BANGKOK, Nov 20 (Bernama)-- The Islamic financing system is expected to grow faster than the previous 15 to 20 percent annually as world economies look at it as an alternative to western models which is in turmoil now, said Asean Secretary-General Surin Pitsuwan.

He said the Islamic system was expanding not only in Muslim world but also in other countries where Muslims are minorities like in Britain, France, United States or Japan.

Surin said while the world financial system was in turmoil and sending shock waves across the globe, trend in Islamic banking and halal food industry was encouraging and positive.

"The rate growth was between 15 and 20 percent annually in the past decade. The trend is likely to continue with the construction boom in Middle East and Asia which would boost the value of Syariah assets," he added.

Speaking at the Bangkok Global Halal Conference here, Surin, whose grand father started a madrasah in the Southern Thai province of Nakhorn Si Thammmarat, said the Islamic financing system now accounts for one percent of the global market and expected to rise to 12 percent by 2025.

With the current financial turmoil that was affecting United States and other parts of the world, Surin said the Islamic banking could grow much more faster as the world looks for an alternative.

Surin said the Islamic model was timely and suited the current situation as it gave loans to less risky ventures while both the lenders and borrowers shared the risks.

"Islam forbids interest and insists on investment in productive activities. It builds in protection from turmoils that is currently affecting economies in North America and Europe,"he said.

In fact, he said more and more Western leaders and financial research houses are promoting Sukuk as a way of financing.

"The Kuwait Commerce Minister was quoted as saying that the global crisis will prompt more countries to use Islamic financing to run their economies," he said.

According to Surin, global sukuk was estimated at over US$90 billion, of which half are Malaysian domestic bonds and the remainder from the Gulf states.

He said the total volume was expected to reach US$200 billion by 2010.

Surin also said many Gulf countries with huge amount of funds at their disposal are seeking to invest in agriculture, halal food processing and marketing in the region.

-- BERNAMA