Top Islamic banking officials will meet in Singapore this week to discuss ways to revive an industry which has stalled as interest in new markets cool and legal uncertainties cloud the role of sukuk as funding tools.
Once touted as a viable alternative to traditional banking, Islamic finance has failed to make a mark outside its core markets as countries from Britain to Hong Kong and Australia put on hold sukuk issuance plans and proposed regulatory changes to accommodate sharia banking.
Its reputation stained by Dubai’s $26 billion debt crisis in 2009, Islamic finance is struggling to attract investors’ attention with emerging markets flush with funds, in contrast to 2008 when the global crisis shut down credit markets and prompted a search for alternative sources of finance.
“Islamic financing has been clouded by the sovereign debt issues in Europe and quantitative easing has resulted in a lot of funds from the U.S. moving into various emerging markets,” said Anuwar Idris, head of marketing and business development at Affin Fund Management in Kuala Lumpur.
Dwarfed by the size and financial muscle of its conventional banking rival, the $1 trillion Islamic finance industry needs to find new markets beyond the Middle East and Southeast Asia for growth.
In the first meeting of top officials since the Middle East unrest broke, Gulf and Asian regulators and bankers will gather in Singapore on Wednesday and Thursday to restore confidence in sukuk as fund-raising instruments. Continue reading