Islamic finance is approaching a fork in the road and tough decisions will have to be made to move ahead, an expert claimed.Speaking on the sidelines of the forum, Dow Jones global director of Islamic indices Rushdi Siddiqui said the industry would have to attract investors from outside the Islamic community to reach its true potential.
“We have to decide whether the industry can move forward with strict Sharia-compliant screens on investment products or whether we should have parallel products based on ethical investment,” he said.
“Sukuk are financial instruments that could be attractive to western investors but at present there is no real secondary market in these products.
“People tend to buy them and hold on to them until they mature but bringing in institutional investment from the west would create a secondary market as institutions would trade sukuk rather than hold them for long terms.”
“It is important that there are more players in the market,” he said.
“Islamic finance is not just for Muslims, it is for everyone who believes in this way of investing.”
He said that while the Islamic finance industry was growing strongly there was still not enough supply of products.
This gap could be crossed by attracting global fund managers and hedge funds into investing in Islamic products like sukuk, he said.
“Western finance will come into the industry because Islamic finance is seen as a good investment vehicle,” he added.