In June last year, the UK became the first non-Muslim country to issue a bond compliant with sharia law, known as a Sukuk. Now, a government minister has said London should become a hub for Islamic finance worldwide.
Tobias Ellwood, under secretary of state at the Foreign and Commonwealth Office, told a conference on the Middle East run by the Telegraph newspaper in the UK capital that Britain needed to “promote inclusive political participation and job creation across the region.”
He said that prosperity was at the heart of a long-term security strategy for the Middle East, the Telegraph reports.
Islamic law prohibits the charging or paying of interest, so a Sukuk is structured differently from other bonds. This can involve an investment in a tangible asset, in which the bondholder will gain a stake through their Sukuk purchase. The bonds can be issued by corporations or sovereign states.
Dubai and Bangladesh are some recent issuers, along with a very long list of others. The UK’s Sukuk, which went on sale in June 2014, attracted orders of £2.3 billion ($3.55 billion) (paywall)—ten times the £200 million available.
Money from the Middle East has been used to fund some of London’s big recent building projects, such as The Shard, which became the tallest building in the country when it was completed in 2013 and was eventually paid for by a consortium of investors from Qatar.
Chancellor George Osborne has long been supportive of foreign investment in the UK, and of London rivaling finance centers elsewhere by cultivating a flexible approach. “I want Britain to be not just the western hub of Chinese finance—but of Islamic finance too,” he said in a key speech in June 2014.