CAIRO – In a bid to make London a Makkah for Muslim businessmen, David Cameron has announced plans to encourage investment by Muslim countries, saying he wants to make London “one of the greatest centers for Islamic finance anywhere in the world”.
“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 and Kuala Lumpur as one of the great capitals of Islamic finance anywhere in the world,” the British PM said as he welcomed world leaders at the inauguration of 9th World Islamic Economic Forum in London on Tuesday, October 29, Islamic Financial Times reported.
“Investing in London is good for you and opening London up to your investment is good for us.
“Never again should a Muslim in Britain feel unable to go to university because they cannot get a student loan simply because of their religion,” he added.
Politicians and business leaders gathered in the capital for the ninth annual World Islamic Economic Forum – the first time the major event has not been held in a Muslim country.
The Prime Minister appeared on stage alongside a number of world leaders, including King Abdullah of Jordan and the Sultan of Brunei.
The global market in Islamic investments is rapidly expanding, rising by 150 per cent since 2006 and expected to be worth £1.3 trillion next year.
London's Deputy Mayor Sir Edward Lister has also voiced ambitions to make the English capital a hub for Islamic finance.
A task force on building the UK's Islamic finance industry has been at work since early 2013.
“The task force has just started and its aim is to make it easier for banks in London to have Islamic products, which is still quite a new concept to any of them,” Lister told a press conference in September during his trip to Malaysia.
“Only now people are beginning to understand what the products actually mean and how they comply ... What you will see is a lot of companies introducing those products.”
Hoping to get a share of the Islamic finance pie, Cameron announced a plan from the Treasury to issue an Islamic bond - or sukuk - worth around £200 million.
“Britain is a country ready to welcome your investment, a country that values your friendship and a country which will never exclude anyone because of their race, religion color or creed,” he told the gathering of 1,800 political and business leaders from over 115 countries.
“This government wants Britain to be the first sovereign outside of the Islamic world to issue an Islamic bond… to be launched as early as next year.
The British Treasury also plans to issue fixed returns based on the profit made by a named asset, allowing for Muslims to invest without breaking Islamic laws forbidding interest-bearing bonds.
Islam forbids Muslims from usury, receiving or paying interest on loans.
Islamic banks and finance institutions cannot receive or provide funds for anything involving alcohol, gambling, pornography, tobacco, weapons or pork.
Shari`ah-compliant financing deals resemble lease-to-own arrangements, layaway plans, joint purchase and sale agreements, or partnerships.
Investors have a right to know how their funds are being used, and the sector is overseen by dedicated supervisory boards as well as the usual national regulatory authorities.
Cameron added that Islamic investment was “already fundamental” to the success of the UK economy.
“When Islamic finance is growing 50% faster than traditional banking and when global Islamic investments are set to grow to £1.3tn by 2014 we want to make sure a big proportion of that new investment is made here in Britain,” he said.
“I know some people look at foreign companies investing in our businesses, financing our infrastructure or taking over our football clubs and ask - shouldn't we do something to stop it? Well, let me tell you, the answer is no.”
The United Kingdom is one of the leading countries in the European Union to have Islamic banks. It is also developing its takaful market for Islamic insurance.
The UK also has a strong foothold in developing products such as commodity murabaha – Islam’s version of interbank short-term lending and syndicated loans.
Moreover, London has established the first secondary market in sukuk outside the Islamic world to help Islamic investors who seek to buy property and assets in the UK in a way that fits in with their religion, which bans earning interest, speculating or risk-taking.
London is also advanced in Islamic retail services, with institutions offering a range of Islamic banking products, such as mortgages and car loans.
The Islamic Bank of Britain, granted a license in August 2004, became the first Islamic bank in the UK and has continued to attract customers for mortgages.
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