Frank Kane writes in an opinion column at Emirates Business 24/7 that more clarity is needed in the sukuk market to encourage continued growth. He argues that the recent Bloomberg article (described briefly here last week) claiming that the controversy over the Shari'ah-compliance of ijara sukuk caused a decline in sukuk issuance and prices was not the correct causation. Following Sheikh Usmani's criticism that 85% of GCC sukuk are not Shari'ah-compliant, the AAOIFI Shari'ah-board which Sheikh Usmani chairs met and released a statement on repurchase agreements that added some clarity to the issue. More likely, the spillover from the credit crisis is more likely the cause of the slowdown.
In an update to the Bloomberg story, the total sukuk issuance through August 31, 2008 was $14 billion compared with $23 billion in the same period in 2007 according to Standard & Poors.
Qatar National Bank, which had a representative office in Singapore has converted this into a full branch. QNB has a wholesale banking license in the country. Singapore has worked to catch up with other countries in Southeast Asia at attracting Islamic finance. One area where other countries and city-states can compete with Malaysia, which has a large advantage in Islamic finance industry development, is working internationally, particularly with the GCC region. Malaysia has led the region on Islamic finance but this development has been largely for the domestic market and the more liberal Shari'ah standards have made its expansion internationally more difficult, particularly in regions with more conservative interpretations of Shari'ah-compliance.