meet minimum capital requirements.
On Friday, KASB Modaraba said it had taken management control of First Pak Modaraba and First Prudential Modaraba, three of a total 26 modarabas active in the country.
Modarabas are a form of Islamic investment partnership where assets are managed on behalf of clients, with income and expenses shared under a pre-agreed ratio.
The sector remains a tiny part of the country's Islamic finance industry, with several firms lacking scale to compete.
Last week, First Habib Bank Modaraba, a unit of Pakistan's largest lender HBL Bank, liquidated its business.
As of March, the three modarabas held a combined 1.9 billion rupees ($18.7 million) worth of assets, dwarfed by larger peers such as Standard Chartered Modaraba with 5.3 billion rupees in assets.
The Securities and Exchange Commission of Pakistan (SECP) has also developed risk management guidelines for modarabas, last year introducing sharia compliance and sharia audit mechanisms to strengthen the sector.
ISLAMABAD—Pakistan raised $1 billion through an Islamic bond issue on Wednesday, its first such issue in nearly a decade, in a bid to boost the country’s economy, finance ministry officials said.
The government initially planned to raise $500 million from the issue, but the bond was oversubscribed, with requests totaling $2.3 billion, the finance ministry said. Offers of $1 billion were accepted for a five-year maturity at a so-called profit rate, which is similar to a yield, of 6.75%.
The issue was part of Prime Minister Nawaz Sharif ’s ambitious plans to boost Pakistan’s economy, which include divestments and privatization of as many as 31 state-owned enterprises.
Finance Minister Ishaq Dar called the bond issue “a reflection of [the] international investor community’s [confidence] in the leadership of Prime Minister Nawaz Sharif and his economic policies.”
Officials on Thursday said the issue had added significance because of the abandoned sale of a part of the government’s stake in the country’s largest oil and gas business, due to poor investor response. That sale had been expected to raise $800 million, but investors tendered bids for only 52% of the shares on offer.
An Islamic bond, or Sukuk, doesn’t rely on interest, which is forbidden in Islam. Instead, the bonds are linked to assets and profits paid to investors based on revenue generated by the assets, or based on the investor’s part-ownership of the asset, depending on the bond’s arrangement.
“This [bond] issue has been very successful; It’s a big boost and a statement of trust from investors,” a senior finance ministry official said, requesting anonymity because he wasn’t authorized to speak to the media. “Our assessments proved correct: that investors were hungry for an Islamic bond.”
In a statement issued after the issue, Pakistan’s finance ministry said the profit rate of the $1 billion Islamic bond “compares favorably with the average weighted cost of comparable domestic debt of about 11%” and will result in annual savings worth 5 billion Pakistani rupees, or nearly $50 million, in debt servicing.
The ministry said the $1 billion proceeds from the bond issue will immediately go to the country’s central bank, which will help boost foreign exchange reserves. Pakistan had liquid foreign exchange reserves of $13.2 billion as of November 21, according to the State Bank of Pakistan. The government wants to increase reserves to $15 billion by the end of this year.
The International Monetary Fund is expected, pending a review by its executive board next month, to release a $1.1 billion tranche of a $6.6 billion loan to Pakistan.
Do visit my blog too on Halal Investment options in Canadian perspective.
All menu items are halal, and there's even a shawarma-meets-gyro type of wrap to get local tastebuds interested: Behold, the McArabia.
You can get a McArabia for just under $3.00. Add a drink and some fries, and you're still at under $5.00.
In a country where pork is banned for religious reasons, Sausage and Egg McMuffins are on the menu — but the sausage is made from chicken.
Senior militant commander Ehsanullah Ehsan, who is a spokesman for one of the Taliban factions in Pakistan, laughed when asked Friday for his thoughts on the hamburger chain.
"Hahahaha, so you are asking me about McDonald's food," the TTP-JA fighter said. "Yes, I know McDonald's and its food but we will never eat it. We don't even consider it as a food. This isn't our food ... We live in the rough, tough mountainous areas and need energy and power to fight against the enemy."
A senior member of the Afghan Taliban told NBC News he had once tasted McDonald's food in the Pakistani city of Karachi but it was "too expensive" and tasteless. He said that Taliban fighters preferred mutton and rice.
However, he conceded that it was "good when you are in a hurry and have no access to proper food."
"We know it's an American food company and our religious scholars have forbidden us from consuming any Western food and beverages," the militant added, saying that he intended to visit the Quetta outlet with friends but would not eat there.
Quetta needs a break. Since the Soviet invasion of next door Afghanistan in 1979, it has morphed from a well-manicured city to a violent, refugee-laden hideout of some of the region's most dangerous militants.
The capital of the insurgency-ridden Pakistani province of Balochistan has has slowly been stabilized and terror incidents have decreased by more than 60 percent since last year, according to the paramilitary Frontier Corps, which is in charge of the city's security.
The new McDonald's is in Millenium Mall, which is located in the highly secured Police Lines neighborhood.
Quetta's under-fire cops have been targeted many times near the fast-food restaurant.
