Forbes released a Special Report on Islamic finance. Although the U.S. has not shown much interest in changing regulations to put Islamic finance on a level playing field with conventional finance, other countries like the U.K., Malaysia, Singapore, Japan, Dubai and Bahrain are vying to be the largest hubs of Islamic finance. The growth in Islamic investing is one area in which ethical investing has begun to grow out of being a niche market within the global financial system, although it is still small compared with the system as a whole. The growth, however, has come with challenges. One of the greatest is the shortage of Shari'ah scholars who know both the Shari'ah, financial services and with enough knowledge of English "to wade through hundreds of pages of a prospectus or legal documents".
Forbes also provides a historical analogy to the development of Islamic finance in the conventional finance market. This was the gradual move away from prohibitions of interest (usuria) in Catholicism. Although there is nothing that suggests that the prohibition of interest in Islamic finance will be circumvented, the historical analogy provides a warning against focusing on the form, rather than the spirit, of the prohibition of riba. The tension between the letter and spirit of Islamic law is the subject of a piece by Haider Ala Hamoudi, a professor at the University of Pittsburgh.
One of the areas in which the U.S. has seen significant growth in Islamic finance is in equity mutual funds, the subject of one article in Forbes.
Islamic banks in Pakistan report the need of short-term liquidity instruments, a need filled using short-term government bonds by conventional banks. The increased cost of products used by Islamic banks in the absence of liquidity management products may slow growth in demand because, as the CEO of Meezan Bank Irfan Siddiqui noted, people's demand for Islamic banking depends on the service and price, in addition to its Shari'ah-compliance. The government of Pakistan announced on April 25th that it has appointed manager of the first rupee-denominated government sukuk, expected to be Rs. 20 billion ($309 million).
The fifth Islamic bank in the U.K., Gatehouse Bank, is now open. The takaful industry, now at $3.5 billion, is expected to grow to $10 billion by 2012. Despite unsolved regulatory and tax issues, Indonesia plans to issue up to $2 billion in sovereign sukuk this year to finance the country's large budget deficit. Islamic finance, while still at an early stage, is growing in Canada. The Kuwaiti exchange will allow the selling of Islamic options on stocks using the controversial arboun structure. Although very little has been done in Islamic finance in France, the government is setting up two round tables to assess the feasibility of Islamic finance in France, in part to attract funds from the Middle East caused by the significant increase in the price of oil.
The requirement of compulsory zakat recently enacted in the UAE has attracted criticism from a notable Shari'ah scholar, Sheikh Hussein Hamed Hassan, who says it is an individual, not institutional requirement.