Experts in Middle East are urging the UK government to remove the Shariah-compliant finance laws, so as to make London the capital of Islamic finance in the western world.
The UK has been recently increasing its Islamic finance sector with the developments of the Qatari-backed Shard Tower and Chelsea Barracks, and Malaysian-backed Battersea Power Station, which have been funded using Shariah-compliant structures.
According to Dubai-based Islamic finance head Qudeer Latif Western economies may see about 10% of global Islamic finance work compared with the volumes seen in the Middle East, which is around 60-65%, whereas Islamic finance may constitute about 1% of global financial assets.
Though the UK lawyers are looking for the Treasury’s planned sukuk launch in 2014, alongside a new Islamic index on the London Stock Exchange, they are not expecting to witness an immediate surge in demand for specialist advice.
Norton Rose Fulbright partner Farmida Bi said the UK has the only Western system that completely allows for Islamic finance and they have the existing links to the Islamic world and the liquidity for it.
"The only thing missing was a high-profile transaction, and I think the sukuk issue is the landmark deal that can help UK corporates realise that there is money to be found in the Islamic markets," Bi added.
"Hopefully, the announcement will create a larger volume of work, but we will have to wait and see. It has been very positively received – I’ve had many calls from clients in the Middle East and Asia since."