Sometimes, culinary trends move in sync with political ones. Sauerkraut was renamed “liberty cabbage” when the U.S. was at war with Germany, and a more recent falling-out with the French led to the invention of “freedom fries.”
But sometimes they move in mysterious ways. In an election season dominated by Donald Trump, Muslims haven’t always been made to feel welcome in America. Meanwhile sales of halal food, prepared according to Islamic law, are surging -- and not just among the fast-growing U.S. Muslim population: Adventurous millennial foodies are embracing it too.
Shahed Amanullah could only find about 200 places that served halal food in 1998, when he launched a website to help Americans find it. Today, he’s tracking 7,600, and he says halal is making inroads even among people who are wary of Muslims. “Food is a great medium for cultural sharing,” Amanullah said.
There’s a well-trodden path in America’s food culture, leading from ethnic-specialty status to the mainstream. It happened long ago with Italian cuisine, and to some extent with kosher food, which offers a closer parallel to halal. Like the Jewish equivalent, Islamic rules mandate humane treatment of animals as well as other special preparations.
At every level of the U.S. food chain, halal already occupies a small but rapidly expanding niche.
In grocery and convenience stores and similar outlets, research firm Nielsen estimates that sales reached $1.9 billion in the 12 months through August, a 15 percent increase from 2012.
Overall, from restaurants to supermarkets, halal sales are projected at $20 billion this year, up by one-third since 2010, according to the Islamic Food and Nutrition Council of America, which certifies halal food and promotes education on the topic
Whole Foods Market Inc., which has been among the pioneers, ranks halal among its fastest growing categories, with double-digit sales growth in each of the last five years. It’s been running Ramadan promotions since 2011.
For early-adopting retailers, there’s been some flak -- especially in the corners of social media where Islam comes under regular criticism. Amanullah said his “where-to-find-it” website is often used in such circles as a “who-to-boycott” guide -- though he said such efforts typically backfire and end up helping his business.
When Whole Foods ran its initial Ramadan campaign, it was criticized for failing to tout other religious holidays. Rick Findlay, global grocery coordinator for Whole Foods, says the company wasn’t deterred.
“People look to Whole Foods to be that trend setter,” he said, “We’re happy to be on that cutting edge and take some risks.”
The new spot, located at 340 O’Farrell St. in the old Naan N Curry, will be the first step in what’s a miniature Bay Area takeover for the East Coast food cart. (They have plans for another spot in Berkeley). Right now, the Halal Guys have 200 locations in development across the U.S., Canada and Southeast Asia.
We’ve been following the news of Halal Guys setting up shop in the Bay Area for the last few months now. This latest update means they’re less than a month from dishing out those renowned chicken gyros or falafel between Taylor and Mason streets for both Union Square and Tenderloin audiences.
Stay tuned for more coverage.
Halal Guys: 340 O’Farrell St., Sunday through Wednesday from 10 a.m. to 2 a.m. and Thursday through Saturday from 10 a.m. to 4 a.m.
Growth of sharia-compliant investment funds in Pakistan is helping fuel demand for sukuk, or Islamic bonds, giving local firms new funding options while strengthening the case for Islamic pensions in other majority-Muslim countries.
Strong demand for Islamic funds, and in turn sukuk, could encourage other countries trying to deepen their Islamic capital markets, in particular in the Gulf region where private pensions are rare.
Pakistan's Islamic banks lag their conventional peers, holding around 13 percent of total deposits, while Islamic mutual funds and private pensions have a far greater market share.
Islamic mutual funds held 242.7 billion rupees ($2.3 billion) in assets as of December, or 37 percent of the total, official statistics show.
Almost two-thirds of assets in the country's voluntary pension system (VPS) are now managed under Islamic principles.
All 10 VPS managers offer Islamic pension products, worth a combined 14.5 billion rupees, or 63 percent of total VPS assets with the largest VPS product being sharia-compliant.
Attractive yields, tax exemptions and greater flexibility in choosing external managers have made VPS products popular, which in turn adds to demand for sukuk, said Abdullah Ghaffar, head of investment banking at Al Baraka Bank Pakistan.
"Mutual funds, both fixed income as well as equity funds, have become big time investors in existing and new sukuk issues taking place because of the huge assets under management under their disposal."
Two recent sukuk transactions from manufacturing companies attracted significant interest from such investment funds, while equity funds are also becoming active in initial public offerings, Ghaffar added.
Reforms from Pakistan's capital market regulator have also helped equity-like financing vehicles, known as modarabas, to grow their combined assets above 41 billion rupees.
This has attracted a wide range of issuers: Byco Oil Pakistan Limited raised 3.12 billion rupees via sukuk using a credit gurantee and Ghani Gases raised 1.3 billion rupees via a privately-placed sukuk last month.
In December, Fatima Fertilizer Company mandated banks to raise 10.5 billion rupees through a lease-based sukuk.
Pakistan GasPort Consortium Limited plans to raise 8.6 billion rupees via seven-year sukuk to finance the construction of the country's second LNG import terminal.