BRITAIN'S plan to issue its first sovereign sukuk as early as next year will further boost the Islamic finance market and spur other non-Muslim economies to tap the growing interest in Islamic bonds.
Maybank Islamic Bhd chief executive officer Muzaffar Hisham said Britain's confidence in the sukuk market is creating more excitement in the global financial market.
Even when British Prime Minister David Cameron expressed his aspiration to see London growing alongside Kuala Lumpur and Dubai as great capitals of Islamic finance, he said a little competition never hurts anyone.
"The Islamic finance industry is in for an exciting time and any competition will push the industry to be more efficient. From Cameron's announcement, I see a further boost to the Islamic capital market."
Muzaffar, who runs Malaysia and Asean's largest Islamic bank in terms of asset size of US$30 billion (RM94.7 billion) as at September 2012, said the global financial industry is operating in a converging economy and Islamic finance can bridge all nations and increase cross-border transactions.
Speaking at a bankers' panel session on internationalising Islamic finance at the 9th World Islamic Economic Forum, here, on Wednesday, Muzaffar said the issuance of a sovereign sukuk by any country will increase market confidence and encourage the private sector and state-owned enterprises to tap the sukuk market.
Muzaffar shared Malaysia's experience as a robust Islamic capital market and how, for the last six to seven years, the sukuk market has overshot the conventional bond market.
Today, Malaysia's sukuk market accounts for 60 per cent of the global outstanding sukuk.
Responding to a remark from a member of the audience that Britain's sukuk proposal may run into some syariah harmonisation issues, Muzaffar said Britain must have a clear framework based on the rulings of its own syariah scholars, and that industry players must respect the rulings.
In the case of Malaysia, he said all players follow the rulings of the Syariah Advisory Council set up by Bank Negara Malaysia.
"When we were involved in the 'dim sum' sukuk and faced some issues with the Hong Kong authorities, they suggested we have some form of transparency and allow the market to decide, and the sukuk was a success."
He said there will always be debates on syariah harmonisation, which is why countries participating in Islamic finance must have clear regulations and financial acts.
"Syariah harmonisation is a challenge for Islamic scholars but I believe we are moving towards the right direction," he said.