It seems that Islamic financial instruments are not only becoming popular in the Muslim world but are also attracting more attention and gaining wider acceptability in the rest of the world. Addressing the 9th World Islamic Economic Forum (WIEF) in London on 29th October, 2013, British Prime Minister David Cameron announced the introduction of "world first" Islamic Index for the London Stock Exchange as well as plans for Britain to become the first non-Muslim country in the world to issue Islamic bonds. He asserted that he wanted the British capital "to stand alongside Dubai and Kuala Lumpur as one of the great capitals of Islamic finance anywhere in the world". These plans were part of the country's drive to attract potentially lucrative investments as Islamic finance was growing 50 percent faster than the traditional banking sector and Islamic investments were set to worth 1.3 trillion pounds by 2014. Islamic index will identify companies compliant with Sharia law, which forbids the charging of interest and involvement in business dealings in alcohol or gambling. At the same time, British Treasury was working on the "practicalities" of issuing a 200-million pound Islamic bond, known as sukuk, as early as next year.
It needs to be mentioned that it was for the first time that meeting of the WIEF was held in a non-Islamic country due mainly to the acceptance of Islamic finance on a wider scale and the emerging importance of the city of London as a centre for such a financial hub outside the Muslim world. It must, however, be acknowledged that Britain seems to have ventured into this new area of finance not because of the "love" of the Islamic economic system but due to purely commercial and investment considerations. With more than 1.5 billion people or 23 percent of the world population including more than 835 million youth under the age of 24 and a combined GDP of dollar 6.6 trillion, Islamic nations have to offer much of economic contribution to the rest of the world. The growth potential of the Islamic financial market could be gauged from the fact that while about one-fourth of the world population is Muslim, only one percent of the world's financial assets are Sharia-compliant and merely 20 percent of adults in the Middle East and North Africa have a formal bank account. The gap presents a huge economic opportunity to the UK. Already, London is the biggest centre of Islamic finance outside the Muslim world and more than 20 banks are offering Islamic financial services with reported assets of dollar 19 billion. Britain is also home to more than a dozen universities or business schools offering executive courses in Islamic finance; primarily, to attract Petro-dollars from the Middle East.
It needs to be remembered, however, that acceptability or popularity of Islamic finance in Britain or other non-Muslim countries is not due to the fact that they are genuinely impressed by such a mode of finance but by their prudent approach to use financial resources of Muslim countries for promoting development in their own countries and providing an edge to their banking institutions in expanding their business. According to George Osborne, British Chancellor of the Exchequer, Islamic bonds would not only entitle investors to a share in the returns generated by an underlying asset, such as property, but would also act as a catalyst for corporate institutions to follow suit - further expanding the use of Sukuk as an asset class in the global market, and helping to promote much-needed overseas investment in Britain's infrastructure. By embracing Islamic finance, the present British government was "doing what it takes to open Britain up for business, and for new sources of finance and extra jobs." This clearly indicates that we should not be unduly swayed by the present positive approach of non-Muslim countries towards Islamic finance. They have adopted it as a purely commercial proposition, mainly to shift the surplus resources of Muslim countries to benefit their own institutions and promote economic activity in their own countries. It appears, therefore, that a lot of work still needs to be done by Muslim scholars and economists to demonstrate the superiority of Islamic finance over the traditional finance, both in theory and practice, so that it becomes a permanent feature of the global economic system in the years to come. The proponents of Islamic finance are required to address questions with regard to its character as a component of modern capitalist system, identification of principles upon which the Islamic system was built, developed and evolved over the years. It is also important to address the question whether Islamic finance institutions can be modernised to meet the present-day needs. One must not lose sight of the fact that China's economic system - under the stewardship of the Communist Party of China - is continually evolving.
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