Last week news emerged of what could be the world’s largest initial public offering (IPO) set to take place in Riyadh before the end of the year. Selling of shares in Saudi Arabian oil giant Aramco are seen by many as a further sign that the once reclusive kingdom is opening up to the world.
Saudi Arabia may be opening up, but in Kuwait frenzied attempts are being made to clam up the country in conservativeness. A ruling delivered a few weeks back by the country’s powerful religious ministry seeks to ban two IPOs that were launched at the start of October, on the basis that such offerings are against religious dictates.
The public offerings in half of Boursa Kuwait, the country’s stock exchange, to citizens, and the long-awaited public subscription to Shamal Al-Zour, the company that owns and operates a major power station, were deemed haram by the Ministry of Awqaf and Islamic Affairs.
The non-binding fatwa issued by the ministry stated that the IPOs breached Islamic law’s prohibition on interest and branded them “haram,” or forbidden. Moreover, said the ministry, the Boursa trades in stocks of companies, including those that do not comply with Islamic principles, and makes “illegal revenues” from brokering transactions in these stocks. It also stated that Boursa Kuwait earns interest on deposits at banks that are not Shariah compliant.
In Kuwait, despite Islam being the official state religion and Shariah a main source of legislation, all laws are promulgated by an elected parliament that openly debates and challenges every aspect of the law before it is issued.The laws on IPOs were fully approved by parliament and do not mandate that companies offering shares should be Shariah-compliant.
Kuwaitis are bewildered by the ruling, many consider it an election ploy by conservative lawmakers playing to their electorate gallery. With elections coming up next year, hardline Islamists and other conservative lawmakers are well aware that in Kuwait populism pays. Parliamentarian Mohammed Al-Hayef, the hardline Islamist MP seen as the architect of the campaign against the IPO, has promised to grill the Finance Minister Nayef Al-Hajraf over various issues, including the IPO offerings.
In a country that binges on Kentucky Fried Chicken and drowns in Pepsi and Coke, one wonders why no one bothers to ask before buying these products, whether the companies selling them are Shariah compliant or halal. Nailing this question, columnist Ahmad Al-Sarraf wrote in the local Arabic daily, Al-Qabas: “Don’t those who issue these fatwas know that their salaries and the salaries of their sons come from state investments inside and outside Kuwait and from interest on stocks, bonds and deposits in companies and banks?”