Whilst new entrants are welcome into the growing Islamic finance industry, the ethical principles of Islamic Economics should be at the forefront of thought and intention rather than financial structuring.
Malta is the latest entrant keen to get a slice of the Islamic finance pie. The annual Finance Malta conference, held on 20 and 21 May included a presentation by CEO of Dar Al Sharia, Sohail Zubairi who said he had seen interest growing in Malta over the five years that he had been coming to promote Islamic finance – and that it now appeared that there was political will “so something should be happening soon”.
He went on to say other countries are also pushing to be Islamic finance hubs such as Tunisia and Turkey, but he was very enthusiastic about the potential for Malta, since Islamic banks in the Gulf could use Malta as a base to passport to the EU.
Ireland has enjoyed much success in the growth of its Islamic finance sector. An estimated 20pc of the Islamic funds market outside the Gulf is located in Ireland, with €2.5bn worth of Sharia-compliant funds administered. The Irish Stock Exchange (ISE) has in recent years consistently listed more Sukuk on its exchange than the London Stock Exchange.
However, a deeper look into the data highlights the problem faced by many financial centres which lack the depth of conventional centres such as London.
The Sukuk listings on the Irish Stock Exchange are technical listings, meaning no secondary market trading occurs through the exchange. Trading in the underlying securities are carried out on an over the counter basis off the exchange.
In a recent interview Noel Lourdes who heads the Dublin office of global Islamic finance advisors Amanie, stated “There is now an over-reliance on the ISE to create the statistics to make Ireland look like a growing centre of Islamic finance. How much of that €2.5bn listed has created additional jobs in Ireland?”,
He went on, “You could probably count the number of jobs created here through Islamic finance on less than five fingers. Pointing to ISE statistics as a measure of Ireland’s success in Islamic finance is misleading. A lot of this is ticking boxes. It creates statistics,”
“Most of the work is done and dusted before the funds come to Ireland. All it is coming here to do is to basically register itself, which simply means going to the Central Bank and applying for a licence. Most of the deals are structured in London, Dubai or Kuala Lumpur. And that’s where the high-value work is done.” he added.