DAR AL HARB - U.K.: GREAT BRITAIN, THE WORLD LEADER IN SHARI'AH COMPLIANT BANKING

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Changes in the Budget open the gateway to the huge islamic funds market

It was the rate cuts that grabbed the Budget headlines with much debate and comment around whether 2% was enough to restore the UK’s tax competitiveness and who would be the winners and losers.

Amid all this, the real story about the UK’s competitiveness on the world stage was perhaps missed.

Gordon Brown announced measures that potentially open the floodgates for up to $400bn (£202bn) of oil-fuelled funds from the Middle East to invest in the UK.

Many investors from the Middle East can only put their money into Shariah compliant funds. They have thus been restricted to what is on offer.

Due to an anomaly in the tax system, “Sukuks” (Shariah compliant vehicles similar to conventional bonds) are very expensive to invest in. The reasons are technical but essentially this is because income streams derived from a Sukuk investment are classed as “rent” or “profit” by HMRC and, as such, are subjected to a much higher tax charge than “interest” on a conventional western bond.

This deters businesses or investment houses whose underlying activities might be acceptable to an Islamic investor from issuing Sukuks.

Last week the chancellor proposed legislation that will level the tax playing field and make it economic for UK businesses and investment houses to issue Sukuks.

There is huge appetite in the Middle East to diversify their investments. The paucity of Shariah compliant vehicles has meant that these funds have largely been limited to investing intra-region in the Middle East.

This geographic limitation is further compounded by the narrow range of sectors available to them – oil and gas, real estate or local infrastructure.

Such a portfolio – lacking both regional and sectoral diversification is an investment bank’s nightmare and we can confidently expect significant investment flows from the region if we provide the vehicles.

And if $4bn sounds like a lot of money, take a look at the future. Standard and Poor’s have forecast that Islamic finance could grow to a value of $4 trillion. Why would we not want to attract capital flows of this size?

The chancellor has created the framework for London to emerge as the leader in the global Islamic finance industry and his changes are likely to be replicated in many other countries.

And, as a result, Islamic finance to move from being niche to the mainstream as a viable and valid financing option for all.


Exactly the goal of the JIHAD, whether it is by exploding bombs, exploding humans, RPGs', or nukes, the goal is to have the entire world comply with THE LAWS OF ALLAH: SHARI'AH...

The stupid infidels are going right along with it, until it is TOO LATE, too late for all of us...


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