The Prime Minister has announced that the UK will become the first non-Muslim country to issue an Islamic bond.
At the World Islamic Economic Forum in London, David Cameron also announced plans for a new Islamic index on the London Stock Exchange which is intended to attract more Islamic investors.
This is the first time that the World Islamic Economic Forum has been held outside the Muslim world.
Under Islamic rules, no interest on business dealings can be charged. Transactions must also be based on real trade or business activities and they must not involve anything forbidden under Sharia law, such as gambling or alcohol.
Mr Cameron believes that Islamic finance is a good opportunity for the UK’s financial services industry as Islamic investments have soared by 150% in the past seven years and are expected to be worth £1.3 trillion next year.
“I don’t just want London to be a great capital of Islamic finance in the Western world, I want London to stand alongside Dubai as one of the great capitals of Islamic finance anywhere in the world,” he said.
“There are some countries which naturally look inwards, pull up the drawbridge and refuse to recognise that the way the world is changing affects their future success. But Britain will not make that mistake,” he added.
The Treasury hopes to launch an Islamic bond – called a sukuk – worth £200m as early as next year. It will be structured to bring in a fixed return from a tangible asset or service, and without charging interest, in accordance with Islamic financial principles.
Muslim Council of Britain
Meanwhile, the Muslim Council of Britain welcomed David Cameron’s announcement to boost Islamic finance provision in the United Kingdom.
The announcement includes the introduction of Islamic bonds and the promise to help students and families take out loans according to Islamic provisions.
Farooq Murad, Secretary General of the Muslim Council of Britain, said: “The announcement is a very significant milestone for the community. The issuance of the Sukuk would enable all of us to save money using safer instruments that comply with Islamic principles. Islamic pensions and investment funds would also be able to use the Sukuk to balance their portfolios, leading to greater choice in the market.”
“The statements by David Cameron are a strong message to investors from Muslim majority countries that Britain is open for business and welcomes their support for the British economy. We would expect and encourage such investments, particularly given the high quality of assets and advisors available in the UK.”
Earlier the MCB issued a report highlighting the massive investment coming into UK from Muslim world.
The report said that:
– British Muslims make an estimated £31+ billion contribution to the UK economy.
– Some 114,548 Muslims are in higher managerial, administrative and professional occupations.
– 13,400 Muslim-owned businesses in London alone are creating 70,000 jobs.
– Over a £1 billion is being spent on the halal food industry.
– British Muslims have an estimated spending power of £20.5 billion.
– With Islamic finance totalling £1.3 trillion, London has become a major centre for the industry.
– Islamic finance has helped build the UK’s “newsiest” landmarks.